Prospectus re Admission to the Official List - Heritage Oil

7.3 Petroleum and Natural Gas RevenuePetroleum and natural gas revenue may be analysed as follows:2004 2005 2004 2005$ $ $/bbl (1) $/bbl (1)Congo ......................................... 2,304,373 5,444,936 34.58 47.53OmanCondensate ................................... 2,991,096 468,816 40.86 52.24LPG ........................................ 297,252 372,950 11.30 14.703,288,348 841,766 33.05 24.515,592,721 6,286,702 33.66 42.22(1) As a result of the periodic nature of condensate sales from the Bukha field, Oman, $/bbl is based on net sales volumes ratherthan net production volumes.Petroleum and natural gas revenue increased by $693,981 (12 per cent.) in 2005 to $6,286,702. $1,273,919of this increase resulted from a 25 per cent. increase in average commodity prices, offset by $579,938 froma 10 per cent. reduction in sales volumes. The average sales price per barrel increased from $33.66 in 2004to $42.22 in 2005.Revenue would have been higher in 2005, save for the periodic nature of condensate sales from the Bukhafield, Oman. In 2004, 73,207 bbls of condensate were sold, compared to 8,975 in 2005. However, a sale ofapproximately 17,500 bbls of condensate net to the Group took place in the first quarter of 2006.7.4 Other IncomeOther income in 2004 and 2005 included the Group’s share of a pipeline tariff in the Congo. Other incomein 2005 also included drilling income of $342,973 from the Group’s 50 per cent. share of Eagle Drill. In2005, Eagle Drill was the drilling contractor for the operator of Block 2, Uganda, the first well (Mputa-1)spud in December 2005 and the drilling programme continued into 2006.7.5 Interest IncomeInterest income of $371,651 in 2005 was $189,275 (34 per cent.) lower than the previous year, as a result oflower average cash balances in 2005 and higher average interest rates in 2004, principally from a$14 million note receivable (denominated in Euros) that bore interest at Euribor plus 2.65 per cent. Thenote receivable was repaid in three tranches during 2004 and 2005, with the final payment received inMarch 2005.7.6 Operating ExpensesOperating expenses increased by $211,641 (15 per cent.) in 2005 to $1,653,657. Total operating costs fromthe Kouakouala and Oman operations in 2005 were similar to the previous year. The increase in 2005arose from the Group’s 50 per cent. share of Eagle Drill’s operating costs from drilling in Block 2, Uganda.7.7 General and AdministrativeGeneral and administrative expenses of $5,249,862 in 2005 were approximately double those incurred inthe previous year. During 2005, the Group grew substantially, employing additional staff, appraising andundertaking operations in new territories and establishing a management and finance office in Switzerland.The Group’s level of activity also increased in 2005, notably linked to the acquisition of the ZapadnoChumpasskoye field in Russia and two memoranda of understanding entered into during the year inthe KRI.General and administrative expenses in 2005 included $930,000 of one-off costs associated with financingthe loan for the London technical services office and the establishment of the management and financeoffice in Lugano, Switzerland.Additionally, general and administrative expenses in 2005 were higher than the previous year as theyincluded costs of $625,365 from the amortisation of the fair value of stock options granted in 2005compared to $10,240 in 2004.153