Final Results

MERCOM OIL SANDS PLC

FINAL RESULTS FOR THE 12 MONTHS TO 31 MARCH 2013

Chairman's Statement

I am pleased to present my Chairman's Statement for the Company's first annual report for the period ended 31 March 2013. The Company was incorporated in England and Wales under the Companies Act 2006, as a public company, on 15 February 2012. It successfully raised £3,350,000 (before costs) by way of placing of 35,500,000 new Ordinary shares and was admitted to the AIM market on 29 May 2012. It was the Company's intention at the time of admission to proceed with the implementation of a Farm-in agreement with Norwegian Oil Sands Corp. to acquire a 50 per cent. share of the Chard Oil Sand leases in Canada. Full details of the Farm-in agreement and the oil sands leases are set out in the Admission Document.

On 19 June 2012, John Zorbas joined the Board as a joint CEO alongside Kim Berknov. On 31 July Kim Berknov, who had overseen the creation of Mercom Oil Sands PLC, stepped down from the Board as joint CEO. During the period the Company under the leadership of John Zorbas decided to undertake a review of the Farm-in Agreement and as a result it was agreed with Norwegian Oil Sands Corp. that certain of the contractual deadlines would be extended from 31 July 2012 until 31 October 2012. Upon reviewing the CEO's findings, the Board concluded that the merits of the transaction had been overtaken by subsequent events and the Company sought to negotiate a revision to the terms of the Farm-in agreement. The negotiations broke down in November with Norwegian Oil Sands Corp., and it was declared the Company to be in breach of its contractual obligations. The matter is currently the subject of an agreed arbitration procedure in Canada.

New investment strategy

On 24 May 2013, the Company held a General Meeting to secure shareholder support for a new strategy, which was duly approved. The new strategy is to create shareholder value through the investment of its cash assets in the natural resources and energy sectors, with a focus on oil and gas. The Board of Mercom believes this will generate better returns while bank deposit rates remain low and its Farm-in agreement with Nordic Petroleum ASA is being resolved. The Group had cash resources of approximately £1.5m as at 31 March 2013.

Investments may be made in quoted shares, units in open ended investment companies and exchange traded funds, commodities, future contracts, or any type of financial instrument that the Board deems to be beneficial to increasing shareholder value. It intends to buy shares and/or financial instruments which it considers to be fundamentally undervalued and offer scope for material returns for shareholders within 5 years. It is not intended that investments will be for stakes of greater than 20 per cent. in the investee company or fund. It is not intended for there to be cross holdings in respect of investments. However, this will not be considered as a restriction in the Company's investing policy, as the Company might find an opportunity which requires it to take a stake of more than 20% which is beneficial to the Company. The threshold of 20 per cent can be surpassed as long as there is a unanimous Board approval accompanied by an independent valuation prepared by a professional or organisation in support of the acquisition price.

There will be no geographic, or company specific concentration restrictions or limit on the number of investments made. Whilst the Directors intend to take into account funds available for investment when assessing the amount of any investment and the spread of investments, it is not proposed that there be any maximum investment limit. Investment will be long only and the Group does not intend to trade in investments. It is proposed that investments will be ungeared.

The Company will publish a quarterly update on its NAV. It is not intended to appoint an investment manager to manage the investments. Investments will be focused on investment opportunities in good quality mid-tier companies offering upside potential but which have significant existing track records. The Company will also explore speculative investments. The Directors are already in the process of identifying investment opportunities which match the strategy, and of evaluating the potential profitability and risks associated with those discovered so far. The General Meeting and the Resolutions approved by the shareholders have created aclarity of purpose and enabled the Board to move forward with renewed confidence.

Dr Patrick Cross

Chairman

24 September 2013

Enquiries:

Libertas Capital Corporate Finance Ltd +44 (0)203 697 9495

Sandy Jamieson

Cardew Group +44 (0)20 7930 0777

Shan Shan Willenbrock

The Company's annual report are being sent to shareholders and will shortly be available on the Company's website at www.mercomoil.com.

