Prospectus re Admission to the Official List - Heritage Oil

HERITAGE OIL CORPORATIONNOTES TO CONSOLIDATED FINANCIAL INFORMATIONHeritage Oil Corporation (the ‘‘Corporation’’) is incorporated under the Business Corporations Act(Alberta) and its primary business activity is the exploration, development and production of petroleumand natural gas in Africa, Russia, South Asia and the Middle East.These consolidated financial statements include the results of the Corporation and all subsidiaries overwhich the Corporation exercises control. The subsidiaries consolidated within these financial statementsinclude inter-alia Heritage Oil & Gas Limited, Eagle Energy (Oman) Limited, Heritage Oil and Gas (U)Limited, Heritage Energy Middle East Limited, Heritage DRC Limited, Coatbridge Estates Limited,ChumpassNefteDobycha, Neftyanaya Geologicheskaya Kompaniya, Heritage Oil & Gas (Austria)GesmbH, Heritage Mali Block 7 Limited, Heritage Mali Block 11 Limited, Heritage Energy HoldingGesmbH (Austria), Heritage Oil & Gas (Gibraltar) Limited, TISE-Heritage Neftegaz (Russia), Begal AirLimited, Heritage I.E. Heritage International Holding GmbH, Heritage Talinskoye GmbH, Heritage Oil &Gas Holdings Limited, Eagle Drill Limited, Heritage Oil (Barbados) Limited, Heritage Oil & Gas(Switzerland) SA and Heritage International Holding (Gibraltar) Limited.The Corporation’s consolidated financial statements are presented in U.S. dollars, which is theCorporation’s functional and presentation currency.The Corporation’s financial statements have historically been drawn up to 31 December. In February 2008,the Corporation announced that it will enter into a corporate reorganisation which will result in a newlyincorporated company, Heritage Oil Limited (‘‘Heritage Jersey’’), becoming the parent company of theCorporation and its current subsidiaries. Heritage Jersey will be seeking to list its ordinary shares on theOfficial List of the United Kingdom Listing Authority and to trading on the Main Market of the LondonStock Exchange plc (the ‘‘LSE’’). The Corporation intends to delist its existing Common Shares from theToronto Stock Exchange (the ‘‘TSX’’) and obtain a listing for a new class of exchangeable shares on theTSX and the LSE. This financial information has been prepared for inclusion in the prospectus of HeritageJersey to be dated 31 March 2008. In order to meet the requirements relating to the age of financialinformation to be included in the prospectus, the financial information has been drawn up to30 September 2007 and comparative information has been provided for the period ended30 September 2006 on an unaudited basis.The financial statements were approved by the Board and authorized for issuance on 28 March 2008.1 Significant accounting policiesThe principal accounting policies applied in the preparation of these consolidated financial statementsare set out below. These policies have been consistently applied to all the periods presented, unlessotherwise stated.a) Basis of preparationThe consolidated financial information has been prepared in accordance with the requirementsof the Listing Rules and in accordance with this basis of preparation. This basis of preparationdescribes how the financial information has been prepared in accordance with InternationalFinancial Reporting Standards (IFRS).These consolidated nine month financial statements of the Corporation have been prepared inaccordance with IFRS for the first time. This is the first set of financial statements which havebeen prepared by the Corporation under IFRS. The disclosures required by IFRS 1 concerningthe transition from Canadian Generally Accepted Accounting Principles (Canadian GAAP) toIFRS are set out in note 28.The consolidated financial statements have been prepared under the historical cost convention,as modified by the revaluation of certain financial assets and liabilities at fair value.The preparation of financial statements in conformity with IFRS requires the use of certaincritical accounting estimates. It also requires management to exercise its judgement in theprocess of applying the Corporation’s accounting policies. The areas involving a higher degree ofjudgement or complexity, or areas where assumptions and estimates are significant to theconsolidated financial statements are disclosed in note 3.181