Heritage Oil Plc (LSE: HOIL), an independent upstream exploration and production company, announces that Shoreline Natural Resources Limited ("Shoreline"), a special purpose private Nigerian company formed between a subsidiary of Heritage and a local Nigerian partner, Shoreline Power Company Limited ("Shoreline Power"), has reached agreement to acquire, by way of assignment, a 45% participating interest in a producing oil mining lease in Nigeria ("OML 30"), together with a 45% interest in other assets under the joint operating agreement for OML 30 (the "Acquisition Assets"), for a total cash consideration of US$850 million, net of costs (the "Proposed Acquisition"). The vendors of the Acquisition Assets are The Shell Petroleum Development Company of Nigeria Limited ("Shell"), Total E&P Nigeria Limited ("Total") and Nigerian Agip Oil Company Limited ("ENI" and together with Shell and Total, the "Vendors") who each own participating interests of 30%, 10% and 5% in the Acquisition Assets, respectively. The remaining 55% participating interest is held by the Nigerian National Petroleum Corporation ("NNPC").

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There will be a conference call for analysts at 9:00am, on Monday 2 July, to be hosted by Paul Atherton, Chief Financial Officer. For further information, contact Stephanie Power at FTI Consulting on + 44 (0) 20 7269 7277 or [email protected].

When completed, the Proposed Acquisition will result in a material change in production and reserves. Net production is expected to increase to c.11,350 bopd from 605 bopd, based on the relative financial contribution by Heritage to Shoreline. Heritage also expects to achieve a 356% increase in net proved and probable reserves from 61 mmbbls to a management estimate of 278 mmbbls.

It is expected that OML 30 will be cash generative immediately following Completion. Heritage intends to use this cash flow to develop and explore the lease area and its existing portfolio as well as pursuing additional value generating opportunities.

Heritage believes there are many opportunities to develop the existing fields in OML 30 and increase production. In the short term, refurbishing the gas lift system in producing wells and non-producing existing wells to be re-started is expected to increase and stabilise production. OML 30 includes over 200 wells, more than half of which are currently in production. Pipeline repairs should restore production from many wells that were vandalised during the period from 2006 to 2009. In the medium term, existing wells can be worked over to improve completions and install gas lift in wells without artificial lift. In the longer term, drilling will target additional reservoir intervals based on the significant number of proved drilling locations. Plans include drilling of over 200 new wells and restoring approximately 60 wells to production with a focus on horizontal drilling. The lease also contains deeper exploration targets already identified on 3D seismic. Higher gas prices in the future may result in the development of estimated gross reserves of 2.5 Tcf of gas.

Shoreline is structured to meet the criteria required to be classified under Nigerian law as an indigenous Nigerian company. Shoreline Power and its affiliates comprise a leading energy and infrastructure group based in Nigeria and operating in several African countries. Shoreline Power has, over the years, built a strong and respected network of relationships in the Nigerian oil and gas community. Combined with Heritage’s strong technical team with relevant geographic expertise, the Company believes this partnership will establish Shoreline as one of the leading indigenous companies in the oil industry in Nigeria. Shoreline’s integration within the oil industry in Nigeria is expected to be reinforced through an advisory board which will look to include influential stakeholders.

Nigeria has proved reserves of 37.2 bnbbls, the largest in Sub-Saharan Africa, the second largest in Africa and the tenth largest in the world

When completed, the Proposed Acquisition will create an exploration and production oil and gas company with a listing on the Premium Listing segment of the Official List of the United Kingdom Listing Authority ("UKLA"). The Company will have a significant portfolio of geographically diverse assets with access to international capital markets. Heritage will continue to focus on bringing its development assets into production and pursuing additional high-impact exploration opportunities.

Heritage, together with its Nigerian partner, Shoreline Power, has established Shoreline, a special purpose private Nigerian company, which on 29 June 2012, entered into an agreement with Shell, Total and ENI (the "Acquisition Agreement") to acquire a 45% participating interest in OML 30, a producing oil mining lease in Nigeria, together with a 45% interest in other assets under the joint operating agreement for OML 30, which includes a segment of the Trans Forcados pipeline, for a total cash consideration of US$850 million, net of costs.

Shoreline is structured to meet the criteria required under Nigerian law to be classified as an indigenous Nigerian company, with 55% of its equity interest held by Shoreline Power, a leading local energy and infrastructure company, and the remaining 45% held by Heritage (through a wholly-owned subsidiary). The economic rights of Heritage and Shoreline Power in Shoreline differ from the equity division and are reflected by the dividend entitlements set out in the Shoreline shareholders’ agreement, which will initially reflect the respective capital contributions of Shoreline Power and Heritage to Shoreline.

The Proposed Acquisition and certain terms related to the payment and financing of the consideration payable in respect of the Proposed Acquisition are subject to the approval of the Company’s shareholders, which approval will be sought at an extraordinary general meeting of the Company expected to be held in August 2012 (the "EGM"). A shareholder circular convening the EGM and seeking the necessary approvals (the "Circular") will be published by the Company in due course alongside a prospectus (the "Prospectus") containing the required disclosure in respect of: (i) the admission of new shares to be issued by Heritage in connection with the financing of the Proposed Acquisition, as described below, to the Premium Listing segment of the Official List of the UKLA and to trading on the Main Market of the London Stock Exchange ("LSE"); and (ii) the admission of the existing share capital of Heritage, as enlarged by the Proposed Acquisition to the Premium Listing segment of the Official List of the UKLA and to trading on the Main Market of the LSE, at Completion ("Admission").

