Prospectus re Admission to the Official List - Heritage Oil

At 31 December, 2006, this has resulted in increases in property, plant and equipment of$103,065, intangible exploration assets of $64,121, and retained earnings of $171,189, withdecreases in foreign exchange losses of $171,189 and the foreign currency translation reserveof $4,003.l) Convertible bondsUnder Canadian GAAP, the Corporation’s convertible bonds were initially recognised with anallocation between equity and liability components based on their relative fair values. IFRSrequires the recognition of a liability and an embedded derivative liability representing the bondholder’s conversion option. The fair value of the derivative financial liability is subsequentlymeasured at fair value at each period end with changes in fair value being recognised in income.At 31 December, 2006, this has resulted in increases in derivative financial liabilities of$27,997,140 and a loss on derivative financial liabilities of $24,851,951, and decreases in othercontributed equity of $3,145,845, and retained earnings of $24,851,295.220