----

----

| o | REGISTRATION STATEMENT PURSUANT TO SECTION 12(b) or 12(g) OF THE SECURITIES EXCHANGE ACT OF 1934 |
|---|--------------------------------------------------------------------------------------------------|

| x | ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
|---|--------------------------------------------------------------------------------------|

|   | For the fiscal year ended December 31, 2014 |
|--------|---------------------------------------------|

| o | TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
|---|------------------------------------------------------------------------------------------|

| o | SHELL COMPANY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
|---|---------------------------------------------------------------------------------------------|

|  Title of Each Class |  Name of each exchange on which registered |
|---------------------------|-------------------------------------------------|
| None                      | Not applicable                                  |

----

| U.S. GAAP |   o | International Financial Reporting Standards as issued by the International Accounting Standards Board    x | Other |     o |
|-----------|----------|--------------------------------------------------------------------------------------------------------------------------------|-------|----------------------|

----

|   |  (A) |  Report of Our Independent Registered Public Accounting Firm dated April 29, 2015;                                        |
|--------|-----------|--------------------------------------------------------------------------------------------------------------------------------|
|   |  (B) |  Report of Independent Registered Public Accounting Firm dated April 30, 2014;                                            |
|   |  (C) |  Consolidated statement of financial position for the fiscal years ended December 31, 2014 and 2013;                      |
|   |  (D) |  Consolidated statements of comprehensive profit and loss for the fiscal years ended December 31, 2014, 2013 and 2012;    |
|   |  (E) |  Consolidated statements of changes in equity (deficit) for the fiscal years ended December 31, 2014, 2013 and 2012; |
|   |  (F) |  Consolidated statements of cash flows for the fiscal years ended December 31, 2014, 2013 and 2012; and                   |
|   |  (G) |  Notes to consolidated financial statements .                                                                             |

----

|   | · | Report of Independent Registered Public Accounting Firm dated April 29, 2015; |
|--------|--------|-------------------------------------------------------------------------------|

|   | · | Report of Independent Registered Public Accounting Firm dated April 30, 2014; |
|--------|--------|-------------------------------------------------------------------------------|

|   | · | Consolidated statement of financial position for the fiscal years ended December 31, 2014, 2013 and 2012; |
|--------|--------|-----------------------------------------------------------------------------------------------------------|

|   | · | Consolidated statements of comprehensive profit and loss for the fiscal years ended December 31, 2014, 2013 and 2012; |
|--------|--------|-----------------------------------------------------------------------------------------------------------------------|

----

|   | · | Consolidated statements of changes in equity (deficit) for the fiscal years ended December 31, 2014, 2013 and 2012; |
|--------|--------|--------------------------------------------------------------------------------------------------------------------------|

|   | · | Consolidated statements of cash flows for the fiscal years ended December 31, 2014, 2013 and 2012; and |
|--------|--------|-------------------------------------------------------------------------------------------------------------|

|   | · | Notes to consolidated financial statements |
|--------|--------|--------------------------------------------|

----

|                                                     | Page   |
|----------------------------------------------------------|--------|
|                                                     |   |
| Report of Independent Registered Public Accounting Firm  | 1 - 2  |
|                                                     |   |
| Consolidated Statements of Financial Position            | 3      |
|                                                     |   |
| Consolidated Statements of Comprehensive Profit and Loss | 4      |
|                                                     |   |
| Consolidated Statements of Changes in Equity (Deficit)   | 5      |
|                                                     |   |
| Consolidated Statements of Cash Flows                    | 6      |
|                                                     |   |
| Notes to Consolidated Financial Statements               | 7 - 26 |

----

|                       |   |                                     |
|----------------------------|--------|------------------------------------------|
|                       |   |                                     |
|                       |   |  Chartered Professional Accountants |
|                       |   |  Licensed Public Accountants        |
|  Mississauga, Ontario |   |                                     |
|  April 29, 2015       |   |                                     |
|                       |   |                                     |

----

| Tel-Aviv, Israel | KOST FORER GABBAY & KASIERER     |
|------------------|--------------------------------------|
| April 30 , 2014  | A Member of Ernst & Young Global |

----

| CONSOLIDATED STATEMENTS OF FINANCIAL POSITION |
|-----------------------------------------------|

|                                           |   |   |   |   |              |   |    |              |   |
|------------------------------------------------|--------|--------|--------|--------|-------------------|--------|---------|-------------------|--------|
|                                           |   | Note   |   |   | December 31, 2014 |   |    | December 31, 2013 |   |
| ASSETS                                         |   |   |   |   |              |   |    |              |   |
|                                           |   |   |   |   |              |   |    |              |   |
| CURRENT ASSETS:                                |   |   |   |   |              |   |    |              |   |
| Cash and cash equivalents                      |   |   | 4      |   |              | $      | 334     |              |   | $ | 617 |   |
| Restricted deposits                            |   |   | 5      |   |              |   | 9       |              |   |   | 35 |   |
| Other receivables and prepaid expenses         |   |   | 6      |   |              |   | 64      |              |   |   | 2,513 |   |
|                                           |   |   |   |   |              |   |    |              |   |   |   |   |
| Total current assets                           |   |   |   |   |              |   | 407     |              |   |   | 3,165 |   |
|                                           |   |   |   |   |              |   |    |              |   |   |   |   |
| NON-CURRENT ASSETS:                            |   |   |   |   |              |   |    |              |   |   |   |   |
| Property and equipment, net                    |   |   | 7      |   |              |   | 2       |              |   |   | 61 |   |
|                                           |   |   |   |   |              |   |    |              |   |   |   |   |
| Total assets                                   |   |   |   |   |              | $      | 409     |              |   | $ | 3,226 |   |
|                                           |   |   |   |   |              |   |    |              |   |   |   |   |
| LIABILITIES AND EQUITY (DEFICIT)               |   |   |   |   |              |   |    |              |   |   |   |   |
|                                           |   |   |   |   |              |   |    |              |   |   |   |   |
| CURRENT LIABILITIES:                           |   |   |   |   |              |   |    |              |   |   |   |   |
| Trade payables                                 |   |   | 9      |   |              | $      | 167     |              |   | $ | 2,817 |   |
| Other accounts payable and accrued liabilities |   |   | 10     |   |              |   | 56      |              |   |   | 986 |   |
|                                           |   |   |   |   |              |   |    |              |   |   |   |   |
| Total current liabilities                      |   |   |   |   |              |   | 223     |              |   |   | 3,803 |   |
|                                           |   |   |   |   |              |   |    |              |   |   |   |   |
| EQUITY (DEFICIT):                              |   |   |   |   |              |   |    |              |   |   |   |   |
| Share capital                                  |   |   | 13     |   |              |   | -       |              |   |   | - |   |
| Additional paid-in capital                     |   |   | 13     |   |              |   | 34,051  |              |   |   | 34,023 |   |
| Accumulated deficit                            |   |   |   |   |              |   | (33,865 | )                 |   |   | (34,600 | ) |
|                                           |   |   |   |   |              |   |    |              |   |   |   |   |
| Total equity (deficit)                         |   |   |   |   |              |   | 186     |              |   |   | (577 | ) |
|                                           |   |   |   |   |              |   |    |              |   |   |   |   |
| Total liabilities and equity                   |   |   |   |   |              | $      | 409     |              |   | $ | 3,226 |   |

| April 29, 2015                               |   | /s/ Dennis Bennie                  |   | /s/ Alan Friedman     |
|----------------------------------------------|--------|------------------------------------|--------|-----------------------|
| Date of approval of the financial statements |   | Dennis BennieChairman of the Board |   | Alan FriedmanDirector |