The Proposed Acquisition will be financed by a US$550 million secured bridge finance facility (the "Standard Bank Bridge Facility") provided by Standard Bank of South Africa ("Standard Bank"), and an underwritten rights issue ("Rights Issue") raising proceeds of up to US$370 million (as such amount may be reduced by the proceeds of any capital raising prior to the launch of the Rights Issue). The Company and J.P. Morgan Securities Ltd. ("JPMSL") have entered into a standby underwriting commitment under which the Company agrees to conduct, and JPMSL agrees to underwrite, an equity raising of up to US$370 million (as such amount may be reduced by the proceeds of any capital raising prior to the launch of the Rights Issue) by the Company. The standby underwriting commitment contemplates a further underwriting agreement being entered into in respect of the Rights Issue prior to the publication of the Circular and Prospectus. JPMSL is acting as sole sponsor, joint global coordinator and joint bookrunner in respect of the Rights Issue and any such capital raising. Standard Bank Plc is acting as joint global coordinator and joint bookrunner in respect of the Rights Issue and any such capital raising. Canaccord Genuity Limited ("Canaccord") has undertaken to underwrite 27% of the amount to be raised under the Rights Issue and is acting as lead manager in respect of the Rights Issue and any such capital raising. The proceeds of the Rights Issue will be applied toward the payment of: (i) a deposit of US$85 million (the "Deposit"); (ii) up to US$215 million, being the balance of the consideration (less the Deposit) not financed by the Standard Bank Bridge Facility; and (iii) the estimated costs associated with the Proposed Acquisition (US$70 million). The Deposit is initially being

financed from the Company’s existing cash resources and, on signing of the Acquisition Agreement, a portion of the Deposit representing 1% of the market capitalisation of Heritage, as is permitted under the Listing Rules of the UKLA, was paid to the Vendors. The balance of the Deposit was paid into an escrow account on signing of the Acquisition Agreement, where it will be held until shareholder approval in respect of the payment terms applicable to such balance amount is obtained at the EGM, following which the entire Deposit will be non- refundable in certain circumstances. If shareholder approval is not obtained at the EGM, the balance of the Deposit held in escrow will be returned to Shoreline and subsequently repaid to the Company.

In order for the Company to have certainty of funds available during the period between the signing of the Acquisition Agreement and the receipt of the Rights Issue proceeds, the Company has entered into a bridge facility provided by JPM Chase Bank N.A. under which US$215 million will be made available to Heritage, and on-lent to Shoreline (the "JPM Bridge Facility"). The JPM Bridge Facility and the Standard Bank Bridge Facility are initially secured by assets of Shoreline and certain asset guarantees and share pledges of Heritage and its subsidiaries (the "Heritage Group"); however, following satisfaction of certain release conditions, including Completion, there will be no recourse to the Heritage Group under the Standard Bank Bridge Facility. Following Completion, Shoreline plans to refinance the Standard Bank Bridge Facility by implementing a long-term lending facility in respect of, and secured by, its interest in OML 30, arranged by Standard Bank.

The Proposed Acquisition is classified as a reverse takeover under the Listing Rules of the UKLA. Consequently, with effect from Monday 2 July 2012, listing of the ordinary shares in the capital of the Company ("Ordinary Shares") and of Heritage Oil Corporation’s exchangeable shares (together with the Ordinary Shares, the "Heritage Shares") on the Official List of the UKLA and trading of the Heritage Shares on the Main Market of the LSE will be suspended until such time as Heritage has published sufficient information in the public domain to allow Heritage to assess the impact of the Proposed Acquisition on its financial position and inform investors accordingly. The Company is seeking to publish such information as would be sufficient to allow the suspension to be lifted as soon as is practicable, and currently expects this to be at the time of publication of the Circular and Prospectus, which will be posted to shareholders as soon as is practicable following the date of this Announcement.

The Proposed Acquisition is conditional on, amongst other things: (i) approval by shareholders of the Company of the relevant resolutions at the EGM; (ii) confirmation from the UKLA that the Ordinary Shares will be admitted to the Official List of the UKLA at Completion or as soon as practicable thereafter; and (iii) the consent of the Nigerian Minister of Petroleum Resources to the Proposed Acquisition. For the purposes of the condition set out at (ii) above, it is expected that such confirmation shall be treated as having been given where the Company and the UKLA have taken all steps necessary for Admission and where the Company has not received any indication that Admission will not take place

J.P. Morgan Limited is acting as sole financial adviser in respect of the Proposed Acquisition.

OML 30 is located onshore in the delta in Nigeria, less than 50 kilometres east of Warri in Southern Nigeria. The lease covers 1,097 square kilometres and includes eight main producing fields with oil and gas contained in numerous stacked reservoirs, and the Acquisition Assets include a 45% interest in the segment of the Trans Forcados pipeline between the Eriemu manifold and the Forcados River manifold (the "OML 30 Trans Forcados Pipeline Segment"). Based on current information provided by the Vendors, crude production from OML 30 is averaging c.35,000 bopd and Heritage management, based on due diligence to date, estimates gross proved and probable reserves of 707 mmbbls.

The fields in OML 30 include extensive infrastructure, including nine flow stations with a combined capacity in excess of 400,000 bopd, pipelines, gas lift compression and gas compressors for artificial gas lift. The Acquisition Assets also include a 45% interest in the OML 30 Trans Forcados Pipeline Segment, which pipeline has a capacity of 850,000 bopd and transports liquids from OML 30 and several other blocks, generating tariff revenue from third parties. Production from OML 30 is transported by the Trans Forcados pipeline to the Forcados export terminal and sold at a premium to Brent Crude.

The OML 30 lease extends to June 2019 and, based on current Nigerian law, Heritage expects it to be renewed thereafter.

Following Completion, the operatorship of OML 30 will transfer from Shell to the Nigerian Petroleum Development Company, a subsidiary of NNPC.