2013 Interim Report and Accounts - Heritage Oil

Heritage Oil Plc4Interim Report and Accounts 2013Chairman’s and Chief Executive’s reviewGood progressmichael J. hibbErdchairmananthony buckinghamchief executive officerHeritage continues to focus onexpanding a balanced portfolio ofassets with producing fields capable ofgenerating significant cash flow anda growing exploration asset base.The first half of this year has been busy for both sides of our portfolio.Heritage, through Shoreline Natural Resources Limited (“Shoreline”),established a base in Lagos with a team, including technical staff, tooversee our interest in OML 30, Nigeria. This asset, which has recentlyachieved record gross production, since acquisition, of c.44,000 bopd,remains the main development priority for the Company. All existingfacilities have been reviewed to identify opportunities for improvementand maintenance. A number of comprehensive operational, engineeringand community projects that commenced in the first half of the yearare already generating and contributing to significant productionincreases. Average daily gross production for July was c.23,100 bopdwhich has increased to c.40,800 bopd to date in August.Shoreline has continued to develop a close working relationship withthe operator, Nigerian Petroleum Development Company (“NPDC”),and is assisting in various studies and with the procurement ofnew equipment.A not for profit Non-Government Organisation (“NGO”), registeredand working in Nigeria and West Africa for over 20 years, has beenengaged to work with NPDC and Shoreline to ensure a cohesiveapproach to community issues. These initiatives have already had amarked impact on activities since June with production significantlyhigher than in the first six months of the year. Further increases arisingfrom these initiatives are expected during the remainder of the year.

Interim Report and Accounts 2013Heritage Oil Plc5Work programmes across our exploration portfolio continue with wellsplanned to commence drilling in both Papua New Guinea andTanzania in 2014.Total production, net to Heritage, for the first half of 2013 was7,197 bopd generating revenues of $238 million. Production fromNigeria for the period, net to Heritage was 6,725 bopd and for Russiawas 472 bopd. Nigeria contributed $234.4 million of revenue at anaverage realised price of $116.87/bbl and revenues from Russia of$3.4 million were at an average realised price of $41.05/bbl.OPERATIONAL OVERVIEWNigeriaGross production from OML 30 averaged 15,327 bopd over the firsthalf of the year. Gross production peaked at c.35,890 bopd during theperiod but several issues were encountered which resulted in increaseddowntime and a delay to installation of equipment. Intermittent strikes,by various groups of workers, and community related issues over theOlomoro, Oroni and Kokori Fields were the largest contributors to thedowntime. Some maintenance continued and spares for refurbishmentwere received despite the strikes.The need for an increased focus on community engagement becameapparent during the period and further resource is now being dedicatedto this. A community relations group has been formed jointly betweenShoreline and NPDC in order to provide an aligned response to anycommunity issues that may emerge. The appointed NGO hasundertaken needs assessments across local community clusters toensure that concerns are addressed and that local communities feelincluded as stakeholders in the licence. Key projects in the CorporateSocial Responsibility programme to date have included drilling waterwells, installation of a water distribution system and commencementof a series of training programmes. These initiatives have been pursuedover the last three months and resulted in a marked improvement inrelationships and a reduction in downtime. Consequently, productionhas recently reached new post-acquisition highs of c.44,000 bopd.The procurement and installation of new equipment will contribute toachieving average production of 45,000 bopd gross in the second halfof 2013. Three new compressors were ordered in the first half of theyear and have arrived in country. They are scheduled to come onstreamthrough a phased installation by November 2013. These newcompressors will be installed in the Kokori, Afiesere and OlomoroFields to enhance existing facilities and are expected to help minimisedowntime and increase average production. In addition, a gas distributionmanifold is currently being installed at Afiesere to increase productionfrom this field which has, until now, been producing without theassistance of artificial lift. The long-term potential gross productioncapability of the OML 30 licence is estimated at approximately300,000 bopd, with the existing infrastructure having capacityof 395,000 bpd.In addition to the three new compressors and the gas distributionmanifold two new engines have been ordered to act as “swing engines”for the refurbishment campaign. The new engines will be installed atOlomoro. The two existing engines at Olomoro will be refurbished forinstallation on another field as the campaign progresses. Compressorswill be overhauled while the engines are replaced. This cycle willminimise downtime while the systematic refurbishment campaignis underway. Replacement of all ten instrument air compressors isunderway along with generator replacement. In order to reduceprocessing, treatment and storage expenses, a project to expand theUghelli Pumping Station to remove water and inject it into nearbydeep wells has progressed to the FEED stage.Production from the Uzere West Field halted in November 2011 dueto issues concerning historic community leadership. Shoreline hasbeen responsible for leading the recent engagement with the localcommunities to resolve the issues. The plant and facilities have beeninspected and found to be in good working order and production isscheduled to restart on this field imminently. It is expected that thisfield will take four weeks to achieve full production of between 3,000to 5,000 bopd.Erratic production in the first half of the year led to an overliftoccurring by the first quarter which was then nearly rebalanced duringthe second quarter. With production now more stable as a result of theinitiatives undertaken, it is expected that regular liftings will occur overthe remainder of the year with the next one due at the end of August.RussiaProduction for the first half of 2013 averaged 472 bopd, a declineof 17% compared to the same period in the prior year due to thereplacement of the electric submersible pump in horizontal well 363in the first quarter 2013. Production averaged 675 bopd in July 2013,over 40% higher than the first six months of the year.TanzaniaThe acquisition of approximately 600 kilometres of 2D seismic over theRukwa licence was completed in the first quarter of 2013. The data hasbeen processed and interpretation is expected to be completed in thethird quarter 2013. Preliminary results from this extensive dataset arevery encouraging with the high quality data enabling enhanced mappingof targeted leads. A comprehensive drilling logistics study continues asplanned on the Rukwa licence, with drilling slated for 2014.The acquisition of approximately 100 kilometres of reconnaissanceseismic across the Kyela licence completed in January 2013. Theinterpretation of the data has provided further encouragement withrespect to the prospectivity of the area. A geochemical survey of thelicence will be completed later this year.

Interim Report and Accounts 2013Heritage Oil Plc7U g a n daLegal proceedings arising from the sale of the Group’s interests inBlocks 1 and 3A, Uganda, are ongoing. Heritage Oil & Gas Limited(“HOGL”), the Company’s wholly owned subsidiary, is engaged inappeals to the Ugandan High Court, an application to the Court ofAppeal and also in international arbitration proceedings in Londonagainst the Ugandan government.On 15 April 2011, Heritage and its wholly owned subsidiary HOGL,received Particulars of Claim filed in the High Court of Justice inEngland by Tullow Uganda Limited (“Tullow”) seeking $313,447,500for alleged breach of contract as a result of HOGL’s and Heritage’srefusal to reimburse Tullow in relation to a payment made by it of$313,447,500 on 7 April 2011 to the Ugandan Revenue Authority(“URA”). Heritage and HOGL filed their Defence and Counterclaimagainst Tullow.On 14 June 2013, judgment against Heritage and HOGL was receivedfrom the English Commercial Court. A consequential hearing washeld on 29 July 2013 at which Heritage was ordered to pay to Tullow$313,447,500 plus interest accrued on this amount and legal costs.OUTLOOKThe second half of the year will see a continued focus on our existingoperations in Nigeria to deliver on production growth. Work programmesin Nigeria will continue with refurbishment and installation of newequipment and further engagement with the local communities.Drilling of new wells across OML 30, funded from cash flow generatedthrough field operations, remains on track for the second half of 2014.Work programmes across the remainder of the portfolio continuewith exploration and development drilling planned for 2014.michael J. hibbErdchairmananthony buckinghamchief executive officer28 August 2013At that consequential hearing Heritage and HOGL sought permissionto appeal the judgment which was rejected by the first instancejudge. Consequently, on 2 August 2013, Heritage and HOGL madean application to the Court of Appeal for permission to appealthe judgment.Heritage had until 27 August 2013 to satisfy the order notwithstandingseeking permission to appeal from the Court of Appeal. In this regard,on 1 August 2013, the escrow funds of approximately $288 million heldwith Standard Chartered Bank were released to Tullow to satisfy themajority of the debt. The remaining balance has been met fromHeritage’s current assets.Pursuant to the terms of the order arising from the decision of theCommercial Court, Tullow has undertaken to Heritage and the HighCourt that if Tullow receives any reimbursement from the URA or theUgandan government of any of the $313,447,500 which Tullow paid tothem in respect of Heritage’s disputed tax liability then Tullow will paysuch amount to Heritage.Tullow has also provided a further undertaking to Heritage and theHigh Court that in the event Heritage is given permission to appeal andsucceeds in its appeal in whole or in part such that a sum is repayablefrom Tullow and that Tullow Oil plc will act as guarantor.

Heritage Oil Plc10Interim Report and Accounts 2013Financial reviewwell positionedPaul athertonchief financial officerHeritage is undergoing a substantial change throughthe operations in Nigeria which are generatingsignificant cash flow.Selected operational and financial dataSix monthsended30 June 2013Six monthsended30 June 2012 ChangeProduction bopd 7,197 567 1,169%Sales volume bopd 11,537 567 1,935%Average realised price $/bbl 113.9 39.9 185%Petroleum revenue $ million 237.8 4.1 5,700%Profit/(loss) from continuing operations after tax $ million 57.2 (50.0) 214%Loss from discontinued operations $ million (475.6) (2.2) n/aCash generated by (used in) continuing operations $ million 135.1 (17.6) n/aTotal cash capital expenditures $ million 30.1 36.1 n/aAs at30 June 2013As at31 December2012Period end cash balance 1 $ million 112.9 89.6 n/a1 Excluding amounts related to the tax dispute in Uganda and cash deposited as part security in respect of OML 30 of $51 million which was released back to the Company on22 August 2013 and replaced with alternative security granted by Heritage.

