Prospectus re Admission to the Official List - Heritage Oil

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RPS EnergyHeritage Oil – Competent Persons ReportThis forecast price was used as the basis for all other price forecasts required for the valuation. Theseprices are summarised in Table 32. Details of how each price deck was derived can be found in the sectionsbelow for each asset.Oman Russia KurdistanOil Condensate LPG GasBukha/ Bukha/Bukha/ West West West UralsWest West Saudi Saudi Bukha Bukha Bukha Bukha Export KirkukBukha NWS Bukha Propane Butane Propane Butane Gas Gas Blend Domestic BlendYear $/bbl $/bbl $/bbl $/tonne $/tonne $/tonne $/tonne $/MMBTU $/MMBTU $/bbl $/bbl $/bbl2007 . . . . . . . . . . . . . 88.59 85.75 83.05 662.74 675.85 530.19 540.68 0.00 1.00 84.16 42.08 82.392008 . . . . . . . . . . . . . 85.00 82.35 79.65 640.97 653.51 512.77 522.81 0.00 1.00 80.75 40.38 79.052009 . . . . . . . . . . . . . 82.00 79.51 76.81 622.78 634.84 498.22 507.87 0.00 1.00 77.90 38.95 76.262010 . . . . . . . . . . . . . 80.00 77.62 74.92 610.65 622.39 488.52 497.91 0.00 1.00 76.00 38.00 74.402011 . . . . . . . . . . . . . 78.00 75.72 73.02 598.52 609.95 478.82 487.96 0.00 1.00 74.10 37.05 72.542012 . . . . . . . . . . . . . 77.00 74.77 72.07 592.45 603.72 473.96 482.98 0.00 1.00 73.15 36.58 71.612013 . . . . . . . . . . . . . 77.29 75.05 72.35 594.21 605.53 475.37 484.42 0.00 1.00 73.43 36.71 71.882014 . . . . . . . . . . . . . 78.83 76.51 73.81 603.55 615.11 482.84 492.09 0.00 1.00 74.89 37.44 73.312015 . . . . . . . . . . . . . +2%pa +2%pa +2%pa +2%pa +2%pa +2%pa +2%pa 0.00 1.00 +2%pa +2%pa +2%paTable 32:Table of Base Case Forecast Prices7.2. Valuation Methodology7.2.1. Reserves1P, 2P and 3P reserves were valued using spreadsheet based discounted cash flow models. Each model wasbased on the applicable contract terms and a forecast of future production and costs.7.2.2. Contingent and Prospective ResourcesThe only 1C, 2C and 3C contingent and prospective resources in the portfolio are in Block 1 and 3A,Uganda and, at the request of Heritage, were not valued.7.2.3. Other (Miran)In the case of the Miran Contract area in Kurdistan no prospect or lead has yet been properly defined. Thevaluation therefore involved illustrating the value of a number of notional fields on a recoverable volumevs. value plot as an indication of the potential value of success in this block.7.3. Oman—Block 87.3.1. Fiscal Regime and Contract TermsThe Block 8 Petroleum Agreement was signed in February 1985 and has a Development Period of 30 yearsfrom date of first commercial discovery. There is also an option to extend this for a further 10 years underterms to be negotiated which shall be no less favourable than those under which other oil companies arethen operating in Oman.The extended details of the Block 8 PSC are subject to confidentiality agreements. However, RPS Energyconfirms that it has had full access to the final, signed copy of PSC under the terms of such agreements andthat the commercial terms therein have been built into our economics models. The RPS valuation honoursfully these commercial terms.The commercial structure of the Block 8 PSC is in our opinion, very similar to standard PSC’s with theContractor’s entitlement revenue comprising of Cost Oil (defined as a maximum percentage of the totalrevenue) and Profit Oil (shared between the Contractor and the Government based on a fixed percentageof the revenue less any cost oil). There are no royalty payments due under the contract and theContractor’s Income Tax liability is paid by the Government out of its share of Profit Oil.7.3.2. Price Assumptions7.3.2.1. CondensateThe current Bukha condensate contract price for the current month is based on the average mean quotesof APPI NWS oil during the previous month plus the mean of the Platts NWS differential for the month120
RPS EnergyHeritage Oil – Competent Persons Reportprior to that less a discount of US$2.70/bbl. A NSW forecast price was derived from the Brent forecastprice using a relationship developed from a study of historical prices for both NWS and Brent.No contract price has yet been agreed for West Bukha condensate so this has been valued on the samebasis as the current Bukha condensate contract.7.3.2.2. OilWest Bukha oil has been valued assuming parity with the Brent forecast price.7.3.2.3. GasThere are no gas sales from Bukha, but West Bukha gas has a contract gas price with RAKGAS ofUS$1/MMBTU when Saudi Light is above US$34/bbl.7.3.2.4. LPGLPG’s (Propane and Butane) from Bukha are sold at 80 per cent. of the average price of Saudi Propaneand Butane for the previous month less a 50 per cent. discount to account for RAKGAS share. It has beenassumed that West Bukha LPG’s will be sold on the same basis.7.3.3. Unrecovered CostsThe total amount of unrecovered costs in Block 8 at 30/09/2007 stands at US$35.51 million. The majorityof these costs however relate to the West Bukha development. For the valuation of Bukha on its own anestimate of 5 per cent. of the total was assumed as unrecovered costs. This estimate was providedby Heritage.7.3.4. Valuation Summary—BukhaThe post-tax valuation of the net Heritage share is shown in Table 33 at various discount rates.Post-Tax Net Present ValueEconomic(US$ Million, Money of the Day)Net Heritage Share Limit (1) 5% 7.5% 10% 12.5% 15%Proved Reserves (1P) .............................. 2029 2.2 1.7 1.4 1.2 1.0Proved plus Probable Reserves (2P) ................... 