----

| CONSOLIDATED STATEMENTS OF COMPREHENSIVE PROFIT AND LOSS |
|----------------------------------------------------------|

|                                                                                              |   |   |   |   | Year ended December 31, |   |
|---------------------------------------------------------------------------------------------------|--------|--------|--------|--------|-------------------------|--------|
|                                                                                              |   | Note   |   |   | 2014                    |   |   | 2013 |   |   | 2012 |   |
|                                                                                              |   |   |   |   |                    |   |   |   |   |   |   |   |
| Revenues and other income                                                                         |   |   | 18     |   |                    | $      | - |   |   | $ | 17 |   |   | $ | 1,889 |   |
|                                                                                              |   |   |   |   |                    |   |   |   |   |   |   |   |   |   |   |   |
| Expenses:                                                                                         |   |   |   |   |                    |   |   |   |   |   |   |   |   |   |   |   |
| Exploration expenses                                                                              |   |   | 8      |   |                    |   | - |   |   |   | 677 |   |   |   | 1,026 |   |
| General and administrative expenses                                                               |   |   | 19     |   |                    |   | 602 |   |   |   | 2,813 |   |   |   | 5,304 |   |
| Gain on settlement of accounts payable and other payables                                         |   |   | 8(e)   |   |                    |   | (1,374 | ) |   |   | - |   |   |   | - |   |
| Impairment charge                                                                                 |   |   | 8(e)   |   |                    |   | - |   |   |   | 5,168 |   |   |   | 7,810 |   |
|                                                                                              |   |   |   |   |                    |   |   |   |   |   |   |   |   |   |   |   |
| Total expenses                                                                                    |   |   |   |   |                    |   | (772 | ) |   |   | 8,658 |   |   |   | 14,140 |   |
|                                                                                              |   |   |   |   |                    |   |   |   |   |   |   |   |   |   |   |   |
| Profit (loss) before financing income and gain on foreign exchange                                |   |   |   |   |                    |   | 772 |   |   |   | (8,641 | ) |   |   | (12,251 | ) |
|                                                                                              |   |   |   |   |                    |   |   |   |   |   |   |   |   |   |   |   |
| Financing income                                                                                  |   |   | 20     |   |                    |   | - |   |   |   | 3,027 |   |   |   | 2,480 |   |
| Gain on foreign exchange                                                                          |   |   |   |   |                    |   | (37 | ) |   |   | (30 | ) |   |   | (745 | ) |
|                                                                                              |   |   |   |   |                    |   |   |   |   |   |   |   |   |   |   |   |
| Profit (loss) before income taxes                                                                 |   |   |   |   |                    |   | 735 |   |   |   | (5,644 | ) |   |   | (10,516 | ) |
| Income taxes                                                                                      |   |   | 12     |   |                    |   | - |   |   |   | - |   |   |   | (41 | ) |
|                                                                                              |   |   |   |   |                    |   |   |   |   |   |   |   |   |   |   |   |
| Net profit (loss) and comprehensive profit (loss)                                                 |   |   |   |   |                    | $      | 735 |   |   | $ | (5,644 | ) |   | $ | (10,557 | ) |
|                                                                                              |   |   |   |   |                    |   |   |   |   |   |   |   |   |   |   |   |
| Basic and diluted net earnings (loss) per share attributable to equity holders of the parent      |   |   | 14     |   |                    | $      | 0.06 |   |   | $ | (0.47 | ) |   | $ | (1.19 | ) |
|                                                                                              |   |   |   |   |                    |   |   |   |   |   |   |   |   |   |   |   |
| Weighted average number of Ordinary shares used in computing basic and diluted net loss per share |   |   |   |   |                    |   | 12,158,302 |   |   |   | 12,052,073 |   |   |   | 8,862,724 |   |

----

| CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY (DEFICIT) |
|--------------------------------------------------------|

|                                                              |   |      |       |   | Attributable to equity holders of the parent |   |   |               |   |   |        |   |
|-------------------------------------------------------------------|--------|-----------|------------|--------|----------------------------------------------|--------|--------|--------------------|--------|--------|-------------|--------|
|                                                              |   | Number of |       |   | Share                                        |   |   | Additional paid-in |   |   | Accumulated |   |   |   |   |   | Non-controlling interests |   |   | Total equity |   |
|                                                              |   | shares    |       |   | capital                                      |   |   | capital            |   |   | deficit     |   |   | Total |   |   | (deficit) |   |
| Balance as of December 31, 2011                                   |   |      | 6,784,513  |   |                                         | $      | -      |               |   | $      | 27,775      |   |   | $ | (19,169 | ) |   | $ | 8,606 |   |   | $ | 220 |   |   | $ | 8,826 |   |
| Shares issued in private placement, net (Note 13(b))              |   |      | 5,267,509  |   |                                         |   | -      |               |   |   | *)5,215     |   |   |   | - |   |   |   | 5,215 |   |   |   | - |   |   |   | 5,215 |   |
| Investment in equity of subsidiary by non-controlling interests   |   |      | -          |   |                                         |   | -      |               |   |   | -           |   |   |   | - |   |   |   | - |   |   |   | 550 |   |   |   | 550 |   |
| Share-based compensation                                          |   |      | -          |   |                                         |   | -      |               |   |   | 976         |   |   |   | - |   |   |   | 976 |   |   |   | - |   |   |   | 976 |   |
| Net loss                                                          |   |      | -          |   |                                         |   | -      |               |   |   | -           |   |   |   | (8,554 | ) |   |   | (8,554 | ) |   |   | (2,003 | ) |   |   | (10,557 | ) |
| Adjustment of non-controlling interests **)                       |   |      | -          |   |                                         |   | -      |               |   |   | -           |   |   |   | (1,233 | ) |   |   | (1,233 | ) |   |   | 1,233 |   |   |   | - |   |
|                                                              |   |      |       |   |                                         |   |   |               |   |   |        |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Balance as of December 31, 2012                                   |   |      | 12,052,022 |   |                                         |   | -      |               |   |   | 33,966      |   |   |   | (28,956 | ) |   |   | 5,010 |   |   |   | - |   |   |   | 5,010 |   |
|                                                              |   |      |       |   |                                         |   |   |               |   |   |        |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Share-based compensation                                          |   |      | -          |   |                                         |   | -      |               |   |   | 57          |   |   |   | - |   |   |   | 57 |   |   |   | - |   |   |   | 57 |   |
| Net loss                                                          |   |      | -          |   |                                         |   | -      |               |   |   | -           |   |   |   | (5,644 | ) |   |   | (5,644 | ) |   |   | - |   |   |   | (5,644 | ) |
|                                                              |   |      |       |   |                                         |   |   |               |   |   |        |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Balance as of December 31, 2013                                   |   |      | 12,052,022 |   |                                         |   | -      |               |   |   | 34,023      |   |   |   | (34,600 | ) |   |   | (577 | ) |   |   | - |   |   |   | (577 | ) |
|                                                              |   |      |       |   |                                         |   |   |               |   |   |        |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Shares and warrants issued in private placement, net (Note 13(b)) |   |      | 240,000    |   |                                         |   | -      |               |   |   | 60          |   |   |   | - |   |   |   | 60 |   |   |   | - |   |   |   | 60 |   |
| Share-based compensation recovery                                 |   |      | -          |   |                                         |   | -      |               |   |   | (32         | )      |   |   | - |   |   |   | (32 | ) |   |   | - |   |   |   | (32 | ) |
| Net loss                                                          |   |      | -          |   |                                         |   | -      |               |   |   | -           |   |   |   | 735 |   |   |   | 735 |   |   |   | - |   |   |   | 735 |   |
|                                                              |   |      |       |   |                                         |   |   |               |   |   |        |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Balance as of December 31, 2014                                   |   |      | 12,292,022 |   |                                         | $      | -      |               |   | $      | 34,051      |   |   | $ | (33,865 | ) |   | $ | 186 |   |   | $ | - |   |   | $ | 186 |   |