Mercom Oil Sands PLC

Consolidated Statement of Comprehensive Income

For the period ended 31 March 2013

Mercom Oil Sands PLC

Consolidated and Company Statements of Financial Position

For the period ended 31 March 2013

Mercom Oil Sands PLC

Consolidated and Company Statements of Cash Flows

For the period ended 31 March 2013

Mercom Oil Sands PLC

Consolidated and Company Statement of Changes in Equity

For the period ended 31 March 2013

1. BASIS OF PRESENTATION

Basis of presentation

The financial statements have been prepared in accordance with International Financial Reporting Standards ("IFRS") as issued by the International Accounting Standards Board ("IASB") and adopted by the European Union.

Basis of consolidation

The Group financial statements include the financial statements of the Company and its subsidiary undertaking Mercom Oil Sands Canada Inc., a company incorporated in Canada. The results of subsidiary undertakings sold or acquired are included in the Consolidated Statement of Comprehensive Income up to, or from the date control passes. Intra group sales and profits are eliminated fully on consolidation.

Functional currency

The presentational and functional currency of the Group and Company is U.K Sterling.

Significant accounting estimates and judgments

The preparation of these financial statements requires management to make judgments and estimates that affect the reported amounts of assets and liabilities at the date of the financial statements and reported amounts of expenses during the reporting period. Actual outcomes could differ from these judgments and estimates. The financial statements include judgments and estimates which, by their nature, are uncertain. The impacts of such judgments and estimates are pervasive throughout the financial statements, and may require accounting adjustments based on future occurrences. Revisions to accounting estimates are recognised in the period in which the estimate is revised and the revision affects both current and future periods.

Significant assumptions about the future and other sources of judgments and estimates that management has made at the statement of financial position date, that could result in a material adjustment to the carrying amounts of assets and liabilities, in the event that actual results differ from assumptions made, relate to, but are not limited to, the following:

· Management's position that there are no income tax considerations required within these audited financial statements; and

· The carrying value of trade and other receivables.

Going concern

These financial statements have been prepared in accordance with International Financial Reporting Standards ("IFRS") applicable to a going concern, which assume that the Company will be able to realise its assets and discharge its liabilities in the normal course of operations. The Company has no current source of operating revenues and its capacity to operate as a going concern in the near-term will likely depend on its ability to continue raising equity or debt financing. There can be no assurance that the Company will be able to continue to raise funds in which case the Company may be unable to meet its obligations. Should the Company be unable to realise on its assets and discharge its liabilities in the normal course of business, the net realisable value of its assets may be materially less than the amounts recorded in the Consolidated and Company Statements of Financial Position. The financial statements do not include adjustments to amounts and classifications of assets and liabilities that might be necessary should the Company be unable to continue operations.

2. SIGNIFICANT ACCOUNTING POLICIES

Exploration and evaluation assets

(i) Capitalised costs

Exploration and evaluation expenditures include the costs of maintaining licenses, costs associated with exploration and evaluation activity, and the fair value (at acquisition date) of exploration and evaluation assets acquired in a business combination. Before legal rights to explore an area are obtained, exploration and evaluation expenditures are expensed as incurred. Expenditures associated with the acquisition of exploration and evaluation assets through a business combination or asset acquisition are capitalised and recognised as assets. Exploration and evaluation costs incurred thereafter are capitalised. Capitalised costs, including general and administrative costs, are only allocated to the asset to the extent that these costs can be related directly to operational activities in the relevant area of interest where it is considered likely to be recoverable by future exploitation or sale, or where the activities have not reached a stage which permits a reasonable assessment of the existence of reserves. Costs of extending agreements are not capitalised.

