Monchhichi PLC Regulatory News (MCC)

NOT FOR RELEASE, PUBLICATION OR DISTRIBUTION DIRECTLY OR INDIRECTLY INTO THE UNITED STATES, CANADA, AUSTRALIA, THE REPUBLIC OF IRELAND, THE REPUBLIC OF SOUTH AFRICA, JAPAN OR ANY OTHER JURISDICTION WHERE TO DO SO WOULD BE UNLAWFUL

This announcement is not an admission document. This announcement does not constitute or form part of, and should not be construed as, any offer or invitation to sell or issue, or any solicitation of any offer to purchase or subscribe for, any shares in Mercom Oil Sands Plc or securities in any other entity nor shall it, or any part of it, or the fact of its distribution, form the basis of, or be relied on in connection with, any contract or investment decision in relation thereto. This announcement does not constitute a recommendation regarding any securities.

Any investment decision must be made exclusively on the basis of the admission document published by Mercom Oil Sands Plc . A copy of the admission document is available on the Company's website (www.mercomoil.com).

Mercom Oil Sands Plc

("Mercom" or the "Company")

First day of Dealings on AIm and Placing

Mercom is pleased to announce the admission today of its ordinary shares to trading on the AIM market of the London Stock Exchange and the commencement of dealings in its ordinary shares under the ticker symbol MMO. 

Mercom has raised £3.35 million before expenses through a placing of 33,500,000 new ordinary shares at a placing price of 10p per share with institutional and other investors. At the placing price, Mercom has a market capitalisation of £31.7 million on admission. The net proceeds of the placing will be used to fund Mercom's proposed drilling programme and acquisition due diligence on other oil sands properties in the region.

Libertas is the Nominated Adviser and Broker to the Company.

Overview

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 (the "Chard Oil Sands Leases") in consideration for C$700,000 and for agreeing to fund a further C$2.5 million of exploration and development expenditure on these leases.

·; The Chard Oil Sands Leases are located in the Athabasca oil sands in north eastern Alberta and comprise of 31 sections covering a total of 7,936 hectares (19,610 acres). Alberta has the largest oil sand reserves in the world and the Athabasca region contains the largest deposit, representing approximately 82% of Alberta's total oil sands resources. Alberta is also well located for the US market, which is the world's largest consumer of oil.

·; The Company plans to drill eight wells over the next two years in order to form a better understanding of the contingent resources. This would include refining the delineation of the reservoir and confirming the API gravity of the resource within the reservoir. The Company's strategy in the longer term is to take the Chard Oil Sand Leases into production.

·; The Company will also continue to look for opportunities to acquire other properties in the region with the intention of producing an enhanced return for investors through economies of scale.

·; The Directors have yet to determine the most appropriate extraction technology to use in order to develop the Chard property. This will be determined, in part by, the current proposed work programme, in part by world oil prices and in part by the continued development of in situ extraction technology.

·; The Directors, led by Chief Executive Kim Berknov, have a wide range of expertise and experience in the oil and gas industry and other sectors. The Directors believe that the Board as a whole has the knowledge and experience to achieve its objectives.

·; On admission, Mercom will be the only pure play Canadian oil sands business listed on AIM.

Oil Sands Market

·; Production and processing costs of oil sands have fallen significantly over the past 20 years, making a portion of Canada's oil sands resources economically recoverable.

·; The IEA's World Energy Outlook forecasts significant growth in heavy oil and bitumen production, particularly from Canadian oil sands. Heavy oil resources are concentrated in Canada, with 2.5 trillion bbl, and Venezuela, with 1.5 trillion bbl.

·; The markets for Canadian oil have traditionally been in western and eastern Canada and the midwest and Rocky Mountain regions of the United States, with small amounts transported to the west coast of the United States. The majority of the future incremental production volumes from Canada's oil sands are likely to be consumed in the United States.

·; Significant pipeline expansion and refining reconfiguration projects are forecast to increase transportation and refining capacity for Canadian oil sands production. In response to increased crude oil demand, several refinery expansion plans have been announced in the United States. A significant portion of this expansion will allow refineries to process heavier grades of crude oil, such as that produced from the Canadian oil sands.

The Chard Property

·; The Chard property is located in a region in which a number of active oil sands projects are operating and, as a result, the property is well located to access local infrastructure, including an all weather provincial highway and a rail line, each of which cross the Property. There are also several pipelines in the area that carry diluted bitumen to refineries in Edmonton.

·; Because of the depth of the sands containing the resource at the property, the oil sands are not suitable for exploitation by open pit mining and the Company plans to develop the property using in situ techniques.

·; The development of techniques for the extraction of bitumen from oil sands is continuing and the Directors believe that further advances could add significantly to the economic return from the property, both by reducing the cost of extraction and by allowing exploitation of bitumen held in thinner sand deposits.