----

| CONSOLIDATED STATEMENTS OF CASH FLOWS |
|---------------------------------------|

|                                                                              |   | Year ended December 31, |   |
|-----------------------------------------------------------------------------------|--------|-------------------------|--------|
|                                                                              |   | 2014                    |   |   | 2013 |   |   | 2012 |   |
|                                                                              |   |                    |   |   |   |   |   |   |   |
| Cash flows from operating activities:                                             |   |                    |   |   |   |   |   |   |   |
|                                                                              |   |                    |   |   |   |   |   |   |   |
| Net profit (loss)                                                                 |   | $                       | 735    |   |   | $ | (5,644 | ) |   | $ | (10,557 | ) |
|                                                                              |   |                    |   |   |   |   |   |   |   |   |   |   |
| Adjustments to reconcile net loss to net cash used in operatingactivities:   |   |                    |   |   |   |   |   |   |   |   |   |   |
| Adjustments to the profit or loss items:                                          |   |                    |   |   |   |   |   |   |   |   |   |   |
| Depreciation                                                                      |   |                    | 45     |   |   |   | 88 |   |   |   | 96 |   |
| Impairment charge                                                                 |   |                    | -      |   |   |   | 5,168 |   |   |   | 7,810 |   |
| Loss on sale of fixed assets                                                      |   |                    | 3      |   |   |   | - |   |   |   | 726 |   |
| Revaluation of warrants                                                           |   |                    | -      |   |   |   | (3,013 | ) |   |   | (2,299 | ) |
| Share-based compensation (recovery)                                               |   |                    | (32    | ) |   |   | 57 |   |   |   | 976 |   |
| Gain on settlement of accounts payable and other payables                         |   |                    | (1,374 | ) |   |   | - |   |   |   | - |   |
|                                                                              |   |                    |   |   |   |   |   |   |   |   |   |   |
|                                                                              |   |                    | (1,358 | ) |   |   | 2,300 |   |   |   | 7,309 |   |
| Changes in operating asset and liability items:                                   |   |                    |   |   |   |   |   |   |   |   |   |   |
|                                                                              |   |                    |   |   |   |   |   |   |   |   |   |   |
| Decrease (increase) in accounts receivable, other receivablesand prepaid expenses |   |                    | 2,449  |   |   |   | 4,847 |   |   |   | (6,696 | ) |
| Increase (decrease) in trade payables                                             |   |                    | (1,276 | ) |   |   | (3,024 | ) |   |   | 5,359 |   |
| Increase (decrease) in other accounts payable and accruedliabilities              |   |                    | (930   | ) |   |   | (490 | ) |   |   | 537 |   |
|                                                                              |   |                    |   |   |   |   |   |   |   |   |   |   |
|                                                                              |   |                    | 243    |   |   |   | 1,333 |   |   |   | (800 | ) |
|                                                                              |   |                    |   |   |   |   |   |   |   |   |   |   |
| Net cash used in operating activities                                             |   |                    | (380   | ) |   |   | (2,011 | ) |   |   | (4,048 | ) |
|                                                                              |   |                    |   |   |   |   |   |   |   |   |   |   |
| Cash flows from investing activities:                                             |   |                    |   |   |   |   |   |   |   |   |   |   |
|                                                                              |   |                    |   |   |   |   |   |   |   |   |   |   |
| Expenditures on exploration and evaluation assets                                 |   |                    | -      |   |   |   | (2,636 | ) |   |   | (10,654 | ) |
| Purchase of property and equipment                                                |   |                    | -      |   |   |   | - |   |   |   | (70 | ) |
| Proceeds from sale of equipment                                                   |   |                    | 11     |   |   |   | 1,823 |   |   |   | - |   |
| Increase (decrease) in long-term receivable                                       |   |                    | -      |   |   |   | - |   |   |   | (640 | ) |
| Decrease (increase) in restricted cash                                            |   |                    | 26     |   |   |   | 1,047 |   |   |   | (639 | ) |
|                                                                              |   |                    |   |   |   |   |   |   |   |   |   |   |
| Net cash provided by (used in) investing activities                               |   |                    | 37     |   |   |   | 234 |   |   |   | (12,003 | ) |
|                                                                              |   |                    |   |   |   |   |   |   |   |   |   |   |
| Cash flows from financing activities:                                             |   |                    |   |   |   |   |   |   |   |   |   |   |
| Proceeds from issuance of warrants, net of issuance expenses                      |   |                    | -      |   |   |   | - |   |   |   | 4,586 |   |
| Proceeds from issue of shares, net of issuance expenses                           |   |                    | 60     |   |   |   | - |   |   |   | 5,215 |   |
| Investment in equity of subsidiary by non-controlling interests                   |   |                    | -      |   |   |   | - |   |   |   | 550 |   |
|                                                                              |   |                    |   |   |   |   |   |   |   |   |   |   |
| Net cash provided by financing activities                                         |   |                    | 60     |   |   |   | - |   |   |   | 10,351 |   |
|                                                                              |   |                    |   |   |   |   |   |   |   |   |   |   |
| Decrease in cash and cash equivalents                                             |   |                    | (283   | ) |   |   | (1,777 | ) |   |   | (5,700 | ) |
| Cash and cash equivalents at the beginning of the year                            |   |                    | 617    |   |   |   | 2,394 |   |   |   | 8,094 |   |
|                                                                              |   |                    |   |   |   |   |   |   |   |   |   |   |
| Cash and cash equivalents at the end of the year                                  |   | $                       | 334    |   |   | $ | 617 |   |   | $ | 2,394 |   |