Interim Report and Accounts 2013Heritage Oil Plc11CORPORATE PERFORMANCEProduction and sales volumesIn November 2012, Heritage, through Shoreline, completed theacquisition of a 45% interest in OML 30 together with a 45% interest inother assets owned under a joint operating agreement for OML 30 (the“Acquisition Assets”). Shoreline is a special purpose Nigerian companyformed between a subsidiary of Heritage and a Nigerian partner,Shoreline Power, which acquired 45% of OML 30. Heritage’s currenteconomic share in Shoreline is 97.5%. Production from OML 30 isincorporated within the Group’s results with effect from 1 November2012. Average daily production, net to Heritage’s economic interest,of 6,725 bopd was generated from OML 30 in the six month periodended 30 June 2013.The difference between the production and sales volumes is due to thechange in the oil inventory balance during the period.Average daily production from the Zapadno Chumpasskoye Fieldin Russia decreased from 567 bopd in the six month period ended30 June 2012 to 472 bopd in the six month period ended 30 June 2013,primarily due to the replacement of the electric submersible pump onhorizontal well 363 in the first quarter of 2013. Production has sinceincreased, averaging 675 bopd in July 2013.RevenueHeritage’s net share of petroleum revenue from its interest in OML 30was $234.4 million. Sales volumes in the six month period ended30 June 2013 were 11,084 bopd and the average realised commodityprice was $116.87/bbl. Sales volumes were higher than productionvolumes in the period because of the build-up of inventories at thebeginning of the period as the first sale was in January 2013, followingthe acquisition with effect from 1 November 2012. OML 30 crudeis priced using the Forcados benchmark, which trades at a premiumto Brent.Petroleum revenue from the Zapadno Chumpasskoye Field in Russiadecreased by 18% to $3.4 million, which comprised:––$(0.8) million from a decrease in sales volumes from 567 bopd inthe first half of 2012 to 453 bopd in the same period in 2013; and––$0.1 million from an increase in average realised commodity pricesfrom $39.92/bbl in the six month period ended 30 June 2012 to$41.05/bbl in the six month period ended 30 June 2013.Operating resultsExpensesNet operating costs for OML 30 were $37.3 million. Average operatingcost per produced barrel of oil was $30.64/bbl in the six month periodended 30 June 2013. The average operating costs per barrel were higherthan expected as a result of the lower level of production in the periodand a certain portion of the operating costs, such as manpower, arefixed. As at 30 June 2013, Shoreline’s cumulative oil liftings were higherthan its cumulative production and therefore it has recognised the costfor this overlift position within operating expenses and a creditor forthe overlift position.In the six month period ended 30 June 2013 there was a changein inventory of $9.0 million, which was held in inventory as at31 December 2012 and transferred to the income statement in the sixmonth period ended 30 June 2013 when the production was lifted.Petroleum operating costs for the Zapadno Chumpasskoye Fieldincreased by 5% to $1.7 million in the six month period ended 30 June2013. Average operating cost per produced barrel of oil increased from$15.95/bbl in the six month period ended 30 June 2012 to $20.17/bblin the six month period ended 30 June 2013. This was due primarilyto production being 17% lower in the first half of 2013 compared tothe same period last year and the fixed nature of certain costs,including certain personnel.Production tax in Nigeria recognised in the six month period ended30 June 2013 was $44.4 million. This royalty is calculated onproduction levels.Production tax in Russia decreased from $2.2 million in the six monthperiod ended 30 June 2012 to $1.9 million in the six month periodended 30 June 2013 as a result of the 18% decrease in revenues in thefirst half of 2013.General and administrative expenses increased from $6.3 million in thesix month period ended 30 June 2012 to $11.0 million in the six monthperiod ended 30 June 2013. This was due primarily to additional costsarising from the office established by Shoreline to support operationsin Lagos. General and administrative expenses consist of salaries ofmanagement, finance and administrative staff, consulting, legal andprofessional fees, transportation costs and other costs.Depletion, depreciation and amortisationSix monthsended30 June 2013$ millionSix monthsended30 June 2012$ millionPetroleum and natural gas assets 7.0 0.7Other corporate assets 0.8 0.5Total 7.8 1.2Depletion, depreciation and amortisation expenses increased from$1.2 million in the six month period ended 30 June 2012 to $7.8 millionin the same period in 2013, primarily as a result of the inclusionof depletion for Heritage’s net interest in OML 30. Depletion forthe Zapadno Chumpasskoye Field decreased in line with lowerproduction volumes.Exploration expenditures expensed in the period and not capitalised,increased from $1.7 million in the six month period ended 30 June2012 to $3.2 million in the six month period ended 30 June 2013. Thisincrease was related principally to activities in Africa as the Companylooked to expand its portfolio in its core areas.

Heritage Oil Plc12Interim Report and Accounts 2013Financial reviewcontinuedExpenses of acquisition of OML 30 in the six month period ended30 June 2013 were nil. In the six month period ended 30 June 2012,$18.1 million of costs were incurred by Shoreline through acquiring itsinterest in OML 30, which related predominantly to costs incurred oraccrued for legal and professional fees that included stamp duty of$10.5 million.The Group did not recognise an impairment of intangible explorationand evaluation assets in the six month period ended 30 June 2013,compared to the impairment of intangible exploration and evaluationassets of $18.4 million recognised in the six month period ended30 June 2012, which related to the write-off of all expenditures inconnection with Mali.Finance income/costsInterest income of $0.8 million in the six month period ended 30 June2013 was $1.3 million lower than in the six month period ended30 June 2012 primarily as a result of lower average cash balances in2013. Cash and cash equivalents are typically held in interest bearingtreasury accounts.Other finance costs increased from $2.5 million in the six monthperiod ended 30 June 2012 to $34.7 million in the six month periodended 30 June 2013, due primarily to financing fees and interestcharges incurred for the bridge facilities and guarantee relating tothe Acquisition Assets, and interest charges incurred on the loan of$30 million received in August 2012 to refinance the acquisition of anaircraft. The impact of the new financing arrangements was partiallyoffset by lower convertible bond accretion expense following repaymentof the convertible bond at term in February 2012.In the six month period ended 30 June 2013, the Group had a foreignexchange loss of $0.4 million compared to a $0.01 million loss in thesix month period ended 30 June 2012. The small loss arose fromnet foreign exchange gains and losses on revaluation of balancesdenominated in currencies different from the functional currency.Heritage recognised an unrealised loss on other financial assets of$2.3 million in the six month period ended 30 June 2013 (six monthperiod ended 30 June 2012 – $4.1 million). The loss in the first half of2013 arose from the decrease in market value of investments in sharesof PetroFrontier. As at 30 June 2013, the Company held 15,860,467shares of PetroFrontier representing 19.98% of listed shares of thecompany. The investment in share capital of PetroFrontier is classifiedas available-for-sale and valued at fair value determined using themarket price at the end of the period. At 30 June 2013, the market priceof PetroFrontier shares was Cdn$0.20 per share compared to themarket price of Cdn$0.35 per share at the beginning of 2013.Results from continuing operationsHeritage’s continuing operations have been transformed by theacquisition of the interest in OML 30. Heritage’s profit from continuingoperations after tax in the six month period ended 30 June 2013 was$57.2 million, compared to a loss of $50.0 million for the six monthperiod ended 30 June 2012.Disposal of Ugandan AssetsOn 18 December 2009, Heritage announced that it and its whollyowned subsidiary HOGL, had entered into a Sale and PurchaseAgreement (“SPA”), with ENI International B.V. (“Eni”) for thesale of HOGL’s 50% interests in Blocks 1 and 3A in Uganda (the“Ugandan Assets”). On 17 January 2010, Tullow exercised itsrights of pre‐emption.On 27 July 2010, Heritage announced that HOGL had completed thedisposal of the Ugandan Assets. Tullow paid cash of $1.45 billion,including $100 million from a contractual settlement, of whichHeritage received and retained $1.045 billion.The URA contends that income tax is due on the capital gain arisingon the disposal and it raised assessments of $404,925,000 priorto completion of the disposal. Heritage’s position, based oncomprehensive advice from leading legal and tax experts in Uganda,the United Kingdom and North America, is that no tax should bepayable in Uganda on the disposal of the Ugandan Assets and that– even if tax were payable – under the terms of the production sharingagreements with the Ugandan government relating to the UgandanAssets (the “Ugandan PSAs”), HOGL should be indemnified by theUgandan government (under the contract stabilisation clause).On closing, Heritage deposited $121,477,500 with the URA,representing 30% of the disputed tax assessment of $404,925,000.$121,477,500 has been classified as a deposit with an offsetting baddebt provision for the full amount in the balance sheet at 30 June 2013for the sake of accounting prudence. A further $283,447,000 wasretained in escrow with Standard Chartered Bank in London. Includingaccrued interest, an amount of $287,698,000 (31 December 2012 –$286,915,000) is classified as restricted cash in the balance sheet at30 June 2013.In August 2010, the URA issued a further income tax assessment of$30 million representing 30% of the additional contractual settlementamount of $100 million. HOGL has challenged the Ugandan taxassessments on the disposal of HOGL’s entire interest in theUgandan Assets.