2029 2.8 2.1 1.7 1.4 1.2Proved plus Probable plus Possible Reserves (3P) ......... 2029 3.0 2.3 1.7 1.4 1.2Note 1: Economic limit represents last year of input forecast productionTable 33:Bukha Post-Tax Valuation (Net Heritage Share)Bukha reserves are summarised in Table 34, below.Heritage Net Heritage NetGross Working EntitlementRemaining Interest Reserves at BaseReserves Reserves Case Price Forecast(MMstb) (MMstb) (MMstb)CondensateProved Reserves (1P) ............................. 2.1 0.206 0.094Proved plus Probable Reserves (2P) .................. 2.4 0.243 0.099Proved plus Probable plus Possible Reserves (3P) ......... 2.6 0.260 0.102LPGProved Reserves (1P) ............................. 1.5 0.151 0.035Proved plus Probable Reserves (2P) .................. 2.2 0.225 0.046Proved plus Probable plus Possible Reserves (3P) ......... 2.5 0.253 0.049Table 34:Bukha Reserves Summary121
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This document comprises a prospectu
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SUMMARY INFORMATIONThis summary mus
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Summary Consolidated Income Stateme
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Summary Consolidated Cash Flow Stat
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Production from the Zapadno Chumpas
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Given the geographic spread of the
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RISK FACTORSAny investment in the O
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wells may change as a result of low
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which could have a materially adver
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Failure to obtain additional financ
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contractual or pricing terms, both
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years. In addition, since December
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UgandaUganda is among the poorest c
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Market Price of the Ordinary Shares
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DIRECTORS, CORPORATE SECRETARY, SEN
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EXPECTED TIMETABLE OF PRINCIPAL EVE
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CurrenciesAll references in this do
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PART I—INFORMATION ON THE GROUPOV
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Strong management and technical tea
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the availability of existing infras
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In 2005, the Group acquired a 95 pe
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The Group acquired a 10 per cent. i
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The Group is the operator and has a
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exploration wells. The total estima
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The Group has also entered into a s
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Pakistan has current proved hydroca
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operational by drawing up an Enviro
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Mr. Buckingham has never had any as
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Date2007 ........ On 18 January 200
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(3) One common share of Heritage Ho
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(f) General Sir Michael WilkesGener
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Remuneration CommitteeThe Remunerat
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Goldsworth House, Denton Way, Golds
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ResourcesA summary of the gross Con
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The post tax Net Present Value (NPV
Page 71 and 72: RPS EnergyHeritage Oil - Competent
Page 121: RPS EnergyHeritage Oil - Competent
Page 135 and 136: Summary Consolidated Balance Sheets
Page 137 and 138: Summary Consolidated Balance Sheets
Page 139 and 140: locks during the first three and a
Page 141 and 142: On 2 October 2007, the Group execut
Page 143 and 144: of amplitude anomalies, further sup
Page 145 and 146: The increase in operating expenses
Page 147 and 148: 5.11 Discontinued OperationsThe res
Page 149 and 150: 6. RESULTS OF CONTINUING OPERATIONS
Page 151 and 152: 6.7 Foreign Exchange LossesThere wa
Page 153 and 154: 6.14 Capital ExpendituresThe follow
Page 155 and 156: 7.3 Petroleum and Natural Gas Reven
Page 157 and 158: 7.14 Capital ExpendituresAdditions
Page 159 and 160: 10. LIQUIDITY AND CAPITAL RESOURCES
Page 161 and 162: Year Ended 31 December 2005 Prepare
Page 163 and 164: Intangible E&E assets related to ea
Page 165 and 166: 11.2 The year ended 31 December 200
Page 167 and 168: (c) Reconciliation of loss for the
Page 169 and 170: Year Ended 31 December 2004 Prepare
Page 171 and 172: PART VII—FINANCIAL INFORMATIONA.
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DeclarationFor the purposes of Pros
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HERITAGE OIL LIMITEDNOTES TO BALANC
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AUDITED AND UNAUDITED FINANCIAL INF
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HERITAGE OIL CORPORATIONCONSOLIDATE