(ii) Depletion and amortisation

Capitalised costs related to each cost centre from which there is production will be depleted using the unit-of-production method based on proved petroleum and natural gas reserves, as determined by independent consulting engineers. The cost of significant development projects and undeveloped properties will be excluded from costs

subject to depletion until it is determined whether or not proved reserves are attributable to the properties or impairment has occurred. Estimated future costs to be incurred in developing proved reserves will be included and estimated salvage values are excluded from costs subject to depletion. In cost centers from which there has been no production, certain costs will not be subject to depletion until commercial production commences. No depletion has been calculated.

(iii) Impairment

Exploration and evaluation assets are assessed for impairment if (i) sufficient data exists to determine technical feasibility and commercial viability, and (ii) facts and circumstances suggest that the carrying amount exceeds the recoverable amount. Once the technical feasibility and commercial viability of the extraction of mineral resources in an area of interest are demonstrable, exploration and evaluation assets attributable to that area are first tested for impairment and then reclassified to mining property and development assets within property, plant and equipment. Recoverability of the carrying amount of the exploration and evaluation assets is dependent on successful development and commercial exploitation, or alternatively, sale of the respective areas of interest.

(iv) Asset retirement obligations

Asset retirement obligations include present obligations where the Group will be required to retire tangible long-lived assets such as producing well sites and facilities. The asset retirement obligation is measured at the present value of the expenditure expected to be incurred using a risk-free discount rate. The associated asset retirement cost is capitalised as part of the cost of the related long-lived asset. Changes in the estimated obligation resulting from revisions to estimated timing, amount of cash flows, or changes in the discount rate are recognised as a change in the asset retirement obligation and the related asset retirement cost. Increases in asset retirement obligations resulting from the passage of time are recorded as accretion of asset retirement obligation in the statement of operations. The Group has not recognised any asset retirement obligations as of 31 March 2013.

Investments

Fixed asset investments are stated at cost less amounts written off.

Corporation tax

Corporation tax on the profit or loss for the period presented comprises current and deferred tax. Corporation tax is recognised in profit or loss except to the extent that it relates to items recognised directly in equity, in which case it is recognised in equity.

2. SIGNIFICANT ACCOUNTING POLICIES

Corporation tax

Current tax expense is the expected tax payable on the taxable income for the period, using tax rates enacted or substantively enacted at period end.

Deferred tax is recorded using the asset and liability method, providing for temporary differences, between the carrying amounts of assets and liabilities for financial reporting purposes and the amounts used for taxation purposes. The following temporary differences are not provided for: goodwill not-deductible for tax purposes; the initial recognition of assets or liabilities that affect neither accounting or taxable loss; and differences relating to investments in subsidiaries to the extent that they will probably not reverse in the foreseeable future. The amount of deferred tax provided is based on the expected manner of realisation or settlement of the carrying amount of assets and liabilities, using tax rates enacted or substantively enacted at the period end date.

A deferred tax asset is recognised only to the extent that it is probable that future taxable profits will be available against which the asset can be utilised. To the extent that the Group does not consider it probable that a future tax asset will be recovered, the tax asset is not recognised.

Deferred tax assets and liabilities are offset when there is a legally enforceable right to set off current tax assets against current tax liabilities and when they relate to income taxes levied by the same taxation authority and the Group intends to settle its current tax assets and liabilities on a net basis.

Cash and cash equivalents

Cash and cash equivalents consist of cash on deposit with banks and short-term interest-bearing investments with maturities of 90 days or less from the original date of acquisition. Cash and cash equivalents are recorded at fair value and changes in fair value would be reflected in the Consolidated Statement of Comprehensive Income.

Warrants

Warrants issued to consultants are accounted for using the fair value method and result in share issue costs and a credit to warrants when the warrants are issued. When warrants are exercised, the corresponding warrant fair value and the proceeds received by the Group are credited to share capital. When warrants expire, the corresponding fair value is credited to contributed surplus.

Loss per share

Basic loss per share is calculated using the weighted average number of shares outstanding. Diluted loss per share assumes that any proceeds from the exercise of dilutive stock options and warrants would be used to repurchase Ordinary shares at the average market price during the period, with the incremental number of shares being included in the denominator of the diluted earnings per share calculation.