Interim Report and Accounts 2013Heritage Oil Plc13In November 2011 and December 2011, the Tax Appeals Tribunalin Uganda dismissed HOGL’s applications in relation to the twoassessments amounting to $434,925,000. The rulings from the TaxAppeals Tribunal in Uganda are part of a domestic process and arenot final and determinative. HOGL has appealed the rulings, whichit believes are fatally flawed in many respects, through the Ugandancourt system commencing with the High Court and subsequentlythe Court of Appeal and Supreme Court if necessary.In May 2011, HOGL commenced international arbitration proceedingsin London against the Ugandan government in accordance withprovisions of the Ugandan PSAs. HOGL is seeking a decision requiringthe return of approximately $405 million, plus interest and costs, inaggregate from the URA. HOGL made a number of claims in thearbitration proceedings that tax had been improperly imposed on itwhich the arbitration tribunal ruled on 3 April 2013 to be outside itsjurisdiction. The tribunal ruled at the same time that there were twoareas of HOGL’s claims which it will consider, in respect of contractualstabilisation clause protection and breach of other contractual obligations.Accordingly, the arbitration proceedings now concern HOGL’s claimsthat the Ugandan government wrongfully or unreasonably delayedconsent to the sale by HOGL of the rights under the Ugandan PSAsand that the Ugandan government should indemnify HOGL withrespect to any tax liability which arose due to changes in law thatmaterially reduced the economic benefits to be derived by HOGLfrom the Ugandan PSAs.The determination by the arbitral tribunal marks the end of thepreliminary phase. The proceedings will now continue to deal with themerits phase of Heritage’s contractual claims against the Ugandangovernment and the underlying substantive Ugandan tax mattersremain under appeal in the Ugandan courts.On 15 April 2011, Heritage and its wholly owned subsidiary HOGL,received Particulars of Claim filed in the High Court of Justice inEngland by Tullow seeking $313,447,500 for alleged breach of contractas a result of HOGL’s and Heritage’s refusal to reimburse Tullow inrelation to a payment made by Tullow of $313,447,500 on 7 April 2011to the URA. Heritage and HOGL filed their Defence and Counterclaimagainst Tullow.The case was heard in the High Court in March 2013 and judgmentreceived on 14 June 2013. The High Court judgment found in favour ofTullow and Heritage’s counterclaim was dismissed. A hearing was heldon 29 July 2013 to determine consequential matters arising from thejudgment and at that hearing Heritage was ordered to pay to Tullow$313,447,500 plus interest accrued on this amount and legal costs.Provision for this amount is included in the balance sheet as at 30 June2013 for the sake of accounting prudence.At that consequential hearing Heritage and HOGL sought permissionto appeal the judgment which was rejected by the first instance judge.Consequently, on 2 August 2013, Heritage and HOGL made anapplication to the Court of Appeal for permission to appeal the judgment.Heritage had until 27 August 2013 to satisfy the order notwithstandingseeking permission to appeal from the Court of Appeal. In this regard,on 1 August 2013, the escrow funds of approximately $288 million heldwith Standard Chartered Bank were released to Tullow to satisfy themajority of the debt. The remaining balance has been met fromHeritage’s current assets.Pursuant to the terms of the order agreed between the parties, Tullowhas undertaken to Heritage and the High Court that if Tullow receivesany reimbursement from the URA or the Ugandan government of anyof the $313,447,500 which Tullow paid to them in respect of Heritage’sdisputed tax liability then Tullow will pay such amount to Heritage.Tullow have also provided a further undertaking to Heritage and theHigh Court that in the event Heritage is given permission to appeal andsucceed in its appeal in whole or in part such that a sum is repayablefrom Tullow and that Tullow Oil plc will act as guarantor.The results of the Ugandan operations have been classified asdiscontinued operations. The loss on disposal of discontinuedoperations (which for the sake of accounting prudence comprises aprovision for the Award to Tullow, a provision against the receivabledue from the URA, legal fees and costs relating to the litigationdescribed above) as at 30 June 2013 and 2012 is as follows:Six monthsended30 June 2013$’000Six monthsended30 June 2012$’000Loss on disposal of discontinued operations (475,331) (2,234)(475,331) (2,234)Although disputes of this nature are inherently uncertain, the Directorsbelieve that the actions Heritage and HOGL are undertaking will besuccessful and that ultimately any funds transferred to Tullow ordeposited with the Ugandan government will be recovered by Heritage.

Heritage Oil Plc14Interim Report and Accounts 2013Financial reviewcontinuedEarnings per shareIn the six month period ended June 2013, the basic and dilutedearnings per share from continuing operations was $0.22 and $0.21respectively, compared to the basic and diluted loss per share of$0.19 in the six month period ended June 2012.Heritage’s net loss in the six month period ended June 2013 was$418.4 million, compared to $52.2 million in the six month periodended June 2012 as a result of the provision made in the first halfof 2013 against funds held in respect of the Uganda tax dispute.In the six month period ended June 2013 basic and diluted loss pershare was $1.62, compared to basic and diluted loss per share of$0.20 in the six month period ended June 2012.Cash flow and capital expendituresCash generated by operating activities from continuing operations was$135.1 million in the six month period ended 30 June 2013 comparedto cash used in operating activities of $17.6 million in the six monthperiod ended 30 June 2012. Total cash capital expenditures forcontinued operations in the six month period ended June 2013 was$30.1 million compared to $36.1 million in the six month period endedJune 2012. The following major work programmes were undertaken inthe six month period ended 30 June 2013:––in April, Heritage entered into an agreement with LNG Energy tofarm-in to two licences onshore PNG; Petroleum ProspectingLicence No:319 (“PPL 319”) and Petroleum Retention LicenceNo:13 (“PRL 13”) from subsidiary companies of LNG Energy. Inreturn for obtaining up to 80% working interests and operatorship,Heritage has paid LNG Energy $4.0 million in contribution to itsback costs on the licences and repaid the costs LNG Energyincurred for the acquisition of 22 kilometres of 2D seismic data in2013 as well as agreed to fund a future seismic programme and drillone well;––Heritage’s PNG work programme commenced in the second quarterof 2013 with the acquisition of 40 kilometres of 2D seismic dataover the Tuyuwopi structure in PPL 319;––acquisition and processing of approximately 600 kilometres of 2Dseismic data in the Rukwa licence was completed and interpretationhas commenced; and––acquisition of approximately 100 kilometres reconnaissance seismicacross the Kyela licence was completed in January. The data hasbeen processed and interpreted.FINANCIAL POSITIONLiquidityThere was a net increase in cash and cash equivalents during the sixmonth period ended 30 June 2013 of $23.3 million, following revenuesreceived from Heritage’s net share in OML 30 and the release of$50 million from restricted cash which had been used to providesecurity on the bridge facility. During the period ended 30 June 2013,Shoreline made a cash payment of $52.5 million (Heritage’s net share$51.2 million) to reduce its bridge facility loan to $497.5 million whichwas refinanced at the end of June by a new five year $500 million SeniorSecured Revolving Reserves Based Lending Facility (“RBL Facility”),which can be increased up to $600 million. At 30 June 2013, Heritagehad a working capital deficit of $34.0 million, including cash and cashequivalents of $112.9 million.The RBL Facility, which is secured at the Nigeria level, replaces thebridge loan executed as part of the acquisition of a 45% interest inthe OML 30 licence and provides long-term financing to Shorelineto develop the licence further. The RBL Facility has been arrangedon better terms and provides greater flexibility than the bridge loan.$51 million deposited as part security in respect of OML 30 wasreleased back to the Company on 22 August 2013 and replaced withalternative security granted by Heritage.Like most oil and gas exploration companies, Heritage raises financefor its activities from time to time using a variety of sources. Sources offunding for future exploration and development programmes will bederived from, inter alia, disposal proceeds from the sale of assets, suchas of the Ugandan Assets in 2010 (see Disposal section of the FinancialReview on pages 12 to 13), using its existing treasury resources, newcredit facilities, reinvesting its funds from operations, farm-outs and,when considered appropriate, issuing debt and additional equity.Accordingly, the Group has a number of different sources of finance.Capital structureHeritage’s financial strategy has been to fund its capital expenditureprogrammes and any potential acquisitions by selling non-core assets,reinvesting funds from operations, using existing treasury resources,finding new credit facilities and, when considered appropriate, eitherissuing unsecured convertible bonds or equity.At 30 June 2013, Heritage had net debt of $394.4 million (31 December2012 net debt – $472.1 million) (cash and cash equivalents lessborrowings) and 42% gearing (31 December 2012 – 33%) (net debt as apercentage of total capital, total capital is calculated as “equity” asshown in the condensed consolidated balance sheet plus net debt).

