Heritage Oil Plc

Heritage Oil Plc

May 16, 2011 13:15 ET

Heritage Announces Commencement of Arbitration Proceedings Against Ugandan Government

CALGARY, ALBERTA--(Marketwire - May 16, 2011) -


Heritage Oil Plc (TSX:HOC)(LSE:HOIL), an independent upstream exploration and production company, announces that international arbitration proceedings have been commenced against the Government of the Republic of Uganda (the "Ugandan Government") by Heritage Oil & Gas Limited, a wholly owned subsidiary of Heritage, ("HOGL"). HOGL is seeking a decision requiring, among other things, the release of approximately $405 million currently on deposit with the Ugandan Revenue Authority ("URA") or in escrow with Standard Chartered Bank following HOGL's sale of its interests in Blocks 1 and 3A in Uganda on 26 July 2010.

On completion of the sale of the interests in Blocks 1 and 3A in Uganda on 26 July 2010, Heritage received and retained $1.045 billion. An additional, approximately $405 million of the purchase price, was in part deposited with the URA and in part deposited in escrow pending resolution of a tax dispute with the URA. The position of both Heritage and HOGL is based upon comprehensive advice from leading tax experts in Uganda, the United Kingdom and North America; the disposal of the interests in Blocks 1 and 3A is not taxable in Uganda.

Accordingly, the arbitration proceedings concern HOGL's claims that the Ugandan Government wrongfully or unreasonably withheld consent to the sale by HOGL of the rights under the Production Sharing Agreements for Blocks 1 and 3A, including by making this consent conditional upon the payment of a sum alleged to be a tax liability of HOGL. Whilst HOGL has sought to resolve the issue without resorting to arbitration, it has been left with no alternative but to take this step.

The arbitration proceedings will be held in London in accordance with the provisions of the Production Sharing Agreements in relation to Block 1 and Block 3A.

Notes to Editors

  • Heritage is listed on the Main Market of the London Stock Exchange and is a constituent of the FTSE 250 Index. The trading symbol is HOIL. Heritage has a further listing on the Toronto Stock Exchange (TSX:HOC)

  • Heritage is an independent upstream exploration and production company engaged in the exploration for, and the development, production and acquisition of, oil and gas in its core areas of Africa, the Middle East and Russia

  • Heritage has a producing property in Russia and exploration projects in the Kurdistan Region of Iraq, the Democratic Republic of Congo, Malta, Pakistan, Tanzania and Mali

  • All dollars are US$ unless otherwise stated

  • For further information please refer to our website, www.heritageoilplc.com

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Except for statements of historical fact, all statements in this news release – including, without limitation, statements regarding production estimates and future plans and objectives of Heritage – constitute forward-looking information that involve various risks and uncertainties. There can be no assurance that such statements will prove to be accurate; actual results and future events could differ materially from those anticipated in such statements. Factors that could cause actual results to differ materially from anticipated results include risks and uncertainties such as: risks relating to estimates of reserves and recoveries; production and operating cost assumptions; development risks and costs; the risk of commodity price fluctuations; political and regulatory risks; and other risks and uncertainties as disclosed under the heading "Risk Factors" in its Prospectus and elsewhere in Heritage documents filed from time-to-time with the London Stock Exchange and other regulatory authorities. Further, any forward-looking information is made only as of a certain date and the Company undertakes no obligation to update any forward-looking information or statements to reflect events or circumstances after the date on which such statement is made or reflect the occurrence of unanticipated events, except as may be required by applicable securities laws. New factors emerge from time to time, and it is not possible for management of the Company to predict all of these factors and to assess in advance the impact of each such factor on the Company's business or the extent to which any factor, or combination of factors, may cause actual results to differ materially from those contained in any forward-looking information.

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