· Acquisition of 3D seismic planned to begin across the Miran Block in the fourth quarter of 2010
· Well planning has commenced for an exploration well on the Zamzama North Licence, Pakistan. Recent floods in our licence area have delayed the well into the first quarter of 2011
· Production expected to increase in Russia with additional development drilling
Tony Buckingham, Chief Executive Officer, commented:
"We are encouraged with progress of the Miran West-2 well and will provide an update when we have reached total depth. We have a very attractive prospective portfolio that has the potential to create significant shareholder value in the next year through several high impact exploration wells. In addition, the proceeds received from the disposal of the Ugandan assets leave the Company with a strong balance sheet capable of executing the current strategy and we are actively looking for new acquisitions and opportunities"
Heritage's 2010 interim report is available on its website at www.heritageoilplc.com
CHAIRMAN'S & CHIEF EXECUTIVE OFFICER'S REVIEW
The sale of our Ugandan assets has placed Heritage in a strong financial position with approximately $700 million of cash, excluding amounts related to the tax dispute, after the sale of the Ugandan assets and payment of the special dividend of 100 pence per share. We believe the sale of our Ugandan assets is one of the largest oil deals in Sub-Saharan Africa, moving the Ugandan oil industry a significant step closer to full development. Our activities in Uganda over the last 13 years have created material benefits for both our shareholders and the people of Uganda. The monetisation of these assets demonstrates clearly the success of Heritage's strategy of first mover advantage supported by sound technical and operating expertise. We now have the financial flexibility to consider new opportunities to create value, whilst at the same time accelerating programmes in our existing core areas where we continue to make progress. In Kurdistan drilling continues on the Miran West structure and elsewhere in our portfolio seismic acquisition continues in several areas to support planning for new drilling activity. Delays in the completion of the disposal of our Ugandan assets absorbed more management time than envisaged. This has caused minor delays in some areas, but we are now firmly focused on our diversified high impact exploration programmes.
Operational Overview
Kurdistan
The Miran West discovery was made in the first quarter of 2009, confirming the presence of oil in the structure. The Miran West-2 well commenced drilling on 26 November 2009 and is currently drilling ahead on prognosis at a depth of 3,468 metres, close to the base of the Jurassic section. Data acquired after drilling operations commenced indicates that the Miran West-2 well is positioned optimally to test deeper exploration objectives with further potential for substantial quantities of hydrocarbons.
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