Tullow Oil dragged down by Ugandan tax dispute
Thursday 26 August 2010
Tullow Oil was the FTSE 100's second-biggest faller yesterday after the company admitted its deal to buy a stake in a key Ugandan oil field is being held up by a tax dispute between the seller, Heritage, and the government in Kampala.
Tullow's stock plunged by 6 per cent in afternoon trading, recovering slightly to close down 4.6 per cent at 1238p, despite half-year results from the company showing revenues up by 11 per cent to $486m (£314m), profits nearly tripling from $31m to $89m, and 14 successful strikes out of 17 exploration wells.
Although Tullow's $1.5bn purchase of Heritage's interests, the Lake Albert oil field, has been approved by Uganda, a row over whether Heritage owes capital gains tax has stalled the completion of the deal, which in turn puts the brakes on Tullow's plan to farm down parts of its newly increased stakes to China National Offshore Oil Corporation (Cnooc) and Total.
The timing was bad for Tullow. An earlier understanding that Heritage's tax bill had no bearing on Tullow moving ahead with its farm-down arrangements was changed only this week, just in time for the expected delays to be included in the group's financial results and spook the market.
The company hopes for a cooling-off period of between two and four weeks, allowing the tax question to be separated again from its arrangements with Cnooc and Total to accelerate development of the Lake Albert fields. "Our desire is to see the Heritage tax issue decoupled from our farm-down process," Ian Springett, Tullow's chief financial officer, said. "We think that in two, three or four weeks we will see these issues resolved."
The uncertainty over Lake Albert also overshadowed Tullow's confirmation that the first phase of its massive Jubilee field off the Ghanaian coast will go into production before the end of the year.
- 1 Jeremy Clarkson 'does not see a problem' with his racist language on Top Gear, says BBC
- 3 ALS ice bucket challenge co-founder Corey Griffin drowns, aged 27
- 4 A third of employers never check job applicants' qualifications, survey finds
Richard Dawkins on babies with Down Syndrome: 'Abort it and try again – it would be immoral to bring it into the world'
Scottish independence: English people overwhelmingly want Scotland to stay in the UK
Isis threat: Cameron wants an alliance with Iran
Michael Brown shooting: Chaos erupts on the streets of Ferguson after autopsy shows teenager was shot six times – twice in the head
Bin bag full of cats' heads discovered near Manchester's Curry Mile
Disgusting, frustrating, but intriguing: how the country really feels about its politicians
iJobs Money & Business
£25000 - £35000 per annum: Harrington Starr: Junior Quant Analyst - C++, Boost...
£25000 - £35000 per annum: Harrington Starr: Service Desk Analyst- (Desktop Su...
£30000 - £50000 per annum: Harrington Starr: Junior Quant Analyst (Machine Lea...
£45000 - £55000 per annum: Harrington Starr: UNIX Application Support Analyst-...