Statement from the CEO

I am very satisfied that Shelton Petroleum is again able to report revenue from sale of oil. The production in September amounted to over 400 barrels per day. Despite financial concerns and fear of an approaching recession in Europe and USA, the oil price has remained at a high level. This strengthens the operating result as well as cash flow from our operations. Another positive matter is the amended tax legislation that President Medvedev approved. The amended tax legislation will reduce the production tax considerably from 2012 for the size of fields that Shelton Petroleum holds.

Shelton Petroleum’s prioritized objective is to increase the production volumes. This applies to both the Russian and Ukrainian operations. In July the company announced an overall plan for the development of the Rustamovskoye field, where we as operator have completed a successful exploration program and started production of oil. The development program includes infrastructure for processing, storing and transportation of oil and drilling of up to six new production wells. Given the debt crisis in Europe and the turbulence on the global financial markets, Shelton Petroleum will implement the development program at a pace where we balance investments against our finances. The current exchange of the convertible bond of approximately SEK 30 million, where seventy per cent of the holders of the existing bond have notified the company that they intend to accept the offer, and the expected payment from the liquidation of Tomsk Refining of SEK 15-20 million in the first quarter of 2012, are important parts of the financing.

In parallel to the development program in Bashkiria, we are taking steps to increase production on the Lelyaki field in Ukraine. Production was reinstated in September and amounted to 7000 barrels of oil, net to Shelton Petroleum, in September. In October the corresponding amount was 8100 barrels of oil. Together with our partner Ukrnafta, the largest oil and gas company in Ukraine, we are conducting a program consisting of workovers of old wells, drilling of new wells and planning for future side tracks. The field has been producing oil for several decades which enables cost-effective investments with low geological risk.

In order to deepen the knowledge of the characteristics and extension of the reservoirs and to increase the company’s registered oil reserves, we are also conducting further exploration activity on the two licenses neighboring Rustamovskoye. Results so far strengthen us in our opinion that the license portfolio has much to offer going forward.

Robert Karlsson

Shelton Petroleum’s reserves and strategic objectives

(For table, see attached file)

Reserves are based upon assessment carried out in year 2009 by Trimble Engineering Associates and AGR TRACS International Consultancy Ltd.

Shelton Petroleum operates upon a good base of reserves and resources. The company has formulated the following strategic objectives:

Increase production in Bashkiria

Shelton Petroleum will continue exploration and increase extraction of oil in order to realize the potential of the Rustamovskoye, Aysky and Suyanovskoye license blocks. The short-term objective is to increase production from Rustamovskoye, where the company has completed a successful exploration program and started oil production from the first two wells.

Ramp up production at Lelyaki, Ukraine

The Lelyaki oil field was previously one of the largest producing oil fields in the Soviet Union, with a cumulative production of 385 million barrels of oil. The company plans to increase production by drilling new wells and by re-entering and sidetracking suspended wells. Investments in the Lelyaki oil field are self-financed through cash flows from oil sales. Well interventions show good economics as the required investments are low. The new wells are drilled in close proximity to pipeline infrastructure for rapid tie-in.

Convert resources to reserves

Shelton Petroleum will step by step pursue its potentially high-yield exploration opportunities offshore in Ukraine and onshore in Russia. Work will include analyzing historical exploratory data, collecting new seismic and selective and carefully assessed drilling.

Acquire new licenses and integrate vertically

Shelton Petroleum has built effective personal relationships, strategic regional partnerships and a portfolio of projects onshore and offshore. Local knowledge and experience enables the company to identify, acquire and exploit attractively valued assets in Russia and Ukraine. Shelton Petroleum holds a significant stake in Tomsk Refining AB, which is under voluntary liquidation after a trade sale of the company’s assets, and Baltic Oil Terminals, an AIM listed company with a terminals and transshipment business in Kaliningrad on the coast of the Baltic Sea.

January - September 2011

Revenue from oil sales for the period amounted to SEK 14 (27) million. The decrease in revenue compared to the first nine months 2010 is a result of the temporary shut-in of production at Lelyaki oil field until the end of August 2011. Revenue for 2011 includes sales from production at Rustamovskoye.

During the period Shelton Petroleum received SEK 51 million from the liquidation of Tomsk Refining AB and reports other revenue and a gain from the investment of SEK 11 million.

Total revenue amounted to SEK 25 (27) million.

Operating result for the period amounted to SEK -1 (-5) million.

Cash flow for the period was SEK 34 (6) million. Shelton Petroleum invested SEK 11 (12) million in the existing oil and gas properties during the period.

Cash and cash equivalents at the end of the period amounted to SEK 56 (37) million.

July - September 2011

Russian operations

Production and sale of oil in Russia during the third quarter amounted to 17,400 barrels, which is higher than the second quarter test production of 9,500 barrels. The oil was produced from the two exploration wells. There was no oil inventory in Russia at the end of the third quarter.

In July, the company announced an overview of a development program including infrastructure and drilling of up to six wells. During the third quarter, the company has taken several steps in this program by completing a comprehensive project design and construction of the drill pad. The company has conducted a close dialog with government authorities in order to secure permits and approvals. In addition, a tender process for selecting contractor for manufacturing and installing equipment for infrastructure as well as a contractor for drilling of production wells has been completed.

Shelton Petroleum has also made progress in its exploration program. Earlier this spring, sixty-five kilometers of seismic data were collected on the Aysky block. A third party processing and interpretation of the seismic data identified three prospective structures with an independent estimated potential of over 20 million barrels according to Russian standards for calculating reserves and resources. During the third quarter, the company completed a helium study on Aysky providing indications of the presence of hydrocarbons and supporting evidence that the producing structure on Rustamovskoye extends into the Aysky block.

