Statement from the CEO

Shelton Petroleum’s immediate goal is to increase cashflow-generating production from its reserves and then, step by step, to realize the potential of over 300 million barrels of oil equivalent in its offshore fields. We have taken a number of steps in this direction during the past quarter. It is very satisfying to be able to say that Shelton Petroleum, for the first time in its history, is reporting revenues from the sale of oil through the consolidation of the Lelyaki field in Chernigov region outside Poltava. The company has entered into a production phase, in other words. We also anticipate being able to report initial revenues from oil sales from Rustamovskoye in Russia as early as summer 2010. A production test recently conducted there on the second exploration well RS#2 indicated flows of 200 barrels per day.

Shelton Petroleum is taking a number of measures to increase production levels. On the Rustamovskoye field, we are preparing a field development program, with start of drilling in 2011. On the Lelyaki field, Shelton Petroleum has rolled out a series of works consisting of new wells and a continuous program of well workovers. The field's properties are well known and this enables a cost-effective development program at low risk.

Shelton Petroleum has a clear-cut growth strategy, and I look forward to adding to the license portfolio during this year. Both Russia and Ukraine offer excellent business opportunities today.

Robert Karlsson

(For full report, including tables, see attached file)