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Oil Column: Heritage loses to Tullow in High Court

Heritage Oil (LON:HOIL) dismissed the financial impact of the ruling against it in its spat with Tullow Oil (LON:TLW) in London’s High Court today. 

The court favoured Tullow in the US$313mln contract dispute, relating to tax paid by Tullow to the Ugandan authorities for assets the pair of oil companies were partners in. 

In a stock market statement Heritage said it strongly disagrees with the High Court’s decision and it plans to appeal. 

Heritage said it maintains its view that Tullow’s payments to the Ugandan authorities were commercially motivated rather than as the result of a valid legal obligation.

“It is apparent from the judgment that [The Honourable Mr Justice] Burton was not ruling on the fundamental legality of the imposition of the tax by the Uganda Revenue Authority, and it has no bearing on the outcome of the international arbitration proceedings against the Ugandan Government in London, which are ongoing,” the company said.

“Appeals to the Ugandan High Court in respect of the tax assessments are pending. 

“Heritage's position remains, based on comprehensive advice from leading counsel, legal and tax experts, that this retrospectively placed tax, with no precedent, is not valid.”

Heritage also said that the ruling does not impact the company’s current cash position because US$283.4mln was placed in escrow in 2010, and US$121.5mln was deposited with the Ugandan government as well.

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July 31 2012

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