Interim Report and Accounts 2013Heritage Oil Plc15IMPORTANT EVENTS SUBSEQUENT TO30 JUNE 2013Under the terms of the Shoreline Option Agreement, Shoreline Powerhad an option to increase its economic interest in Shoreline by purchasing30% of the shares from Heritage. Shoreline Power exercised the optionin December 2012 and payment is anticipated to be received in thethird quarter of 2013. On completion, Heritage’s effective workinginterest in OML 30 will reduce from 43.875% to 30.71%.On 22 August 2013, Heritage entered into a Standby Letter of CreditFacility (the “Facility”) with Standard Bank Plc (“Standard Bank”) inrelation to an already existing $51 million letter of credit transaction(the “Existing Letter of Credit”) issued by Standard Bank to NigerianPetroleum Development Company (“NPDC”) to cover Shoreline’sworking capital requirements under the joint operating agreement forOML 30. Pursuant to the terms of the Facility, Standard Bank releasedthe cash collateral (of $51 million, before fees), counter-indemnityagreement and security agreements already provided by Heritage assecurity for Heritage’s obligations in connection with (amongst otherthings) the Existing Letter of Credit in exchange for alternative securitygranted by Heritage. The Facility matures (i.e. envisages cancellation orfull cash collateralisation by Heritage of the Existing Letter of Credit)on 31 December 2013, although Heritage has the option to extend thisto 28 November 2014.PRIMARY RISKS AND UNCERTAINTIES FACINGTHE BUSINESSHeritage’s business, financial standing and reputation may be impactedby various risks, not all of which are within its control. The Groupidentifies and monitors the key risks and uncertainties affecting it andruns its business in a way that minimises the impact of such risks wherepossible. The primary risks to the business include:––Production delivery risk – failure to control risks could result indelays to projects, cost overruns and not achieving set targets.Production operations are closely monitored to ensure thatunplanned downtime is kept to a minimum and that operating costsare tightly controlled. Actual production is regularly checkedagainst the annual production forecast.––Oil and gas sales volumes and prices – whilst not under the directcontrol of the Company, a material movement in commodity pricescould impact on the Group. The Group did not hedge oil pricesduring the period under review.––Factors associated with operating in developing countries includingpolitical, fiscal, local community and regulatory instability – theGroup maintains close contact with governments in the areas whereit operates and, where appropriate, invests in community projects.Considerable work is undertaken before commencing operations inany new territory.––Exploration and development expenditures and success rates – theGroup has experienced management and technical teams with atrack record of finding attractive hydrocarbon discoveries and hasa diversified portfolio of exploration, development and productionassets. Considerable technical work is undertaken to reduce relatedareas of risk and maximise opportunities.––Title disputes – notwithstanding potential challenges in Malta, theGroup believes that it has good title to its oil and gas properties.However, the Group cannot control or completely protect itselfagainst the risk of title disputes or challenges and there can be noassurance that claims or challenges by third parties against theGroup’s properties will not be asserted at a future date. Naturally,the Group strives to employ the best internal and advisoryknowledge available to help to minimise this risk associated withits activities.––Loss of key employees – remuneration packages are regularlyreviewed to ensure key executives and senior management areproperly remunerated. Long-term incentive programmes have beenestablished. Employees are encouraged to develop their potentialand, where appropriate, to further their careers within the Group.This is one of the Group’s Key Performance Indicators andcontinues to remain at low levels.––Foreign exchange exposure – generally, it is the Group’s policyto conduct and manage its business in US dollars, which is itsreporting currency. Cash balances in Group subsidiaries areprimarily held in US dollars but small amounts may be held in othercurrencies in order to meet immediate operating or administrativeexpenses or to comply with local currency regulations.Further details on risks and how the Company mitigates them aredisclosed on pages 32 to 34 of the Annual Review within the 2012Annual Report and Accounts which were issued on 30 April 2013.Paul athertonchief financial officer28 August 2013

Heritage Oil Plc16Interim Report and Accounts 2013RESPONSIBILITY STATEMENT OF THE DIRECTORSIN RESPECT OF THE INTERIM REPORT AND ACCOUNTSWe confirm on behalf of the Board that to the best of our knowledge:––the condensed set of financial statements has been prepared inaccordance with International Accounting Standard (“IAS”) 34Interim Financial Reporting as adopted by the European Union(“EU”);––the Interim Report and Accounts includes a fair review of theinformation required by:> > DTR 4.2.7R of the Disclosure and Transparency Rules (“DTR”),being an indication of important events that have occurredduring the first six months of the financial year and their impacton the condensed set of financial statements; and a description ofthe principal risks and uncertainties for the remaining sixmonths of the year; and> > DTR 4.2.8R of the Disclosure and Transparency Rules, beingrelated party transactions that have taken place in the first sixmonths of the current financial year and that have materiallyaffected the financial position or performance of the Groupduring that period; and any changes in the related partytransactions described in the last Annual Report and Accountsthat could do so.For and on behalf of the Boardanthony buckinghamchief executive officerPaul athertonchief financial officer28 August 2013

Interim Report and Accounts 2013Heritage Oil Plc17INDEPENDENT REVIEW REPORT TO HERITAGE OIL PLCIntroductionWe have been engaged by Heritage Oil Plc (the “Company”) to reviewthe condensed set of financial statements in the Interim Report andAccounts for the six months ended 30 June 2013 which comprises thecondensed consolidated income statement, condensed consolidatedstatement of comprehensive income, condensed consolidated balancesheet, condensed consolidated statement of changes in equity,condensed consolidated cash flow statement and the relatedexplanatory notes.We have read the other information contained in the Interim Reportand Accounts and considered whether it contains any apparentmisstatements or material inconsistencies with the informationin the condensed set of financial statements.This report is made solely to the Company in accordance with theterms of our engagement to assist the Company in meeting therequirements of the Disclosure and Transparency Rules (the “DTR”)of the UK’s Financial Conduct Authority (the “UK FCA”) as if thoserequirements applied to it. Our review has been undertaken so that wemight state to the Company those matters we are required to state to itin this report and for no other purpose. To the fullest extent permittedby law, we do not accept or assume responsibility to anyone other thanthe Company for our review work, for this report, or for the conclusionswe have reached.Directors’ responsibilitiesThe Interim Report and Accounts is the responsibility of, and has beenapproved by, the Directors. The Directors have accepted responsibilityfor preparing the Interim Report and Accounts in accordance with theDTR of the UK FCA.As disclosed in note 2, the annual financial statements of the Groupare prepared in accordance with International Financial ReportingStandards (“IFRS”) as adopted by the EU. The condensed set offinancial statements included in this half-yearly financial report hasbeen prepared in accordance with IAS 34 Interim Financial Reportingas adopted by the EU.Our responsibilityOur responsibility is to express to the Company a conclusion on thecondensed set of financial statements in the Interim Report andAccounts based on our review.Scope of reviewWe conducted our review in accordance with The InternationalStandard on Review Engagements (UK and Ireland) 2410 Review ofInterim Financial Information Performed by the Independent Auditorof the Entity issued by the Auditing Practices Board for use in the UK.A review of interim financial information consists of making enquiries,primarily of persons responsible for financial and accounting matters,and applying analytical and other review procedures. A review issubstantially less in scope than an audit conducted in accordance withInternational Standards on Auditing (UK and Ireland) and consequentlydoes not enable us to obtain assurance that we would become aware ofall significant matters that might be identified in an audit. Accordingly,we do not express an audit opinion.ConclusionBased on our review, nothing has come to our attention that causes usto believe that the condensed set of financial statements in the InterimReport and Accounts for the six months ended 30 June 2013 is notprepared, in all material respects, in accordance with IAS 34 InterimFinancial Reporting as adopted by the EU and the DTR of the UK FCA.Lynton Richmondfor and on behalf of KPMG Audit PlcChartered Accountants15 Canada SquareLondonE14 5GL28 August 2013

Heritage Oil Plc18Interim Report and Accounts 2013Condensed consolidated income statementSix monthsended30 June 2013$’000Six monthsended30 June 2012$’000RevenuePetroleum 237,838 4,122ExpensesPetroleum operating (39,030) (1,628)Change in inventory (8,991) –Production tax (46,299) (2,239)General and administrative (11,034) (6,257)Depletion, depreciation and amortisation (7,835) (1,180)Exploration expenditures (3,183) (1,712)Expenses of acquisition costs – (18,088)Impairment of intangible exploration and evaluation assets – (18,370)Operating profit/(loss) 121,466 (45,352)Finance income/(costs)Interest income 845 2,123Other finance costs (34,692) (2,523)Foreign exchange losses (421) (5)Unrealised losses on other financial assets (2,250) (4,098)(36,518) (4,503)Profit/(loss) from continuing operations before tax 84,948 (49,855)Income tax expense (27,703) (119)Profit from continuing operations after tax 57,245 (49,974)Loss on disposal of discontinued operations (note 4) (475,618) (2,234)Loss for the period attributable to owners of the Company (418,373) (52,208)Net earnings/(loss) per share from continuing operations (dollars)Basic 0.22 (0.19)Diluted 0.21 (0.19)Net loss per share from discontinued operations (dollars)Basic and diluted (1.84) (0.01)Net loss per share (dollars)Basic and diluted (1.62) (0.20)The notes are an integral part of these condensed consolidated financial statements.

Interim Report and Accounts 2013Heritage Oil Plc19CONDENSED CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOMESix monthsended30 June 2013$’000Six monthsended30 June 2012$’000Loss for the period (418,373) (52,208)Other comprehensive gain/(loss)Exchange differences on translation of foreign operations (2,603) (603)Net change in fair value of available-for-sale financial assets (2,287) (3,665)Net change in fair value of available-for-sale financial assets reclassified to the income statement 2,250 4,098Other comprehensive loss, net of income tax (2,640) (170)Total comprehensive loss for the period (421,013) (52,378)Attributable toOwners of the Company (421,013) (52,378)The notes are an integral part of these condensed consolidated financial statements.

Heritage Oil Plc20Interim Report and Accounts 2013CONDENSED CONSOLIDATED BALANCE SHEET30 June2013$’00031 December2012$’000ASSETSNon-current assetsIntangible exploration and evaluation assets (note 6) 97,014 71,420Intangible goodwill assets (note 6) 351,370 351,370Property, plant and equipment (note 6) 2,584,582 2,589,751Other financial assets (note 7) 5,972 13,2683,038,938 3,021,290Current assetsInventories 150 9,083Prepaid expenses 1,266 1,960Trade and other receivables 16,847 11,798Deposit with URA (note 4) – 121,477Restricted cash (notes 4, 5) 338,701 387,917Cash and cash equivalents 112,897 89,634469,861 621,8693,508,799 3,643,19LIABILITIESCurrent liabilitiesTrade and other payables 419,507 108,453Current tax liabilities 26,630 194Borrowings (note 8) 57,744 530,967503,881 639,614Non-current liabilitiesBorrowings (note 8) 449,583 30,757Provisions 24,160 23,010Deferred tax 1,984,477 1,983,2242,458,220 2,036,9912,962,101 2,676,605Net assets 546,698 966,554SHAREHOLDERS’ EQUITY ATTRIBUTABLE TO OWNERS OF THE COMPANYShare capital (note 9) 342,359 342,359Reserves 86,899 88,382Retained earnings 117,440 535,813546,698 966,554The notes are an integral part of these condensed consolidated financial statements.