----

----

| NOTE 1: | GENERAL |
|---------|---------|

|   | a. | Nature of operations |
|--------|----|----------------------|

|   | b. | Going concern |
|--------|----|---------------|

----

----

| NOTE 2: | BASIS OF PREPARATION |
|---------|----------------------|

|   | a. | Statement of compliance |
|--------|----|-------------------------|

|   | These consolidated financial statements have been prepared in accordance with International Financial Reporting Standards ("IFRS") as issued by the International Accounting Standards Board (“IASB”) and interpretations issued by the IFRS Interpretations Committee (“IFRIC”). |
|--------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | b. | Basis of presentation |
|--------|----|-----------------------|

|   | The consolidated financial statements have been prepared on a historical cost basis, and are presented in U.S. dollars. All values are rounded to the nearest thousand ($000), except share and per share data or when otherwise indicated. |
|--------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | On August 9, 2013, the Company completed a consolidation of the Company’s Common Shares on the basis of one post-consolidation Common Share for every three pre-consolidation Common Shares (the "Share Consolidation"). |
|--------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | On September 29, 2014, the Company completed a second consolidation of the Company’s Common Shares on the basis of one post-consolidation Common Share for every five pre-consolidation Common Shares (the "Second Share Consolidation").  All share and per share data for all periods presented have been adjusted to reflect the decrease in number of shares resulting from the Consolidation and the Second Consolidation. |
|--------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | c. | Basis of consolidation |
|--------|----|------------------------|

|   | These consolidated financial statements include the accounts of the Company and its wholly-owned subsidiaries Adira Energy Holdings Corp., Adira Energy Israel Limited, Adira Oil Technologies Limited and Adira Energy Israel Services Ltd. In addition Adira Energy Holdings Corp. has a 60% ownership in Adira Geo Global Limited. |
|--------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| NOTE 3: | SIGNIFICANT ACCOUNTING POLICIES |
|---------|---------------------------------|

|   | a. | Significant judgments and estimates |
|--------|----|-------------------------------------|

|   | The preparation of the consolidated financial statements requires management to make judgments, estimates and assumptions that have an effect on the application of the accounting policies and on the reported amounts of assets, liabilities, revenues and expenses. These estimates and underlying assumptions are reviewed regularly. Changes in accounting estimates are reported in the period of the change in estimate. In the preparation of these consolidated financial statements the Company has not identified any judgments or estimates which may have a significant effect on the amounts recognized in the consolidated financial statements. |
|--------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

----

----

| NOTE 3: | SIGNIFICANT ACCOUNTING POLICIES (Cont.) |
|---------|-----------------------------------------|

|   | b. | Unincorporated joint oil and gas ventures |
|--------|----|-------------------------------------------|

|   | c. | Farm-out arrangements in the exploration and evaluation phase |
|--------|----|---------------------------------------------------------------|

|   | d. | Translation of foreign currencies |
|--------|----|-----------------------------------|

|   | The Company’s presentation currency is the U.S. dollar. The functional currency which is the currency that best reflects the economic environment in which the Company operates and conducts its transactions, is separately determined for the Company and each of its subsidiaries, and is used to measure the financial position and operating results. The functional currency of the Company and its subsidiaries is the U.S. dollar. Transactions denominated in foreign currency (other than the functional currency) are recorded on initial recognition at the exchange rate at the date of the transaction. After initial recognition, monetary assets and liabilities denominated in foreign currency are translated at the end of each reporting period into the functional currency at the exchange rate at that date. Exchange differences, are recognized in profit or loss. Non-monetary assets and liabilities measured at cost are translated at the exchange rate at the date of the transaction. |
|--------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

----

----

| NOTE 3: | SIGNIFICANT ACCOUNTING POLICIES (Cont.) |
|---------|-----------------------------------------|

|   | e. | Cash equivalents |
|--------|----|------------------|

|   | f. | Financial instruments |
|--------|----|-----------------------|

|   |  Financial assets and liabilities         |  Classification              |
|--------|------------------------------------------------|-----------------------------------|
|   |                                           |                              |
|   |  Cash and cash equivalents                |  Loans and receivables       |
|   |                                           |                              |
|   |  Restricted deposits                      |  Loans and receivables       |
|   |                                           |                              |
|   |  Other receivables                        |  Loans and receivables       |
|   |                                           |                              |
|   |  Trade payables                           |  Other financial liabilities |
|   |                                           |                              |
|   |  Accounts payable and accrued liabilities |  Other financial liabilities |

----

----

| NOTE 3: | SIGNIFICANT ACCOUNTING POLICIES (Cont.) |
|---------|-----------------------------------------|

|   | f. | Financial instruments (cont.) |
|--------|----|-------------------------------|

|   | g. | Property and equipment |
|--------|----|------------------------|

|   |                               | %      |   |
|--------|------------------------------------|--------|--------|
|   |                               |   |   |
|   | Drilling rig and related equipment | 10     |   |
|   | Office furniture and equipment     | 10     |   |
|   | Computers and peripheral equipment | 33     |   |

|   | h. | Impairment of non-financial assets |
|--------|----|------------------------------------|

----

----

| NOTE 3: | SIGNIFICANT ACCOUNTING POLICIES (Cont.) |
|---------|-----------------------------------------|

|   | i. | Exploration and evaluation assets |
|--------|----|-----------------------------------|

|   | Pre-license costs are expensed in the period in which they are incurred. |
|--------|--------------------------------------------------------------------------|

|   | Exploration and evaluation costs: |
|--------|-----------------------------------|

|   | j. | Income taxes |
|--------|----|--------------|

----

----

| NOTE 3: | SIGNIFICANT ACCOUNTING POLICIES (Cont.) |
|---------|-----------------------------------------|

|   | m. | Loss per share |
|--------|----|----------------|

----

----

| NOTE 3: | SIGNIFICANT ACCOUNTING POLICIES (Cont.) |
|---------|-----------------------------------------|

|   | o. | Standards and amendments issued but not yet effective |
|--------|----|-------------------------------------------------------|

| NOTE 4: | CASH AND CASH EQUIVALENTS |
|---------|---------------------------|

|                                       |   | December 31, |   |
|--------------------------------------------|--------|--------------|--------|
|                                       |   | 2014         |   |   | 2013 |   |
|                                       |   |         |   |   |   |   |
| In US dollars                              |   | $            | 249    |   |   | $ | 436 |   |
| In Canadian dollars                        |   |         | 41     |   |   |   | 126 |   |
| In new Israeli shekels (“NIS”) |   |         | 44     |   |   |   | 55 |   |
|                                       |   |         |   |   |   |   |   |   |
|                                       |   | $            | 334    |   |   | $ | 617 |   |

