Prospectus re Admission to the Official List - Heritage Oil

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10.8 Facility AgreementsIn January 2005, a wholly owned subsidiary of HOC received a sterling denominated loan of£4,500,000 to finance the acquisition of the technical services office at 34 Park Street, Mayfair,London W1K 2JD. Interest on the loan is fixed at 6.515 per cent. for the first five years and then isvariable at a rate of LIBOR plus 1.35 per cent. The loan, which is secured on the property, isscheduled to be repaid by 240 instalments of capital and interest at monthly intervals, subject to aresidual debt at the end of the term of the loan of no more than £1,860,000. HOC provided acorporate guarantee to the lender.In October 2007, a wholly-owned subsidiary of HOC received a loan of U.S.$9,450,000 to refinancethe acquisition of a private corporate jet delivered in 2007. Interest on the loan is variable at a rateof LIBOR plus 1.6 per cent. The loan, which is secured on the aircraft, is scheduled to be repaid by20 consecutive quarterly instalments of principal. Each instalment equals to US$117,500 with thefinal instalment being $7,217,500. HOC provided a corporate guarantee to the lender.In November 2007, a bank guarantee for $3,037,500 to cover 50 per cent. of the Group’s share ofthe Sanjawi work programme in Pakistan was provided by Standard Bank Jersey Limited on behalfof HOGL upon awarding of the Sanjawi licence. The cash-backed bank guarantee has a term until31 December 2010.In November 2006, a wholly-owned subsidiary of HOC received a loan of $200 million from HOGLfor exploration and development purposes in the Zapadno Chumpasskoye field as well as tosupport the operational and commercial activities of the subsidiary and other activities agreed inadvance by the parties. Interest on the loan is variable at a rate of LIBOR plus 4 per cent. The loanis scheduled to be repaid by instalments determined at HOGL’s discretion over a 30 year period.In July 2007, a wholly-owned subsidiary of HOC granted separate charges over its holding of sharesin SeaDragon in favour of ABN AMRO and Lloyds TSB Bank plc. These charges were made tosupport an overdraft facility of $6 million for use by Gander Drilling Limited, a wholly-ownedsubsidiary of SeaDragon.11. TAXATION11.1 Taxation(a) United Kingdom Taxation(i) GeneralThe following information is based upon the tax legislation and tax authorities’ practicecurrently in force in the U.K. and Jersey. The comments are of a general nature only andare not a full description of all relevant tax considerations. The comments only apply topersons who are resident and (in the case of an individual) ordinarily resident in (and onlyin) the U.K. (except where express reference is made to the treatment ofnon-U.K. residents) and only apply to persons who hold their Ordinary Shares asinvestments and are the absolute beneficial owners of them. The information in both theU.K. and Jersey sections below is applicable to such investors and both sections should beread in conjunction with one another. The statements do not constitute advice to anyShareholder. Any person who is in any doubt as to his tax position, or who is subject to taxin a jurisdiction other than the U.K., should consult a professional adviser concerning histax position in respect of the acquisition, holding or disposal of Ordinary Shares.(ii) Tax ResidenceThe Company is incorporated in Jersey and currently conducts its affairs so that itsbusiness is centrally managed and controlled in Guernsey. This summary is prepared onthe assumption that its business will continue to be centrally managed and controlledin Guernsey.(iii) DividendsUnder current Jersey taxation legislation tax will not be withheld from dividends paid bythe Company. Under current U.K. taxation legislation no tax will be withheld fromdividends paid by the Company. Currently for U.K. tax purposes no tax credit wouldattach to any dividends paid by the Company. After 5 April 2008, U.K. tax law is expected286
to change. Where the Company pays a dividend to a holder of Ordinary Shares being anindividual resident in the U.K. (for the purposes of U.K. tax law) that person may beentitled to a tax credit in respect of the dividend received. These provisions are expectedto apply to an individual who owns less than 10 per cent. of the Ordinary Shares in theCompany provided that that individual receives less than £5,000 in dividends in any taxyear from companies which are not resident in the U.K. for tax purposes. The value of thetax credit is currently one ninth of the amount of the dividend received (or 10 per cent. ofthe aggregate of the amount of the dividend and tax credit). Such an individual will beliable to income tax on an amount equal to the aggregate of the dividend and tax credit(the ‘‘gross dividend’’), which will be regarded as the top slice of his income for taxpurposes and will be subject to U.K. income tax at the special dividend rate of tax asdescribed below.Individuals who are not liable to income tax at a rate greater than basic rate (i.e. those whopay tax at the lower or basic rate only) will be liable to tax on the gross dividend at the‘‘dividend ordinary rate’’ of 10 per cent. This means that the tax credit will satisfy suchindividual’s liability to pay income tax in respect of the gross dividend and there will be nofurther tax to pay and no right to claim any repayment of the tax credit from the