3rd UPDATE:Heritage Completes Sale Of Uganda Blocks To Tullow

27th Jul 2010 10:45

(Adds details, background, share price) By Spencer Swartz Of DOW JONES NEWSWIRES LONDON (Dow Jones)--After months of delay, Heritage Oil PLC (HOIL.LN) said Tuesday it has completed the sale of its two Uganda oil blocks to Tullow Oil PLC (TLW.LN) for $1.45 billion and said it intends to pay a special dividend of up to 100 pence a share next month. The announcement, which comes after the Ugandan government conditionally approved the sale earlier this month, paves the way for London-listed Tullow and its partners, China's CNOOC (CEO) and French oil giant Total SA (TOT), to move forward with developing the two oil blocks. "We will now be pushing ahead with finalizing development plans with our partners and those should be in place by the end of the year," Tullow Chief Financial Officer Ian Springett said in an interview. The total sale price includes $1.35 billion in cash and a "contractual settlement" payment of $100 million. In London, shares of Jersey-based Heritage traded up 11 pence, or 2.7%, at 422 pence while Tullow's stock was up 25 pence, or 2%, at 1,264 pence at 0932 GMT. Heritage said it continued to work with the Ugandan government over a disputed capital gains tax the government says the company owes for cashing in its assets. The disagreement delayed the sale for months. Heritage said it had deposited $121.5 million with the government, or 30% of the $405 million Uganda says Heritage owes. The government has so far rejected the idea of settling the issue at an outside arbitration court. Hilary Onek, Uganda's energy and minerals minister, said that the payment of part of the taxes is a positive response from Heritage and indicates that the dispute will be settled soon. "We welcome the payment. Tax matters are subject to Ugandan law and its good Heritage is responding to government's conditions," he said. Heritage said it now had about $1.2 billion in cash on hand following the Uganda oil-blocks' sale. Details of the company's special dividend will be provided soon, it said. Werner Rising, an analyst at Ambrian, said in a research note he was keeping his "hold" recommendation on Heritage shares until the company gives more clarity on how it plans to beef up its future growth strategy now that it has sold its stakes in the two Uganda oil blocks. "We optimistically await clarification of what the complexion of the future Heritage Oil will look like. Clearly, the business is now cash rich, but relatively 'asset light,' " Werner said. -By Spencer Swartz, +44 207 842 9357; [email protected] (Nicholas Bariyo in Kampala, Uganda, contributed to this article.) (END) Dow Jones Newswires July 27, 2010 05:45 ET (09:45 GMT)