Prospectus re Admission to the Official List - Heritage Oil

The Group is the operator and has a 50 per cent. interest in two exploration licences in the hydrocarbonsystem in Lake Albert, Uganda. The Group has had interests in Uganda since 1997. The Directors believethat the Albert Basin in Uganda represents an exciting opportunity with a potential to discover significantquantities of oil.The assets in the Albert basin are controlled by the Group and Tullow Oil plc. Eight exploration andappraisal wells have been drilled successfully in the basin since the beginning of 2006 and all haveencountered oil bearing reservoirs with two of the wells testing at over 12,000 bopd. It is currentlyanticipated that potential production could be in excess of 100,000 bopd in the medium-term. The Group isthe operator of Blocks 3A and 1.Blocks 3A and 1 are located in a sedimentary basin known as the Albert Basin in the western arm of theEast African rift valley, straddling the border with the DRC. Approximately 80 per cent. of Block 3Acovers the south-eastern part of Lake Albert and the remainder is found in the onshore Semliki flats areato the south of the lake.The Block 3 licence was awarded in 1997 and after drilling three test wells at the same Turaco drill site,which were not considered commercial discoveries, all of the area was subsequently relinquished. Block3A, originally encompassing most of the exploration acreage which previously constituted Block 3, wasre-licensed in 2004 for a term of six years. Block 3A now covers an area of 2,033 square km.Energy Africa (now owned by Tullow) farmed-in to the licence in August 2001, acquiring 50 per cent. inreturn for funding a seismic survey and partly funding the costs of a well.The licence for Block 1 extends over an area of almost 3,659 square km and was awarded pursuant to thePSC entered into by the Group with the Government of Uganda on 1 July 2004. Under the terms of thePSC, the Group will act as operator.According to the Block 1 and Block 3A PSC in Uganda, the Government of Uganda may elect to enterinto a joint venture agreement, at any time, for up to 15 per cent. participation in the properties and theassociated production. The Company has not received any indication from the Government of Ugandathat it intends to invoke this election.The Group has agreed to a total minimum contractual work programme comprising the acquisition of atleast 150 km of seismic data and the drilling of up to three exploration wells. The total minimum financialcommitment amounts to $12.5 million spread over three separate two year exploration periods.The Kingfisher deviated well in Block 3A spud in August 2006 and drilled to a total depth of 3,195 metres,which was determined to be close to the limit of the rig’s operational capability. Four intervals were testedsuccessfully in the Kingfisher well, resulting in an overall cumulative flow rate of 13,893 bopd through aone inch choke.A shallower interval, at a depth of 1,783 metres, was tested successfully in November 2006, producing4,120 bopd over a 10 metre interval. The tested oil was light (approximately 30 o API) and sweet with a lowgas-oil ratio and some associated wax. Flow data from the test indicated that the reservoir had anextremely high permeability of over 2,000 milliDarcies.Three intervals were successfully tested in February 2007, from between 2,260 metres to 2,367 metres andproduced a cumulative flow rate of 9,773 bopd over a total net productive thickness of 44 metres. The oil isof good, quality light (between 30 o and 32 o API) and sweet with a low gas-oil ratio and some associatedwax. The reservoirs are sandstones with high permeability up to 3,000 milliDarcies.3D and 2D seismic programmes have identified a number of targets in Blocks 3A and 1, for whichmulti-well drilling programmes are planned to commence in the first half of 2008.A 325 square km 3D seismic survey was carried out over the Kingfisher and neighbouring Pelicanstructures during the summer of 2007. Initial interpretation of the 3D seismic survey confirms that theKingfisher structure has an aerial extent of approximately 45 square km. The data also identifies a numberof appraisal/development targets within the Kingfisher structure for a multi-well drilling programme fromland and on Lake Albert.A 530 km 2D seismic acquisition programme was completed in Block 3A in Lake Albert in the thirdquarter of 2007. This most recent programme supplemented previously acquired 2D seismic surveys andcovered previously un-surveyed areas of Lake Albert, in order to identify additional drilling targets.43