----

----

| NOTE 5: | RESTRICTED CASH |
|---------|-----------------|

| NOTE 6: | OTHER RECEIVABLES AND PREPAID EXPENSES |
|---------|----------------------------------------|

|                   |   | December 31, |   |   |
|------------------------|--------|--------------|--------|--------|
|                   |   | 2014         |   |   | 2013 |
| Receivable from UJVs   |   | $            | -      |   |   | $ | 2,292 |   |
| Government authorities |   |         | 16     |   |   |   | 108 |   |
| Prepaid expenses       |   |         | 48     |   |   |   | 86 |   |
| Other receivables      |   |         | -      |   |   |   | 27 |   |
|                   |   | $            | 64     |   |   | $ | 2,513 |   |

| NOTE 7: | PROPERTY AND EQUIPMENT, NET |
|---------|-----------------------------|

| Composition and movement: |
|---------------------------|

| 2014 |
|------|

|                                       |   | Drilling rig and related equipment |   |   | Office furniture and equipment |   |   | Computer and peripheral equipment |   |   | Total  |   |
|--------------------------------------------|--------|------------------------------------|--------|--------|--------------------------------|--------|--------|-----------------------------------|--------|--------|--------|--------|
| Cost:                                      |   |                               |   |   |                           |   |   |                              |   |   |   |   |
| Balance at January 1, 2014            |   | $                                  | -      |   |                           | $      | 5      |                              |   | $      | 285    |   |   | $ | 290 |   |
| Disposals during the year                  |   |                               |   |   |                           |   | (5     | )                                 |   |   | (282   | )      |   |   | (287 | ) |
| Balance at December 31, 2014               |   |                               | -      |   |                           |   | -      |                              |   |   | 3      |   |   |   | 3 |   |
|                                       |   |                               |   |   |                           |   |   |                              |   |   |   |   |   |   |   |   |
| Accumulated depreciation:                  |   |                               |   |   |                           |   |   |                              |   |   |   |   |   |   |   |   |
| Balance at January 1, 2014            |   |                               | -      |   |                           |   | 4      |                              |   |   | 225    |   |   |   | 229 |   |
| Depreciation for the year                  |   |                               |   |   |                           |   | 1      |                              |   |   | 44     |   |   |   | 45 |   |
| Disposals during the year                  |   |                               | -      |   |                           |   | (5     | )                                 |   |   | (268   | )      |   |   | (273 | ) |
| Balance at December 31, 2014               |   |                               | -      |   |                           |   | -      |                              |   |   | 1      |   |   |   | 1 |   |
|                                       |   |                               |   |   |                           |   |   |                              |   |   |   |   |   |   |   |   |
| Depreciated cost at December 31, 2014 |   | $                                  | -      |   |                           | $      | -      |                              |   | $      | 2      |   |   | $ | 2 |   |

----

----

| NOTE 7: | PROPERTY AND EQUIPMENT, NET (Cont.) |
|---------|-------------------------------------|

| 2013 |
|------|

|                                       |   | Drilling rig and related equipment |   |   | Office furniture and equipment |   |   | Computer and peripheral equipment |   |   | Total  |   |
|--------------------------------------------|--------|------------------------------------|--------|--------|--------------------------------|--------|--------|-----------------------------------|--------|--------|--------|--------|
| Cost:                                      |   |                               |   |   |                           |   |   |                              |   |   |   |   |
| Balance at January 1, 2013            |   | $                                  | 426    |   |                           | $      | 83     |                              |   | $      | 285    |   |   | $ | 794 |   |
| Disposals during the year                  |   |                               | (426   | )      |                           |   | (78    | )                                 |   |   | -      |   |   |   | (504 | ) |
| Balance at December 31, 2013               |   |                               | -      |   |                           |   | 5      |                              |   |   | 285    |   |   |   | 290 |   |
|                                       |   |                               |   |   |                           |   |   |                              |   |   |   |   |   |   |   |   |
| Accumulated depreciation:                  |   |                               |   |   |                           |   |   |                              |   |   |   |   |   |   |   |   |
| Balance at January 1, 2013            |   |                               | 348    |   |                           |   | 30     |                              |   |   | 140    |   |   |   | 518 |   |
| Depreciation for the year                  |   |                               | -      |   |                           |   | 3      |                              |   |   | 85     |   |   |   | 88 |   |
| Disposals during the year                  |   |                               | (348   | )      |                           |   | (29    | )                                 |   |   | -      |   |   |   | (377 | ) |
| Balance at December 31, 2013               |   |                               | -      |   |                           |   | 4      |                              |   |   | 225    |   |   |   | 229 |   |
|                                       |   |                               |   |   |                           |   |   |                              |   |   |   |   |   |   |   |   |
| Depreciated cost at December 31, 2013 |   | $                                  | -      |   |                           | $      | 1      |                              |   | $      | 60     |   |   | $ | 61 |   |

|   | NOTE 8: | EXPLORATION AND EVALUATION ASSETS |
|--------|---------|-----------------------------------|

|   | The following is a description of activities in respect of the Company's licenses: |
|--------|------------------------------------------------------------------------------------|

|   | a. | Gabriella: |
|--------|----|------------|

|   | The Gabriella License was awarded to the Company in July 2009. The license was issued for an initial three year period and could be renewed upon fulfillment of certain conditions for a further four year period with a further renewal option of two years in case of a reserve discovery. |
|--------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | Adira Israel, Modi’in Energy LP (“MELP”) and Brownstone Energy Inc., the partners in the license entered into various agreements for the purpose of drilling an exploration well on the Gabriella License in January 2013. The drilling, however, was not accomplished and Adira Israel and MELP alleged that the other was in default of various obligations under the Gabriella Joint Operating Agreement (“JOA”) and other agreements entered into on behalf of the Gabriella License participants. Accordingly, on February 11, 2013, Adira Israel, in its capacity as operator under the Gabriella JOA, suspended operations on the Gabriella License due to lack of funding and lack of reasonable expectation of funding to meet certain work program obligations. |
|--------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

