OIL explorer Tullow faced tough questions over its plans in Uganda yesterday, as shares dipped despite a 152 per cent increase in pre-tax profit in the last six months.
Its $10bn (£6.6bn) project on oil fields once owned by Heritage stalled in January, after the Ugandan government disputed Heritage’s capital gains tax payments on the sale.
Exploration director Angus McCoss told City A.M. yesterday: “It’s a very short-term situation and we want to make sure that we set the industry off on the right foot in Uganda.”
McCoss added: “I think these things are characteristics of a new entrant to the oil industry. We encounter similar problems in other places; it’s the reality of being a frontier explorer.”
Tullow, which is led by Aidan Heavey, saw its stock closed down 4.6 per cent at £12.38 after the results announcement raised concerns.
“When you get beyond the headline figures you find significant problems in Uganda,” said Doug Youngson, oil analyst at Arbuthnot. “It’s misleading for the company to say this will be resolved in weeks, since it’s been going on for months. And the longer this goes on, the colder the deal gets for its partners Total and CNOOC.”
Pre-tax profit more than doubled to $131m (£84.8m) in the six months to 30 June.