Tullow Oil defeats Heritage in High Court battle

14th Jun 2013 14:56

Tullow Oil has defeated former partner Heritage Oil in a contract dispute taken to the UK High Court.The dispute related to which of the two companies was liable for a tax payment to the Ugandan government.On Friday, in the High Court in London, the FTSE 100 group's subsidiary Tullow Uganda received judgment in its favour.The Honourable Mr Justice Barton awarded judgement in favour of Tullow's entire indemnity claim for $313m and also dismissed Heritage's counterclaim. In 2010, FTSE 250-listed Heritage sold Tullow its entire 50% stake in two blocks of oil fields in Uganda's Lake Albert basin for $1.35bn cash.As part of that initial payment, roughly $405m was deposited partly with the Ugandan government and partly held in an escrow account pending resolution of a tax dispute with the Ugandan Revenue Authority (URA).In a statement, Heritage said: "The company strongly disagrees with the decision. It maintains the view that Tullow's original payments to the Uganda Revenue Authority were commercially motivated rather than as the result of a valid legal obligation."Heritage added that it would review its legal options with a view to appealing the judgment, which must be lodged within 21 days.Tullow pointed out that the URA designated Tullow Uganda as agent in relation to this transaction and required Tullow to pay, on Heritage's behalf, $313m to the URA as an outstanding Capital Gains Tax that the Ugandan Government claimed from Heritage in respect of the transaction. Tullow said it sought an indemnity from Heritage under the sale agreement in respect of this $313m payment. A further hearing will be scheduled in due course to address matters arising from the judgment such as the amount of interest Heritage owes Tullow on the $313m and Tullow's submissions in respect of payment of its costs by Heritage.Shares in Tullow Oil were up 1.6% at 1,049p, while those in Heritage Oil were down 2.8% at 138.2p at 15:15 on Friday. OH