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Adira Energy research and analysis

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Adira Energy Ltd. (“Adira” or the “Company”) is an early-stage, oil and gas exploration company with exposure to the offshore oil and gas discoveries in the eastern Mediterranean Sea. The Company, with head office in Toronto, Ontario, is the operator of three petroleum exploration licences that cover about 220,000 acres offshore Israel: Gabriella (15% working interest plus 15% back-in option; 96,371 acres); Yitzhak (60% W.I.; 31,629 acres); and Samuel (41.25% W.I.; 89,205 acres).

Adira announced in July 2012 that Israel-based partner Modiin Energy LP, on behalf of the Gabriella Licence Consortium (including Adira and Canadian-based partner Brownstone Energy Inc.) had executed a detailed drilling contract with an operating subsidiary of Noble Corporation, a well-established, large, international drilling contractor headquartered in Switzerland. The agreement provides for the drilling of the Gabriella licence (Adira’s core asset) by the Noble Homer Farrington semi-submersible rig, prior to the government-regulated spud date of June 30, 2013.

On the funding side, Adira recently closed an $11.1 million financing, with net proceeds to be used in part to advance Gabriella, Yitzhak, and Samuel.

Adira Energy Ltd. shares are currently held 30% by Management and the Board, 40% by institutions, and 30% by retail accounts.

BACKGROUND

Adira Energy Ltd. evolved from predecessor companies AMG Oil Ltd. and Trans New Zealand Oil, and from a business combination with Adira Energy Corp.

The Company’s shares are listed on the TSX Venture Exchange, trading under the symbol ADL. Adira also trades on the Frankfurt Stock Exchange (symbol AORLB8), and on the OTCBB (symbol ADENF). The Company recently applied for a listing on the Tel Aviv Stock Exchange.

Note: There was an article in the September 1, 2012 Financial Times (of London), entitled “Israel’s Field of Dreams”, that covers the history and significance of the discovery of natural gas offshore Israel.

FOCUS: EASTERN MEDITERRANEAN, OFFSHORE ISRAEL

Adira Energy Ltd. is focused on exploration in the eastern Mediterranean, offshore Israel. The Company received exploration permits for Gabriella, Yitzhak, and Samuel in this area between July 2009 and October 2010.

The Company’s licences are located in what is known as the Levant Basin Province (see Maps 1 and 2), an area that is estimated to contain a mean of 1.7 billion barrels of recoverable oil and a mean of 122 trillion cubic feet of recoverable gas (U.S. Geological Survey (USGS) assessment).

The area is host to huge natural gas discoveries of vital interest to the State of Israel. The Tamar (discovered in 2009) and Leviathan (discovered in 2010) natural gas fields, which are to the northwest of Adira’s licences (see Map 2), are estimated to have natural gas reserves of 8.4 tcf and 17 tcf respectively. Noble Energy Ltd. is the operator of both Tamar and Leviathan (36% and 40% working interests respectively).

ADIRA’S LICENCES: GABRIELLA, YITZHAK, & SAMUEL

Adira’s Gabriella, Yitzhak, and Samuel licences are shown on the map below.

The map shows Adira’s three licences, which total about 220,000 acres. Yitzhak (31,689 acres), the most northerly licence, is 17 kilometres offshore Israel, between the coastal cities of Hadera and Netanya. Contiguous to the south is Gabriella (96,371 acres), 10 kilometres offshore, between Netanya and the coastal city of Ashdod. Samuel (89,205 acres), the most southerly licence, is situated adjacent to the coast between the cities of Bat Yam and Ashkelon.

1. GABRIELLA

Licence Area: 96,371 acres; 10 kilometres offshore Israel, between the city of Netanya to the north and the city of Ashdod to the south.

Targets: Oil/Gas/Condensate.

Working Interest: 15%, plus 15% back-in option from Modiin Energy LP upon discovery, at cost.

Partners: Brownstone Energy Inc. (15%); Modiin Energy LP (70%).

Extension of Licence: The Ministry of Energy and Water of the State of Israel (the “Ministry”) has granted an extension of the dates for the execution of a drilling contract and the spudding of the first well at Gabriella. The new spud date for Gabriella is now June 30, 2013 (previously December 1, 2012).

