Statement from the CEO

It is pleasing to note that Shelton Petroleum continues its positive trend. We have taken the company from pure exploration into production. The company is now generating a healthy profit from production and sale of oil.

On the Rustamovskoye field in Russia, we have implemented measures to counteract the natural depletion that all wells are exposed to and also to maximize information on reservoir characteristics in order to determine drill locations and optimize drilling technology. During the summer, we have completed a vertical seismic profile and fracking of two wells. It is satisfying that we as a direct result of the fracking raised the field’s production to over 200 barrels per day so far in August, compared to 120 in June.

The results from Rustamovskoye are encouraging and strengthen our confidence in the potential of this and the company’s adjacent fields. Based on our analyses and modeling, the company has now resolved to commence production drilling. We will conclude a drilling contract and then commence mobilization of the rig. Details of the program will be announced once they have been agreed with the drilling company.

Production in Ukraine during the second quarter was 14 per cent higher than in the fourth quarter 2011. A mobile rig is performing workovers that step by step enable us to raise produced volumes on the very profitable Ukrainian market. In addition, the activity on the oil and gas market in Ukraine is high, and we are continually taking steps to strengthen our position.

The second quarter marks another period of solid operational performance for Shelton Petroleum. We have built a foundation from which I am looking forward to further developing the potential in our license portfolio. We are committed toward further increasing the company’s production.

Robert Karlsson

For more information, please contact:

Robert Karlsson, CEO, +46-709565141,

robert.karlsson@sheltonpetroleum.com