Heritage Extends Buffalo Discovery with Major Oil Find in Uganda's Block 1

Heritage Oil has announced a world-class oil discovery with the successful Giraffe-1 exploration well in Block 1, Uganda, which also unlocks further potential in the block

The Giraffe-1 exploration well, which is located in the Butiaba region of Uganda Block 1, has encountered over 38 meters of net oil pay within an 89 meter gross oil bearing interval. These results demonstrate Giraffe to be a down-dip extension of the Buffalo discovery, making this the largest discovery in the Lake Albert Rift Basin to date.

The well was drilled 5 km from Buffalo-1 to a total depth of 705 meters and has been successfully logged and sampled. These data indicate a net reservoir thickness of 38 meters, the largest encountered in the area to date, and excellent reservoir quality in all pay zones with moveable oil being recovered to surface.

Interpretation of the well and seismic data indicates that the reservoir sands intersected in the Giraffe-1 well are in communication with those in the Buffalo discovery. An oil-water contact was penetrated and is interpreted as being common to the entire Buffalo-Giraffe structure with the potential for a single continuous oil column of some 140 meters.

Based on current mapping the Company's initial estimate of reserves for the Buffalo-Giraffe complex is over 400 million barrels.

Giraffe-1 is the sixth successful test of the Victoria Nile delta play fairway within the Lake Albert Rift Basin and was drilled some 6.5 km south of the crest of the Buffalo-Giraffe structure. This latest result further extends the play fairway and de-risks several adjacent prospects, located in Blocks 1 and 2, which are scheduled for drilling in 2009.

The well will now be suspended as a future producer and on completion of operations the light land rig will move to the Tullow Operated Block 2. Drilling operations will recommence in early February with the drilling of the Mputa-5 appraisal well to calibrate recently enhanced seismic data. Thereafter the rig will return to the Block 2 Butiaba campaign.

There are many other prospects and leads mapped within Block 1 from over 600 kilometres of seismic data acquired in the license during the past 18 months. The data give the potential to find additional substantial quantities of oil. All these prospects and leads are characterised by similarly encouraging seismic amplitude anomalies as those seen over the successful Warthog, Buffalo and Giraffe discoveries, and represent further additional multiple drilling targets within the block. Heritage plans to undertake further drilling in Block 1 later in 2009.

Heritage is the Operator of Block 3A and Block 1 in Uganda with a 50% equity interest in the licenses with Tullow Oil Plc holding the remaining 50% interest.

Tony Buckingham, Heritage's Chief Executive Officer, commented, "The large Buffalo-Giraffe structure is a world-class discovery which could prove to be substantially more extensive than currently outlined, unlocking the multi-billion barrel potential of Block 1. Heritage is very proud of being the pioneering company that was awarded the first licence in the Albert Basin in 1997 and has now discovered oil reserves that have achieved the commercial threshold for development. Having reached this critical commerciality milestone, 2009 will be very exciting as we enter the developmental phase for the Albert Basin, while continuing to appraise and explore the basin’s further potential."

Also commenting today, Aidan Heavey, Tullow's Chief Executive, said, "Buffalo-Giraffe is one of the largest recent onshore oil discoveries in Africa. Combined with our other finds in the region, we have now clearly exceeded the thresholds for basin development. Options for commercialization and first oil production are currently being fast-tracked."