Prospectus re Admission to the Official List - Heritage Oil

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(d) Reversal of impairmentUnder IFRS, impairment losses previously recorded are reversed if the conditions giving rise to theimpairment have reversed. The reversal of impairment losses was not permitted under Canadian GAAP.The impact on adoption of IFRS at 1 January 2005 is an increase in inventory of $24,976, an increase inproperty, plant and equipment of $1,656,846, and an increase in retained earnings of $1,681,822.At 31 December 2005, this has resulted in increases in inventory of $35,441, property, plant and equipmentof $1,442,748, retained earnings of $1,478,189, and depletion expense for the year of $203,633.(e) Share-based paymentsUnder Canadian GAAP, the Group recognised an expense related to their share-based payments on astraight-line basis through the date of full vesting. Under IFRS, the Group is required to recognise theexpense over the individual vesting periods for the graded vesting awards.At 31 December 2005, this has resulted in increases in general and administrative expenses and sharebasedpayments reserves of $456,747, with a corresponding decrease in retained earnings.(f) Deferred taxUnder Canadian GAAP, the Corporation recognised a deferred tax liability and corresponding increase inproperty, plant and equipment associated with its acquisition of Russian properties. However, under IFRSdeferred tax is only recognised on the initial recognition of an asset if it is acquired through a businesscombination.At 31 December 2005 and 31 December 2006, this has resulted in a reduction in property, plant andequipment and deferred tax liability of $2,346,605. There was no impact at 1 January 2005.(g) Depletion policyUpon transition to IFRS, the Corporation adopted a policy of depleting petroleum and natural gasinterests on a units of production basis over proved plus probable reserves. The depletion policy underCanadian GAAP was units of production over proved reserves.The impact on adoption to IFRS at 1 January 2005 is an increase in property, plant and equipment andretained earnings of $789,008. At 31 December 2005, this resulted in increases in property plant andequipment and retained earnings of $743,642, and depletion expense for the year of $34,734, and adecrease in earnings from discontinued operations of $10,632. At 31 December 2006, this resulted indecreases in property plant and equipment of $233,631, retained earnings of $211,900, and earnings fromdiscontinued operations of $674,905, and increases in inventory of $21,731, and depletion expense for theyear of $280,637.12. RELATED PARTY TRANSACTIONSNine-Month Period Ended 30 September 2007 Prepared in Accordance with IFRSDuring the nine-month period ended 30 September 2007, general and administrative expenses includedadvisory fees of $806,607 ($644,258 in the nine-month period ended 30 September 2006) charged byMr. Anthony Buckingham, a director of HOC and CEO.Mr. Paul Atherton, a director of HOC, is also a director and CFO of SeaDragon. The Group acquired605,000 common shares in SeaDragon on 9 March 2007 through the sale of its 65 per cent. interest inPipelay and Naturalay Technologies.Year Ended 31 December 2006 Prepared in Accordance with IFRSIn 2006, general and administrative expenses included an advisory fee of $1,494,317 charged byMr. Anthony Buckingham, a director of HOC, who was appointed CEO on 6 October 2006.Year Ended 31 December 2005 Prepared in Accordance with IFRSIn 2005, the Group established a management and finance office in Switzerland that required Mr. AnthonyBuckingham, a director of HOC, to relocate and he received a relocation allowance of $275,918. In 2005,general and administrative expenses included an advisory fee of $877,686 charged by this director.166
Year Ended 31 December 2004 Prepared in Accordance with Canadian GAAPIn 2004, general and administrative expenses included an advisory fee of $429,208 charged by Mr. AnthonyBuckingham.13. CURRENT TRADING AND PROSPECTSThe Company is well positioned to benefit from a series of exploration, appraisal and development drillingin 2008. Drilling programmes in Blocks 3A and 1 are scheduled to commence in Uganda in 2008. Anexploration well is also scheduled to commence drilling in the Miran licence in the KRI in the second halfof 2008.Production from the Zapadno Chumpasskoye field should increase from the average of 342 bopd inFebruary 2008 as a result of existing wells being brought on production as well as further developmentdrilling.Production from Block 8, Oman is not expected to change materially from the average net production of109 bopd of LPG and condensate in January 2008, until the West Bukha field commences production,which is expected to take place in the third quarter of 2008.167
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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
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RPS EnergyHeritage Oil - Competent
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Page 117 and 118: 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: (c) Reconciliation of loss for the
Page 171 and 172: PART VII—FINANCIAL INFORMATIONA.
Page 173 and 174: DeclarationFor the purposes of Pros
Page 175 and 176: HERITAGE OIL LIMITEDNOTES TO BALANC
Page 177 and 178: AUDITED AND UNAUDITED FINANCIAL INF
Page 179 and 180: HERITAGE OIL CORPORATIONCONSOLIDATE
Page 181 and 182: HERITAGE OIL CORPORATIONCONSOLIDATE
Page 183 and 184: HERITAGE OIL CORPORATIONNOTES TO CO
Page 185 and 186: Intangible E&E assets related to ea
Page 187 and 188: k) InvestmentsThe Group classifies
Page 189 and 190: usually when legal title passes to
Page 191 and 192: iii) IFRIC 12, ‘‘Service conces
Page 193 and 194: v) Liquidity riskLiquidity risk is
Page 195 and 196: ii) DerivativesDerivatives are reco
Page 197 and 198: 5 Other finance costsNine-month per
Page 199 and 200: Congo to the other partners in the
Page 201 and 202: No assets have been pledged as secu
Page 203 and 204: 31 December 30 September2005 2006 2
Page 205 and 206: 16 Trade and other payables31 Decem
Page 207 and 208: A reconciliation of the asset retir
Page 209 and 210: 21 Loss per shareThe following tabl
Page 211 and 212: 25 Commitments and contingenciesHer
Page 213 and 214: In November 2007, the Group farmed-
Page 215 and 216: Reconciliation of loss for the year
Page 217 and 218: 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 CORPORATIONCONSOLIDATE
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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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