Prospectus re Admission to the Official List - Heritage Oil

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Third Party Contractors and Providers of Capital Equipment Can Be ScarceThe Group contracts or leases services and capital equipment from third party providers. Such equipmentand services can be scarce and may not be readily available at times and places required. In addition, costsof third party services and equipment have increased significantly over recent years and may continue torise. Scarcity of equipment and services and increased prices may in particular result from any significantincrease in exploration and development activities on a region by region basis which might be driven byhigh demand for oil and gas. In the regions in which the Group operates there is significant demand forcapital equipment and services. The unavailability and high costs of such services and equipment couldresult in a delay or restriction in the Group’s projects and adversely affect the feasibility and profitability ofsuch projects and therefore have an adverse affect on the Group’s business, financial condition, results ofoperations and prospects.Reliance on other Operators and Stakeholders Limits the Group’s Control Over Certain ActivitiesTo the extent the Group is not the operator of its oil and gas properties, including in Oman where RAKPetroleum is the operator and in the DRC where Tullow is the operator, it will be dependent on suchoperators for the timing of activities related to such properties and will be largely unable to direct orcontrol the activities of the operators or the costs of production and exploration of such operations. Inaddition, the success of the Group will be largely dependent upon the performance of the operator’s keyemployees. Any mismanagement of an oil or gas property by the operator may result in delays or increasedcosts to the Group’s non-operated exploration, development and production activities, which couldmaterially and adversely affect the Group’s business, financial condition, results of operationsand prospects.The terms of any relevant operating agreement generally impose standards and requirements in relation tothe operator’s activities. While the Group has deliberately acquired interests in oil and gas properties thatare operated by operators it believes to be reputable, there can be no assurance that any such operator willobserve such standards or requirements.There is a risk that other parties with interests in the Group’s oil and gas properties may elect not toparticipate in certain activities relating to those properties and which require that party’s consent. In thesecircumstances, it may not be possible for such activities to be undertaken by the Group alone or inconjunction with other participants at the desired time or at all.Other participants who have invested in the Group’s oil and gas properties may default in their obligationsto fund capital or other funding obligations in relation to such properties. In such circumstances, theGroup may be required under the terms of the relevant operating agreement to contribute all or part ofany such funding shortfall.After the twelve month period from the date of this document, any such delay or inability to undertakesuch activities, increased cost or obligation to provide further funding could adversely affect the Group’sbusiness, financial condition, results of operations and prospects.Permits, Approvals, Authorisations, Consents and Licences May Be Difficult to Obtain, Sustain or RenewThe operations of the Group require licences, approvals, authorisations, consents and permits and in somecases renewals of existing licences, approvals, authorisations, consents and permits from variousgovernmental authorities. The Directors believe that the Group currently holds or has applied for allnecessary licences, approvals, authorisations, consents and permits to carry on the activities which it iscurrently conducting under applicable laws and regulations in respect of its properties, and also believethat the Group is complying in all material respects with the terms of such licences, approvals,authorisations, consents and permits or extensions thereof. However, the Group’s ability to obtain, sustainor renew such licences, approvals, authorisations, consents and permits on acceptable terms are subject tochanges in regulations and policies and to an extent, on the discretion of the relevant governments.To the extent any such approvals, permits, authorisations, licences and consents are required and notobtained or maintained, the Group may be curtailed or prohibited from proceeding with plannedexploration or development of oil and gas properties.Amendments to current laws, regulations and permits, authorisations, licences, consents and approvalsgoverning operations and activities of oil and gas companies, or more stringent implementation thereof,could result in increases in capital expenditure or production costs or a reduction in levels of productionfrom producing properties or require abandonment or delays in development of new properties, all of14
which could have a materially adverse effect on the Group’s business, financial condition, prospects andresults of operations.Regulatory Requirements can be Onerous and ExpensiveThe current or future operations of the Group, including development activities and commencement ofproduction on its properties, require permits, authorisations, licences, consents and approvals from variousforeign, federal, state and local governmental authorities and such operations are and will be governed byapplicable laws and regulations governing oil and gas exploration and development, exports, taxes, labourstandards, occupational health, waste disposal, toxic substances, land use, environmental protection andother matters.Any changes or requirements additional to any such applicable laws, regulations and permittingrequirements may require the installation of additional equipment or remedial actions in order to ensurecompliance with such amendments, which may be expensive.Failure to comply with applicable laws, regulations and permitting requirements may result in enforcementactions in local jurisdictions thereunder, including orders issued by regulatory or judicial authoritiescausing operations to cease or be curtailed, and may include corrective measures requiring capitalexpenditures, installation of additional equipment or remedial actions.Parties engaged in oil and gas operations may be required to compensate those suffering loss or damage byreason of such activities and may have civil or criminal fines or penalties imposed for violations ofapplicable laws or regulations.The Group Cannot Completely Protect Itself Against Title