Tullow Oil says Uganda farm-down deal has been terminated

Tullow Oil said on Thursday that its farm-down agreement with Total and China National Offshore Oil Corp (CNOOC) has ended after it failed to agree tax details with the Government of Uganda.

The company said that while its capital gains tax position had been agreed, the Ugandan Revenue Authority and the joint venture partners could not agree on the availability of tax relief for the consideration to be paid by Total and CNOOC as buyers.

Tullow will now begin a new sales process to cut its 33.3% operated stake in the Lake Albert project, which has more than 1.5bn barrels of discovered recoverable resources and is expected to produce in excess of 230,000 barrels of oil per day at peak production.

Chief executive officer Paul McDade said: "Tullow has worked tirelessly over the last two and a half years to complete this farm down which was structured to re-invest the proceeds in Uganda. Whilst this is a very attractive low-cost development project, we remain committed to reducing our operated equity stake.

"It is disappointing to report this news at a time when we are making so much progress elsewhere towards the growth of the group with our recent oil discovery in Guyana and the first export of oil from Kenya."

At 1200 BST, the shares were down 3.5% at 209.60p.