Feb 2010

• The company changes its name to Shelton Petroleum after the completion of the merger

• New independent Western reserves report confirms reserves of 14 million barrels of oil and a resource potential of 342 million barrels of oil equivalent

• Bashkiria, Russia: Successful exploration program completed with good oil flow rates. Acquisition of two new licenses increased the company’s license area by factor of ten

• Ukraine: Drilling of a new development well in Lelyaki commenced during the first quarter 2010. Significantly improved sales prices for oil at the end of 2009

• Obtained an option to acquire a considerable holding in Tomsk Refining AB

• The company was in an exploration phase and no sale of oil or gas has yet occurred. Sales of oil will be accounted for in the first quarter 2010

• Result for the period after tax: SEK -16 million (-8)

• Result per share before and after dilution: SEK -0.10 (-0.41)

Statements from the CEO

At year-end, the merger between Petrosibir and Shelton Canada Corp. was completed and during the beginning of 2010 the new name Shelton Petroleum was adopted. I am convinced that the transaction is very positive for the shareholders of both companies. Together we obtain an increased reserves base, existing production with large resource potential, possibilities to expand both in Ukraine and Russia, strengthened operational expertise within exploration and production and increased liquidity in the share with improved access to capital.

During 2009 we achieved solid exploration results on the Rustamovskoye field in Bashkiria, Russia. We measured good indicative flow rates also in the second exploration well. We plan to start production from this well upon the completion of the upcoming test program. During the fall of 2009, we were awarded two new licenses, which increased our license area in Russia by factor of ten, resulting in a continuous block of 540 square kilometers.

The results from the Ukrainian operations will be consolidated from 1 January 2010. It is evident from the recently completed auctions that the pricing of oil improved significantly during the end of 2009 in Ukraine. It is also rewarding that the company already during the first quarter of 2010 has commenced drilling of a new development well on the Lelyaki oil field in the Chernigov Region near Poltava.

I would also like to highlight the results from the recently published independent Western reserve reports. Reserves amount to 14 million barrels of oil, and the potential in the company's oil and gas fields amounts to 342 million barrels of oil equivalent. The immediate objective is to increase the cash flow generating production from the reserves and then step-by-step realize the huge potential in the Ukrainian off-shore fields.

Shelton Petroleum’s reserves and strategic objectives

(For table, see attached file)

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

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 field's total daily production in 2009 was over 600 barrels per day. The company plans to increase production by drilling new wells and by re-entering and sidetracking suspended wells. Well interventions show very good economics as the required investments are low. The new wells are drilled in close proximity to pipeline infrastructure for rapid tie-in.

Commence production in Bashkiria

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

Convert resources to reserves

Shelton Petroleum will take steps to 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 into the oil refining business

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 undervalued assets in Russia and Ukraine. Shelton Petroleum holds an option to acquire a major share holding in Tomsk Refining AB, which owns a newly built refinery in Western Siberia.

January-December 2009

The merger between Petrosibir and Shelton Canada Corp. was completed on 31 December 2009 and the new group adopted the new name Shelton Petroleum during the first quarter of 2010. Consequently, the consolidated balance sheets for the year-end include both companies but the profit and loss statement for 2009 only refers to Petrosibir. From 1 January 2010 the consolidated profit and loss statement will include also operations in Ukraine, including the existing sale of oil.

During 2009 Shelton Petroleum completed the drilling of the second of two exploration wells on the Rustamovskoye field in the Russian republic of Bashkiria. Oil and gas have been encountered in both wells. The second well was drilled to a final depth of 2,440 meters. Core samples and an extensive program of logs have confirmed the presence of one gas interval and multiple oil intervals. An extrapolation of a recently completed shorter open hole drill stem test indicated a well flow rate corresponding to 700 barrels of oil per day from the Kynovsko-Pashysky horizon of the Devonian period. The well has now been cased, and Shelton Petroleum will commence a test program. The tests will provide additional information about the flow rates and the characteristics of the reservoir.

