Prospectus re Admission to the Official List - Heritage Oil

HERITAGE OIL CORPORATIONCONSOLIDATED BALANCE SHEETSDecember 31, 2005 and 2004(U.S. dollars)2005 2004$ $ASSETSCURRENT ASSETS:Cash and cash equivalents .................................... 8,583,321 16,235,523Accounts receivable ......................................... 1,318,450 4,640,802Note receivable (note 7) ..................................... — 4,280,161Inventories ............................................... 216,474 94,483Prepaid expenses ........................................... 219,222 272,16810,337,467 25,523,137Property and equipment (note 3) ................................. 72,382,935 54,083,097Deferred development costs (note 4) .............................. 1,187,371 1,013,01283,907,773 80,619,246LIABILITIES AND SHAREHOLDERS’ EQUITYCURRENT LIABILITIES:Accounts payable and accrued liabilities .......................... 4,438,649 6,397,247Current portion of long-term debt .............................. 248,045 —4,686,694 6,397,247Long-term debt ............................................. 7,520,438 —Asset retirement obligations (note 5) .............................. 434,849 328,553SHAREHOLDERS’ EQUITY:Share capital and warrants (note 6 (b)) ........................... 22,854,418 21,434,168Contributed surplus (note 6 (g)) ................................ 517,209 24,421Retained earnings .......................................... 47,894,165 52,434,85771,265,792 73,893,446Commitments (note 12)Subsequent events (note 13)83,907,773 80,619,246See accompanying notes to consolidated financial statements.On behalf of the Board:MICAEL GULBENKIANDirectorPAUL ATHERTONDirector224