Tullow Oil (LON:TLW) has reached agreement with the Ugandan authorities over a long running capital gains tax dispute.
The oil firm agreed to US$250mln of capital gains tax, resulting from its farm-downs to CNOOC and Total in 2012.
Some US$142mln was already paid to Uganda back in 2012, and the group will now spread the other US$108mln in three instalments of US$36mln. The first such payment has now been made, and it will be followed by payments in 2016 and 2017.
The Ugandan authorities previously assessed the CGT bill to be US$473mln.
“The settlement of this long-running dispute is good news for Tullow and Uganda,” said Tullow chief executive Aidan Heavey.
“In recent months, the Government of Uganda has proposed welcome and necessary changes to its tax regime for oil and gas investments which it is hoped will enable substantive progress to be made towards the sanction of the Lake Albert oil development."
Caren Crowley, analyst at Dublin broker Davy, meanwhile, said: “A final resolution to the CGT liability dispute should remove a roadblock to the award of production licences and help advance the development of the 1.7bn barrels of discoveries in the East African country.
“The settlement is a further sign of the conciliatory approach adopted by the Ugandans and follows an amendment to the Ugandan VAT act to allow exemptions on oil developments.”