----

----

|   | NOTE 8: | EXPLORATION AND EVALUATION ASSETS (Cont.) |
|--------|---------|-------------------------------------------|

|   | a. | Gabriella: |
|--------|----|------------|

|   | Effective July 8, 2013 (the "Settlement Agreement Effective Date"), Adira Israel entered into a settlement and release agreement (the "Settlement Agreement") with MELP and Brownstone to resolve the abovementioned disputes and the related suspension of operations on the Gabriella License. Pursuant to the Settlement Agreement, the Gabriella License participants agreed to waive and release each other from any claims and demands that they may have had against each other with respect to the Gabriella License. The Agreement further provided that the Gabriella License participants will fund their proportionate share of costs incurred in connection with the attempted drilling of the first exploration well. As of June 30, 2013, Adira Israel’s net share of the costs totaled approximately US$3.3 million, which has been paid as at December 31, 2013. Additionally, Adira Israel agreed to relinquish several entitlements, including, but not limited to, its management fee. |
|--------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | b. | Yitzhak: |
|--------|----|----------|

|   | c. | Samuel: |
|--------|----|---------|

----

| NOTE 8: | EXPLORATION AND EVALUATION ASSETS (Cont.) |
|---------|-------------------------------------------|

|   | d. | Yam Hadera: |
|--------|----|-------------|

|   | e. | For the year ended December 31, 2012, the Company recorded a $7,596 and $214 non-cash impairment charges arising from the write-off of exploration and evaluation assets on its Samuel and Eitan properties, respectively, in the statement of comprehensive profit and loss. For the year ended December 31, 2013, as a result of the relinquishment of the Samuel license and the cessation of operations on the Gabriella licenses and the lack of progress on the Yitzhak licenses, the Company recorded a $5,168 non-cash impairment charge arising from the write-off of exploration and evaluation assets in the statement of comprehensive profit and loss. For the year ended December 31, 2014 Adira Israel recorded a gain on settlement of accounts payable and other payables in the amount of $1,374, arising from settlement agreements reached with suppliers which were lower than the obligations recorded as of December 31, 2013. |
|--------|----|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| NOTE 9: | TRADE PAYABLES |
|---------|----------------|

| NOTE 10: | OTHER ACCOUNTS PAYABLE AND ACCRUED LIABILITIES |
|----------|------------------------------------------------|

|                            |   | December 31, |   |
|---------------------------------|--------|--------------|--------|
|                            |   | 2014         |   |   | 2013 |   |
|                            |   |         |   |   |   |   |
| Employees in respect of payroll |   | $            | 30     |   |   | $ | 346 |   |
| Accrued expenses                |   |         | 26     |   |   |   | 603 |   |
| Other                           |   |         | -      |   |   |   | 37 |   |
|                            |   | $            | 56     |   |   | $ | 986 |   |

----

|   | b. | Liquidity risk: |
|--------|----|-----------------|

|   | 2. | Foreign currency risk: |
|--------|----|------------------------|

----

| NOTE 12: | TAXES ON INCOME |
|----------|-----------------|

|                                                           |   | 2014   |   |   | 2013   |   |   | 2012   |   |
|----------------------------------------------------------------|--------|--------|--------|--------|--------|--------|--------|--------|--------|
| Income (loss) before recovery of   income taxes |   | $      | 735    |   |   | $      | (5,644 | )      |   | $ | (10,516 | ) |
|                                                           |   |   |   |   |   |   |   |   |   |   |   |   |
| Expected income tax recovery                                   |   | $      | 195    |   |   | $      | (1,496 | )      |   | $ | (2,787 | ) |
| Taxes in respect of prior years                                |   |   | -      |   |   |   | -      |   |   |   | 38 |   |
| Difference in foreign tax rates                                |   |   | -      |   |   |   | (134   | )      |   |   | 149 |   |
| Tax rate changes and other   adjustments        |   |   | (1,208 | )      |   |   | -      |   |   |   | - |   |
| Non-deductible expenses                                        |   |   | (343   | )      |   |   | 925    |   |   |   | 179 |   |
| Unrealized foreign exchange                                    |   |   | 617    |   |   |   | -      |   |   |   | - |   |
| Change in tax benefits not recognized                          |   |   | 739    |   |   |   | 705    |   |   |   | 2,462 |   |
| Income tax (recovery) expense                                  |   | $      | -      |   |   | $      | -      |   |   | $ | 41 |   |

|                               |   | 2014   |   |   | 2013   |   |
|------------------------------------|--------|--------|--------|--------|--------|--------|
| Deferred Tax Assets                |   |   |   |   |   |   |
| Non-capital losses carried forward |   | $      | 475    |   |   | $      | 162,748 |   |
|                               |   |   |   |   |   |   |   |   |
| Deferred Tax Liabilities           |   |   |   |   |   |   |   |   |
| Note payable                       |   | $      | (475   | )      |   | $      | (162,748 | ) |

|                                     |   | 2014   |   |   | 2013   |   |
|------------------------------------------|--------|--------|--------|--------|--------|--------|
| Deferred income tax assets               |   |   |   |   |   |   |
|    Property and equipment |   | $      | 1      |   |   | $      | 1 |   |
|    Share issuance costs   |   | $      | 874    |   |   | $      | 1,468 |   |
| Non-capital losses carried forward       |   | $      | 5,887  |   |   | $      | 4,492 |   |

----

| NOTE 12: | TAXES ON INCOME (Cont.) |
|----------|-------------------------|

| 2027   |   | $      | 88    |   |
|--------|--------|--------|-------|--------|
| 2028   |   |   | 476   |   |
| 2029   |   |   | 883   |   |
| 2030   |   |   | 1,112 |   |
| 2031   |   |   | 2,313 |   |
| 2032   |   |   | 683   |   |
| 2033   |   |   | 1,125 |   |
| 2034   |   |   | 1,001 |   |
|   |   | $      | 7,681 |   |

| NOTE 13: | SHARE CAPITAL |
|----------|---------------|

|   | a. | Authorized |
|--------|----|------------|

|   | Unlimited number of Common shares without nominal or par value. |
|--------|-----------------------------------------------------------------|

|   | b. | Issued and outstanding Common shares |
|--------|----|--------------------------------------|

|   | On August 9, 2012, the Company completed a prospectus offering of 5,267,509 units for gross proceeds of $11,099 (before issuance expenses of $1,298 including the fair value of broker warrants $219). Each unit was priced at CAN$2.10 and consists of one Common Share and three warrants. Each warrant is exercisable to acquire one Common Share at a price of CAN$0.60 per Common Share until August 9, 2015. |
|--------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | The warrants are denominated in Canadian dollars, while the functional currency of the Company is US dollars; therefore the fair value of the warrants was classified as a financial liability and the fair value of the warrants on the date of issuance was approximately $5,312. This financial liability is remeasured to fair value at the end of each period and changes in fair value is recorded in profit or loss. Therefore, the Company recorded a gain in financing income of $3,013 during the year ended December 31, 2013 and $2,299 during the year ended December 31, 2012, as a result of remeasuring the fair value of the warrants to their fair value of $3,013 and zero as of December 31, 2013 and 2012, respectively. |
|--------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | As part of the offering a total of 1,117,667 broker warrants were issued. Each broker warrant is exercisable for one Common Share at an exercise price of CAN$0.42 per Common Share until August 9, 2014. The fair value of the warrants on the date of issuance was $219, which was included in offering expenses in statement of changes in equity. |
|--------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | On July 23, 2014, the Company completed a non-brokered private placement by issuing 240,000 common shares at a price of $0.25 per common share for gross proceeds of $60. |
|--------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