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HERITAGE OIL CORPORATIONNOTES TO CO
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Intangible E&E assets related to ea
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k) InvestmentsThe Group classifies
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usually when legal title passes to
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iii) IFRIC 12, ‘‘Service conces
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v) Liquidity riskLiquidity risk is
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ii) DerivativesDerivatives are reco
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5 Other finance costsNine-month per
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Congo to the other partners in the
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No assets have been pledged as secu
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31 December 30 September2005 2006 2
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16 Trade and other payables31 Decem
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A reconciliation of the asset retir
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21 Loss per shareThe following tabl
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25 Commitments and contingenciesHer
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In November 2007, the Group farmed-
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Reconciliation of loss for the year
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At the end of the last reporting pe
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Reconciliation of cash flow stateme
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At 31 December 2006, this has resul
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AUDITED FINANCIAL STATEMENTS RELATI
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AUDITORS’ REPORT TO THE SHAREHOLD
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HERITAGE OIL CORPORATIONNOTES TO CO
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effective as hedges, both at incept
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A ceiling test was undertaken at De
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6. Share capital:(a) Authorized:Unl
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fair value of stock options are amo
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C. PRO FORMA FINANCIAL INFORMATION
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PRO FORMA NET ASSET STATEMENTThe fo
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Production assumptionsProduction du
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Macroeconomic assumptionsThe Direct
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Accordingly, the Illustrative Proje
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Arrangement AgreementPursuant to th
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PART X—ADDITIONAL INFORMATION1. R
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(ii) no share or loan capital of th
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(j)In Alberta, the principal jurisd
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nominal amount has been paid up of
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instrument of transfer (in the case
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up on all the shares conferring tha
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(B) may be a director or other offi
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and is in default for a period of 1
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(c)have sufficient moneys, assets o
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(e)against surrender of the Exchang
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e, to the extent that the same is r
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(g)(ii) by arranging for the credit
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(b) rights, options or warrants oth
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any provision of provincial, territ
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7.5 None of the major shareholders
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Position stillDirector/Senior Manag
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employment or terminates his or her
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All rights of a holder of Exchangea
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agreement of this nature. These cir
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to change. Where the Company pays a
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As part of an agreement reached in
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(x) Foreign Property Information Re
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19. DOCUMENTS AVAILABLE FOR INSPECT
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declared and unpaid dividends on ea
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‘‘DTR’’‘‘DutchCo’’
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‘‘ISIN’’‘‘ITA’’‘
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anniversary of the Effective Date a
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‘‘Support Agreement’’‘‘
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emaining quantities recovered will
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