Half Yearly Report

MERCOM OIL SANDS PLC

INTERIM RESULTS FOR THE SIX MONTHS TO 30 SEPTEMBER, 2012

Chairman's Statement.

Mercom Oil Sands Plc ("the Company") was listed on the AIM market in May 2012, with the first day of trading being 29 May, 2012 and this is therefore the Company's first interim report.

Mercom was incorporated on 15 February, 2012 to acquire and develop in situ oil sand properties in Canada. On 25 February, 2012, the Company entered into a Farm-in Agreement to acquire a 50% ownership and working interest in four oil sand leases over the Chard field in Alberta, Canada .

On 19 June, 2012 John Zorbas was appointed to the role of Joint CEO, to be based in Toronto. He has extensive experience and interests in mining and materials production in Canada and globally. On 26 July, 2012 Kim Berknov, the Joint CEO based in London, stepped down to a Non-Executive Director position, and five days later resigned from the Board. Kim had overseen the creation of Mercom Oil Sands, had prepared the company for listing on AIM, and had successfully implemented the flotation.

Led by John Zorbas the Company reviewed the strategy, and the farm-in agreement which had been reached with Nordic Petroleum to acquire a share of the Chard Oil Sands Reserve. The Company concluded that the deal had been overtaken by events and sought to negotiate a revision to its terms to protect and ensure the best interests of its shareholders. The delay resulted in some difficulty between Mercom and Nordic, and negotiations broke down in November 2012 after the date of these Interim Results. The Company hopes to revive its interest in Chard in a new but not yet defined form, and is also looking for other exploration opportunities to drive shareholder value.

In the course of evaluating the strategy, and renegotiating the contract, general and corporate expenses of £1,238,243 have been incurred. Current assets stand at £2,212,150.

Patrick Cross

Chairman, Mercom Oil Sands Plc

21 December, 2012

NOTICE TO SHAREHOLDERS

Responsibility for Financial Statements

The accompanying interim financial statements of Mercom Oil Sands PLC for the three and six months ended September 30, 2012 and 2011 have been prepared by management in accordance with International Financial Reporting Standards applicable to interim financial statements (see notes 2 & 3 to the interim financial statements). Recognizing that the Company is responsible for both the integrity and objectivity of the financial statements, management is satisfied that these financial statements have been fairly presented.

Auditors Involvement

The external auditors of Mercom Oil Sands PLC., have not audited or performed a review of the unaudited interim financial statements for the three and six months ended September 30, 2012 and 2011, nor have they conducted any procedures with respect to the supplementary financial schedules included herein.

MERCOM OIL SANDS PLC

Condensed Interim Statements of Financial Position

The accompanying notes are an integral part of these financial statements.

MERCOM OIL SANDS PLC

Condensed Interim Statements of Loss and Comprehensive Loss

For the six months ended September 30, 2012

The accompanying notes are an integral part of these financial statements.

MERCOM OIL SANDS PLC

Condensed Interim Statements of Cash Flows

For the six months ended September 30, 2012

The accompanying notes are an integral part of these financial statements.

MERCOM OIL SANDS PLC

Condensed Interim Statements of Changes in Equity

For the six months ended September 30, 2012

The accompanying notes are an integral part of these financial statements.

Nature of business

Mercom Oil Sands PLC ("the Company") was incorporated in England and Wales under the Companies Act 2006 as a public company, on 15 February 2012. The Company is in the development stage and has not yet commenced principal operations. The Company's principal business activities are the acquisition, exploration, and development of petroleum and natural gas interests in Alberta, Canada.

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 realize its assets and discharge its liabilities in the normal course of operations. The Company has no 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 on the statement 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.

These condensed interim financial statements have been prepared in accordance and compliance with International Financial Reporting Standards ("IFRS") applicable to the preparation of interim financial statements, including IAS 34, Interim Financial Reporting.

The policies applied in these condensed interim financial statements are consistent with the policies disclosed in Notes 2 of the audited financial statements for the period ended March 31, 2012. These condensed interim financial statements should be read in conjunction with the Company's audited financial statements for the period ended March 31, 2012.

Future Changes in Accounting Standards not yet adopted

Standards issued but not yet effective up to the date of issuance of the Company's financial statements are listed below. The Company intends to adopt those standards when they become effective.