HMRC.In the case of individuals who are liable to income tax at the higher rate, tax will bepayable on dividends at the ‘‘dividend upper rate’’ (currently 32.5 per cent.). The10 per cent. tax credit will be set against his liability to tax in respect of the gross dividend.Therefore, he will have to pay additional tax equal to 22.5 per cent. of the gross dividend(or 25 per cent. of the net dividend received), to the extent that the gross dividend, whentreated as the top slice of his income, falls above the threshold for higher rate income tax.Individual holders of Ordinary Shares who are not liable to income tax in respect of thegross dividend income cannot reclaim payment of the tax credit from HM Revenueand Customs.Subject to certain exceptions, a corporate Shareholder which is resident for tax purposesin the U.K. is not liable to tax on a dividend paid by the Company to it and is not able toclaim repayment of the tax credit attaching to the dividend.(iv) Capital Gains TaxA disposal or deemed disposal of capital assets by a U.K. resident or ordinarily residentshareholder will give rise to either a chargeable gain or an allowable loss. Gains and lossesare calculated by deducting from the sale proceeds or, in some instances from the marketvalue of the time of disposal, the original cost and incidental costs of acquisition andincidental costs of disposal. Recipients within the charge to corporation tax may beentitled to an indexation allowance in computing a capital gain. Currently, a U.K. residentindividual or trustee may be entitled to taper relief in computing a capital gain or loss. It isexpected that taper relief will be abolished for disposals after 5 April 2008. U.K. residentindividuals or trustees may also be entitled to an annual allowance in arriving at theamount on which they are charged capital gains tax.A disposal or deemed disposal of a capital asset by a U.K. resident or ordinarily residentindividual who is not domiciled in the U.K., will be liable to U.K. capital gains tax(‘‘CGT’’) in the same way as for a U.K. domiciled individual unless the asset is situatedoutside of the U.K. at the time of disposal. Where the asset is non-U.K. situated, gains willonly be taxed to the extent that the gains are (or are deemed to be) remitted to theU.K. As the Company is incorporated outside of the U.K., and as its principal register ismaintained outside of the U.K. it is expected that the Ordinary Shares will be deemed tobe non-U.K. situated for these purposes. Various changes to remittance basis are expectedto take place after 5 April 2008. An individual claiming the remittance basis may losecertain tax allowance and, in certain cases, an individual may be charged a flat rate sum ofmoney before the remittance basis can apply.If an individual ceases to be resident or ordinarily resident in the U.K. for a period of lessthan five years and disposes of the Ordinary Shares, in certain circumstances any gain onthat disposal may be liable to U.K. CGT upon that holder becoming once again resident orordinarily resident in the U.K.287
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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 CORPORATIONNOTES TO CO
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Intangible E&E assets related to ea
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k) InvestmentsThe Group classifies
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usually when legal title passes to
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iii) IFRIC 12, ‘‘Service conces
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v) Liquidity riskLiquidity risk is
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ii) DerivativesDerivatives are reco
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5 Other finance costsNine-month per
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Congo to the other partners in the
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No assets have been pledged as secu
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31 December 30 September2005 2006 2
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16 Trade and other payables31 Decem
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A reconciliation of the asset retir
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21 Loss per shareThe following tabl
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25 Commitments and contingenciesHer
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In November 2007, the Group farmed-
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Reconciliation of loss for the year
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At the end of the last reporting pe
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Reconciliation of cash flow stateme
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At 31 December 2006, this has resul
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AUDITED FINANCIAL STATEMENTS RELATI
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AUDITORS’ REPORT TO THE SHAREHOLD
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HERITAGE OIL CORPORATIONNOTES TO CO
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effective as hedges, both at incept
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A ceiling test was undertaken at De
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6. Share capital:(a) Authorized:Unl
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