During the period ended 31 March 2013, all issued and outstanding warrants and options were anti-dilutive and were excluded from the diluted loss per share calculations.

Foreign currency translation

The functional and presentational currency of the Group is U.K Sterling. Transactions in currencies other than the functional currency are recorded at the rates of exchange prevailing on dates of transactions. At each period end date monetary assets and liabilities denominated in foreign currencies at the reporting date are translated to U.K Sterling at the exchange rate at that date. Foreign exchange differences arising on translation are recognised in the Consolidated Statement of Comprehensive Income. Non-monetary assets and liabilities that are measured at historical cost are translated using the exchange rate at the date of the transaction.

2. SIGNIFICANT ACCOUNTING POLICIES

Impairment of non-financial assets

At each period end date, non-financial assets are reviewed for impairment if there is any indication that the carrying amount may not be recoverable. If any such indication is present, the recoverable amount of the asset is estimated in order to determine whether impairment exists. Where the asset does not generate cash flows that are independent from other assets, the Group estimates the recoverable amount of the cash-generating unit to which the asset belongs. Any intangible asset with an indefinite useful life is tested for impairment annually and whenever there is an indication that the asset may be impaired.

An asset's recoverable amount is the higher of fair value less costs to sell and value in use. In assessing value in use, the estimated future cash flows are discounted to their present value, using a pre-tax discount rate that reflects current market assessments of the time value of money and the risks specific to the asset for which estimates of future cash flows have not been adjusted.

If the recoverable amount of an asset or cash generating unit is estimated to be less than its carrying amount, the carrying amount is reduced to the recoverable amount. Impairment is recognised immediately as additional depreciation. Where an impairment subsequently reverses, the carrying amount is increased to the revised estimate of recoverable amount but only to the extent that this does not exceed the carrying value that would have been determined if no impairment had previously been recognised. A reversal is recognised as a reduction in the depreciation charge for the period.

Share issue costs

Costs incurred for the issue of Ordinary shares are deducted from share premium.

Revenue recognition

Revenue from the sale of petroleum and natural gas is recognised when the risks and rewards of ownership pass to the purchaser, including delivery of the product, the selling price is fixed or determinable and collection is reasonably assured. Oil and natural gas royalty revenue is recognised when received.

Financial Instruments

Financial assets

The Group classifies its financial assets into one of the following categories, depending on the purpose for which the asset was acquired. The Group's accounting policy for each category is as follows:

Fair value through profit or loss - This category comprises derivatives, or assets acquired or incurred principally for the purpose of selling or repurchasing it in the near term. They are carried in the Consolidated Statement of Financial Position at fair value with changes in fair value recognised in the Consolidated Statement of Comprehensive Income.

Loans and receivables - These assets are non-derivative financial assets with fixed or determinable payments that are not quoted in an active market. They are carried at cost less any provision for impairment. Individually significant receivables are considered for impairment when they are past due or when other objective evidence is received that a specific counterparty will default.

Held-to-maturity investments - These assets are non-derivative financial assets with fixed or determinable payments and fixed maturities that the Group's management has the positive intention and ability to hold to maturity. These assets are measured at amortised cost using the effective interest method. If there is objective evidence that the investment is impaired, determined by reference to external credit ratings and other relevant indicators, the financial asset is measured at the present value of estimated future cash flows. Any changes to the carrying amount of the investment, including impairment losses, are recognised in the Consolidated Statement of Comprehensive Income.

2. SIGNIFICANT ACCOUNTING POLICIES

Available-for-sale - Non-derivative financial assets not included in the above categories are classified as available-for- sale. They are carried at fair value with changes in fair value recognised directly in equity. Where a decline in the fair value of an available-for-sale financial asset constitutes objective evidence of impairment, the amount of the loss is removed from equity and recognised in profit or loss.

