Source: Sharecast
In a brief update, Tullow confirmed that the International Chamber of Commerce tribunal had found against it. It found that Ghana’s $196.5m corporate income tax assessment on insurance proceeds received by Tullow between 2016 and 2019 did not breach the firm’s petroleum agreements, as the oil producer had claimed.
The tribunal also ruled that the assessment of penalties of 100% fell outside the scope of the contractual protections included in the petroleum agreements.
As at 1345 BST, the stock had plunged 43% at 11.14p.
Tullow said it was "disappointed" by the decision, and would consider its next steps following further engagement with the Ghanaian government.
In a statement, Ghana’s ministry of finance said it would work closely with Tullow to implement the tribunal award while taking into account the need to maintain operations at the Jubilee and Ten oilfields.
Earlier this week, Tullow boosted oil production guidance following a strong first half, and called the longer-term outlook for the Ghana-focused business healthy. However, it has been marred by ongoing disputes with the Ghanaian tax authorities. A separate $190.5m assessment over loan interest deductions will got to a tribunal hearing in 2027.
Panmure Liberum analyst Ashley Kelty told Reuters: "The loss of the tax case in not a huge surprise. But the problem is that until they make some decent progress on paying down debt, I can’t see long-term survival for the company."
Tullow’s net debt stood at $1.4bn as at 30 June. Last year the firm posted adjusted earnings before interest, tax, depreciation, amortisation and exploration costs of $586m on revenues of $847m.
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