IFRS 9 - Financial Instruments

IFRS 9, Financial instruments ("IFRS 9") was issued by the IASB on November 12, 2009 and will replace IAS 39, Financial Instruments: Recognition and Measurement ("IAS 39"). IFRS 9 replaces the multiple rules in IAS 39 with a single approach to determine whether a financial asset is measured at amortized cost or fair value and a new mixed measurement model for debt instruments having only two categories: amortized cost and fair value. The approach in IFRS 9 is based on how an entity manages its financial instruments in the context of its business model and the contractual cash flow characteristics of the financial assets. The new standard also requires a single impairment method to be used, replacing the multiple impairment methods in IAS 39. IFRS 9 is effective for annual periods beginning on or after January 1, 2015. The Company is assessing the impact of IFRS 9 on its results of operations and financial position.

IFRS 10 - Consolidated Financial Statements

IFRS 10, "Consolidated Financial Statements" (IFRS 10) was issued by the IASB on May 12, 2011 and will replace portions of IAS 27 Consolidated and Separate Financial Statements and interpretation SIC-12Consolidated - Special Purpose Entities. IFRS 10 incorporates a single model for consolidating all entities that are controlled and revises the definition of control to be "An investor controls an investee when it is exposed, or has rights, to variable returns from its involvement with the investee and has the current ability to affect those returns through its power over the investee". Along with control, the new standard also focuses on the concept of power, both of which will include a use of judgment and continuous reassessment as facts and circumstances change. IFRS 10 is effective for annual periods beginning on or after January 1, 2013, with early adoption permitted. The Company is assessing the impact of IFRS 10 on its results of operations and financial position.

IFRS 11 - Joint Arrangements

IFRS 11, Joint Arrangements (IFRS 11) was issued by the IASB on May 12, 2011 and will replace IAS31, Interest in Joint Ventures. The new standard will apply to the accounting for interest in joint arrangements where there is joint control. Joint arrangements will be separated into joint ventures and joint operations. The structure of the joint arrangement will no longer be the most significant factor on classifying a joint arrangement as either a joint operation or a joint venture. Proportionate consolidations will be removed and replaced with equity accounting. IFRS 11 is effective for annual periods beginning on or after January 1, 2013, with early adoption permitted. The Company is assessing the impact of IFRS11 on its results of operations and financial position.

IFRS 12 - Disclosure of Interest in Other Entities

IFRS 12, Disclosure of Interest in Other Entities was issued by the IASB on May 12, 2011. The new standard includes disclosure requirements about subsidiaries, joint ventures and associates, as well as unconsolidated structured entities and replaces existing disclosure requirements. IFRS 12 is effective for annual periods beginning on or after January 1, 2013, with early adoption permitted. The Company is assessing the impact of IFRS 12 on its financial statements.

IFRS 13 - Fair Value Measurement

IFRS 13, Fair Value Measurement was issued by the IASB on May 12, 2011. The new standard converges IFRS and US GAAP on how to measure fair value and the related fair value disclosures. The new standard creates a single source of guidance for fair value measurements, where fair value is required or permitted under IFRS, by not changing how fair value is used but how it is measured. The focus will be on an exit price. IFRS 13 is effective for annual periods beginning on or after January 1, 2013, with early adoption permitted. The Company is assessing the impact of IFRS 13 on its financial statements.

The capital of the Company consists of shareholders' equity. The Company's objectives when managing capital are to safeguard the Company'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 Company 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 Company 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 Company currently has an interest are in the exploration and evaluation stage; as such the Company is dependent on external financing to fund its activities. In order to carry out the planned exploration and pay for administrative costs, the Company will spend its existing working capital and raise additional amounts as needed. The Company 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 Company, is reasonable. There were no changes in the Company's approach to capital management during the six months ended September 30, 2012. The Company is not subject to externally imposed capital requirements.

Cash and cash equivalents earn interest based on market rates applicable to each form of interest bearing instrument. Cash is deposited at a reputable financial institution. The fair value of cash and cash equivalents approximates the values disclosed in this note.

6. PETROLEUM AND NATUAL GAS LEASES

Petroleum and Natural Gas Leases

On 24 February 2012, Norwegian Oil Sands Corp. ("NOS"), a legally enacted entity incorporated pursuant to the laws of the Province of Alberta, agreed to sell to the Company a 50% working interest in four Alberta Crown Oil Sands Leases (the "Leases") and assets held in connection therewith (the "Agreement"). According to the Agreement, for the Company to acquire interest in the Leases, it must:

(a) pay a cash amount of C$700,000 to Norwegian Oil Sands Corp., as follows:

(i) C$100,000 deposit (paid), no later than 5 days after execution of the agreement;

(ii) C$100,000 extension fee (paid) on or before 30 May 2012; and

(iii) C$500,000 upon transfer of the 50% interest in the Leases; and

(b) be obligated to fund the first C$2,500,000 of the capital costs of the appraisal program.