----

| NOTE 13: | SHARE CAPITAL (Cont.) |
|----------|-----------------------|

|   | c. | Stock Option Plan |
|--------|----|-------------------|

|                             |   | Number ofoptionsoutstanding |      |   | Weighted averageexercise price |   |
|----------------------------------|--------|-----------------------------|-----------|--------|--------------------------------|--------|
|  Balance, January 1, 2012   |   |                        | 625,615   |   |                           | $      | 7.8 |   |
|                             |   |                        |      |   |                           |   |   |   |
| Options granted                  |   |                        | 675,333   |   |                           |   | 3.15 |   |
| Options forfeited                |   |                        | (123,541  | )      |                           |   | 8.4 |   |
|                             |   |                        |      |   |                           |   |   |   |
|  Balance, December 31, 2012 |   |                        | 1,177,407 |   |                           |   | 5.10 |   |
|                             |   |                        |      |   |                           |   |   |   |
| Options forfeited                |   |                        | (518,874  | )      |                           |   | 4.74 |   |
|                             |   |                        |      |   |                           |   |   |   |
| Balance, December 31, 2013       |   |                        | 658,533   |   |                           |   | 5.45 |   |
|                             |   |                        |      |   |                           |   |   |   |
| Options forfeited                |   |                        | (242,533  | )      |                           |   | 4.29 |   |
|                             |   |                        |      |   |                           |   |   |   |
| Balance, December 31, 2014       |   |                        | 416,000   |   |                           | $      | 5.37 |   |

----

| NOTE 13: | SHARE CAPITAL (Cont.) |
|----------|-----------------------|

|   | c. | Stock Option Plan |
|--------|----|-------------------|

| Grant date           | Expiry date       |   | Grant date fair value |   |   | Exercise price (*) |   |   | Number of options outstanding |   |   | Number of options exercisable |   |   | Average remaining contractual life |    |
|----------------------|-------------------|--------|-----------------------|--------|--------|--------------------|--------|--------|-------------------------------|--------|--------|-------------------------------|--------|--------|------------------------------------|---------|
|                 |              |   |                  |   |   |               |   |   |                          |   |   |                          |   |   |                               |    |
| January 28, 2010     | January 27, 2015  |   | $                     | 8.40   |   |               | $      | 9.00   |                          |   |   | 58,000                        |   |   |                               | 58,000  |   |   |   | 0.07 |   |
| July 22, 2010        | July 21, 2015     |   | $                     | 3.75   |   |               | $      | 9.00   |                          |   |   | 16,667                        |   |   |                               | 16,667  |   |   |   | 0.56 |   |
| January 11, 2011 (*) | January 10, 2016  |   | $                     | 9.90   |   |               | $      | 10.32  |                          |   |   | 70,000                        |   |   |                               | 64,583  |   |   |   | 1.03 |   |
| March 18, 2011 (*)   | March 17, 2016    |   | $                     | 8.85   |   |               | $      | 9.29   |                          |   |   | 6,667                         |   |   |                               | 5,833   |   |   |   | 1.21 |   |
| May 3, 2011 (*)      | May 2, 2016       |   | $                     | 7.80   |   |               | $      | 7.74   |                          |   |   | 16,667                        |   |   |                               | 14,583  |   |   |   | 1.34 |   |
| December 1, 2011 (*) | November 30, 2016 |   | $                     | 3.30   |   |               | $      | 6.45   |                          |   |   | 2,000                         |   |   |                               | 1,500   |   |   |   | 1.92 |   |
| August 22, 2012 (*)  | August 21, 2017   |   | $                     | 1.05   |   |               | $      | 2.58   |                          |   |   | 246,000                       |   |   |                               | 246,000 |   |   |   | 2.64 |   |
|                 |              |   |                  |   |   |               |   |   |                          |   |   |                          |   |   |                               |    |   |   |   |   |   |
|                 |              |   |                  |   |   |               |   |   |                          |   |   | 416,000                       |   |   |                               | 407,167 |   |   |   |   |   |

|   | (*) | The exercise price is denominated in Canadian dollars and was translated to USD in the table above using the exchange rate on December 31, 2014. |
|--------|-----|--------------------------------------------------------------------------------------------------------------------------------------------------|

----

| NOTE 13: | SHARE CAPITAL |
|----------|---------------|

|                            |   | Number of warrants (*) |   |   | Weighted average exercise price |    |
|---------------------------------|--------|------------------------|--------|--------|---------------------------------|---------|
|                            |   |                   |   |   |                            |    |
| Balance as of January 1, 2012   |   | 15,057,375             |   |   | $                               | (**0.54 | ) |
| Warrants                        |   | 82,365,640             |   |   |                            | (**0.20 | ) |
|                            |   |                   |   |   |                            |    |   |
| Balance as of December 31, 2012 |   | 97,423,015             |   |   | $                               | 0.25    |   |
|                            |   |                   |   |   |                            |    |   |
| Warrants expired                |   | (15,057,375            | )      |   |                            | 0.54    |   |
| Balance as of December 31, 2013 |   | 82,365,640             |   |   |                            | 0.20    |   |
|                            |   |                   |   |   |                            |    |   |
| Warrants expired                |   | (3,353,000             | )      |   |                            | 0.12    |   |
| Balance as of December 31, 2014 |   | 79,012,640             |   |   | $                               | 0.17    |   |

| Issue date     |   | Expiry date    |   | Grant date fair value |   |   | Exerciseprice (**) |   |   | Number of warrants |   |
|----------------|--------|----------------|--------|-----------------------|--------|--------|--------------------|--------|--------|--------------------|--------|
|           |   |           |   |                  |   |   |               |   |   |               |   |
| August 9, 2012 |   | August 9, 2015 |   | $                     | 0.07   |   |               | $      | 0.17   |               |   |   | 79,012,640 |   |

|   | (*) | Following the Share Consolidation and the Second Share Consolidation, every 15 previously issued warrants will be convertible into one Common Share of the Company. |
|--------|-----|---------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | (**) | The exercise price of these warrants is denominated in Canadian dollars and was translated to USD in the table above using the exchange rate as of December 31, 2014. |
|--------|------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| NOTE 14: | EARNINGS (LOSS) PER SHARE |
|----------|---------------------------|

