Tullow Oil has agreed to pay $250 million to settle a tax dispute with the Ugandan government out of court, almost half of the sum the east African country had originally demanded in tax relating to a sale of oil licences.
Legal proceedings have now been dropped, Tullow said on Monday. Shares in Tullow were rose 0.7 percent by 0942 GMT. “The settlement of this long-running dispute is good news for Tullow and Uganda,” said Tullow Chief Executive Aidan Heavey.
Uganda ordered Tullow to pay $473 million in capital gains tax following its $3 billion sale of a 66.6 percent stake in various oil licences to France’s Total and China’s CNOOC in 2012.
“The settlement clears another obstacle in the path of developing East Africa’s substantial oil resources,” said analysts at J.P Morgan Cazenove.