Prospectus re Admission to the Official List - Heritage Oil

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advance income tax ruling has been sought or obtained from CRA to confirm the taxconsequences of any of the transactions described herein.This summary also assumes that the Company is and will remain a non-resident of Canada forthe purposes of the ITA.For the purposes of the ITA, all amounts relating to the acquisition, the holding and thedisposition of the Ordinary Shares, including dividends, adjusted cost base and proceeds ofdisposition must generally be determined in Canadian dollars at applicable exchange rates.(vii) Dividends on Ordinary SharesDividends received or deemed to be received on Ordinary Shares by a CanadianShareholder who is an individual will be required to be included in computing theCanadian Shareholder’s income for the purposes of the ITA and will not be subject to thegross up and dividend tax credit rules applicable to dividends received from taxableCanadian corporations under the ITA.Dividends received or deemed to be received on Ordinary Shares by a CanadianShareholder that is a corporation will be required to be included in computing theCanadian Shareholder’s income for purposes of the ITA and will generally not bedeductible in computing its taxable income.(viii) Disposition of Ordinary SharesCost Averaging of Identical PropertyThe ITA provides for a cost averaging rule for ‘‘identical properties’’, such as shares issuedby a company (including any fractional share) that are of the same class or series.Generally, when a person acquires a property that is identical to one or more otherproperties already held by the person, the person’s adjusted cost base of each identicalproperty will be equal to the quotient obtained when the aggregate of the adjusted costbases of all the identical properties previously held by the person and the cost of the newlyacquired identical property is divided by the number of all such identical properties held atthat time. Accordingly, at any time, the cost to a Canadian Shareholder of an OrdinaryShare will be averaged with the adjusted cost bases of any other Ordinary Shares held bythe Canadian Shareholder as capital property at that time.Acquisition and Disposition of Ordinary SharesA disposition or deemed disposition of Ordinary Shares (including on the purchase of theOrdinary Shares for cancellation by the Company) by a Canadian Shareholder willgenerally result in a capital gain (or capital loss) to the extent that the proceeds ofdisposition exceed (or are less than) the aggregate of the adjusted cost base to theCanadian Shareholder of the Ordinary Shares immediately before the disposition and anyreasonable cost of disposition.One half of any capital gain (the ‘‘taxable capital gain’’) realised by a CanadianShareholder will be included in its income for the year of disposition. One half of anycapital loss (the ‘‘allowable capital loss’’) realised by a Canadian Shareholder may bededucted by that person against taxable capital gains for the year of disposition subject toand in accordance with rules contained in the ITA. Any excess of allowable capital lossesover taxable capital gains for the year of disposition may be deducted in any of the threepreceding taxation years or carried forward indefinitely and deducted in any subsequenttaxation year against net taxable capital gains realised in such year to the extent andsubject to the limitations prescribed in the ITA. Any capital loss resulting from thedisposition of Ordinary Shares may, in certain circumstances, be reduced by the amount ofdividends previously received or deemed received on Ordinary Shares, to the extent andunder the circumstances described in the ITA. Capital gains realised by an individual ortrust, other than certain trusts, may give rise to alternative minimum tax under the ITA.(ix) Refundable TaxA Canadian Shareholder that is a ‘‘Canadian controlled private corporation’’ (as suchterm is defined in the ITA) may be liable to pay a refundable tax on certain investmentincome, including taxable capital gains and dividends paid on Ordinary Shares.290
(x) Foreign Property Information ReportingA Canadian Shareholder that is a ‘‘specified Canadian entity’’ for a taxation year or fiscalperiod and whose total cost amount of ‘‘specified foreign property’’ (which includes theOrdinary Shares) at any time in the year or fiscal period exceeds Cdn$100,000 will berequired to file an information return in respect of such property disclosing certaininformation including particulars of the Canadian Shareholder’s investment in suchproperty. Subject to certain exceptions, a Canadian Shareholder would be a specifiedCanadian entity. Such Canadian Shareholder holding specified foreign property shouldconsult their tax advisors in this respect.(xi) Proposed Legislation on Foreign Investment EntitiesOn 29 October 2007, Bill C-10 to amend the ITA, including proposals relating to foreigninvestment entities, was introduced in the House of Commons of Canada (‘‘FIELegislation’’). The proposed legislation, if enacted, would generally be applicable fortaxation years of taxpayers commencing after 2006. Canadian Shareholders should consulttheir own tax advisors regarding the potential application of these proposed rules in theirparticular circumstances.(xii) Eligibility for InvestmentThe Ordinary Shares, if and when listed on a designated stock exchange (which wouldinclude the LSE), will be qualified investments under the ITA for trusts governed byregistered retirement savings plans, registered retirement income funds, deferred profitsharing plans, registered disability savings plans and registered education savings plans.12. RELATED PARTY TRANSACTIONSSave as disclosed in the financial information in Part VII of this document at Note 24 and elsewherein this document, no members of the Group entered into related party transactions during thefinancial year ended 31 December 2006, or during the period between 1 January 2007 and the dateof this document.13. LITIGATIONMr. Micael Gulbenkian, a former chairman and CEO of HOC, who was dismissed on6 October 2006, has threatened legal action for wrongful dismissal and commenced arbitrationprocedures. The Group considers the likelihood of any successful claims as remote. As at the dateof this document no formal statement of claim has been served on the Group. The Group has,however, received various correspondence from Mr. Gulbenkian’s lawyers stating thatMr. Gulbenkian and his consulting company have or will invoke arbitration procedures based onarbitration clauses contained in agreements with the Group in respect of these allegations. TheDirectors do not know what the potential outcome of these claims will be and the Group will defendany action.Save as set out in the preceding paragraph, neither the Company nor any member of the Group isor has been involved in any governmental, legal or arbitration proceedings (including any suchproceedings which are pending or threatened of which the Company is aware) which may have, orhave had during the 12 months prior to the date of this document, a significant effect on theCompany and/or the Group’s financial position or profitability.The Directors are not aware of any environmental issues that may affect the Company’s utilisationof its tangible fixed assets.14. WORKING CAPITALThe Company is of the opinion that the Group has sufficient working capital for its presentrequirements, that is for at least the next 12 months from the date of this document.15. THE CITY CODEThe City Code will apply to the Company, and on Admission the Shareholders will be afforded theprotections provided by the City Code, in particular the mandatory takeover provisions in rule 9 ofthe City Code. In the event of a takeover, the squeeze-out provisions in articles 117 to 119 of the291
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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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fair value of stock options are amo
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C. PRO FORMA FINANCIAL INFORMATION
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Page 303 and 304: anniversary of the Effective Date a
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Prospectus re Admission to the Official List - Heritage Oil

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