----

| NOTE 15: | CAPITAL MANAGEMENT |
|----------|--------------------|

| NOTE 16: | RELATED PARTY TRANSACTIONS |
|----------|----------------------------|

|   | Compensation to directors and key management personnel: |
|--------|---------------------------------------------------------|

|                         |   | Year ended December 31, |   |
|------------------------------|--------|-------------------------|--------|
|                         |   | 2014                    |   |   | 2013 |   |   | 2012 |   |
|                         |   |                    |   |   |   |   |   |   |   |
| Short-term employee benefits |   | $                       | 212    |   |   | $ | 1,133 |   |   | $ | 1,071 |   |
| Share-based compensation     |   |                    | 22     |   |   |   | 16 |   |   |   | 613 |   |
|                         |   | $                       | 234    |   |   | $ | 1,149 |   |   | $ | 1,684 |   |
|                         |   |                    |   |   |   |   |   |   |   |   |   |   |
| Number of people             |   |                    | 2      |   |   |   | 6 |   |   |   | 7 |   |

|                     |   | Year ended December 31, |   |
|--------------------------|--------|-------------------------|--------|
|                     |   | 2014                    |   |   | 2013 |   |   | 2012 |   |
|                     |   |                    |   |   |   |   |   |   |   |
| Share-based compensation |   | $                       | 38     |   |   | $ | 32 |   |   | $ | 298 |   |
|                     |   |                    |   |   |   |   |   |   |   |   |   |   |
| Number of people         |   |                    | 3      |   |   |   | 3 |   |   |   | 4 |   |

----

| NOTE 17: | COMMITMENTS AND CONTINGENCIES |
|----------|-------------------------------|

| NOTE 18: | REVENUES AND OTHER INCOME |
|----------|---------------------------|

|   | a. | The Company operated in one segment, the oil and gas business and conducted its operations in Israel with its head office in Canada. Details of the Company's revenues and other income (all of which were derived from Israel) are as follows: |
|--------|----|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|                 |   | Year ended December 31, |   |
|----------------------|--------|-------------------------|--------|
|                 |   | 2014                    |   |   | 2013 |   |   | 2012 |   |
| Consulting           |   | $                       | -      |   |   | $ | 7 |   |   | $ | 455 |   |
| Operator fees        |   |                    | -      |   |   |   | 5 |   |   |   | 544 |   |
| Income from farm-out |   |                    | -      |   |   |   | - |   |   |   | 890 |   |
| Other income         |   |                    | -      |   |   |   | 5 |   |   |   | - |   |
|                 |   | $                       | -      |   |   | $ | 17 |   |   | $ | 1,889 |   |

|   | b. | For the year ended December 31, 2013, all $17 of revenues were derived from one customer. |
|--------|----|-------------------------------------------------------------------------------------------|

| NOTE 19: | GENERAL AND ADMINISTRATIVE EXPENSES |
|----------|-------------------------------------|

|                                |   | Year ended December 31, |
|-------------------------------------|--------|-------------------------|
|                                |   | 2014                    |   |   | 2013 |   |   | 2012 |   |
|                                |   |                    |   |   |   |   |   |   |   |
| Payroll and related payments        |   | $                       | 307 |   |   | $ | 945 |   |   | $ | 759 |   |
| Share-based compensation (recovery) |   |                    | (32 | ) |   |   | 32 |   |   |   | 887 |   |
| Professional fees                   |   |                    | 122 |   |   |   | 968 |   |   |   | 2,397 |   |
| Rent and office expenses            |   |                    | 90 |   |   |   | 280 |   |   |   | 287 |   |
| Depreciation                        |   |                    | 45 |   |   |   | 88 |   |   |   | 96 |   |
| Travel                              |   |                    | - |   |   |   | 18 |   |   |   | 350 |   |
| Insurance                           |   |                    | 30 |   |   |   | 48 |   |   |   | 31 |   |
| Others                              |   |                    | 40 |   |   |   | 434 |   |   |   | 497 |   |
|                                |   |                    |   |   |   |   |   |   |   |   |   |   |
|                                |   | $                       | 602 |   |   | $ | 2,813 |   |   | $ | 5,304 |   |

| NOTE 20: | FINANCE INCOME |
|----------|----------------|

|   | On August 9, 2012, the Company completed a prospectus offering of 26,337,546 units for gross proceeds of $11,099 (before issuance expenses of $1,298 including the fair value of broker warrants $ 219).  Each unit was priced at CAN$0.42 and consists of one Common Share and one warrant. Each warrant is exercisable to acquire 15 Common Shares at a price of CAN$0.60 per Common Share until August 9, 2015. |
|--------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

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| Exhibit Number | Description                                                                                                       |
|----------------|-------------------------------------------------------------------------------------------------------------------|
| 1.1            | Articles of Conversion (1)                                                                                        |
| 1.2            | Articles of Continuance (1)                                                                                       |
| 1.3            | By-Laws (1)                                                                                                       |
| 1.4            | Certificate and Articles of Amendment (3)                                                                         |
| 1.5            | Certificate and Articles of Amendment (5)                                                                         |
| 4.1            | 2009 Stock Option Plan (2)                                                                                        |
| 4.2            | Nominee Agreement with BRM Group Ltd (4)                                                                          |
| 8.1            | List of Subsidiaries (5)                                                                                          |
| 12.1           | Certificate of Principal Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 (5)          |
| 12.2           | Certificate of Chief Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 (5)              |
| 13.1           | Certificate of Principal Executive Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 (5)          |
| 13.2           | Certificate of Chief Financial Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 (5)              |
| 15.1           | Letter from Kost Forer Gabbay and Kasierer regarding disclosure in Item 16F of this Annual Report on Form 20F (5) |

| (1) | Incorporated by reference from our current report on Form 8-K filed with the SEC on December 2, 2008. |
|-----|-------------------------------------------------------------------------------------------------------|

| (2) | Incorporated by reference from our Form 20-F shell company report filed with the SEC on September 4, 2009. |
|-----|------------------------------------------------------------------------------------------------------------|

| (3) | Incorporated by reference from our Form 20-F report filed with the SEC on January 22, 2010. |
|-----|---------------------------------------------------------------------------------------------|

| (4) | Incorporated by reference from our Form 20-F report filed with the SEC on February 3, 2011. |
|-----|---------------------------------------------------------------------------------------------|

| (5) | Filed as an exhibit hereto. |
|-----|-----------------------------|

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|   ADIRA ENERGY LTD. |
|--------------------------|
|                     |   |
|                     |   |
|  Per:               | /s/ Gadi Levin                                                          |
|  Name:              |  Gadi Levin |
|  Title:             |  Chief Financial Officer |
|                     |   |
|  Date:              |  October 9, 2015 |

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