Tullow Oil loses $196.5m Ghana tax dispute, shares tank
Tullow Oil shares dropped significantly after a tribunal ruled against the company in a $196.5 million tax dispute with the Ghanaian government. The company is now evaluating its next steps while struggling to manage a $1.4 billion debt load.
Why it matters
The ruling threatens the financial stability of a major oil producer and highlights the ongoing fiscal tensions between multinational energy firms and African host nations.
Tullow Oil lost a $196.5m tax dispute with Ghana today after a tribunal rejected the oil producer's claim that the assessment breached its petroleum agreements, sending its shares plummeting.
Shares of the West Africa-focused Tullow were on track to record their worst day since December 2019. They were down 45.1% at 10.7 pence this morning, a reaction Panmure Liberum analyst Ashley Kelty called overdone.
"The loss of the tax case is 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 really for the company," Kelty said.
The tribunal found that Ghana's corporate income tax assessment on insurance proceeds received by Tullow between 2016 and 2019 did not violate the agreements and that penalties equal to 100% of the assessment were not covered by their contractual protections.
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