Heritage Highlights 2010 Activities

Heritage Oil announced its results for the twelve months ended December 31, 2010. All figures are in US dollars unless otherwise stated.

  • 2010 Operational Highlights
    • Discovered the largest gas field in Iraq in the last 30 years
    • Highly productive Jurassic reservoir intervals tested in the Miran West-2 well at a restricted cumulative flow rate of over 75 million cubic feet per day ("MMscfd")
    • Estimated gross P90-P50 in-place volumes of 6.8-9.1 Trillion Cubic Feet ("TCF"), with a P10 upside of 12.3 TCF for Miran West
    • Management estimates Heritage has mean net risked contingent and prospective resources in Miran West and Miran East of 744 million barrels of oil equivalent ("MMboe"), based on a 75% working interest
    • Miran development options being considered with first export production targeted for 2015 using planned regional infrastructure
    • Achieved nearly a twelvefold increase in contingent resources from 53 MMbbls to 605 MMboe following the successful testing of hydrocarbons
    • Completed 3D seismic acquisition offshore Tanzania; data currently being processed
    • Further development work in Russia, production increased 65% in 2010
  • 2010 Financial Highlights
    • Completed the disposal of interests in Block 3A and Block 1, Uganda, (the "Ugandan Assets") for which Tullow Uganda Limited ("Tullow") paid a cash consideration of $1.45 billion, including $100 million for a contractual settlement, and Heritage received and retained $1.045 billion
    • Cash at year end of $598 million
    • Special dividend of 100 pence per share paid in August 2010
  • Outlook
    • Rig contract to drill Miran West-3 well signed in April, well scheduled to spud July 2011
    • Exploration drilling to commence on Miran East in Q4 2011
    • 3D seismic data being processed for Tanzania with a view to establishing a drilling location
    • Mali 2D seismic data currently being acquired with a well expected to be drilled in early 2012
    • Malta 2D seismic data to be acquired during summer 2011
    • Well in Pakistan planned for H2 2011
    • Development options being reviewed for Kurdistan which include a phased development for oil, condensate and gas
    • First horizontal well to be drilled in Q2, 2011, in the Zapadno Chumpasskoye Field, Russia, which should help to provide a material increase in production

Tony Buckingham, Chief Executive Officer, commented, "The sale of the Ugandan Assets in 2010 has provided Heritage with a strong balance sheet for activities within the current portfolio and the ability to appraise further opportunities to generate value for shareholders. We remain active across the portfolio with seismic programs and drilling planned for 2011, including a multi-well exploration and appraisal drilling program in Kurdistan commencing in July. In addition, we are progressing with discussions with the Kurdistan Regional Government for the fast-track development of the Miran Field."

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