Prospectus re Admission to the Official List - Heritage Oil

Macroeconomic assumptionsThe Directors have assumed the following:Foreign exchange ratesThere will be no material fluctuations in respect of foreign exchange rates. The following exchange rateshave been adopted throughout the projected period:15 months ending 12 months ending 12 months ending31 December 2008 31 December 2009 31 December 2010RR/US$ ................................ 25 25 25US$/£ ................................. 1.9973 1.9973 1.9973CHF/US$ ............................... 1.20 1.20 1.20Cdn$/US$ .............................. 0.98 0.98 0.98InflationAnnual inflation will be 2 per cent. for operating expenses and 20 per cent. for general and administrativeexpenses throughout the forecast period.InterestLIBOR will be 3 per cent. throughout the forecast period.Commercial termsThe Directors have assumed that commercial terms, specifically those of the Group’s PSCs and licences,will continue to be in line with those outlined in Part I of this document.Other assumptionsThe Directors have assumed: There will be no changes in applicable legislation, taxation, regulations, political or economicconditions which will materially affect the Group’s or the Group’s customers’ operations; There will be no interruptions to business which would have a material adverse effect on the Group orits operations and customers; and For the purpose of the Illustrative Projections, it has been assumed that the Group will not make anymajor acquisitions or disposals, although such acquisitions or disposals may in fact occur.Risk factorsThe Illustrative Projections are subject to a variety of material risk factors that could cause the actual cashflows to differ materially from those projected. The most significant risk factors impacting these IllustrativeProjections are as follows. Exploration and development expenditure and success rates; Factors associated with operating in developing countries, political and regulatory instability; Oil and gas sales volumes and prices; and Reliance on key employees.Additional risk factors are discussed in the ‘‘Risk Factors’’ section of this document.The above risk factors could materially adversely affect the cash flows to an extent that the Group mayneed, after 12 months from the date of this document, in certain circumstances to obtain further debt orequity financing.243