Prospectus re Admission to the Official List - Heritage Oil

PART I—INFORMATION ON THE GROUPOVERVIEW1. INTRODUCTIONThe Company was incorporated in Jersey on 6 February 2008 to be the ultimate holding company of theGroup. The Group was established in 1992 (with HOC being incorporated on 30 October 1996) as anindependent upstream exploration and production group engaged in the exploration for, and thedevelopment, production and acquisition of, oil and gas in its core areas of Africa, the Middle East andRussia. HOC, being a member of the Group and in anticipation of the Admission, has proposed areorganisation of its share capital. The reorganisation will culminate in the creation of the ExchangeableShares which will be subject to voting rights and terms and conditions different from the Ordinary Sharesbut which, subject to certain conditions, will be exchanged for Ordinary Shares on a one-to-one basis. HOCintends to (at or immediately following Admission) procure the admission of the Exchangeable Shares totrading on both the TSX and on the Official List together with admission to trading on the London StockExchange’s main market for listed securities. See ‘‘Corporate Reorganisation’’ Part IX of this document forfurther information on the reorganisation of HOC’s share capital and the voting and other rights attachingto the Exchangeable Shares and see ‘‘Additional Information’’ in section 6.3 of Part X for furtherinformation on the terms and conditions attaching to the Exchangeable Shares.The Group has exploration projects in Uganda, the KRI, the DRC, Malta, Pakistan and Mali, andproducing properties in Oman and Russia. The Group’s management team believes that it hasdemonstrated a track-record of finding new substantial discoveries, particularly in Africa, including thehydrocarbon system in the Albert Basin, Uganda and the M’Boundi oilfield in Congo. The Group’sproducing, development and exploration projects, together with potential opportunities, provide acombination of early cash flow and longer term value-creation opportunities for its shareholders. See‘‘History and Development’’ in section 9 of Part I of this document and ‘‘Intercorporate Relationships’’ insection 11 of Part I of this document for further information on the origins of the Group and itsdevelopment.All references in this Part I of the document to ‘‘production’’ are to such stated production figures that arenet to the Group unless specified otherwise.2. SUMMARY OF GROUP ASSETSThe Group has a portfolio of production, development and exploration assets focussed on Africa, theMiddle East, Russia and the Mediterranean. Management has focussed the Group’s efforts on large areaswith multiple drilling opportunities. The Group’s two producing assets are located in Russia and Oman.The Group has a producing interest in the Khanty-Mansiysk Region of West Siberia with 60.5 million bblsproved and probable reserves net to the Group and average production of 342 bopd in February 2008. TheGroup is the operator of this asset and holds a 95 per cent. interest. The asset in Oman, the Bukha field,located approximately 40 km offshore in the Straits of Hormuz, has proved and probable reserves of0.15 million bbls (based on the Group’s entitlement interest) and net production is 109 bopd as atJanuary 2008. The operator is RAK Petroleum and the Group has a 10 per cent. interest.The West Bukha discovery is also located in Oman, where a well was successfully drilled in 2006. The firstphase of the West Bukha development has commenced and comprises design, fabrication and installationof the wellhead platform and pipeline with a tie into the Bukha facilities. Management believes thatproduction, subject to unforeseen circumstances, is likely to commence in the third quarter of 2008 and anagreement is in place to sell the gas from the West Bukha field to Rakgas for five years. The Group’sreserves for West Bukha (entitlement interest) were estimated at 1.5 bcf of gas and 1.25 MMboe of oil,condensate and LPG by RPS as at 30 September 2007.The Group also holds assets in the Albert Basin in Uganda, as operator with a 50 per cent. working interestin Block 3A and as operator with a 50 per cent. interest in Block 1. The assets are currently in the appraisaland exploration stages, however, management is confident about the opportunities in the Albert Basin.RPS has certified that the Group had a 50 per cent. working interest share of the mean risked workinginterest prospective resources from Blocks 3A and 1 in Uganda of 462 MMboe (923 MMboe gross) as at30 September 2007. The Government of Uganda has a back-in right which could, if exercised, reduce theGroup’s working interest to 42.5 per cent. In the event that these resources were to mature into reserves33