Contingent Resources

DeGolyer and MacNaughton Canada have estimated that the Chard Oil Sands Leases contain approximately 240 million barrels of bitumen, of which 53% is contained within sands with a thickness of greater than 8 metres. DeGolyer has estimated that the Chard Oil Sands Leases contain the following contingent resources (in which the Company has a 50% working interest):

The low and best estimates of exploitable bitumen in place take into account estimates of bitumen in sands with a thickness of 10 metres or more. The high estimate takes into account bitumen in sands with a thickness of 8 metres or more. Different recovery factors have then been applied in each case to give the above estimates of contingent resources, measured in thousands of barrels (Mbbl).

Kim Berknov, Chief Executive Officer said: "Mercom was created to enable investors to access an increasingly attractive and growing but not particularly well known sector of the oil and gas market. Athabasca's oil sands contain Canada's largest oil resource, making them a key part of the economy and consequently a key priority for the Canadian government. Our strategy is simple, take the Chard Oil Sand leases towards production and look to expand further through the acquisition of other similar fields. We believe the commercial strength of this area is only going to continue to improve, through a combination of improving extraction/production technologies and increasing demand, especially from the US."

Director Biographies

Dr Patrick Cross (68) Non-executive Chairman

Dr Cross is the Non-executive Chairman of Empyrean Energy Plc (AIM: EME). His previous positions include 25 years with British Petroleum specialising in marketing, strategic planning, and business development. Additionally he was for two years President of Cable & Wireless Japan and for six years was Managing Director of BBC World Limited. Dr Cross holds a PhD in Microwave Technology and a BSc (Eng.) in Electrical Engineering from University College London. Dr Cross lives in Oxfordshire, UK.

Kim Berknov (49) Chief Executive Officer

Mr Berknov is the Managing Director of Evergreen Capital Partners. Previously he was Managing Director at TransConnect and Digital Mountain, both Venture Capital firms in Germany. He has also worked as a Management Consultant at McKinsey & Company in Germany. Mr Berknov has further held other operational positions as CEO and COO of Vyke Communications Plc, Executive Vice President and Managing Director of Aldata Solution Oy, Managing Director of GE Capital IT Solution, Sales Director of HIS and Sales/Marketing Manager of NCR Cooperation. Mr Berknov holds an MBA from IMD in Switzerland and a BA from Copenhagen School of Economics and Business in Denmark. Mr Berknov lives in London, UK.

Kyle Appleby (37) Finance Director

Mr Appleby is a member of the Ontario and the Canadian Institutes of Chartered Accountants and President and Chief Executive of CFO Advantage Inc., a company that provides CFO, and other financial accounting and compliance services to companies in various industries including junior mining, manufacturing and distribution. Mr Appleby is currently CFO of Renforth Resources Inc. (CNSX: RFR), Legend Gold Corp. (TSX: LGN), Mukuba Resources Limited (TSX: MKU) and Xylitol Canada Inc. Mr Appleby lives in Toronto, Canada.

Albert Edmond Taubi (51) Non-executive Director

Mr Taubi is the Managing Director of Merchant and Commercial Confirmers Ltd, an oil trading company with its activities in the Middle East and Southern Africa. He is also a director of Intellego Ltd, a health management consultancy firm providing services to the public sector in the UK (NHS) and to various organisations in Qatar. Mr Taubi has also held other operational positions in Wealth Management for 12 years with Republic National Bank of New York and Union Bancaire Privee in Geneva. Mr Taubi holds a business administration bachelor degree from ASSAS University in Paris. Mr Taubi lives in London, UK.

JV Partner and Operator

The project will be operated by Norwegian Oil Sands, the joint owner of the leases and a subsidiary of Nordic Petroleum. A joint operating agreement and committee has been established and comprises Kyle Appleby and Oisten Nyberg (69) Chairman of Norwegian Petroleum AS and President of Norwegian Oil Sands. Mr Nyberg has more than 40 years experience with the global oil exploration and production industry and in the past 20 years has held senior positions with Fountain Oil, Petronorse AS in US, Canada, Eastern Europe, Russia and Norway, and with OAO Yuuzharalnneftegas/Orentrade AG in Russia and Switzerland. Prior to that he was Managing Director of Smedvig Technology. He has also worked for Statoil and AB and Schlumberger Overseas in Norway and International. Mr Nyberg holds a Degree in Civil Engineering from Stavanger Technical College and a BSCE from South Dakota School of Mines and Technology plus numerous courses of additional education within Geophysic, Geology, Petrophysics and Reservoir Engineering together with a Business Degree from Hvaring Business School. Mr Nyberg lives in San Francisco, USA.