Tullow and Heritage complete Uganda deal

27th Jul 2010 10:36

Tullow Oil is officially the proud owner of Heritage Oil's 50% interest in Blocks 1 and 3A in Uganda after months of uncertainty.It has paid $1.35bn in cash for the assets plus an additional contractual settlement of $100m, of which Heritage has received $1.045bn. The rest is sitting in an escrow account until a tax row with the Ugandan authorities is resolved. Heritage, whose shareholders now stand to collect a special dividend, has already deposited $121.5m, 30% of the disputed amount, with the Ugandan Revenue Authority.Uganda's government gave conditional approval on 6 July, since when all conditions have now been met and the assets transferred to Tullow Uganda.Tullow exercised its first refusal rights over the blocks back in January after Heritage first agreed to sell the stakes to Italy's Eni at the end of November.The government originally blocked the sale, fearing it would give too much control to the Irish group. There was also disagreement with Heritage over the amount of capital gains tax payable on the sale. Tullow is now setting up a deal with CNOOC of China and France's Total to farm down two thirds of its interests in Blocks 1, 2 and 3A in the Lake Albert Rift Basin. Chief executive Aidan Heavey says that will pave the way for an accelerated basin-wide development plan that is expected to deliver production "well in excess" of 200,000 barrels of oil per day from the Albert Rift Basin.