Prospectus re Admission to the Official List - Heritage Oil

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(c)Foreign exchange risk:The Corporation is exposed to foreign exchange fluctuations as it holds working capital andlong-term debt in foreign currencies. In addition, a portion of the operating activities areconducted in sterling and Swiss francs. There are no exchange rate contracts in place at, orsubsequent to, December 31, 2005.(d) Interest rate risk:The Corporation is exposed to interest rate risks.10. Long-term debt:In January 2005, a wholly-owned subsidiary of the Corporation received a sterling denominated loanof $8.45 million (£4.5 million) to refinance the acquisition of a corporate office. Interest on the loan isfixed at 6.515% for the first five years and then is variable at a rate of London Interbank Offered Rate(‘‘LIBOR’’) plus 1.35%. The loan, which is secured on the property, is scheduled to be repaid by240 installments of capital and interest at monthly intervals, subject to a residual debt at the end of theterm of the loan of $3.5 million (£1,860,000).11. Related party transaction:In 2005, general and administrative expenses included an advisory fee of $877,686 (2004—$429,208)charged by a director of the Corporation. The Corporation established a management and financeoffice in Switzerland that required this director to relocate and he received a relocation allowanceof $275,918.12. Commitments:Heritage’s net share of outstanding commitments at year-end 2005 are estimated at:Less thanPayments Due by Period Total 1 year 1-3 years 4-5 years After 5 yearsU.S.$m U.S.$m U.S.$m U.S.$m U.S.$mLong Term Debt .................... 7,768 248 246 246 7,028Capital Lease Obligations ............. — — — — —Operating Leases .................... 2,659 217 434 434 1,574Purchase Obligations ................. — — — — —Other Long Term Obligations ........... 875 588 287 — —Work Programme Obligations ........... 19,350 16,950 2,400 — —Total Contractual Obligations ........... 30,652 18,003 3,367 680 8,602The Corporation may have a potential residual obligation to satisfy the shortfall in certain individuals’secured real estate borrowings in the event of default, a shortfall on the proceeds from the disposal ofthe properties and the individuals being unable to repay the balance. In the unlikely event this was tooccur the Corporation would look to recover any monies direct from the individual.13. Subsequent events:On March 27, 2006, the Corporation issued a $60,000,000 unsecured convertible bond, with a couponof 10% and a term of five years and one day. The bond is convertible into Common Shares at a priceof U.$.$18.00 per share at any time during the term of the bond. The Corporation may redeem thebond in whole or part at any time during the first 12 months at 150% of par value. The Corporationhas no redemption rights after the first twelve months. The proceeds of the bond can be employed fordevelopment of the West Chumpass field in Russia and for general corporate purposes.236
C. PRO FORMA FINANCIAL INFORMATION FOR THE COMPANYAccountant’s report on pro forma financial information for Heritage Oil LimitedKPMG LLP8 Salisbury Square,London, EC4Y 8BB,United KingdomThe DirectorsHeritage Oil LimitedOrdnance House31 Pier RoadSt. HelierJersey JE4 8PWChannel Islands28 March 2008Dear SirsHeritage Oil Limited (the ‘‘Company’’)We report on the pro forma financial information (the ‘‘Pro forma financial information’’) set out inPart VII(c) of the prospectus that will be dated 28 March 2008, which has been prepared on the basisdescribed in note 1, for illustrative purposes only, to provide information about how the fundraising inNovember 2007 might have affected the financial information presented on the basis of the accountingpolicies adopted by the Group in preparing the financial statements for the period ended30 September 2007. This report is required by paragraph 20.2 of Annex I of the Prospectus DirectiveRegulation and is given for the purpose of complying with that paragraph and for no other purpose.ResponsibilitiesIt is the responsibility of the directors of the Company to prepare the Pro forma financial information inaccordance with paragraph 20.2 of Annex I of the Prospectus Directive Regulation.It is our responsibility to form an opinion, as required by paragraph 7 of Annex II of the ProspectusDirective Regulation, as to the proper compilation of the Pro forma financial information and to reportthat opinion to you.Save for any responsibility arising under Prospectus Rule 5.5.3R (2)(f) to any person as and to the extentthere provided, to the fullest extent permitted by law we do not assume any responsibility and will notaccept any liability to any other person for any loss suffered by any such other person as a result of, arisingout of, or in connection with this report or our statement, required by and given solely for the purposes ofcomplying with paragraph 23.1 of Annex I of the Prospectus Directive Regulation, consenting to itsinclusion in the prospectus.Basis of OpinionWe conducted our work in accordance with the Standards for Investment Reporting issued by the AuditingPractices Board in the United Kingdom. The work that we performed for the purpose of making thisreport, which involved no independent examination of any of the underlying financial information,consisted primarily of comparing the unadjusted financial information with the source documents,considering the evidence supporting the adjustments and discussing the Pro forma financial informationwith the directors of the Company.We planned and performed our work so as to obtain the information and explanations we considerednecessary in order to provide us with reasonable assurance that the Pro forma financial information hasbeen properly compiled on the basis stated and that such basis is consistent with the accounting policies ofthe Company.237
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This document comprises a prospectu
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SUMMARY INFORMATIONThis summary mus
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Summary Consolidated Income Stateme
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Summary Consolidated Cash Flow Stat
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Production from the Zapadno Chumpas
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Given the geographic spread of the
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RISK FACTORSAny investment in the O
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wells may change as a result of low
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which could have a materially adver
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Failure to obtain additional financ
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contractual or pricing terms, both
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years. In addition, since December
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UgandaUganda is among the poorest c
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Market Price of the Ordinary Shares
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DIRECTORS, CORPORATE SECRETARY, SEN
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EXPECTED TIMETABLE OF PRINCIPAL EVE
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CurrenciesAll references in this do
