Heritage Oil Issues Interim Management Statement

PRODUCING ASSET

Russia

Production for the first quarter 2011 averaged 431 bopd, 12% lower than in the fourth quarter 2010. A temporary problem with power generation, that has since been rectified, caused the decrease in production. Further development work is being undertaken in 2011 and drilling operations have now commenced on a horizontal well. This is the first horizontal well to be drilled in the licence and is expected to achieve a material increase in production. Drilling and completion activities are scheduled to take 60 days.

CORPORATE

As at 31 March 2011, Heritage had a cash position of more than $570 million, excluding amounts related to the tax dispute of approximately $405 million, which is more than sufficient to cover the current 2011 work programme.

On 26 April, Heritage announced the commencement of a share buy back programme of up to $100 million. To date 2,070,631 Ordinary Shares have been bought back and are held in treasury. Consequently Heritage has 286,210,299 Ordinary Shares in issue (excluding treasury shares) as well as 2,953,508 exchangeable shares of no par value of Heritage Oil Corporation each carrying one voting right in Heritage.

The total number of voting rights in Heritage, excluding treasury shares as at 17 May 2011, is 289,163,807

As announced on 16 May 2011, Heritage Oil & Gas Limited ("HOGL"), a wholly owned subsidiary of Heritage, has commenced arbitration proceedings in London against the Ugandan Government.  HOGL is seeking a decision requiring, among other things, the return of approximately $405 million currently on deposit with the Ugandan Revenue Authority or in escrow with Standard Chartered Bank following HOGL's sale of its interests in Blocks 1 and 3A in Uganda on 26 July 2010.

Annual General Meeting

The 2011 Annual General Meeting will be held on Monday, 20 June 2011, at 3.00pm at 22 Grenville Street, St Helier, Jersey.

Tony Buckingham, Chief Executive Officer, commented:

"We are making operational progress across our portfolio with a focus on work programmes in Kurdistan being accelerated and expanded and fast track development options being considered and discussed with the KRG.  We also continue to evaluate new opportunities in existing and new areas that have the potential to generate significant shareholder value."