Heritage Oil updated on Heritage Oil & Gas Limited's (HOGL) disposal of its entire interests in Block 1 and Block 3A in Uganda.
In accordance with the Petroleum Exploration and Production Act Cap 150, Mr. Hilary Onek, Minister of Energy & Mineral Development, has given consent to Heritage's disposal of the Assets. This consent is conditional on HOGL demonstrating to Government that it will pay any taxes on demand which may arise from the disposal of the Assets.
In a separate letter Mr. Kabagambe-Kaliisa, Permanent Secretary to the Ministry of Energy & Mineral Development, advised that if HOGL was to resolve the tax matter by arbitration in London, then such arbitration would be on the basis that HOGL deposit approximately US $121.5 million, representing 30% of the disputed amount of US $404,925,000 with the Uganda Revenue Authority and provide a bank guarantee for the balance. As announced on June 17, 2010 Heritage previously proposed to Government the option of arbitration in London.
Heritage's position, based on comprehensive advice from leading tax experts in Uganda, the United Kingdom and North America, is that the disposal of the Assets is not taxable in Uganda. Heritage is considering Government's response and will update the market in due course.
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