UPDATE:Heritage To Pay 30% Of Tax On Tullow Deal Now-Uganda Min

6th Jul 2010 15:56

(Adds comments from permanent secretary.) By Nicholas Bariyo and James Herron Of DOW JONES NEWSWIRES KAMPALA, Uganda (Dow Jones)--Heritage Oil Ltd. (HOIL.LN) has agreed to pay up front 30% of the disputed $404 million capital gains tax bill on the sale of its Uganda assets to Tullow Oil PLC (TLW.LN), Ugandan Energy and Minerals Minister Hilary Onek said Tuesday. The tax was the last major sticking point to the sale, which values Heritage's stake in two oil blocks at up to $1.5 billion. "We have approved the sale on condition that Heritage Oil deposits 30% of the assessed capital gains tax on the transaction with the Uganda Revenue Authority," Onek told Dow Jones Newswires. "We have also asked Heritage to seek bank a guarantee of the remaining 70% of the tax which government can access on demand as the arbitration on the tax dispute continues," he said. The long-delayed approval of the transaction clears Tullow to continue with preparations to bring on Total SA (TOT) and Cnooc Ltd. (CEO) as partners for the development of oil discoveries in three blocks in the Lake Albert basin, Onek said. Kalisa Kabagambe, Uganda's Energy and Minerals Development Permanent Secretary, said the approval will allow Tullow to finalize the transactions with Total and Cnooc to develop oil blocks in the Lake Albert basin. "Tullow is free to carry out further transactions because we have allowed them to buy Heritages stakes," he said. The government's tax proposals to Heritage and the arbitration process will not hamper the development timetable of the oil fields, Kabagambe said. -By Nicholas Bariyo and James Herron, Dow Jones Newswires; +44 (0)20 7842 9317; [email protected] (END) Dow Jones Newswires July 06, 2010 10:56 ET (14:56 GMT)