Prospectus re Admission to the Official List - Heritage Oil

UgandaUganda is among the poorest countries in the world with a predominantly agricultural economy and ahistory of civil strife and political instability although the country has made significant socio-politicalimprovements in the last two decades. Rural Uganda has an underdeveloped infrastructure andproductivity; competitiveness and capital development expenditure are also low.DRCThe DRC is an impoverished country with physical and institutional infrastructure that is often in adilapidated condition. It is in transition from a largely state controlled economy to one based on freemarket principles and from a non-democratic political system with a centralised ethnic power base to apolitical system based on more democratic principles.The DRC has historically had high rates of inflation. As the Group will not be able to control the marketprice at which it sells the oil and gas it produces (except to the extent that it enters into forward sales andother derivative contracts), it is possible that high inflation rates in the DRC in the future could result in anincrease in future operational costs in Congolese Francs and have a material adverse effect upon theGroup’s business, results of operations and financial condition.PakistanPakistan has suffered from decades of internal political disputes (including the recent assassination ofBenazir Bhutto), low levels of foreign investment, and a costly, ongoing confrontation with neighbouringIndia. Despite employing International Monetary Fund-approved policies, bolstered by generous foreignassistance, renewed access to global markets and overall decreases in poverty levels by 10 per cent. since2001, inflation remains the biggest threat to the economy, jumping to more than 9 per cent. in 2005 beforeeasing to 7.9 per cent. in 2006. It is possible that high inflation rates in Pakistan in the future could result inan increase in future operational costs in Pakistani Rupees and have a material adverse effect upon theGroup’s business, results of operations and financial condition.Uncertainties of Legal Systems in Jurisdictions in Which the Group OperatesRussia, Uganda, the DRC, the KRI and other jurisdictions in which the Group operates or might operatein the future may have less developed legal systems than more established economies which could result inrisks such as (i) effective legal redress in the courts of such jurisdictions, whether in respect of a breach oflaw or regulation, or in an ownership dispute, being more difficult to obtain; (ii) a higher degree ofdiscretion and corruption on the part of governmental authorities; (iii) the lack of judicial or administrativeguidance on interpreting applicable local rules and regulations; (iv) inconsistencies or conflicts betweenand within various laws, regulations, decrees, orders, resolutions and judgements; or (v) relativeinexperience of the judiciary and courts in such matters. In certain jurisdictions, the commitment of localbusiness people, government officials and agencies and the judicial system to abide by legal requirementsand negotiated agreements may be more uncertain, creating particular concerns with respect to theGroup’s licences and business agreements. Some or all of these may be susceptible to revision orcancellation and legal redress may be uncertain, unavailable or delayed. Equally, there can be no assurancethat PSCs, concession agreements, joint ventures, licences, licence applications or other legal arrangementswill not be adversely affected by the actions of government authorities or others and the effectiveness ofand enforcement of such arrangements in these jurisdictions cannot be assured.Failure to Meet Contractual Agreements May Result in the Loss of the Group’s InterestsAny change in government or legislation may affect the status of the Group’s PSCs or contractualarrangements or its ability to meet its contractual obligations and may result in the loss of its interests in itsoil and gas properties. Some of the contracts pursuant to which the Group holds an interest in itsproperties permit the other party to terminate the contract if force majeure conditions cause operations tobe economically unviable or interrupted for more than thirty days. Due to the potential for civil unrest incertain countries in which the Group’s properties are located, there can be no assurance that theseproperties will not become subject to force majeure conditions for more than thirty days which could havethe consequence of putting those contractual interests at risk. The laws of Jersey do not apply to any ofthese contractual arrangements and no assurance can be given that these contractual arrangements will beenforced or interpreted in the same manner or to the same extent as would be the case if the laws of Jerseydid apply.23