Interim Report and Accounts 2013Heritage Oil Plc21CONDENSED CONSOLIDATED STATEMENT OF CHANGES IN EQUITYSharecapital$’000Foreigncurrencytranslationreserve$’000Availablefor-saleinvestmentsrevaluationreserve$’000Six months ended 30 June 2013Share-basedpaymentsreserve$’000Retainedearnings$’000Equity portionof convertibledebt$’000Balance at 1 January 2013 342,359 230 1,215 62,288 535,813 24,649 966,554Total comprehensive loss for the periodLoss for the period – – – – (418,373) – (418,373)Other comprehensive income/(loss)Exchange differences on translationof foreign operations – (2,603) – – – – (2,603)Net change in fair value of available-for-salefinancial assets – – (2,287) – – – (2,287)Net change in fair value of available-for-salefinancial assets reclassified to theincome statement – – 2,250 – – – 2,250Total other comprehensive loss – (2,603) (37) – – – (2,640)Total comprehensive loss for the period – (2,603) (37) – (418,373) – (421,013)Transactions with owners, recorded directly in equityContributions by and distributions to ownersShare-based payment transactions – – – 1,157 – – 1,157Total transactions with owners – – – 1,157 – – 1,157Balance at 30 June 2013 342,359 (2,373) 1,178 63,445 117,440 24,649 546,698Totalequity$’000The notes are an integral part of these condensed consolidated financial statements.

Heritage Oil Plc22Interim Report and Accounts 2013Condensed consolidated statement of changes in equitySharecapital$’000Foreigncurrencytranslationreserve$’000Availablefor-saleinvestmentsrevaluationreserve$’000Six months ended 30 June 2012Share-basedpaymentsreserve$’000Retainedearnings$’000Equity portionof convertibledebt$’000Balance at 1 January 2012 345,682 (1,823) 120 60,380 507,196 24,649 936,204Total comprehensive loss for the periodLoss for the period – – – – (52,208) – (52,208)Other comprehensive income/(loss)Exchange differences on translation of foreignoperations – (603) – – – – (603)Net change in fair value of available-for-salefinancial assets – – (3,665) – – – (3,665)Net change in fair value of available-for-salefinancial assets reclassified to theincome statement – – 4,098 – – – 4,098Total other comprehensive income/(loss) – (603) 433 – – – (170)Total comprehensive income/(loss) for the period – (603) 433 – (52,208) – (52,378)Transactions with owners, recorded directly in equityContributions by and distributions to ownersShare buy back (3,323) – – – – – (3,323)Share-based payment transactions – – – 1,562 – – 1,562Total transactions with owners (3,323) – – 1,562 – – (1,761)Balance at 30 June 2012 342,359 (2,426) 553 61,942 454,988 24,649 882,065Totalequity$’000The notes are an integral part of these condensed consolidated financial statements.

Interim Report and Accounts 2013Heritage Oil Plc23CONDENSED CONSOLIDATED CASH FLOW STATEMENTSix monthsended30 June 2013$’000Six monthsended30 June 2012$’000Cash provided by (used in) operating activitiesNet profit/(loss) from continuing operations for the period 57,245 (49,974)Items not affecting cashDepletion, depreciation and amortisation 7,835 1,180Finance costs – accretion expenses 10,048 178Foreign exchange losses/(gains) 1,169 (543)Share-based compensation 963 934Loss on other financial assets 2,250 4,098Impairment of intangible exploration and evaluation assets – 18,370Increase in trade and other receivables (6,372) (31)Decrease in prepaid expenses 694 511Decrease in inventory 8,932 14(Decrease)/increase in trade and other payables (24,619) 9,013Change in restricted cash 49,216 (1,462)Increase in tax payable 27,690 120Continuing operations 135,051 (17,592)Discontinued operations (7,408) (1,918)127,643 (19,510)Investing activitiesTransaction related expenses for acquisition of business joint venture – (4,875)Increase in restricted cash for acquisition of assets – (78,000)Loan to joint venture – (2,125)Property, plant and equipment expenditures (5,340) (1,064)Intangible exploration expenditures (24,711) (35,011)(30,051) (121,075)Discontinued operationsTransaction related expenses and other – disposal of Miran PSC (10,425) –(40,476) (121,075)Financing activitiesShare buy back (note 9) – (3,323)Payment of guarantee fees for bridge facility – (4,858)Proceeds from loan raised 487,500 –Payment of transaction costs for loan (12,463) –Repayment of short-term and long-term debt (538,022) (127,581)(62,985) (135,762)Increase/(decrease) in cash and cash equivalents 24,182 (276,347)Cash and cash equivalents – beginning of period 89,634 310,882Foreign exchange (gain)/loss on cash held in foreign currency (919) 74Cash and cash equivalents – end of period 112,897 34,609Non-cash investing and financing activitiesSupplementary informationThe following have been included within cash flows for the period under operating and investing activitiesInterest received 926 2,213Interest paid 29,580 5,216The notes are an integral part of these consolidated financial statements.

Heritage Oil Plc24Interim Report and Accounts 2013Notes to condensed consolidated financial statements1 REPORTING ENTITYHeritage Oil Plc (the “Company”) was incorporated under the Companies (Jersey) Law 1991 (as amended) (the “Jersey Companies Law”) on6 February 2008 as Heritage Oil Limited. The Company changed its name to Heritage Oil Plc on 18 June 2009. Its primary business activityis the exploration, development and production of petroleum and natural gas in Africa, the Middle East and Russia. The Company wasestablished in order to implement a corporate reorganisation of Heritage Oil Corporation (“HOC”).2 BASIS OF ACCOUNTING AND PRESENTATION AND SIGNIFICANT POLICIESThese interim condensed set of financial statements of the Company as at and for the six months ended 30 June 2013 include the results of theCompany and all subsidiaries over which the Company exercises control (together referred to as the “Group”).The Group had available cash of $112.9 million at 30 June 2013, excluding amounts related to the tax dispute with the Ugandan government andamounts held in restricted cash for the Acquisition Assets.After making enquiries, the Directors have a reasonable expectation that the Group has adequate resources to continue in operational existencefor the foreseeable future. Accordingly, they continue to adopt the going concern basis in preparing the Interim Report and Accounts.The condensed set of financial statements has been prepared in accordance with IAS 34 Interim Financial Reporting as adopted by the EU. Theydo not include all information required for full annual financial statements, and should be read in conjunction with the consolidated financialstatements of the Company and all its subsidiaries as at the year ended 31 December 2012.The Company’s condensed set of financial statements are presented in thousand US dollars unless otherwise stated. US dollars are the Company’sfunctional and presentation currency.The accounting policies applied in the preparation of these condensed set of financial statements are consistent with those applied by theCompany and all its subsidiaries in its consolidated financial statements as at, and for the year ended, 31 December 2012.The condensed set of financial statements were approved by the Board and authorised for issuance on 28 August 2013. The comparativeinformation at 31 December 2012 is abridged and therefore is not the Company’s statutory accounts for that financial period.3 SEGMENT INFORMATIONThe Group has a single class of business which is international exploration, development and production of petroleum oil and natural gas. Thegeographical areas are defined by the Company as operating segments in accordance with IFRS 8 Operating Segments. The Group operates ina number of geographical areas based on location of operations and assets, being Russia, Pakistan, Tanzania, Malta, Libya, Nigeria (entered in2012), Papua New Guinea (entered in 2013), Kurdistan (discontinued in 2012), Mali (discontinued in 2012) and Uganda (discontinued in 2010).The Group’s reporting segments comprise each separate geographical area in which it operates.Externalrevenue$’000Segmentresult$’000Six months ended 30 June 2013Totalassets$’000Totalliabilities$’000Capitaladditions$’000Depreciation,depletion andamortisation$’000Russia 3,369 (1,155) 58,941 1,501 979 (487)Libya – – 21,465 – 116 –Pakistan – – 4,748 13 50 –Tanzania – (36) 20,698 476 9,351 –Nigeria 234,469 72,153 2,900,371 2,555,007 3,885 (6,568)Papua New Guinea – 16,232 1,859 16,175 –Malta – – 23,712 18 314 –Kurdistan – discontinued operations – (288) – – – –Uganda – discontinued operations – (475,331) – – – –Total for reportable segments 237,838 (404,657) 3,046,167 2,558,874 30,870 (7,055)Corporate – (13,716) 462,632 403,227 47 (780)Elimination of discontinued operations – 475,618 – – – –Total from operations 237,838 57,245 3,508,799 2,962,101 30,917 (7,835)

Interim Report and Accounts 2013Heritage Oil Plc253 SEGMENT INFORMATION continuedExternalrevenue$’000Segmentresult$’000Six months ended 30 June 2012Totalassets$’000Totalliabilities$’000Capitaladditions$’000Depreciation,depletion andamortisation$’000Russia 4,122 (1,144) 57,897 1,255 1,637 (682)Kurdistan – – 213,488 15,658 27,218 –Libya – – 20,956 – 780 –Pakistan – – 4,715 36 20 –Tanzania – (70) 19,972 2,283 4,743 –Nigeria – (18,557) 100,517 13,177 – –Mali – (18,370) – – 499 –Malta – – 20,668 29 611 –Uganda – discontinued operations – (2,234) – – – –Total for reportable segments 4,122 (40,375) 438,213 32,438 35,508 (682)Corporate – (11,833) 501,082 24,792 96 (498)Elimination of discontinued operations – 2,234 – – – –Total from operations 4,122 (49,974) 939,295 57,230 35,604 (1,180)Corporate activities include the financing activities of the Group and is not an operating segment. There have been no changes to the basis ofsegmentation or the measurement basis for the segment results since 31 December 2012.4 DISCONTINUED OPERATIONSKURDISTANDuring 2012 the Group disposed of its entire business in Kurdistan Region of Iraq (“Kurdistan”) which has therefore been classified as adiscontinued operation. The disposal was completed in two distinct transactions. On 21 August 2012, the Group disposed of a 26% interest in theproduction sharing contract relating to the Miran Block (the “Miran PSC”) in Kurdistan and corresponding interest in the related joint operatingagreement (the “Miran JOA”) to Genel Energy plc (“Genel”) in exchange for cash of $156 million. On the same date, Genel provided a loan of$294 million to the Group (the “Loan”).The Loan bore interest of 8% and had a fixed term ending on the date which is the earlier of: (i) 15 months after the date of the completionof the Acquisition; and (ii) 6 February 2014. The Loan had an option that, following the election of either the Company or Genel and subsequentapproval from the shareholders of the Company, to be repaid through the transfer to Genel of Heritage’s remaining 49% interest in the Miran PSCin Kurdistan and the corresponding interest in the Miran JOA. The Loan terms also provided for the interim funding by Genel of Heritage’sexpenditure on its 49% interest in the Miran PSC by way of increases in the Loan with effect from 1 July 2012.In December 2012, following Heritage’s election to repay the Loan in exchange for the transfer of a 49% interest in the Miran PSC to Genel,Heritage’s shareholders approved the repayment and the exchange became unconditional. Shareholder approval was received in Decemberand the transaction completed shortly thereafter.Six monthsended30 June 2013$’000Six monthsended30 June 2012$’000Loss on disposal of discontinued operations (287) –(287) –

