27 July 2010

Heritage Oil Plc

Heritage Oil Plc (LSE: HOIL), an independent upstream exploration and production company announces today that Heritage Oil & Gas Limited has completed the disposal of its entire interests in Block 1 and Block 3A (the "Assets") in Uganda. Tullow Uganda Limited ("Tullow") has paid cash consideration of US$1.35 billion and an additional contractual settlement amount of US$100 million, of which Heritage has received and retained US$1.045 billion with an additional approximately US$405 million in part deposited with the Government of the Republic of Uganda ("Government") and in part held in escrow pending resolution of a tax dispute with the Ugandan Revenue Authority (the "URA").

Tullow has paid the agreed cash consideration of US$1.35 billion

• A further US$100 million was paid by Tullow in full and final settlement of a potential contractual dispute between the parties relating to the contingent deferred amount

• Heritage has received cash of US$1,045,075,000

• Heritage has disputed a tax assessment of US$404,925,000 and deposited US$121,477,500 with the URA, representing 30% of the disputed amount

• The balance of US$283,447,500 remains in an escrow account and will be released following resolution between Government and Heritage of a mechanism to resolve the tax dispute

• Heritage intends to pay a special dividend of up to 100 pence per share in August 2010

The disposal of the Assets in Uganda has been completed and Tullow has paid cash of US$1.45 billion, of which Heritage has received and retained US$1.045 billion.

Heritage has deposited US$121,477,500 with the URA, representing 30% of the disputed tax assessment of US$404,925,000 which the URA determines arises from the sale of the Assets. Heritage continues to work with Government to agree a way forward for the tax dispute to be resolved. US$283,447,500 has been retained in escrow, pursuant to an agreement between Heritage, Tullow and Standard Chartered Bank pending resolution between Government and Heritage of a mechanism to resolve the tax dispute. This could include the provision of a guarantee or letter of credit from an international bank to Government to provide security for the remainder of the disputed amount.

A further US$100 million was paid by Tullow in full and final settlement of a potential contractual dispute between the parties on the interpretation of the sale and purchase agreement provisions relating to the contingent deferred amount, which could have been payable up to the amount of US$150 million dependent on certain conditions being achieved.

There are now no further monies due to Heritage under that agreement apart from a working capital adjustment with respect to the Assets at the effective date of the transaction of 17 January 2010 which will be agreed in the next few months with Tullow.

Receipt of the funds provides Heritage with a strong balance sheet with cash of approximately US$1.2 billion. It is the Company’s intention to return a portion of these funds to shareholders through a special dividend of up to 100 pence per share in August 2010. Further details of the dividend, including a timetable, will be provided shortly. The remainder of Heritage’s funds, of over US$0.7 billion will be allocated between accelerating the work programmes on the existing portfolio and potential acquisitions.