(Bloomberg) – Tullow Oil Plc shares fell by half after the company lost an arbitration case over taxes on fields in Ghana that account for the bulk of its production.
The decision is strategic blow to the UK-based company, which has been relying on cash from core Ghana assets to pay down its heavy debt burden. Shares of the company fell as much as 52%, the most since 2020, after the announcement. They were 50% lower as of 11:08 a.m. in London, a sharp reversal after the stock posted year-to-date gains of more than 300% earlier this month.
The International Chamber of Commerce ruled that a corporate income tax assessment of $196.5 million is not in breach of Tullow’s petroleum agreements, the Africa-focused oil company said in a statement. The tribunal also ruled the assessment of penalties fall outside contractual protections.
Ghana’s government “intends to ensure that the award is implemented in a way that secures the revenues due to the Ghanian people while preserving Tullow’s ability to continue operating and investing,” Finance Minister Cassiel Ato Forson said in a statement posted on X.
The outcome is “very disappointing,” Canaccord Genuity analyst Charlie Sharp said in a note.
The income tax assessment related to proceeds received during the financial years 2016 through 2019, according to the statement. “Tullow is disappointed that the Tribunal has come to this decision and will now consider next steps after further engagement with the Government of Ghana,” the company said.
Tullow is involved in one other arbitration case with Ghana, and one outstanding tax assessment from Kenya.
