Falklands-based oil firm Rockhopper will pay a £90million capital gains tax bill after finally agreeing a deal with the island’s government.
The explorer had been hit with a £195million tax bill over its 60% farm-out to Premier Oil of the Sea Lion discovery.
But after months of negotiations, the company confirmed it had now reached an agreement with the Falkland Islands government.
“I am pleased that we have now reached agreement with FIG and that the uncertainty over the quantum of CGT liability is now resolved,” said Rockhopper chief executive Sam Moody.
“This is an important commercial milestone for Rockhopper as we drive the Sea Lion development forward with our partner.”
The deal will see Rockhopper pay the sum in two installments. A £25million sum is due immediately, with Rockhopper having paid almost £24million of that earlier this year.
The remainder will be paid at the same time as the first royalty payment from production on the field.
Rockhopper had originally submitted returns for a £51million tax liability, but will now look to drive forward the £3.3billion, 400million barrel project, a funding decision on which is due at the end of next year.
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