Targeted projects include:

· Kurdistan, Iraq

- Conversion of Memoranda of Understanding (MOUs) in Kurdistan, Iraq to production sharing agreements (PSAs). K Petroleum Company (KPC), a 50%- owned subsidiary of Heritage, has entered into two MOUs with the Oil, Gas and Petrochemical Establishment of the Government of the Autonomous Region of Kurdistan, Iraq to undertake field studies over an area exceeding 1,300 square kilometres.

- Iraq’s new constitution, initiated in 2005, gives the Government of the Autonomous Region of Kurdistan the exclusive authority to enter into oil and gas licenses over exploration areas and non-producing fields within its territory. KPC and Heritage have kept the Ministry of Oil in Baghdad fully informed of all developments.

· Russia

- Appraise further opportunities to acquire additional development and or production projects.

- Commence the development of the West Chumpass Field in West Siberia. Heritage acquired a 95% interest in this field in the fourth quarter of 2005. An office has been established in the region and the acquisition of up to 200 km of 2D seismic commenced in March 2006. The acquisition of a 3D seismic survey of up to 300 sq km is being planned for the fourth quarter of this year.

- Early production from the West Chumpass field is being considered for the end of this year by re-entering an existing well and trucking the oil. Commercial production is planned to commence in 2007 from a five-well drilling program slated to commence in the final quarter of this year

· Southern Iraq

- Heritage Middle East Limited, a wholly-owned subsidiary of Heritage, continues to negotiate with the Ministry of Oil in Baghdad to obtain MOUs to undertake exclusive detailed field studies and to prepare development plans over a number of oil fields.

· Uganda

- Drill the Kingfisher Prospect from the shore of Lake Albert, Block 3A. Kingfisher is a large prospect capable of containing several hundred million barrels of reserves. Heritage has a 50% working interest in and is the operator of the license.

· Other

- Heritage is considering the sale of certain of its assets, which are considered non-core, in order to maximize shareholder value and generate cash to finance more promising opportunities in the priority strategic areas being pursued by the Company.

The Company’s business plan for 2006 includesthe following drilling programs:

· Russia

- It is planned to re-enter an existing well that produced 462 bpd under production test, in addition to the previously-mentioned five-well drilling program.

· Sultanate of Oman

- An appraisal well in the West Bukha field, Block 8, is scheduled to be drilled in the second quarter of 2006. Heritage has a 10% working interest in the license.

· Uganda

- It is planned to drill the Kingfisher Prospect, Block 3A, from the shore of Lake Albert. The Kingfisher Prospect has been mapped by two seismic programs.

· Republic of Congo

- Following the ratification of the permit by the Government of Congo, an exploration well in the Noumbi Permit is contemplated. Heritage has a 14% working interest in the license.

- An exploration well to appraise a shallower potential target in the Kouakouala field. Further production wells are being considered. Heritage has a 25% working interest in the license.

In addition, Heritage is in negotiation with a number of governments and entities in the Middle East, Russia and the CIS for the purchase of additional attractive assets, and is focusing on opportunities that have the potential to increase the Company’s reserve base and short and medium-term production prospects.