Heritage Oil Plc26Interim Report and Accounts 2013Notes to condensed consolidated financial statementscontinued4 DISCONTINUED OPERATIONS continuedUGANDAOn 18 December 2009, Heritage announced that it and its wholly owned subsidiary HOGL, had entered into a SPA with Eni for the sale of theUgandan Assets. On 17 January 2010, Tullow exercised its rights of pre-emption.On 27 July 2010, Heritage announced that HOGL had completed the disposal of the Ugandan Assets. Tullow paid cash of $1.45 billion, including$100 million from a contractual settlement, of which Heritage received and retained $1.045 billion.The URA contends that income tax is due on the capital gain arising on the disposal and it raised assessments of $404,925,000 prior tocompletion of the disposal. Heritage’s position, based on comprehensive advice from leading legal and tax experts in Uganda, the UnitedKingdom and North America, is that no tax should be payable in Uganda on the disposal of the Ugandan Assets and that – even if tax werepayable, under the Ugandan PSAs, HOGL should be indemnified by the Ugandan government (under the contract stabilisation clause).On closing, Heritage deposited $121,477,500 with the URA, representing 30% of the disputed tax assessment of $404,925,000. $121,477,500has been classified as a deposit with an offsetting bad debt provision for the full amount in the balance sheet at 30 June 2013 for the sake ofaccounting prudence. A further $283,447,000 was retained in escrow with Standard Chartered Bank in London. Including accrued interest,an amount of $287,698,000 (31 December 2012 – $286,915,000) is classified as restricted cash in the balance sheet at 30 June 2013.In August 2010, the URA issued a further income tax assessment of $30 million representing 30% of the additional contractual settlement amountof $100 million. HOGL has challenged the Ugandan tax assessments on the disposal of HOGL’s entire interest in the Ugandan Assets.In November 2011 and December 2011, the Tax Appeals Tribunal in Uganda dismissed HOGL’s applications in relation to the two assessmentsamounting to $434,925,000. The rulings from the Tax Appeals Tribunal in Uganda are part of a domestic process and are not final anddeterminative. HOGL has appealed the rulings, which it believes are fatally flawed in many respects, through the Ugandan court systemcommencing with the High Court and subsequently the Court of Appeal and Supreme Court if necessary.In May 2011, HOGL commenced international arbitration proceedings in London against the Ugandan government in accordance with provisionsof the Ugandan PSAs. HOGL is seeking a decision requiring the return of approximately $405 million, plus interest and costs, in aggregate fromthe URA. HOGL made a number of claims in the arbitration proceedings that tax had been improperly imposed on it which the arbitrationtribunal ruled on 3 April 2013 to be outside its jurisdiction. The tribunal ruled at the same time that there were two areas of HOGL’s claims whichit will consider, in respect of contractual stabilisation clause protection and breach of other contractual obligations. Accordingly, the arbitrationproceedings now concern HOGL’s claims that the Ugandan government wrongfully or unreasonably delayed consent to the sale by HOGL of therights under the Ugandan PSAs and that the Ugandan government should indemnify HOGL with respect to any tax liability which arose due tochanges in law that materially reduced the economic benefits to be derived by HOGL from the Ugandan PSAs.The determination by the arbitral tribunal marks the end of the preliminary phase. The proceedings will now continue on to deal with the meritsphase of Heritage’s contractual claims against the Ugandan government and the underlying substantive Ugandan tax matters remain under appealin the Ugandan courts.On 15 April 2011, Heritage and its wholly owned subsidiary HOGL, received Particulars of Claim filed in the High Court of Justice in Englandby Tullow seeking $313,447,500 for alleged breach of contract as a result of HOGL’s and Heritage’s refusal to reimburse Tullow in relation to apayment made by Tullow of $313,447,500 on 7 April 2011 to the URA. Heritage and HOGL filed their Defence and Counterclaim against Tullow.The case was heard in the High Court in March 2013 and judgment was received on 14 June 2013. The High Court judgment found in favourof Tullow and Heritage’s counterclaim was dismissed. A hearing was held on 29 July 2013 to determine consequential matters arising from thejudgment and at that hearing Heritage was ordered to pay to Tullow $313,447,500 plus interest accrued on this amount and legal costs. Provisionfor this amount is included in the balance sheet as at 30 June 2013 for the sake of accounting prudence.At that consequential hearing Heritage and HOGL sought permission to appeal the judgment which was rejected by the first instance judge.Consequently, on 2 August 2013, Heritage and HOGL made an application to the Court of Appeal for permission to appeal the judgment.Heritage had until 27 August 2013 to satisfy the order notwithstanding seeking permission to appeal from the Court of Appeal. In this regard,on 1 August 2013, the escrow funds of approximately $288 million held with Standard Chartered Bank were released to Tullow to satisfy themajority of the debt. The remaining balance has been met from Heritage’s current assets.

Interim Report and Accounts 2013Heritage Oil Plc274 DISCONTINUED OPERATIONS continuedPursuant to the terms of the order agreed between the parties, Tullow has undertaken to Heritage and the High Court that if Tullow receives anyreimbursement from the URA or the Ugandan government of any of the $313,447,500 which Tullow paid to them in respect of Heritage’s disputedtax liability then Tullow will pay such amount to Heritage.Tullow have also provided a further undertaking to Heritage and the High Court that in the event Heritage is given permission to appeal andsucceed in its appeal in whole or in part such that a sum is repayable from Tullow and that Tullow Oil plc act as guarantor.The results of the Ugandan operations have been classified as discontinued operations. The loss on disposal of discontinued operations (which forthe sake of accounting prudence comprises a provision for the Award to Tullow, a provision against the receivable due from the URA, legal feesand costs relating to the litigation described above) as at 30 June 2013 and 2012 is as follows:Six monthsended30 June 2013$’000Six monthsended30 June 2012$’000Loss on disposal of discontinued operations (475,331) (2,234)(475,331) (2,234)Although disputes of this nature are inherently uncertain, the Directors believe that the actions Heritage and HOGL are undertaking will besuccessful and that ultimately any funds transferred to Tullow or deposited with the Ugandan government will be recovered by Heritage.5 ACQUISITION OF AN INTEREST IN OML 30On 29 June 2012, Shoreline entered into the Acquisition Agreement with Shell, Total and Agip to acquire the Acquisition Assets for cashconsideration of $850 million, net of costs.Shoreline is a private limited Nigerian company whose ownership interests are held by Heritage Oil SNR (Nigeria) B.V., a wholly owned subsidiaryof Heritage, and a local Nigerian partner, Shoreline Power.At an EGM on 30 August 2012, the shareholders of the Company approved the Acquisition and on 9 November 2012 Heritage announced thecompletion of the Acquisition, effective 1 November 2012.The Acquisition Assets were acquired for cash consideration of $850,000,000, net of costs, of which: (i) a deposit of $85,000,000 was paid byShoreline upon the signing of the Acquisition Agreement (with $5,000,000, being the portion of such deposit not exceeding 1% of the marketcapitalisation of the Company as at 29 June 2012, paid to the Vendors, and the remaining $80,000,000, paid into a dedicated escrow account);and (ii) the balance of the consideration, being $765,000,000 which was paid on completion.The Acquisition was partially financed by a $550,000,000 secured bridge facility provided by Standard Bank to Shoreline. During the periodended 30 June 2013 Shoreline made a cash payment of $52.5 million (Heritage’s net share $51.2 million) to reduce its bridge facility loan to$497.5 million which was refinanced at the end of June by a new five year $500 million RBL Facility, which can be increased up to $600 million.The RBL Facility, which is secured at the Nigeria level, replaces the bridge loan executed as part of the acquisition of a 45% interest in the OML 30licence and provides long-term financing to Shoreline to further develop the licence. The RBL Facility has been arranged on better terms andprovides greater flexibility than the bridge loan.The Company had placed $50,000,000 in an escrow account with Standard Bank as security for the bridge facility, which was released to theCompany in June 2013 following the refinancing and the receipt of the RBL Facility. Standard Bank also provided a Letter of Credit to NPDC, tocover Shoreline’s working capital requirements under the joint operating agreement for OML 30. Heritage provided cash collateral of $51,000,000to Standard Bank to guarantee this Letter of Credit which also covers any interest which may be due under the Letter of Credit, which is classifiedas restricted cash in the balance sheet at 30 June 2013. This cash was released back to the Company on 22 August 2013 and replaced withalternative security granted by Heritage.Under the terms of the Shoreline Option Agreement, Shoreline Power had an option to increase its economic interest in Shoreline by purchasing30% of the shares from Heritage. Shoreline Power exercised the option in December 2012 and payment is anticipated to be received in the thirdquarter of 2013. On completion Heritage’s effective working interest in OML 30 will reduce from 43.875% to 30.71%.