All financial assets except for those at fair value through profit or loss are subject to review for impairment at least at each reporting date. Financial assets are impaired when there is any objective evidence that a financial asset or a group of financial assets is impaired. Different criteria to determine impairment are applied for each category of financial assets, which are described above.

Financial liabilities

The Group classifies its financial liabilities into one of two categories, depending on the purpose for which the asset was acquired. The Group's accounting policy for each category is as follows:

Fair value through profit or loss - This category comprises derivatives, or liabilities acquired or incurred principally for the purpose of selling or repurchasing it in the near term. They are carried in the Statement of Financial Position at fair value with changes in fair value recognised in the Consolidated Statement of Income.

Other financial liabilities - This category includes promissory notes, amounts due to related parties and accounts payables and accrued liabilities, all of which are recognised at amortised cost.

The Group's financial instruments consist of the following:

Cash and cash equivalents Loans and receivables

VAT receivable Loans and receivables

Accounts payable and accrued liabilities Other financial liabilities

Future accounting changes

The following new standards, amendments to standards or interpretations are mandatory for the Group for the first time for the financial period beginning 15 February 2012, but are not currently considered to be relevant to the Group (although they may affect the accounting for future transactions and events):

· Amendment to IFRS 1, 'Presentation of Financial Statements' on Other Comprehensive Income.' The amendment confirms the treatment of borrowing costs relating to qualifying assets for which the commencement date for capitalisation is before the date of transition to IFRSs.

· Amendments to IFRS 7 'Financial Instruments: Disclosures'. These amendments are intended to provide greater transparency around risk exposures when a financial asset is transferred but the transferor retains some level of continuing exposure in the asset. The amendments also require disclosures where transfers of financial assets are not evenly distributed throughout the period.

· Amendment to IAS 12, 'Income taxes'. Deferred tax accounting for investment property at fair value' IAS 12 requires an entity to measure the deferred tax relating to an asset depending on whether the entity expects to recover the carrying amount of the asset through use or sale. It can be difficult and subjective to assess whether recovery will be through use or through sale when the asset is measured using the fair value model in IAS 40 Investment Property. The amendment provides a practical solution to the problem by introducing a presumption that recovery of the carrying amount will, normally, be through sale.

2. SIGNIFICANT ACCOUNTING POLICIES

The following new standards, amendments to standards and interpretations have been issued, but are not effective for the financial period beginning 15 February 2012 and have not been early adopted:

· IFRS 9, 'Financial instruments', issued in November 2009 and effective from 1 January 2015. IFRS 9 represents the first phase of the IASB's project to replace IAS 39 'Financial Instruments: Recognition and Measurement'. It sets out the classification and measurement criteria for financial assets and liabilities and requires all financial assets, including assets currently classified under IAS 39 as available for sale, to be measured at fair value through profit and loss unless the assets can be classified as held at amortised cost. Qualifying equity investments held at fair value may have their fair value changes taken through other comprehensive income by election.

· IFRS 10, 'Consolidated Financial Statements', effective from 1 January 2013. This standard builds on existing principles by identifying the concept of control as the determining factor in which an entity should be included within the consolidated financial statements. The standard provides additional guidance to assist in determining control where this is difficult to assess.

· IFRS 11, 'Joint arrangements', effective from 1 January 2013. This standard establishes principles for financial reporting by parties to a joint arrangement.

· IFRS 12, 'Disclosure of interests in other entities', effective from 1 January 2013. This standard includes the disclosure requirements for all forms of interests in other entities, including joint arrangements, associates, structured entities and other off balance sheet vehicles.

· IFRS 13, 'Fair value measurement', effective from 1 January 2013. This standard aims to improve consistency and reduce complexity by providing a precise definition of fair value and a single source of fair value measurement and disclosure requirements for use across IFRSs. The requirements, which are largely aligned between IFRSs and US GAAP, do not extend the use of fair value accounting but provide guidance on how it should be applied where its use is already required or permitted by other standards within IFRSs or US GAAP.

