Heritage Bumps Production at Russian Field

- Heritage Bumps Production at Russian Field

Tuesday, August 16, 2011
Heritage Oil plc

Heritage announced that the drilling and testing of horizontal well 363 has been completed in the Zapadno Chumpasskoye Field in Russia, resulting in a significant increase in production.

Highlights

• Production from the field has increased from 431 bopd in the first quarter to a current level of c.1,600 bopd
• Oil is light gravity (39˚ API) and sweet
• The well tested at rates of up to 1,405 bopd and is currently producing 1,205 bopd
• Maximum well potential calculated to be 2,365 bopd
• Further horizontal drilling is planned with the next well scheduled to spud in the fourth quarter

Heritage announced the drilling and testing of the first horizontal well in the Zapadno Chumpasskoye Field has completed and results have exceeded pre-drill expectations. Production from the field is currently c.1,600 bopd, which is a significant increase on the level achieved in the first quarter of 431 bopd.

Well 363 is currently producing at a controlled rate of 1,205 bopd. During the flow test, the well produced at rates of up to 1,405 bopd and the well potential has been calculated to be 2,365 bopd. Currently, we plan to drill a further horizontal well in the field in the fourth quarter.

Historical development of this reservoir throughout the region has been through conventional drilling on a grid pattern. Heritage recognized a potential opportunity to improve the efficiency and economics of field development by utilizing horizontal drilling technology, thus decreasing the number of wells and the total cost required to develop the field while potentially improving recovery. The previous reserves review and development plan undertaken by RPS Energy in June 2009 will be updated in due course incorporating the results of well 363 and management expect these results will increase the valuation of the field.

Tony Buckingham, Chief Executive Officer, commented, "We are delighted that the first horizontal well drilled on the field has surpassed our expectations and provided a step change in our production levels. This is the fourth well we have drilled on the license and its success indicates this is the best technique to optimize development of the field. We look forward to further increases in production with the next horizontal well scheduled to spud in the fourth quarter."

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Heritage Commences Drilling in Kurdistan

- Heritage Commences Drilling in Kurdistan

Monday, August 08, 2011
Heritage Oil plc

Heritage Oil has commenced drilling the Miran West-3 well in the Kurdistan Region of Iraq ("Kurdistan").

Highlights

• The Miran West-3 well has commenced drilling with the primary objective of appraising the Miran West structure
• The well is targeting both the Jurassic and Cretaceous reservoir formations encountered in the Miran West-1 and Miran West-2 discovery wells
• The deviated well path, determined from the recent 3D seismic survey, targets the flanks of the structure to optimally intercept networks of open fractures
• It is intended that multiple reservoir intervals will be tested and evaluated as the well is drilled to a target depth of c.4,400 meters
• The well is expected to take approximately seven months to drill and test
• The commencement of drilling of the Miran West-3 well represents the beginning of a multi-well appraisal and exploration program, using the first of two rigs scheduled for back to back drilling on the Miran Field

Miran West-3 Well

Drilling of the Miran West-3 appraisal well has commenced. The well is targeting reservoir sections encountered in discovery wells with the primary objective of appraising the Jurassic and Cretaceous reservoir formations in the Miran West structure. Management estimates gross in-place volumes for the Miran West structure to have a P90-P50 range of 6.8-9.1 TCF of gas, with an upside P10 gas potential of 12.3 TCF. This is in addition to the estimated P50-P90 range of 42-71 MMbbls of condensate and 53-75 MMbbls of oil.

The Miran West-3 location and well trajectory provides a c.4.3 kilometer appraisal step out from the Miran West-2 Jurassic reservoir penetration. The planned well path targets the flanks of the structure. The well bore will be orientated and inclined to optimally intercept open fracture networks associated with multiple faults identified on recently acquired 3D seismic data. This well will also appraise the Cretaceous oil and gas reservoirs discovered in the Miran West-1 and Miran West-2 wells, further enhancing knowledge of the Miran structures.

Drilling of the Miran West-3 well is expected to take approximately seven months with key reservoir intervals being tested as the well is drilled.

After drilling and testing, it is intended that this rig will move to drill the Miran West-4 appraisal well. A second rig is being sourced to drill the planned Miran East-1 exploration well, with drilling expected to commence before year end, at which time there will be two rigs operating in the Miran Field.

