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April 4, 2013 6:33 pm
Heritage Oil played down the impact of a partial defeat in arbitration proceedings in London over the tax treatment of an asset sale in Uganda, which prompted its shares to fall by more than 10 per cent on Thursday.
The FTSE 250 Africa-focused explorer conceded that the tribunal had found against arguments by Heritage challenging the discretion of Ugandan authorities to rule on some tax matters relating to its sale of oil assets in the country in 2010 in a $1.45bn deal.
But Heritage, led by Tony Buckingham, argued that the findings of the tribunal still left the door open for victory in wider arguments that Uganda had unfairly changed the terms of a production sharing contract that has left more than $400m up for grabs in the complex legal dispute.
Heritage argues that a stabilisation clause in its production sharing deal struck with the Ugandan government insulated its projects from subsequent adverse tax changes.
Separately, Heritage remains in dispute with former exploration partner Tullow Oil over its voluntary payment of $313m to Ugandan authorities to meet a capital-gains tax claim made on its acquisition of two Ugandan oil blocks from Heritage.
Tullow argues that it paid the tax bill to help clear Heritage’s tax liabilities during a sale of Heritage’s interests that have left Tullow, Total of France and Cnooc of China in charge of a project to develop oil reserves in the Lake Albert basin.
Tullow is now pursuing Heritage separately for payment of this money in London’s High Court. Both sides are expected to submit the closing statements in the case later this month.
A sum of $283m paid by Heritage has been held in escrow and a further $122m was deposited with Ugandan authorities in 2010 while proceedings over the complex tax dispute continues.
Shares in Heritage fell to as low as 156p before recovering to close down 7 per cent at 165p.
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