Tullow Oil’s Ugandan tax shock clouds 152% rise
Shares in Tullow Oil sank nearly 6% today as it reeled from a tax dispute in Uganda.
Tullow paid rival Heritage Oil $1.5 billion (£972 million) last month for a stake in the development of the Lake Albert oilfields in the country.
Final approval has been delayed, however, due to a dispute between Heritage and the Ugandan government over capital gains tax from the deal.
"Whilst effective ownership of the assets has been transferred to Tullow, the government wishes to resolve the tax dispute prior to granting final approval to proceed," Tullow said. "In the very short term, it is therefore anticipated that there may be some slowdown in activity."
The shock warning overshadowed a 152% rise in first-half profits to $131 million.
Shares in Tullow, which has operations across Africa and has already discovered one billion barrels of oil in the Ugandan fields, tumbled 75p to 1222p, making it the biggest loser in the FTSE 100.
Oil analyst Dougie Youngson, of Arbuthnot Securities, said: "The situation in Uganda is a major concern. The tax issue needs to be resolved before we are likely to see any further activity and this could have a major impact on the valuation of these assets."
The increased profits came after a 45% rise in the oil price more than made up for a 6% fall in production in the first half. Revenues at Tullow were up 11% to $486 million.