Drilling Contract: Adira announced in July 2012 that Modiin Energy LP, on behalf of the Gabriella Licence Consortium (including Adira and Brownstone Energy Inc.), had executed a detailed drilling contract with Noble International Ltd. The agreement provides for the drilling of the Gabriella licence (Adira’s core asset) by the Noble Homer Farrington semi-submersible rig, prior to the government-regulated spud date of June 30, 2013.

Resource Report: Updated NI 51-101 Resource Report received in March 2012 - see table on Page 5.

2. YITZHAK

Licence Area: 31,689 acres; 17 kilometres offshore Israel, between the city of Hadera to the north and the city of Netanya to the south.

Targets: Oil/Gas/Condensate.

Working Interest: 60%.

Partners: Brownstone Energy Inc. (15%); Ellomay Capital (20%); AGR Group ASA (5%).

Extension of Licence: The Ministry has granted extension of the dates for: (1) submission of an environmental survey to October 31, 2012 (previously September 1, 2012); (2) for execution of a drilling contract to December 31, 2012 (previously September 1, 2012); and for the spudding of the first well to October 30, 2013 (previously December 1, 2012).

Resource Report: Updated NI 51-101 Resource Report received in March 2012 - see table on Page 5.

3. SAMUEL

Licence Area: 89,205 acres; adjacent to the west coast of Israel, between Bat Y am to the north and Ashkelon to the south.

Working Interest: 41.25%.

Partners: Brownstone Energy Inc. (6.75%); Pinetree Capital Ltd. (10%); GeoGlobal Resources Inc. (42%).

Extension of Licence: The Ministry has granted an extension of the dates for the execution of a drilling contract and the spudding of the first well on the Samuel licence. The contract execution date has been revised to October 31, 2012 (previously July 1, 2012), and the date for the spudding of the first well is now April 30, 2013 (previously October 1, 2012).

COMMITMENTS

Spud Dates (at least one well):

On Samuel licence: by April 30, 2013 On Gabriella licence: by June 30, 2013 On Yitzhak licence: by October 30, 2013

RESOURCES

Summary of Best Estimate Contingent and Prospective Resources on Gabriella and Yitzhak

FINANCIAL

In August 2012, Adira closed a C$11.1 million financing, comprising 79,012,640 units at $0.14 per unit. Insiders of the Company subscribed for about 19,031,096 of the units (approximately 24.1%). Each unit comprised one common share and one common share purchase warrant, with each warrant exercisable for one common share at $0.20 per share until August 9, 2015.

The net proceeds of the offering are to be used to advance exploration and development programs on the Gabriella, Yitzhak, and Samuel licences, as well as for general corporate purposes.

The Soros Fund took a stake in Adira in this latest financing, having purchased 9,012,000 shares (equivalent to 4.99% of the Company).

As of the close of this offering, Adira has a total of 180,781,093 shares issued and outstanding.

Adira’s previous financings raised proceeds as follows: US$2.5 million (September 2009); US$11 million (November 2010); and C$6.5 million (February 2011).

Estimated current cash position, after the financing, is approximately $12.0 million. Based on Q2/2012, the combined monthly “burn” (non-discretionary) + capex expenditure is $1.25 million. At this rate, the existing cash should last about 10' months.

INVESTMENT CONSIDERATIONS

Strengths

- Adira has a seasoned management team, with extensive experience in the eastern Mediterranean area.

- The Company's licences are in an area where extensive oil and gas has already been discovered.

- The licences are close to infrastructure.

- The Company has NI 51-101 resource reports for two of the licences.

- Drilling contract for the flagship asset (Gabriella) recently finalized.

- $11.1 million financing recently completed. Current cash resources should cover expenses for 10 months.

- Management and Directors hold 30% of the shares.

Challenges

- Operating in the Middle East, with its ongoing political risk.

- Development activities are capital-intensive and present ongoing funding challenges.

- Dependence on equity funding results in a significant dilutive effect.

- Small float and market illiquidity.