Heritage Oil Plc28Interim Report and Accounts 2013Notes to condensed consolidated financial statementscontinued5 ACQUISITION OF AN INTEREST IN OML 30 continuedThe Acquisition Assets meet the criteria of a business as set out in IFRS 3, as they represent an integrated set of activities and assets capable ofbeing conducted and managed for purpose of providing a return, therefore the Acquisition has been accounted for in accordance with IFRS 3.The fair value allocation of the Acquisition Assets is based upon an independent review. The Company used the data from the independent reviewto calculate the fair value of the assets taking proved and probable reserves. In accordance with IAS 12, a deferred tax liability has been recognisedfor the difference between the fair value allocated to property, plant and equipment and the value of the consideration that can be claimed as acapital allowance to offset the future tax liability, calculated on a tax rate of 65.75% for the first five years and rising to 85% after five years. Asonly a portion of the purchase consideration is available to be claimed as a capital allowance and the tax rates are high, this has resulted in therecognition of a significant deferred tax liability. As a result of the impact of the deferred tax liability recognised, the purchase consideration ishigher than the aggregate of the fair value of the identifiable assets and liabilities and therefore goodwill has been recognised. The fair value ofthe identifiable assets and liabilities is provisional and if new information is obtained within one year of the acquisition date the acquisitionaccounting may be revised.The following table provides additional information with respect to the identifiable assets acquired and liabilities assumed at Heritage’s currenteffective 97.5% share of net assets of Shoreline:1 November2012$’000Property, plant and equipment 2,483,317Intangible assets – goodwill 351,370Deferred tax liabilities (1,983,189)Site restoration provision (22,748)828,750The expenses incurred in acquiring the Acquisition Assets as at 30 June 2013 and 2012 are as follows:Six monthsended30 June 2013$’000Six monthsended30 June 2012$’000Expenses of acquisition – (18,088)– (18,088)6 PROPERTY, PLANT AND EQUIPMENT AND INTANGIBLE EXPLORATION AND EVALUATION ASSETSCAPITAL ADDITIONSDuring the six months ended 30 June 2013, the Group acquired property, plant and equipment and intangible exploration and evaluation assetswith a cost of $30,917,000 (six months ended 30 June 2012 – $35,604,000).FARM-INOn 2 April 2013, Heritage announced that it had agreed with LNG Energy to farm-in to two licences onshore PNG. The transaction completedin April 2013 and Heritage has been appointed operator.Heritage has acquired up to an 80% working interest in two licences, PPL 319 and PRL 13 from subsidiary companies of LNG Energy. In returnfor obtaining the 80% working interests and operatorship Heritage has paid LNG Energy $4.0 million in contribution to its back costs on thelicence and repaid the costs LNG Energy incurred for the seismic acquisition it carried out in 2013. Heritage has carried out its first phase ofseismic acquisition and will fund the costs of further seismic acquisition within the next 12 months and the cost of drilling an exploration well.

Interim Report and Accounts 2013Heritage Oil Plc297 OTHER FINANCIAL ASSETS30 June2013$’00031 December2012$’000Non-current assetsInvestment in listed securities 5,972 8,7495,972 8,749The investment in 1,500,000 Afren shares is classified as available-for-sale and valued at fair value which is determined using market price at theend of the period. The valuation at market price at 30 June 2013 resulted in a loss of $37,000 which was recognised in equity.As at 30 June 2013, the Company had acquired 15,860,467 of the listed shares of PetroFrontier representing 19.98% of the outstanding shares ofPetroFrontier. The investment in share capital of PetroFrontier is classified as available-for-sale, and valued at fair value which is determined usingmarket price at the end of the period.The Group recorded an impairment of its investment in PetroFrontier to reflect the market value as at 30 June 2013. The loss of $2,250,000recognised in the available-for-sale reserve for this investment has been reclassified to the income statement.8 BORROWINGS30 June2013$’00031 December2012$’000Current borrowings – securedShort-term debt – secured – 527,365Current portion of long-term debt – secured 57,444 3,60257,444 530,967Non-current borrowingsNon-current portion of long-term debt – secured 449,583 30,757507,327 30,757As set out in note 5 above, in the six month period ended 30 June 2013 Shoreline repaid $52.5 million (Heritage net share $51.2 million) to reducethe bridge facility. In June 2013 the short-term secured bridge facility was replaced by a five-year RBL facility secured at the Shoreline level.9 SHARE CAPITALThe Company was incorporated under the Jersey Companies Law on 6 February 2008. The Company’s authorised share capital is an unlimitednumber of Ordinary Shares without par value. At incorporation, there was one Ordinary Share issued at $42. On 22 February 2008, a secondOrdinary Share was issued at $41.As part of the Reorganisation, described in the 2008 Annual Report and Accounts, the rights of different classes of shares are the same andtherefore economically equivalent. As such, Ordinary and Exchangeable Shares are treated as one class of shares for the net earnings/(loss)per share calculation.ORDINARY SHARESSix months ended 30 June 2013 Six months ended 30 June 2012NumberAmount$’000 NumberAt 1 January 255,585,078 340,333 256,519,296 343,280Exchange of Exchangeable Shares of HOC for Ordinary Shares 10,900 9 339,490 290Shares bought back and held in treasury – – (1,373,708) (3,323)At 30 June 255,595,978 340,342 255,485,078 340,247Amount$’000

Heritage Oil Plc30Interim Report and Accounts 2013Notes to condensed consolidated financial statementscontinued9 SHARE CAPITAL continuedSPECIAL VOTING SHARESix months ended 30 June 2013 Six months ended 30 June 2012NumberAmount$’000 NumberAt 1 January 1 – 1 –Issued during the period – – – –At 30 June 1 – 1 –Amount$’000EXCHANGEABLE SHARES OF HOC EACH CARRYING ONE VOTING RIGHT IN THE COMPANYSix months ended 30 June 2013 Six months ended 30 June 2012NumberAmount$’000 NumberAt 1 January 2,371,918 2,026 2,811,408 2,402Exchange of Exchangeable Shares for Ordinary Shares (10,900) (9) (339,490) (290)At 30 June 2,361,018 2,017 2,471,918 2,112Balance of Ordinary Shares of the Company, excluding treasury shares,and Exchangeable Shares of HOC – at 30 June 257,956,996 342,359 257,956,996 342,359Amount$’000At the AGMs held on 20 June 2011 and 20 June 2013, special resolutions were passed by shareholders authorising the Company to make marketpurchases of its own shares up to the date of the next AGM. Any shares which have been so purchased may be held as treasury shares or cancelledimmediately upon completion of the purchase. No such resolution was proposed at the AGM held on 21 June 2012. Purchased Ordinary Sharesare held in treasury. At 30 June 2013, the Company held 34,602,442 Ordinary Shares in treasury.10 EARNING/(LOSS) PER SHAREThe following table summarises the weighted average Ordinary Shares and Exchangeable Shares used in calculating net earnings/(loss) per share:Six months ended 30 June2013 2012Weighted average Ordinary and Exchangeable SharesBasic 257,956,996 258,682,315Diluted 269,828,927 269,157,668The reconciling item between basic and diluted weighted average number of Ordinary Shares is the dilutive effect of share options and LTIPawards. A total of nil options (30 June 2012 – 3,450,000) and 3,898,754 shares relating to the LTIP (30 June 2012 – 3,898,754) were excludedfrom the above calculation, as they were anti-dilutive. For the calculation of net loss per share from discontinued operations and net loss per share,since the Company has made a loss for the period to 30 June 2013 for the purposes of calculating diluted loss per share, all potential OrdinaryShares have been treated as anti-dilutive in that year.11 RELATED PARTY TRANSACTIONSDuring the six months ended 30 June 2013, the Company incurred transportation costs of $39,000 (six months ended 30 June 2012 – $76,000)with respect to the services provided by a company indirectly owned by Mr. Buckingham, CEO and a Director of the Company.Anthony Buckingham used the corporate jet during the period to June 2013 for a few personal trips. The cost of these trips was reimbursedat independently assessed commercial rates of $301,000 (30 June 2012 – $363,000).Related party transactions described above have been made on an arm’s length basis.

