Prospectus re Admission to the Official List - Heritage Oil

$(106,943) (30 September 2006—$(53,228); 31 December 2006—$(236,730); 31 December2005—$(139)) higher/(lower), mainly as a result of foreign exchange gains/losses ontranslation of Russian rouble-denominated cash in bank and monetary assets and liabilities.At 30 September 2007, if the GBP pound sterling had strengthened/weakened by 10%against the US dollars with all other variables held constant, the loss for the period wouldhave been $781,534 (30 September 2006—$749,534; 31 December 2006—$730,637;31 December 2005—$686,923) higher/(lower), mainly as a result of foreign exchange gains/losses on translation of GBP pound sterling-denominated long-term loan.At 30 September 2007, if the Swiss franc had strengthened/weakened by 10% against theUS dollar with all other variables held constant, the loss for the period would have been$(432,727) (30 September 2006—$(294,544); 31 December 2006—$(286,493);31 December 2005—$(117,816)) higher/(lower), mainly as a result of foreign exchange gains/losses on translation of Swiss franc-denominated cash in bank.ii) Commodity price riskThe Corporation is exposed to commodity price risk to the extent that it will sell itsentitlement to petroleum, condensate and liquid petroleum gas production on a floatingprice basis.The Corporation may consider partly mitigating this risk in the future.The table below summarises the impact of increases/decreases of the relevant oil /condensate / LPG benchmark on the Corporation’s post-tax profit or loss for the period andon equity. The analysis is based on the assumption that the commodity prices had increased /decreased by 5% with all other variables held constant:Year ended Nine-month periods31 December ended 30 September2005 2006 2006 2007$ $ $ $(Unaudited)Brent light crude ...................... — — — 49,227Condensate .......................... 42,088 196,926 133,812 77,831LPG ............................... 17,118 144,786 15,393 15,09559,206 341,712 149,205 142,153Post-tax profit for the year and equity would increase/decrease as a result of commodityrevenues received.iii) Interest rate riskThe Group had fixed rate long-term debt and fixed rate convertible bonds in the periodunder review, therefore it was not exposed to interest rate risk.iv) Credit riskAll of the Corporation’s production is derived from the Republic of Congo, Russia andOman. In 2006, 2005, and for the nine-month periods ended 30 September 2007 and 2006,the Corporation sold all of its production, at any point in time, in each country to a singlecustomer for each commodity. Accordingly, substantially all the Corporation’s accountsreceivables from petroleum and natural gas sales were from a maximum of four customersduring these periods.Debtors of the Corporation are subject to internal credit review to minimize the risk ofnon-payment. The Corporation does not anticipate any default as it transacts withcreditworthy counterparties.No credit limits were exceeded during the reporting periods and management does notexpect any losses from non-performance by these counterparties.190