On August 2, 2012, the Company negotiated an extension to with Nordic Petroleum for the completion of the farm-in agreement by October 31, 2012. In return for the extension, the Company paid an extension fee of £100,000.

On November 12, 2012, the Company announced its withdrawal from the farm-in agreement (See note 11 subsequent events).

7. RELATED PARTY TRANSACTIONS AND BALANCES

Related parties include the Board of Directors, officers, and enterprises which are controlled by these individuals as well as certain persons performing similar functions.

During the six months ended September 30, 2012, the Company was charged £66,250 in consulting fees and a £25,000 success fee (for listing on AIM), to Evergreen Capital Partners Ltd, a company of which Kim Berknov (former CEO and director) is a director of.

During the six months ended September 30, 2012, the Company was charged £10,000 in consulting fees by CFO Advantage Inc., a company that is owned by Kyle Appleby (finance director).

During the six months ended September 30, 2012, the Company was charged £10,052 in consulting fees by Intellego Limited, and £5,000 in consulting fees by AT Investments, companies of which Albert Taubi (director) is a director of.

During the six months ended September 30, 2012, the Company was charged £11,000 in consulting fees by Patrick Cross (director).

During the six months ended September 30, 2012, the Company reimbursed AT investments £90,000 for expenses incurred on behalf of Mercom. Albert Taubi (director) is a director of AT investments.

During the six months ended September 30, 2012, the Company reimbursed Caveliaco Ltd £32,060 for expenses incurred on behalf of Mercom. John Zorbus (CEO) is a director of Caveliaco Ltd.

8. SHARE CAPITAL

a) Shares authorized

The Company is authorized to issue an unlimited number of preferred and common shares without nominal or par value. No preferred shares have been issued.

b) Common shares issued and outstanding

Details of shares issued and outstanding are as follows:

Shares Amount

£

Opening balance - -

Balance, March 31, 2012 280,000,000 280,000

Balance, September 30, 2012 316,875,000 3,677,640

(a) On 15 February 2012, the Company raised £20,000 by way of private placement by issuing 20,000,000 common shares at £0.001 per share.

(b) On 5 March 2012, the Company raised £33,110 by way of a private placement by issuing 33,110,000 common shares at £0.001 per share.

(c) On 23 March 2012, the Company raised £226,890 by way of private placement by issuing 226,890,000 common shares at £0.001 per share.

(d) On 15 May 2012, the Company raised £270,000 by way of private placement by issuing 3,375,000 Ordinary Shares at £0.08 per share.

(e) On 23 May 2012, the Company raised £3,350,000 by way of private placement by issuing 33,500,000 Ordinary Shares at £0.10 per share.

c) Share purchase warrants

The following summarizes the activity during the six months ended September 30, 2012:

The exercise price and expiry date on the warrants outstanding as at 30 September 2012 are as follows:

\* These warrants vested immediately as the contract was terminated during the six months ended September 30, 2012

The fair value of the warrants issued during the period ended 30 September 2012, 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.

9. LOSS PER COMMON SHARE

Basic earnings 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 year.

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.

As can be seen from the above table there were no potentially dilutive warrants as the exercise price exceeded the average market price of the ordinary shares during the period. In any event, any potentially dilutive ordinary shares would have been anti-dilutive because the group was loss-making. For these reasons, the basic and diluted loss per share are identical. All loss per share figures presented above arise from continuing and total operations and therefore no loss per share for discontinued operations is presented.

10. FINANCIAL RISK FACTORS

Credit risk

All the Company's cash is held with well-known and established financial institutions. As such, management considers credit risk related to these financial assets to be minimal. The Company's maximum credit risk exposure is limited to the carrying value of its cash and subscriptions receivable. At 30 September 2012, the Company 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 Company's operations will result in exposure to fluctuations in commodity prices. The Company is currently in its development stage and as such the exposure to fluctuations in commodity prices is not actively managed. In the future, the Company 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 Company 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 Company will not be able to meet its financial obligations as they come due. The Company 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 Company's reputation.

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

Foreign currency risk

The Company is exposed to foreign currency fluctuations on its cash which is denominated in British Pounds as well as its consulting expenses which are denominated in British Pounds.

11. SUBSEQUENT EVENTS

On November 12, 2012, Mercom announced its withdrawal from the farm-in agreement with Nordic Petroleum SA ("Nordic") as the Company had been unable to reach a working agreement with Nodic.

On December 5, 2012, Mercom announced that application has been made for the admission to AIM of 16,410,256 new Ordinary Shares ("New Shares"). The New Shares have been issued at 1.365p per Ordinary Share in settlement of outstanding consultancy fees to a third party.