· IAS 1, 'Other Comprehensive Income', effective from 1 January 2013. The main change resulting from these amendments is a requirement for entities to group items presented in other comprehensive income on the basis of whether they are potentially reclassifiable to profit or loss subsequently. The amendments do not address which items are presented in other comprehensive income.

· IAS 19 (Revised), 'Employee Benefits' effective from 1 January 2013. These amendments are intended to provide a clearer indication of an entity's obligations resulting from the provision of defined benefit pension plan and how those obligations will affect its financial position, financial performance and cash flow.

· IAS 27 (Revised), 'Separate Financial Statements' (Revised), effective from 1 January 2013 has the objective of setting standards to be applied in accounting for investments in subsidiaries, joint ventures, and associates when an entity elects, or is required by local regulations, to present separate (non-consolidated) financial statements.

· IAS 28 (Revised), 'Associates and Joint Ventures' (Revised), effective from 1 January 2013 prescribes the accounting for investments in associates and sets out the requirements for the application of the equity method when accounting for investments in associates and joint ventures.

· Amendment to IAS 32, 'Offsetting Financial Assets and Liabilities', effective from 1 January 2013 clarifies that the tax effect of a distribution to holders of equity instruments should be accounted for in accordance with IAS 32.

3. CAPITAL AND FINANCIAL RISK MANAGEMENT

The capital of the Group consists of shareholders' equity. The Group's objectives when managing capital are to safeguard the Group's ability to continue as a going concern in order to pursue the development of its mineral properties and to maintain optimal returns to shareholders and benefits for other stakeholders.

The Group manages its capital structure and makes adjustments to it in light of changes in economic conditions and the risk characteristics of the underlying assets. To maintain or adjust its capital structure, the Group may attempt to issue new shares or debt, dispose of assets, or adjust the amount of cash and cash equivalents.

The properties in which the Group currently has an interest are in the exploration and evaluation stage; as such the Group is dependent on external financing to fund its activities. In order to carry out the planned exploration and pay for administrative costs, the Group will spend its existing working capital and raise additional amounts as needed. The Group will continue to assess new properties and seek to acquire an interest in additional properties if it feels there is sufficient geologic or economic potential and if it has adequate financial resources to do so.

Management reviews its capital management approach on an ongoing basis and believes that this approach, given the relative size of the Group, is reasonable. There were no changes in the Group's approach to capital management during the period ended 31 March 2013. The Group is not subject to externally imposed capital requirements.

Credit risk

All the Group's cash and cash equivalents are held with well-known and established financial institutions. As such, management considers credit risk related to these financial assets to be minimal. The Group's maximum credit risk exposure is limited to the carrying value of its cash and subscriptions receivable. At 31 March 2013, the Group had no material amounts deemed to be uncollectible.

Commodity price risk

Commodity price risk is the risk that the fair value of future cash flows will fluctuate as a result of changes in oil and natural gas commodity prices. The nature of the Group's operations will result in exposure to fluctuations in commodity prices. The Group is currently in its development stage and as such the exposure to fluctuations in commodity prices is not actively managed. In the future, the Group may use commodity price contracts to manage exposure to fluctuations in pricing.

Interest rate risk

Interest rate risk is the risk that future cash flows will fluctuate as a result of changes in market interest rates. The Group does not have a material exposure to this risk as there are no outstanding debt facilities.

Liquidity risk

Liquidity risk is the risk that the Group will not be able to meet its financial obligations as they come due. The Group ensures, as far as possible, that it will have sufficient liquidity to meet its liabilities when due, without incurring unacceptable losses or harm to the Group's reputation.

The Group utilises authorisation for expenditures to further manage capital expenditures and attempts to match its payment cycle with available cash resources.

Foreign currency risk

The Group is exposed to foreign currency fluctuations on its cash which is denominated in U.K. Sterling and Canadian Dollars.

