Statement from the CEO

Shelton Petroleum continues to show significant progress. The company’s operating margin of 25% in the first quarter is strong, and it has proven to be stable for a number of quarters. Our production of over 519 barrels per day is an increase of 14% compared to the same quarter last year.

During the year, we have focused on the development program at the Rustamovskoye oil field in Bashkiria, Russia. In early May, we announced that the new production well encountered oil in a sandstone formation at target depth. The fact that we have discovered oil in three out of three wells on this field is encouraging for future drillings and our understanding of the ultimate potential of the field. A test program, including perforation of a five-meter interval, will provide important information about the daily production volumes we can expect from this well.

At the Lelyaki oil field in Ukraine, the production was slightly higher than in the first quarter 2012 as a result of continued workovers. The previously announced test of the Permian zone in the new well #310 has been commenced.

In April, Shelton Petroleum divested its holding in AIM-listed Pan European Terminals at a premium to the market price. The transaction strengthened the company’s cash position by approximately SEK 27 million. The divestment gives us increased resources to develop the significant potential in our license portfolio. In addition to the current drilling program in Bashkiria and the development of the Lelyaki field, we have interests in high potential offshore gas licenses in Ukraine, which we want to take to the next level.

Robert Karlsson

January - March 2013

Financial development

Revenue from oil sales during the quarter amounted to SEK 23 (23) million. Shelton Petroleum sold 43,410 (41,400) barrels of oil and the production in the quarter amounted to 46,750 (41,400) barrels of oil. Prices were slightly lower in both Russia and Ukraine in the first quarter 2013 compared to the same period 2012.

The average daily production during the first quarter 2013 amounted to 519 barrels compared 455 barrels the same period 2012.

Operating expenses in the first quarter amount to SEK 18 (19) million and consist primarily of production costs, personnel costs and other external expenses. The operating result for the period January – March 2013 amounted to SEK 6 (12) million. The result for the quarter amounted to SEK 4 (11) million.

Revenue and profit for 2012 include a positive one-off item of SEK 7 million relating to the shareholding in Tomsk Refining.

An adjustment of the fair value of the investment in Pan European Terminals (PAN), SEK 3 million, and translation differences, SEK -2 million, related to intra-group loans in foreign currency are included in other comprehensive income. The adjustments to fair value and translation differences do not affect the cash flow.

The group held SEK 23 million in cash and cash equivalents at the end of the period compared to SEK 31 million at 31 December 2012. Cash flow for the quarter was SEK -8 (2) million. Cash flow from operational activities was SEK 2 million, which is below the operational profit for the quarter due to an increase in accounts receivable. Investments in exploration and development activity amounted to a total of SEK 10 (2) million in the quarter, mainly related to the new Russian well that encountered oil.

Financial fixed assets, consisting of the holding in PAN that was divested after period end in April, amounted to SEK 26 million at the end of the period compared to SEK 24 million at 31 December 2012. The increase is related to an adjustment to fair value.

The company’s convertible loan, SEK 22 million, with a 10 per cent interest and conversion price of SEK 16, matures in December 2013 and has consequently been reclassified to current liabilities.

Shareholders' equity per share at 31 March 2012 was SEK 25.86 (24.87) and the equity to assets ratio was 78 (81) per cent.

Russian operations

Shelton Petroleum’s production of oil in Russia during the first quarter amounted to 17,655 (12,400) barrels, which is significantly higher than the same period previous year. Production per day amounted to 196 (136) barrels. Revenue in the Russian segment in the first quarter amounted to SEK 4.4 (3.3) million and operating profit to SEK 1.1 (0.7) million, corresponding to an operating margin of 25% (22%).

The company spudded a new well in February as part of a production drilling program on Rustamovskoye in Bashkiria. In May, the well reached a total depth of 2,565 meters. Wireline log data show that the well encountered oil in the Devonian sandstone formation from which the other two wells on the Rustamovskoye field are producing. A five-meter interval will be perforated and production tested.

The field will be developed step by step in order to manage geological risks and balance investments against the financial resources available to the company. Shelton has therefore entered into a contract that allows it to drill one well with an option to drill one more well. Following review of drilling data and geological information a new project design on how to optimally target and extract the pool’s reserves will be finalized. The new design will encompass the possibility of horizontal drilling, which, given suitable geological conditions, allows for significantly enhanced well economics.

Ukrainian operations

Production in the first quarter amounted to 29,095 (29,000) barrels. Production per day amounted to 323 (319) barrels. Revenue in the Ukrainian segment in the first quarter amounted to SEK 18.5 (19.9) million and operating profit to SEK 8.4 (7.6) million, corresponding to an operating margin of 48% (38%).

Shelton Petroleum (Zhoda 2001 Corporation) and its partner Ukrnafta, Ukraine’s largest oil and gas company continue the field development program on the Lelyaki field. The objective is to step by step enhance productivity and increase production volumes. As previously announced, the operator Kashtan Petroleum has completed the drilling of well #310. Initially the Carboniferous zone was tested. Based on the results of the tests the operator decided to not start production from this zone, but instead isolate it and perforate the shallower Permian zone. The Permian zone accounts for approximately 75 per cent of the current Lelyaki field production. This testing process has been commenced. The operator will perforate a total of 8 meters, install an electric submersible pump and then measure flow rates.

Significant events occurring after the reporting period

In April the company divested its holding in Pan European Terminals for approximately SEK 27 million.

In May the company announced it had encountered oil in the third well at Rustamovskoye.

The parent company

The parent company's total assets as at the period end amounted to SEK 302 (309) million. Cash and cash equivalents amounted to SEK 17 (21) million. The result after tax for the first quarter was SEK -1 (5).

Risk factors and uncertainties

A detailed account of the risks facing the company can be found in the 2012 annual report. During the period, there has been no major change in material risk factors or uncertainties for the group or the parent company. Risks include exploration risk, oil price risk, exchange rate risk, liquidity risk, credit risk, interest rate risk and political risk, among others.

Upcoming financial reporting

Annual General Meeting 21 May 2013

Interim Report April – June 2013 23 August 2013

Interim Report July – September 2013 22 November 2013

Publication under Swedish law

Shelton Petroleum is publishing this information in accordance with the Swedish Financial Markets Act (Sw. Lag om värdepappersmarknaden) and/or the Swedish Financial Trading Act (Sw. Lag om handel med finansiella instrument). This information was released for publication on 21 May 2013 at 08:30 CET.

This report has not been reviewed by the company’s auditors.

(For full report, see attached file)

For more information, please contact:

Robert Karlsson, CEO, +46-709565141, robert.karlsson@sheltonpetroleum.com

Shelton Petroleum AB

Swedish corporate identity number: 556468-1491

Hovslagargatan 5B

SE-111 48 Stockholm

Tel: +46 8407 18 50

www.sheltonpetroleum.com

About Shelton Petroleum

Shelton Petroleum is a Swedish company focused on exploring and developing concessions in Russia and the resource-rich basins of Ukraine. In Russia, the company holds three licenses in the Volga-Urals area in Bashkiria and has commenced production on the Rustamovskoye field after a successful exploration program. In Ukraine, Shelton Petroleum’s wholly owned subsidiary has a joint venture with Ukrnafta and Chornomornaftogaz, two leading Ukrainian oil and gas companies. The Shelton Petroleum share is traded on NASDAQ OMX Stockholm under the under the symbol SHEL B.