President Medvedev has signed into law an amendment to the tax on oil production, called Mineral Extraction Tax (MET). New oil fields with initial recoverable reserves of less than five million tons (about 35 million barrels), will pay a discounted rate of MET from 1 January 2012. This will significantly enhance the value and cash generation potential of the Rustamovskoye field.

Ukrainian operations

The temporary shut-in of the Lelyaki license block has been lifted by the Ukrainian government authorities. In early September, production was reinstated and production that month and for the third quarter amounted to 7,000 barrels. In October, the company produced a net of 8,100 barrels.

Shelton Petroleum has relaunched a field development program together with its partner Ukrnafta, Ukraine’s largest oil and gas company. The objective is to step by step enhance productivity and increase production volumes. This will be achieved by a series of workovers, drilling of new wells and sidetrack drilling. In the fourth quarter, the operator put well 304A into production and spudded the new well 309.

At the September auction, 8500 barrels of oil were sold in Ukraine. Oil in inventory at the end of the third quarter amounted to approximately 6 000 barrels. Sales in October and November were 8,600 and 10,400 respectively.

Financial development

Revenue from oil sales for the third quarter 2011 amounted to SEK 9 million compared to SEK 8 million during the same period 2010. Revenue for the third quarter 2011 stems from the sale of oil at Rustamovskoye and Lelyaki, whereas revenue for the same period in 2010 was generated at the Lelyaki field. As noted above, the revenue from Lelyaki in the third quarter 2011 is only for September due to the temporary shut in which was lifted in the end of August.

In the end of August Shelton Petroleum received SEK 51 million in a first payment from the liquidation of Tomsk Refining AB (TRAB). The company reports other revenue and a gain from the investment in TRAB of SEK 11 million. The liquidator has informed Shelton Petroleum that a second payment of SEK 15-20 million net to Shelton Petroleum is likely to be made in the first quarter 2012.

Operating expenses in the third quarter amount to SEK 11 (11) million and consist primarily of personnel costs and other external expenses. The result for the third quarter amounted to SEK 8 (-7) million. Other comprehensive income amounted to SEK 1 (-26) million and includes exchange rate differences, which do not affect cash flow, on the internal group loans in foreign currency.

Cash flow for the third quarter was SEK 47 (-9) million, primarily related to operating activities, including the payment from the liquidation of TRAB. Investments in exploration and development activity amounted to a total of SEK 7 (8) million in the quarter and stem mainly from activities in Russia. The group had SEK 56 million in cash and cash equivalents at the end of the period compared to SEK 37 million at 30 September 2010 and SEK 22 million at year-end 2010.

Financial fixed assets amounted to SEK 43 million at the end of the period compared to SEK 50 million at September 2010 and SEK 92 million at 31 December 2010. The decrease since year end is primarily due to ongoing liquidation of TRAB. In the middle of June 2011 the trading in the Baltic Oil Terminals (BOT) shares was suspended. The value of the BOT holdings on that day exceeded the carrying value. Due to lack of a market value of the BOT share, Shelton Petroleum has, in accordance with IFRS, kept the value unchanged. Once trading is resumed the fair value will be reassessed and the carrying value may be adjusted.

Shareholders' equity per share at 30 September 2011 was SEK 23.96 (26.74) and the equity to assets ratio was 78 (78) per cent.

Major events occurring after the reporting period

On 21 November Shelton Petroleum announced an offer to the holders of convertible bond 2009/2011 to exchange the bond for a new secured convertible bond. The new bond will mature on 31 December 2013 and carries an annual interest of 10 per cent. Holders of approximately 70 percent of the existing convertible bond have notified Shelton Petroleum that they intend to subscribe to the offer.

The parent company

The parent company's total assets as at the period end amounted to SEK 324 (286) million. Cash and cash equivalents amounted to SEK 39 (14) million. The result after tax for the third quarter was SEK 8 (-6) million.

Risk factors and uncertainties

A detailed account of the risks facing the company can be found in the 2010 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

Year-end Report January – December 2011 24 February 2012

Annual Report 2011 April 2012

Interim Report January – March 2012 22 May 2012

Interim Report April – June 2012 23 August 2012

Interim Report July – September 2012 22 November 2012

Annual General Meeting 2012 22 May 2012

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 29 November 2011 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 company 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. The company holds three licenses in the Volga-Urals area 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. Shelton Petroleum is pursuing an integrated business model and has acquired an equity stake in Baltic Oil Terminals PLC, an AIM listed company with a terminals and transshipment business in Kaliningrad on the coast of the Baltic Sea. The Shelton Petroleum share is traded on the NGM stock exchange under the symbol SHEL B.

Note on the reserves and resources calculation

Reserves are based upon assessment carried out by Trimble Engineering Associates and AGR TRACS International Consultancy Ltd. The calculations have been derived in accordance with the Canadian Oil and Gas Evaluation Handbook and have been compiled in cooperation with the Society of Petroleum Evaluation Engineers (www.spee.org) and the Canadian Institute of Mining, Metallurgy & Petroleum (Petroleum Society). Resources have been estimated by AGR TRACS. Resources have a lower probability of extraction than reserves. All estimates are based upon information as of 30 September 2009. Reserves and resources refer to the amounts of oil and gas attributable to Shelton Petroleum's share in the fields where the company conducts joint operations via joint ventures and joint investment agreements. Amounts are reported in millions of barrels of oil equivalent. Aysky and Suyanovskoye are two exploration licenses that lie immediately next to Rustamovskoye. Drilling during the Soviet era has confirmed the presence of oil in these fields, and the company has begun an exploration program on these blocks. These licenses were acquired during the fall of 2009 and were not included in the reserve studies.