4. SEGMENTAL REPORTING

5. LOSS BEFORE TAXATION

6. EMPLOYEES

7. TAXATION

8. LOSS OF THE PARENT COMPANY

9. INVESTMENTS

10. EXPLORATION AND EVALUATION ASSETS

11. TRADE AND OTHER RECEIVABLES

12. TRADE AND OTHER PAYABLES

13. RELATED PARTY TRANSACTIONS AND BALANCES

14. SHARE CAPITAL

The fair value of the warrants issued during the period ended 31 March 2013, was estimated at £62,000 using the Black-Scholes option pricing model with the following assumptions:

Risk free interest rate 1.08 %

Expected dividend yield nil

Expected volatility 100 %

Expected life 3 years

Option pricing models require the input of subjective assumptions regarding the expected volatility. Volatility is difficult to ascertain given that the company is still in the development stage, therefore it has been set at 100%. Changes in assumptions can materially affect the estimate of fair value, and therefore, the use of the Black-Scholes option pricing model, as required by IFRS, may not provide a realistic measure of the fair value of the Company's warrants at the date of issue.

14. SHARE CAPITAL

On 24 May 2013 the Directors, by Special Resolution, were authorised to implement, at a future date to be approved by the Board, the reorganisation of the Company's share capital as follows:

a) the consolidation of the Company's share capital so that every 50 Ordinary shares of £0.001 in the issued share capital of the Company be consolidated into one Ordinary share of £0.05 (New Ordinary share). Each New Ordinary share would have the same rights and would be subject to the same restrictions as an existing Ordinary share.

b) following the consolidation in a) the sub division of each New Ordinary share into one Ordinary share of £0.001 and one Deferred share of £0.049.

c) the rights and restrictions of the New Ordinary and Deferred shares are set out in the Articles of Association adopted.

15. LOSS PER ORDINARY SHARE

Basic loss per share is calculated by dividing the loss attributable to equity holders of the Company by the weighted average number of Ordinary shares in issue during the period.

Diluted loss per share is calculated by adjusting the weighted average number of ordinary shares in issue to assume the conversion of all dilutive potential ordinary shares at the start of the period. The Company's dilutive potential ordinary shares arise from warrants. In respect of the warrants a calculation is performed to determine the number of shares that could have been acquired at fair value, based upon the monetary value of the subscription rights attached to the outstanding warrants. The number of shares calculated as above is compared with the number of shares that would have been issued assuming the exercise of the warrants.

There were no potentially dilutive warrants as the exercise price exceeded the average market price of the Ordinary shares during the period. Any potentially dilutive Ordinary shares would have been anti-dilutive because the Group was loss-making.

16. CONTINGENT LIABILITIES

As detailed in note 10 to the Consolidated Financial Statements Mercom Oil Sands Canada Inc. is party to a Farm-in agreement with Nordic Petroleum ASA, a wholly owned subsidiary of Norwegian Oil Sands Corp., a company registered in Norway. The agreement obligated Mercom Oil Sands Canada Inc. to fund the first C$2,500,000 of the capital costs of the Chard Oil Sands leases appraisal program and is subject to the laws of Alberta, Canada. Norwegian Oil Sands Corp. submitted a formal Notice of Arbitration to Mercom Oil Sands Canada Inc. in January 2013 seeking compensation for breach of contract following Mercom Oil Sands Canada Inc.'s announcement of its withdrawal from the Farm-in agreement. The arbitration process is expected to commence later in the year. At the date of approval of these Consolidated Financial Statements the Directors are of the opinion that it is not possible to make a reliable estimate of any potential liability and also believe that in any event no liability to the Group will result from the arbitration process.

17. EVENTS AFTER THE REPORTING DATE

On 24 May 2013 the Group received shareholder approval to change the Group's strategy as detailed in the Directors' Report.

18.ULTIMATE CONTROLLING PARTY

In the opinion of the Directors there is no ultimate controlling party.