Interim Report and Accounts 2013Heritage Oil Plc3112 NON-CASH INVESTING AND FINANCING ACTIVITIES SUPPLEMENTARY INFORMATION30 June 2013$’00030 June 2012$’000Capitalised portion of share-based compensation (194) (629)Capitalised portion of interest (8,899) (3,214)Non-cash property, plant and additions relating to the capitalised portion of share-based compensation 9,093 3,84313 SUBSEQUENT EVENTSExercise of Shoreline Power optionIn December 2012, Heritage announced that Shoreline Power had exercised its call option to acquire a 30% economic interest in Shoreline. Thiswould have the effect of reducing Heritage’s economic interest in Shoreline from 97.5% to 68.25%, with 68.25% representing an effective 30.71%working interest in OML 30. In order to fund a portion of the consideration of c.$120 million, Shoreline Power has entered into an agreementwith Cedar Oil and Gas Exploration and Production Limited (“Cedar”), a local Nigerian company, to sell half of its option rights. This will befacilitated through a farm-out by Shoreline of a 6.75% working interest in OML 30 to Cedar, reducing Shoreline’s working interest in OML 30 to38.25%. Following completion of this transaction, Heritage’s effective working interest in OML 30 of 30.71% remains unchanged as its economicinterest in Shoreline post option exercise has increased from 68.25% to 80.29%.Cedar entered into a farm-out agreement with Shoreline on 22 August 2013 and has placed the initial consideration in an escrow account.Completion of the transaction and release of the initial consideration is subject to Nigerian government approval which is expected shortly.On completion, the initial consideration will be applied as follows:––$31.5 million will be transferred to Heritage as partial payment of the call option consideration and the balance of c.$88.5 million will beprovided by way of an interest bearing loan from Heritage to Shoreline Power secured on the preferential recovery of 80% of Shoreline Power’scash distributions from Shoreline; and––To reduce the RBL Facility by 15% with a mandatory prepayment in line with the proportional reduction of Shoreline’s working interest inOML 30.Standby letter of credit facilityOn 22 August 2013, Heritage entered into a Standby Letter of Credit Facility (the “Facility”) with Standard Bank in relation to an already existing$51 million letter of credit transaction (the “Existing Letter of Credit”) issued by Standard Bank to NPDC to cover Shoreline’s working capitalrequirements under the joint operating agreement for OML 30. Pursuant to the terms of the Facility, Standard Bank released the cash collateral (of$51 million, before fees), counter-indemnity agreement and security agreements already provided by Heritage as security for Heritage’s obligationsin connection with (amongst other things) the Existing Letter of Credit in exchange for the following security granted by Heritage (i.e. for itsobligations relating to the Facility): (a) security interest over approximately 34.6 million shares held by Heritage in treasury; (b) a floating chargeover Heritage’s assets; (c) security over shares held by Heritage in a Dutch subsidiary; and (d) security over the monies in a cash collateral accountheld by Heritage with Standard Bank – though it should be noted that as at the date of the Facility no amounts stand to the credit of such account.The Facility matures (i.e. envisages cancellation or full cash collateralisation by Heritage of the Existing Letter of Credit) on 31 December 2013although Heritage has the option to extend this to 28 November 2014. Any such cash collateralisation and/or cancellation would trigger a releaseand termination of relevant security documents (and the Facility itself on a cancellation). The interest rate relating to the Facility is LIBOR plus7% per annum (together with an interest increase ratchet mechanism linked to the duration of the Facility). However, interest is not charged inconnection with the Facility to the extent cash collateral is provided.

Heritage Oil Plc32Interim Report and Accounts 2013Glossary$ US dollars unless otherwise statedAFRENAfren plcAGIPNigerian Agip Oil Company LimitedAPIa specific gravity scale developed by the American Petroleum Institute for measuring the relativedensity of various petroleum liquids, expressed in degreesBBL/BBLSbarrel/barrelsBBLS/D OR BOPDbarrels per day or barrels of oil per dayBCFbillion cubic feetBOE barrels of oil equivalent 1BOE/D OR BOEPDbarrels of oil equivalent per dayCOMPANYHeritage Oil PlcCONDENSATElow density, high API hydrocarbon liquids that are present in natural gas fields where itcondenses out of the raw gas if the temperature is reduced to below the hydrocarbon dew pointtemperature of the raw gasCONTINGENT RESOURCES those quantities of petroleum estimated, as of a given date, to be potentially recoverable fromknown accumulations by application of development projects but which are not currentlyconsidered to be commercially recoverable due to one or more contingenciesCSRCorporate Social ResponsibilityE&Eexploration and evaluationEIAEnvironmental Impact AssessmentGROUP, HERITAGEthe Company and all of its subsidiariesHOGLHeritage Oil and Gas LimitedHOC OR CORPORATIONHeritage Oil Corporation, incorporated in Canada and a wholly owned subsidiary of the CompanyIFRSInternational Financial Reporting StandardsLEADpotential drilling target that is less well defined than a prospect and requires further data beforebeing considered a prospect for drillingLNG ENERGYLNG Energy Ltd.LSELondon Stock ExchangeMmetresM 3cubic metresMBBLSthousand barrelsMMBBLSmillion barrelsMBOEthousands of barrels of oil equivalentMMBOEmillions of barrels of oil equivalentMCFthousand cubic feetMCF/Dthousand cubic feet per dayMMBTUmillion british thermal unitsMMSCFmillion standard cubic feetMMSCFDmillion standard cubic feet per dayMMSTBmillion stock tank barrelsNGONon-Governmental OrganisationOML 30Oil Mining Licence in NigeriaOverlift/underliftproduction overlift or underlift can occur because of the necessity to lift entitlement productionto suit available shipping schedules as agreed among the relevant parties. This can result in anoverlift (a lifting in excess of the company’s contractual allocation of production) or an underlift(a lifting less than the company’s contractual allocation of production)P1010% certaintyP5050% certaintyP9090% certaintyPETROFRONTIERPetroFrontier Corp.1 boes may be misleading, particularly if used in isolation. A boe conversion ratio of 6 mcf:1 bbl is based on an energy equivalency conversion method primarily applicable at the burnertip and does not represent a value equivalency at the wellhead.

Interim Report and Accounts 2013Heritage Oil Plc33PETROLEUMPNGPOSSIBLE RESERVESPPLPRLPROBABLE RESERVESPROSPECTPROSPECTIVE RESOURCESPROVED RESERVESPSA OR PSCRPSSAHARASAHARA OILSHORELINESHORELINE POWERSTAKEHOLDERTCFTSXWTIany mineral, oil or relative hydrocarbon (including condensate and natural gas liquids) andnatural gas existing in its natural condition in strata (but not including coal or bituminous shaleor other stratified deposits from which oil can be extracted by destructive distillation)Papua New Guineathose additional reserves which analysis and geoscience and engineering data suggest are lesslikely to be recovered than Probable Reserves. The total quantities ultimately recovered from theproject have a low probability to exceed the sum of Proved plus Probable plus Possible ReservesPetroleum Prospecting LicencePetroleum Retention Licencethose additional reserves that are less likely to be recovered than Proved Reserves but morecertain to be recovered than Possible Reserves. It is equally likely that actual remaining quantitiesrecovered will be greater than or less than the sum of the estimated Proved plus Probable Reservespotential drilling target that is well defined, usually by seismic datathose quantities of petroleum which are estimated, as of a given date, to be potentiallyrecoverable from undiscovered accumulationsthose quantities of petroleum, which by analysis and geoscience, can be estimated withreasonable certainty to be commercially recoverable. It is likely that the actual remainingquantities recovered will exceed the estimated Proved Reservesproduction sharing agreement or production sharing contractRPS Energy Consultants LimitedSahara Oil Services LimitedSahara Oil Services Holdings LimitedShoreline Natural Resources LimitedShoreline Power Company Limiteda person or group with a direct interest, involvement, or investment in our activities. Heritage’sstakeholders include employees, shareholders, local communities, NGOs, the media,governments, regulatory authorities and research organisationstrillion cubic feetToronto Stock ExchangeWest Texas IntermediateCONVERSION TABLEThe following table sets forth standard conversions from Standard Imperial Units to the International System of Units (or metric units).To convert from To Multiply byboe mcf 6mcf cubic metres 28.316cubic metres cubic feet 35.315bbls cubic metres 0.159cubic metres bbls oil 6.290feet metres 0.305metres feet 3.281miles kilometres 1.609kilometres miles 0.621acres hectares 0.405

Heritage Oil Plc34Interim Report and Accounts 2013Advisers and financial calendarCOMPANY SECRETARYWoodbourne Secretaries (Jersey) LimitedOrdnance House31 Pier RoadSt Helier JE4 8PW JerseyChannel IslandsREGISTERED OFFICE OF THE COMPANYOrdnance House31 Pier RoadSt Helier JE4 8PW JerseyChannel IslandsHEAD OFFICE AND DIRECTORS’BUSINESS ADDRESSFourth FloorWindward HouseLa Route de la LiberationSt Helier JE2 3BQ JerseyChannel IslandsUK OFFICE OF THE COMPANY34 Park StreetLondon W1K 2JDUnited KingdomBROKER AND FINANCIAL ADVISERSJ.P. Morgan Securities Limited25 Bank StreetCanary WharfLondon E14 5JPUnited KingdomENGLISH LEGAL ADVISERSTO THE COMPANYMcCarthy TétraultRegistered Foreign Lawyers & Solicitors125 Old Broad Street, 26th FloorLondon EC2N 1ARUnited KingdomJERSEY LEGAL ADVISERSTO THE COMPANYMourant Ozannes22 Grenville StreetSt Helier JE4 8PX JerseyChannel IslandsAUDITORS OF THE COMPANYKPMG Audit Plc15 Canada SquareCanary WharfLondon E14 5GLUnited KingdomREGISTRARS OF THE COMPANYComputershare Investor Services (Jersey) LtdQueensway HouseHilgrove StreetSt Helier JE1 1ES JerseyChannel IslandsPRINCIPAL BANKERS OF THE COMPANYStandard Bank (Europe)Barclays BankInvestecBank of Scotland (Europe)INDEPENDENT PETROLEUMENGINEERING CONSULTANTSTO THE COMPANYRPS Energy Consultants Limited309 Reading RoadHenley-on-ThamesOxfordshire RG9 1ELUnited KingdomPRESS AGENTSFTI ConsultingHolborn Gate26 Southampton BuildingsLondon WC2A 1PBUnited KingdomFINANCIAL CALENDARGroup results for the year to 31 December are announced in March/April. The Annual General Meeting is held during the second quarter.Half year results to 30 June are announced in August. Additionally,the Group will issue an Interim Management Statement between10 weeks after the beginning and six weeks before the end of eachhalf year period.W E B S I T Ewww.heritageoilplc.comCANADIAN LEGAL ADVISERSTO THE COMPANYMcCarthy Tétrault LLPSuite 3300421–7th Avenue SWCalgary AlbertaT2P 4K9Canada

Interim Report and Accounts 2013Heritage Oil Plc35Notes

Heritage Oil Plc36Interim Report and Accounts 2013Notes

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HERITAGEOILPLC.COMHeritage Oil PLCFourth Floor, Windward HouseLa Route de la LiberationSt Helier JE2 3BQ JerseyChannel IslandsT: +44 (0) 1534 835 400F: +44 (0) 1534 835 412