Prospectus re Admission to the Official List - Heritage Oil

6. Share capital:(a) Authorized:Unlimited number of Common Shares without par value(b) Issued:2005 2004Number Amount Number Amount$ $Common SharesBalance, beginning of year ............ 21,454,134 21,434,168 20,991,800 20,788,253Issued on exercise of stock options (c) . . . 546,667 1,423,011 442,334 561,463Stock based compensation exercised (g) . . — 132,577 — —Issued on exercise of warrants (d) ...... — — 20,000 84,452Normal course issuer bid (e) .......... (135,100) (135,338) — —Balance, end of year ................ 21,865,701 22,854,418 21,454,134 21,434,168WarrantsBalance, beginning of year ............ 40,962Exercise of warrants ................ (40,962)Balance, end of year ................ —Share capital and warrants, end of year .. 21,865,701 22,854,418 21,454,134 21,434,168(c)Stock options:The Corporation has a stock option plan whereby certain directors, officers, employees andconsultants of the Corporation may be granted options to purchase common shares. Under theterms of the plan, options granted normally vest one third immediately and one third in each ofthe years following the date granted and have a life of five years. In 2005, 150,000 options wereissued to non-employees at an average exercise price of Cdn$12.00 per share and a term of12 months. The cost of stock-based payments to non-employees that are fully vested andnon-forfeitable at the grant date is measured and recognized at that date.Common Share options outstanding and exercisable:Number Average Number Averageof options exercise price of options exercise price(Cdn $) (Cdn $)Balance, beginning of year .............. 476,667 1.31 919,001 1.49Granted ........................... 495,000 10.40 — —Exercised .......................... (546,667) 3.12 (442,334) 1.69Balance, end of year .................. 425,000 9.57 476,667 1.31Share capital and warrants exercisable, endof year ........................... 194,998 9.42 476,667 1.31Number of options RemainingExercise prices (Cdn $) Outstanding Exercisable Life (years)$1.35-$2.88 .................................. 30,000 30,000 1.40$9.70-$13.00 .................................. 395,000 164,998 3.90425,000 194,998 3.73233