Investments in oil and gas assets, not including the acquisition of Shelton Canada Corp, for the period amounted to SEK 19 (24) million and pertain mainly to drilling of the second well. The company is currently in a phase of exploration, and there has yet to be any sale of oil or gas. Operating expenses amounted to SEK 18 (10) million and consist primarily of personnel costs and expenses incurred during the merger between Temporär Förvaltning i Stockholm AB (TFS) and Petrosibir AB, and the merger between Petrosibir and Shelton Canada Corp. The result for the period amounted to SEK -16 (-8) million. This result includes a change in deferred tax, given the change in the tax rate in Russia. To the total result, SEK -6 (0) million was charged in exchange rate differentials not affecting cash flow on the internal group loan in foreign currency. Cash flow for the period was SEK 27 (-44) million. Cash flow from investing activities includes the cash obtained in the reverse takeover of TFS and the merger with Shelton Canada Corp. as well as the payment of the loan to secure the option to acquire shares in Tomsk Refining AB.

At year-end, the group had 20 employees, of which two were employed with the parent company Shelton Petroleum AB. The group had SEK 33 million in cash and cash equivalents at the end of the period. Equity per share as at 31 December 2009 was SEK 0,91.

During 2009 the company was awarded two new licenses in Bashkiria. Aysky and Suyanovskoye neighbor the first license block Rustamovskoye. Previous drilling confirms the occurrence of oil on the new fields.

In November, Shelton Petroleum reached an agreement with a large shareholder in Tomsk Refining AB, a Swedish refinery with operations in Russia. Shelton Petroleum has, by granting a loan to the shareholder, obtained an option to acquire a substantial equity interest in the refinery.

The merger with Shelton Canada Corp. was completed on 31 December 2009 and Shelton Canada Corp. is now a wholly-owned subsidiary of Shelton Petroleum AB. The acquisition was executed through a non-cash issuance directed to Shelton Canada Corp’s shareholders and holders of convertibles and warrants. The value of the acquisition was approximately SEK 97 million. For further details, please see Note 3 b below.

Major events occurring after the reporting period

Shelton Petroleum and Ukraine's largest oil and gas company, Ukrnafta, have commenced drilling of their third development well as partners in the Lelyaki oil field in the Chernigov Region next to Poltava. The well is in close proximity to pipeline infrastructure for rapid tie in.

On 5 February 2010, Shelton Petroleum published the results of an independent Western reserves report on the company's licenses in Russia and Ukraine. Reserves amount to 14 million barrels of oil, and the potential in the company's oil and gas fields amounts to 342 million barrels of oil equivalent.

An EGM voted to change the company’s name from Petrosibir AB to Shelton Petroleum AB. In addition, Richard N. Edgar, Zenon Potoczny and Bruce D. Hirsche were elected as new members of the board. In order to fulfill the requirement that only one board director be a member of management, Robert Karlsson, CEO of Shelton Petroleum, stepped down as member of the board. The EGM resolved to increase the company's incentive scheme, where warrants are acquired at market value, to include the newly-elected board directors Zenon Potoczny and Richard N. Edgar, as well as the company's CFO Joakim Hedlund. Shelton Petroleum published a prospectus regarding the admission to trading of the new shares in Shelton Petroleum issued to the shareholders and holders of convertibles and warrants in Shelton Canada Corp.

The parent company

The parent company's balance sheet total as at the period end amounted to SEK 237 (35) million. Cash and cash equivalents amounted to SEK 11 (35) million. During the year the company has made investments totaling SEK 202 (0) million in connection to an acquisition as well as loans to a subsidiary. The result after tax for the period amounted to SEK -2 (-54) million. During the fourth quarter, the company issued convertible bonds of approximately SEK 30 million.

Risk factors and uncertainties

A detailed account of the risks facing the company appears in the management's report in the 2008 annual report of Petrosibir Exploration. There has been no major change in material risk factors or uncertainties during the period. Risks include exploration risk, exchange rate risk, liquidity risk, credit risk, interest rate risk and political risk, among others.


The Board of Directors intends to propose to the Annual General Meeting that no dividend is given for the financial year 2009.

Upcoming financial reporting

Annual General Meeting 17 May 2010

Interim Report January – March 26 May 2010

Interim Report April – June 26 August 2010

Interim Report July – September 30 November 2010

The Annual Report 2009 will be available at the company’s office and on the corporate website no later than two weeks before the AGM.

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 24 February 2010 at 09.00 CET.

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

For more information, please contact:

Robert Karlsson, CEO, +46-709 565 141, robert.karlsson@sheltonpetroleum.com

Shelton Petroleum AB

Swedish company number: 556468-1491

Birger Jarlsgatan 2

114 34 Stockholm

Tel: +46 8 407 18 50