Prospectus re Admission to the Official List - Heritage Oil

Summary Consolidated Balance Sheets (at 31 December 2005 and 2004 prepared in accordance withCanadian GAAP and audited)Assets2005 2004$ $Current AssetsCash and cash equivalents .................................... 8,583,321 16,235,523Accounts receivable ......................................... 1,318,450 4,640,802Note receivable ............................................ — 4,280,161Inventories ............................................... 216,474 94,483Prepaid expenses ........................................... 219,222 272,16810,337,467 25,523,137Property and equipment ....................................... 72,382,935 54,083,097Deferred development costs .................................... 1,187,371 1,013,01283,907,773 80,619,246Liability and Shareholders’ EquityCurrent LiabilitiesAccounts payable and accrued liabilities .......................... 4,438,649 6,397,247Current portion of long-term debt .............................. 248,045 —4,686,694 6,397,247Long-term debt ............................................. 7,520,438 —Asset retirement obligations .................................... 434,849 328,553Shareholders’ Equity:Share capital and warrants .................................... 22,854,418 21,434,168Contributed surplus ......................................... 517,209 24,421Retained earnings .......................................... 47,894,165 52,434,85771,265,792 73,893,44683,907,773 80,619,246Summary Consolidated Cashflow Statements (for financial years 2005 and 2004 prepared inaccordance with Canadian GAAP and audited)2005 2004$ $Cash used in operating activities ................................ 697,123 1,866,009Cash used in investing activities ................................ (16,184,349) (11,310,312)Cash provided by financing activities ............................. 9,020,147 604,953Foreign exchange gains (losses) on cash held in foreign currency ......... (1,185,123) 906,001Decrease in cash and cash equivalents ............................ (7,652,202) (7,933,349)Cash and cash equivalents—beginning of year ...................... 16,235,523 24,168,872Cash and cash equivalents—end of year .......................... 8,583,321 16,235,523135