3D Seismic Program

The Miran 3D seismic program is now approximately 90% complete. The significant improvement in seismic data quality over the Miran Field is encouraging and assists greatly with the selection of well locations. Initial interpretation of the first tranche of data acquired has highlighted increased resource potential, in particular for the Miran East structure. This potential will be targeted by the Miran East-1 exploration well to be drilled before year end.

Tony Buckingham, Chief Executive Officer, commented, "The spudding of Miran West-3 begins our active multi-well exploration and appraisal drilling program in Kurdistan. This first well is principally appraising the Cretaceous and Jurassic discoveries made in the Miran West-1 and Miran West-2 wells. We plan to provide regular announcements during the drilling of this well as the key reservoir intervals will be tested as the well is drilled."

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Heritage Highlights 2010 Activities

Heritage Highlights 2010 Activities

Tuesday, April 19, 2011
Heritage Oil plc

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."

Heritage to Commence Multi-Well Exploration Program at Miran Block

Heritage to Commence Multi-Well Exploration Program at Miran Block

Monday, April 18, 2011
Heritage Oil plc

Heritage Oil provided an update on the work program and development options for the Miran Block in the Kurdistan Region of Iraq ("Kurdistan").

Highlights

• Rig secured to commence a multi-well exploration and appraisal drilling campaign on the Miran Block
• Miran West-3 well scheduled to spud in July and is estimated to take 160 days to drill and test
• It is planned to undertake a comprehensive testing program
• 3D seismic program progressing with the first batch of data being analyzed
• 2D seismic program to commence in the summer to define other potential prospects on the Block
• Discussions with the Kurdistan Regional Government (the "KRG") continue regarding fast-track development of the gas

Drilling Program

Heritage has signed a rig contract with DaQing International to supply the DQ037 2000HP rig to commence a multi-well exploration and appraisal drilling campaign on the Miran Block. The first well in this continuous drilling campaign will be the Miran West-3 well, which is an approximate 4 kilometer step out appraisal of the major Jurassic gas discovery made by the Miran West-2 well.

The Miran West-3 well, which is scheduled to spud in July, will take an estimated 160 days to drill and test and is targeting the flanks of the Jurassic structure, with the benefit of the current 3D seismic survey. The well will appraise the Upper and Lower Cretaceous reservoirs whilst drilling to its primary Jurassic objective, with an estimated total depth of approximately 3,800 meters. The well bore will be angled to increase the frequency of fracture penetration and orientated in the optimal direction for the interception of open fractures. It is planned to undertake a comprehensive testing program targeting numerous potential reservoir horizons.

On completion of this well the rig will move to drill the Miran West-4 appraisal well. A second rig is being sourced to drill the Miran East-1 exploration well in the fourth quarter of this year, at which point Heritage will have two rigs operating in country.

Seismic Acquisition

Heritage is currently acquiring 730 square kilometers of 3D seismic across the Miran Block to help define further appraisal drilling locations and fully exploit fracture networks. This is believed to be the largest ever 3D seismic program undertaken to date, in Kurdistan. The data will be analyzed in separate tranches to expedite understanding of the structures and the first batch of 3D seismic data, covering 180 square kilometers, is currently being processed.

In addition, 180 kilometers of new 2D seismic data will be acquired within the Block in the summer of 2011 to define other potential prospects.

Gas Monetization

Discussions with the KRG over the fast-tracked phased development of the Miran Field have continued. The KRG has outlined their favored development options for gas utilization and the initial priority will be to satisfy local gas demand by supplying produced gas on commercial terms to local power stations and other end-users in the Sulymaniyah region in 2013. Early production of the gas will also result in early associated condensate and oil production. This will then be followed by the export of gas to Turkey/Europe and full production of the oil and condensate zones enabling full development of the field.

Tony Buckingham, CEO, commented, "The signing of the multi-well rig contact and expansion of the seismic programs demonstrates our commitment to exploring and developing the Miran Field. The initial discussions with the KRG have been very constructive and could lead to the fast-tracked development of the field, which has the potential to benefit our shareholders significantly, and contribute to the further development of the region as well as generate revenue to be shared by all peoples of Iraq."