(NGM: SHEL B)
Shelton Petroleum and Ukraine’s largest oil and gas company, Ukrnafta, have drilled the new production well #304 A to total depth at the Lelyaki oil field in the Chernigov Region close to Poltava. This is the company’s first development well since the recently completed merger that formed Shelton Petroleum. Log analysis indicates good reservoir properties and the well is expected to be tied in for production in May.
“The drilling of the new well has been a success. Close proximity to pipeline infrastructure enables rapid tie in. We have initiated an investment program to increase production volumes and cash flows from the field. The program is financed through internally generated cash flows. The total daily production in 2009 was 600 barrels per day and we now estimate the field’s potential to over 3,000 barrels per day. The field’s properties are well known and this enables a cost-effective development program at low risk,” says Robert Karlsson, CEO of Shelton Petroleum.
The Lelyaki oil field was previously one of the largest producing fields in the Soviet Union, with a cumulative production of 385 million barrels of oil. Shelton Petroleum acquired a forty-five per cent stake in Lelyaki in 2007. The company reduced investments in 2009 due to the weak domestic oil price. This led to decreasing production levels and an average of 600 barrels per day for the field. During the past few months, there has been a significant improvement of the price of oil sold in Ukraine. Shelton Petroleum has therefore launched a work program consisting of new wells and a continuous program of well workovers and interventions. The objective is to reach the field potential of over 3,000 barrels per day. Investments are self-financed through cash generated by sale of oil.
The new well #304 A reached a total depth of 2,016 meters. Log analysis indicates a net pay section of approximately 20 meters in the P1, P2 and K-1 formations. The field produces a light 41 degree API oil.
Ukraine is important to world energy markets. It is one of Europe’s largest energy consumers and wants to increase production from its own basins. The country’s proven reserves include 400 million barrels of oil and 1.1 trillion cubic meters of gas (seven billion barrels of oil equivalents).
For more information, please contact:
Robert Karlsson, CEO, Shelton Petroleum, tel +46 709 565 141
About Shelton Petroleum
Shelton Petroleum is a Swedish company focused on exploring and developing concessions in the Volga-Urals area in Russia and the resource-rich basins of Ukraine. The company’s reserves amount to 14 million barrels of oil, and the potential in the company’s oil and gas contingent resources amounts to 343 million barrels of oil equivalent. Shelton Petroleum has built effective personal relationships, strategic regional partnerships and a portfolio of projects onshore and offshore. The company holds three licenses in the Russian republic of Bashkiria, located southwest of the Ural Mountains. The license blocks, which border one another, have an area of over 500 square kilometers and are surrounded by other producing oil fields. The company has found oil in its first two wells and measured commercial flow rates. In Ukraine, a strategic partnership with Ukrnafta, Ukraine's largest oil and gas company, provides Shelton Petroleum with a stake in the oil producing Lelyaki field in Chernigov Region close to Poltava. Shelton Petroleum also has a Joint Investment Agreement with Chornomornaftogaz, the leading Ukrainian oil and gas company in offshore development, that gives it a fifty per cent stake in three major license areas in the Azov and Black Sea regions. The Shelton Petroleum share is traded on the NGM stock exchange in Sweden under the symbol SHEL B.