Shares of Tullow Oil (LON: TLW) have been boosted on Monday afternoon following an update to shareholders explaining the resolving of an Ugandan tax dispute.
Tullow Oil plc is a multinational oil and gas exploration company founded in Tullow, Ireland with its headquarters in London, United Kingdom. It has interests in over 150 licenses across 25 countries with 67 producing fields and in 2012 produced on average 79,200 barrels of oil equivalent per day.
Tullow Oil have seen their shares boosted 3.59% to trade at 135p on Monday afternoon. 2/12/19 14:47BST.
The FTSE250 listed firm saw their shares crash a few weeks back, following a production warning issuance. However, some ground does seem to have been recovered since the alarming update.
The Ugandan Government said that they had reached a settlement about a dispute with international oil firms, which allows Tullow to revive plans to sell a stake in its assets.
The Ugandan Government has been in lockdown with firms such as Total (EPA: FP) and CNOOC (HKG: 0883) over the taxes assed on Tullow’s plans to sell part of its stakes in Ugandan oil fields.
Uganda’s previous oil tax disputes have been around capital gains tax on proceeds from asset sales.
Hanns Kyazze, a communications specialist at the ministry of energy and mineral development, said the government had offered the companies a deal to end the dispute, although he did not provide details on the agreement.
“They (firms) have now accepted that proposal and are moving on to ensure that package of proposed terms is operationalised,” Kyazze told Reuters.
Total, Tullow and CNOOC hold equal stakes in the fields, however Tullow decided to sell a 22% stake to its partners. This deal eventually collapsed due to business disputes.
Kyazze told Reuters a formal announcement would likely be made in coming days but that the agreement “untangles all issues that stalled and failed the deal, high on it are the taxes, who pays those taxes and how and when should those taxes be paid.”
With the dispute now settled, the government expects the firms to reach a verdict by the end of the first quarter of 2020.