Prospectus re Admission to the Official List - Heritage Oil

Failure to obtain additional financing on a timely basis could cause the Group to forfeit its interest in suchproperties, reduce or terminate its operations or curtail its operations, exploration or development plans.If, after twelve months from the date of this document, the Group’s cash flow from operations is notsufficient to satisfy its capital expenditure requirements, there can be no assurance that additional debt orequity financing will be available to meet these requirements and this will have a materially adverse effecton the Group’s business, prospects, liquidity, financial condition, cash flows and results of operations.Negative Operating Cash Flow Could Increase the Need For Additional Funding After Twelve Months Fromthe Date of this DocumentAlthough the Group has sufficient working capital to meet its present requirements, being for the periodwhich is twelve months after the date of publication of this document, the Group’s ability thereafter togenerate sufficient operating cash flow to make scheduled payments on its indebtedness and meet othercapital requirements will depend on its future operating and financial performance. The Group’s futureperformance will be impacted by a range of economic, competitive and business factors that it cannotcontrol, such as general economic and financial conditions in its industry, including fluctuations inprevailing oil and gas prices, or the economy generally.A significant reduction in operating cash flows resulting from changes in economic conditions, increasedcompetition, or other challenges identified as risk factors in this document could increase the need foradditional financings or alternative sources of liquidity and could have a material adverse effect on theGroup’s business, financial condition, results of operations, prospects and its ability to service its debt andother obligations. If the Group is unable to service its indebtedness in the future, it will be forced to adoptan alternative strategy that may include actions such as selling assets, restructuring or refinancing itsindebtedness, seeking additional equity capital or reducing capital expenditures. Furthermore, the Groupmay not be able to effect any of these alternative strategies on satisfactory terms, if at all, or they may notyield sufficient funds to make required payments on its indebtedness.Issuance of Debt to Finance Acquisitions Would Increase the Group’s Debt LevelsFrom time to time, the Group may enter into transactions to acquire assets or the shares of othercorporations. These transactions may be financed partially or wholly with debt, which may increase theGroup’s debt levels above industry standards. After twelve months from the date of this document, therecan be no assurance that the Group will at any time be able to meet its obligations in respect of suchadditional debt facilities and any actions taken by counterparties in relation to default may have a materialadverse effect on the Group’s business, prospects, liquidity, financial condition, cash flows and resultsof operations.After twelve months from the date of this document, the level of the Group’s indebtedness from time totime could impair its ability to obtain additional financing in the future on a timely basis to take advantageof business opportunities that may arise and limit the Group’s operational flexibility.Significant Competition Attracting and Retaining Skilled PersonnelAttracting and retaining additional skilled personnel will be required to ensure expansion of the Group’sbusiness. The Group faces significant competition for skilled personnel in the oil and gas sector. Skilledpersonnel are required in the areas of exploration and development, operations, engineering, businessdevelopment, oil and gas marketing, finance and accounting. There is no assurance that the Group willsuccessfully attract new personnel or retain existing personnel required to continue to expand its businessand to successfully execute and implement its business strategy.The International Oil and Gas Industry is Highly Competitive in all its PhasesThe international oil and gas industry is highly competitive in all its phases. Competition is particularlyintense in the acquisition of prospective oil and gas properties, exploration and production licences, and oiland gas reserves. The Group’s competitive position depends on its geological, geophysical and engineeringexpertise, its financial resources, and its ability to develop its properties on time and on budget and itsability to select, acquire and develop proved reserves and on its ability to foster and maintain relationshipswith governments of the countries in which it operates. The Group competes with numerous otherparticipants in the search for oil and gas, the acquisition of oil and gas properties on time and on budgetand in the marketing of oil and gas. The Group’s competitors include oil and gas companies which havegreater financial resources, more local contacts, staff and facilities than the Group. Many such competitorsnot only explore for and produce hydrocarbons, but also carry on refining and marketing of oil and gas and17