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PART I—INFORMATION ON THE GROUPOV
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Strong management and technical tea
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the availability of existing infras
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In 2005, the Group acquired a 95 pe
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The Group acquired a 10 per cent. i
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The Group is the operator and has a
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exploration wells. The total estima
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The Group has also entered into a s
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Pakistan has current proved hydroca
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operational by drawing up an Enviro
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Mr. Buckingham has never had any as
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Date2007 ........ On 18 January 200
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(3) One common share of Heritage Ho
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(f) General Sir Michael WilkesGener
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Remuneration CommitteeThe Remunerat
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Goldsworth House, Denton Way, Golds
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ResourcesA summary of the gross Con
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The post tax Net Present Value (NPV
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RPS EnergyHeritage Oil - Competent
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Summary Consolidated Balance Sheets
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Summary Consolidated Balance Sheets
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locks during the first three and a
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On 2 October 2007, the Group execut
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of amplitude anomalies, further sup
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The increase in operating expenses
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5.11 Discontinued OperationsThe res
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6. RESULTS OF CONTINUING OPERATIONS
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6.7 Foreign Exchange LossesThere wa
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6.14 Capital ExpendituresThe follow
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7.3 Petroleum and Natural Gas Reven
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7.14 Capital ExpendituresAdditions
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10. LIQUIDITY AND CAPITAL RESOURCES
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Year Ended 31 December 2005 Prepare
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Intangible E&E assets related to ea
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11.2 The year ended 31 December 200
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(c) Reconciliation of loss for the
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Year Ended 31 December 2004 Prepare
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PART VII—FINANCIAL INFORMATIONA.
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DeclarationFor the purposes of Pros
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HERITAGE OIL LIMITEDNOTES TO BALANC
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AUDITED AND UNAUDITED FINANCIAL INF
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HERITAGE OIL CORPORATIONCONSOLIDATE
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HERITAGE OIL CORPORATIONCONSOLIDATE
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HERITAGE OIL CORPORATIONNOTES TO CO
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Intangible E&E assets related to ea
Page 187 and 188: k) InvestmentsThe Group classifies
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Page 191 and 192: iii) IFRIC 12, ‘‘Service conces
Page 193 and 194: v) Liquidity riskLiquidity risk is
Page 195 and 196: ii) DerivativesDerivatives are reco
Page 197 and 198: 5 Other finance costsNine-month per
Page 199 and 200: Congo to the other partners in the
Page 201 and 202: No assets have been pledged as secu
Page 203 and 204: 31 December 30 September2005 2006 2
Page 205 and 206: 16 Trade and other payables31 Decem
Page 207 and 208: A reconciliation of the asset retir
Page 209 and 210: 21 Loss per shareThe following tabl
Page 211 and 212: 25 Commitments and contingenciesHer
Page 213 and 214: In November 2007, the Group farmed-
Page 215 and 216: Reconciliation of loss for the year
Page 217 and 218: At the end of the last reporting pe
Page 219 and 220: Reconciliation of cash flow stateme
Page 221 and 222: At 31 December 2006, this has resul
Page 223 and 224: AUDITED FINANCIAL STATEMENTS RELATI
Page 225 and 226: AUDITORS’ REPORT TO THE SHAREHOLD
Page 227 and 228: HERITAGE OIL CORPORATIONCONSOLIDATE
Page 229 and 230: HERITAGE OIL CORPORATIONNOTES TO CO
Page 231 and 232: effective as hedges, both at incept
Page 233 and 234: A ceiling test was undertaken at De
Page 235 and 236: 6. Share capital:(a) Authorized:Unl
Page 237: fair value of stock options are amo
Page 241 and 242: PRO FORMA NET ASSET STATEMENTThe fo
Page 243 and 244: Production assumptionsProduction du
Page 245 and 246: Macroeconomic assumptionsThe Direct
Page 247 and 248: Accordingly, the Illustrative Proje
Page 249 and 250: Arrangement AgreementPursuant to th
Page 251 and 252: PART X—ADDITIONAL INFORMATION1. R
Page 253 and 254: (ii) no share or loan capital of th
Page 255 and 256: (j)In Alberta, the principal jurisd
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Page 261 and 262: up on all the shares conferring tha
Page 263 and 264: (B) may be a director or other offi
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Page 267 and 268: (c)have sufficient moneys, assets o
Page 269 and 270: (e)against surrender of the Exchang
Page 271 and 272: e, to the extent that the same is r
Page 273 and 274: (g)(ii) by arranging for the credit
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Page 279 and 280: 7.5 None of the major shareholders
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Page 285 and 286: All rights of a holder of Exchangea
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to change. Where the Company pays a
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As part of an agreement reached in
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(x) Foreign Property Information Re
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19. DOCUMENTS AVAILABLE FOR INSPECT
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declared and unpaid dividends on ea
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‘‘DTR’’‘‘DutchCo’’
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‘‘ISIN’’‘‘ITA’’‘
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anniversary of the Effective Date a
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‘‘Support Agreement’’‘‘
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emaining quantities recovered will
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Prospectus re Admission to the Official List - Heritage Oil

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