DisputesIn many of the countries in which the Group operates, land title systems are not developed to the extentfound in many industrialised countries and there may be no concept of registered title. Although theGroup believes that it has good title to its oil and gas properties, it cannot control or completely protectitself against the risk of title disputes or challenges. There can be no assurance that claims or challenges bythird parties against the Group’s properties will not be asserted at a future date.The Group received a letter from the Iraq Ministry of Oil, dated 17 December 2007, stating that the PSCsigned with the KRG (without the prior approval of the Iraqi government) is considered to be void by theIraqi government as they have stated it violates the ‘‘prevailing Iraqi law’’. On the basis of KRI legaladvice, the Directors believe that the PSC is valid and effective pursuant to the applicable laws.The Group also received a letter from the chairman of the Management Committee of the National OilCorporation of Libya, dated 28 February 2008, stating that the Block 7 licence area offshore Malta lieswithin the Libyan continental shelf and a portion of this area has already been licensed to Sirte OilCompany. This letter also demands that the Group refrain from any activities over or concerning theBlock 7 licence area and asserts the Libyan government’s right to seek to invoke Libyan and internationallaw to protect its rights in the Block 7 licence area. The Directors believe that the Libyan government’sclaims are unfounded.In addition, the DRC work programme pursuant to the DRC PSC cannot be commenced prior to the grantof a presidential decree from the DRC government. The validity of the award of the DRC licences to whichthe work programme relates is currently being disputed by the Congolese Oil Ministry; this is beingrigorously defended by the Group and its partner. There can be no assurance that final approval orratification will ever be received in respect of the DRC PSC or that the pre-agreed fiscal terms will not bere-negotiated at a later date by the DRC government.The Group holds rights to explore its various oil and gas properties, but no assurance can be given thatrelevant governments will not revoke, or significantly alter the conditions of, the applicable exploration anddevelopment authorisations, licences, permits, approvals and consents and that such exploration anddevelopment authorisations, licences, permits, approvals and consents will not be challenged or impugnedby third parties. There is no certainty that existing rights or additional rights applied for will be granted orrenewed on terms satisfactory to the Group.The Group is Highly Dependent on its Executive ManagementThe Group is highly dependent upon its executive management and the loss of such executive managementcould have a materially adverse effect on the Group. In particular, the Chief Executive Officer of theCompany and HOC, Mr. Anthony Buckingham, has a number of key relationships that are important to15
Page 1 and 2: This document comprises a prospectu
Page 3 and 4: SUMMARY INFORMATIONThis summary mus
Page 5 and 6: Summary Consolidated Income Stateme
Page 7 and 8: Summary Consolidated Cash Flow Stat
Page 9 and 10: Production from the Zapadno Chumpas
Page 11 and 12: Given the geographic spread of the
Page 13 and 14: RISK FACTORSAny investment in the O
Page 15: wells may change as a result of low
Page 19 and 20: Failure to obtain additional financ
Page 21 and 22: contractual or pricing terms, both
Page 23 and 24: years. In addition, since December
Page 25 and 26: UgandaUganda is among the poorest c
Page 27 and 28: Market Price of the Ordinary Shares
Page 29 and 30: DIRECTORS, CORPORATE SECRETARY, SEN
Page 31 and 32: EXPECTED TIMETABLE OF PRINCIPAL EVE
Page 33 and 34: CurrenciesAll references in this do
Page 35 and 36: PART I—INFORMATION ON THE GROUPOV
Page 37 and 38: Strong management and technical tea
Page 39 and 40: the availability of existing infras
Page 41 and 42: In 2005, the Group acquired a 95 pe
Page 43 and 44: The Group acquired a 10 per cent. i
Page 45 and 46: The Group is the operator and has a
Page 47 and 48: exploration wells. The total estima
Page 49 and 50: The Group has also entered into a s
Page 51 and 52: Pakistan has current proved hydroca
Page 53 and 54: operational by drawing up an Enviro
Page 55 and 56: Mr. Buckingham has never had any as
Page 57 and 58: Date2007 ........ On 18 January 200
Page 59 and 60: (3) One common share of Heritage Ho
Page 61 and 62: (f) General Sir Michael WilkesGener
Page 63 and 64: Remuneration CommitteeThe Remunerat
Page 65 and 66: Goldsworth House, Denton Way, Golds
Page 67 and 68:
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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Summary Consolidated Balance Sheets
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Summary Consolidated Balance Sheets
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locks during the first three and a
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On 2 October 2007, the Group execut
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of amplitude anomalies, further sup
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The increase in operating expenses
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5.11 Discontinued OperationsThe res
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6. RESULTS OF CONTINUING OPERATIONS
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6.7 Foreign Exchange LossesThere wa
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6.14 Capital ExpendituresThe follow
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7.3 Petroleum and Natural Gas Reven
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7.14 Capital ExpendituresAdditions
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10. LIQUIDITY AND CAPITAL RESOURCES
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Year Ended 31 December 2005 Prepare
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Intangible E&E assets related to ea
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11.2 The year ended 31 December 200
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(c) Reconciliation of loss for the
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Year Ended 31 December 2004 Prepare
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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
Page 305 and 306:
‘‘Support Agreement’’‘‘
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emaining quantities recovered will
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Prospectus re Admission to the Official List - Heritage Oil

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