Heritage Oil Completes Disposal Of Uganda
Heritage Oil plc Upstream exploration and production company Heritage Oil plc (HOIL.L: News ,HOC.TO: News ) Tuesday said that Heritage Oil & Gas Ltd. has completed the disposal of its entire interests in Block 1 and Block 3A in Uganda. The company also plans to pay a special dividend of up to 100 pence per share in August.
The assets have been sold to Tullow Uganda Ltd., a subsidiary of Tullow Oil plc (TLW.L: News ), for a cash consideration of US$ 1.35 billion and an additional contractual settlement amount of US$ 100 million. It was in January this year that Tullow Uganda reached a Sale and Purchase agreement, with Heritage Oil & Gas to purchase their entire interest in Block 1 and Block 3A in Uganda.
Heritage said it has received and retained US$ 1.045 billion of the total consideration. The company has disputed a tax assessment of US$ 404.03 million that arises from the sale of the assets, and deposited US$ 121.48 million, representing 30% of the disputed amount, with the Ugandan Revenue Authority. The company said it continues to work with the government to agree a way forward for the tax dispute to be resolved.
Heritage has also retained US$ 283.45 million in escrow and will be released following a resolution between the Government and the company of a mechanism to resolve the tax dispute. This could include the provision of a guarantee or a letter of credit from an international bank to the government to provide security for the remainder of the disputed amount.
Further, Heritage said that it would reach an agreement with Tullow in the next few months regarding a working capital adjustment with respect to the assets at the effective date of the transaction of January 17, 2010.
As part of returning a portion of the funds it received, Heritage intends to pay a special dividend of up to 100 pence per share in August. In its interim management statement, the company said last month that it proposed a special dividend of 75 pence to 100 pence per share on the sale of the Ugandan Interests.
Heritage will allocate the remainder of the funds of over US$ 0.7 billion between accelerating work programs on its existing portfolio and potential acquisitions.
HOIL.L is trading at 421 pence on the LSE, up 10.50 pence or 2.56%, on a volume of 673,233 shares.
On the TSX, HOC.TO closed at C$6.70 on Tuesday.
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