Prospectus re Admission to the Official List - Heritage Oil

HERITAGE OIL LIMITEDNOTES TO BALANCE SHEETAs at 6 February 2008Heritage Oil Limited (the ‘‘Company’’) was incorporated under the Companies (Jersey) Law 1991 on 6 February, 2008.The balance sheet is prepared in accordance with International Financial Reporting Standards (IFRS).1. Significant accounting policies:(a) Basis of presentation:The majority of the Company’s business will be transacted in U.S. dollars and, accordingly, the Company’s functional andreporting currency is U.S. dollars.(b) Cash and cash equivalents:The Company considers deposits in banks, certificates of deposit and short-term investments with original maturities ofthree months or less as cash and cash equivalents.2. Share capital:(a) Authorized:Unlimited number of Ordinary Shares without par value.(b) Issued:At Incorporation there was one Ordinary Share issued at $42 (£21.29).3. Subsequent events:On 22 February 2008, a second Ordinary Share was issued at $41 (£21.19).On 22 February 2008 the Company entered into an agreement with, inter alia, Heritage Oil Corporation (‘‘HOC’’)(the ‘‘Arrangement Agreement’’). Under the Arrangement Agreement, each holder of HOC Common Shares will exchange theirshares for Ordinary Shares or Exchangeable Shares of HOC on a one-for-ten basis. Exchangeable Shares of HOC have certainspecial rights including the right to direct a trustee as to how it should exercise a number (equal to the number of ExchangeableShares held) of the votes attaching to the Special Voting Share to be issued by the Company for these purposes.On 28 March 2008 the Company entered into the following agreements:• the Voting and Exchange Trust Agreement under which the Company will issue one Special Voting Share. The Special VotingShare will have the number of votes, which may be cast at any meeting at which holders of Ordinary Shares are entitled tovote, equal to the number of Exchangeable Shares of HOC outstanding at the relevant time.Each holder of Exchangeable Shares of HOC on the record date for any meeting at which holders of Ordinary Shares areentitled to vote will be entitled to instruct the Trustee to exercise those votes attached to the Special Voting Share for eachExchangeable Share of HOC held or to obtain a proxy from the Trustee entitling the holder to vote directly, at the relevantmeeting, the votes attached to the Special Voting Share to which the holder is entitled.• the Support Agreement under which for so long as any Exchangeable Shares of HOC remain outstanding, the Company hasmade certain covenants, to the fullest extent permitted by law, in favour of HOC including, but not limited to, the following:(a) the Company will not declare or pay dividends on Ordinary Shares unless HOC is able to declare and pay andsimultaneously declares and pays, as the case may be, an equivalent dividend on the Exchangeable Shares;(b) the Company will advise HOC in advance of the declaration of any dividend by the Company; and(c) the Company will take all actions and do all things reasonably necessary to enable and permit HOC and Alberta CallCoto perform their obligations, if any, arising upon the liquidation, dissolution or winding up of HOC, the receipt of aRetraction Request, the exercise by Alberta CallCo of its right to purchase Exchangeable Shares that are the subject of aRetraction Request and the exercise and the exercise by Alberta CallCo of its right to purchase all Exchangeable Sharesin the event of the a proposed liquidation, dissolution or winding up of HOC.The Company has agreed to take all such actions as are reasonably necessary to cause all Ordinary Shares deliverable inconnection with Exchangeable Shares to be listed and posted for trading on all stock exchanges on which outstanding OrdinaryShares are listed. The Company has also agreed not to exercise any voting rights attached to the Exchangeable Shares ownedby it or any of its affiliates on any matter considered at meetings of holders of Exchangeable Shares.• the Relationship Agreement with Anthony Buckingham and Albion Energy Limited governing the relationship between theparties.• the Sponsor’s Agreement under which, inter alia:the Company appointed JPMorgan Cazenove Limited as sponsor in connection with the application for admission of itsOrdinary Shares to the Official List and to trading on the London Stock Exchange (the ‘‘LSE’’); the Company has agreed topay the Sponsor a management fee of £1,000,000 plus VAT on Admission; the Company has agreed to pay (together with anyrelated value added tax) certain costs, charges, fees and expenses, in connection with, or incidental to Admission; theCompany has given certain warranties and undertakings to the Sponsor and given certain indemnities to the Sponsor that aretypical of an arrangement of this nature.173