- Total revenue for the period: SEK 47 (29) million
- Revenue from oil sales for the period: SEK 36 (29) million
- Operating result for the period: SEK 2 (-11) million
- Result for the period after tax: SEK 1 (-12) million
- Basic and diluted earnings per share: SEK 0.06 (-1.46)
- Production during the fourth quarter: 38,800 barrels, equivalent to 422 barrels per day
- Revenue for the fourth quarter: SEK 22 (2) million
- Operating result for the fourth quarter: SEK 4 (-6) million
- 30 per cent increase in production in Ukraine
- Positive results from exploration activity on Suyanovskoye
- Amended tax law significantly reduces production taxes in Russia and Ukraine in 2012
- Exchange of convertible bond completed
(For complete year end report see attached file)
Statement from the CEO
I am pleased to announce that the production of 38,800 barrels in the fourth quarter is the highest that Shelton Petroleum has recorded in its relatively young history. At the current production level, we are able to generate a profit to our shareholders. This is an important milestone in the development of the company. The increase in sale of oil in the final quarter of the year rendered an operating result of SEK 4 million for the quarter and SEK 2 million for the full year, which is a significant improvement compared to 2010.
Shelton Petroleum’s prioritized objective is to continue to increase production volumes in both Ukraine and Russia. At the Lelyaki oil field, we are implementing a work program consisting of new wells, sidetrack drilling of suspended wells and workovers. As a direct result from these measures, production has increased month by month from 7,000 barrels in September to 9,100 barrels in December. Shelton Petroleum has taken several steps in the development program on Rustamovskoye since the publishing of the previous interim report, such as connecting the pad to the local electricity grid and establishing a network of potential buyers of the oil produced. We are also testing a new pumping design to optimize flows from the two producing wells. This work will be finalized before any new drilling will be commenced.
In order to provide incentives for oil companies to increase investments, the Presidents of both Russia and Ukraine have approved amendments to tax legislation that has significantly increased profitability of oil production as of 1 January 2012. In Russia, a reduction of the production tax for greenfields will improve Shelton Petroleum’s cash flow by approximately USD 10 per barrel. In Ukraine, a new tax formula has been introduced that lowers the royalty by approximately USD 15 per barrel.
The new tax regimes in combination with a strong oil price provide favorable conditions for increasing profitability per barrel. At the same time, the outlook for the global economy remains uncertain. There is tension in the Middle East and financial instability in Europe. Shelton Petroleum is committed to increasing its production levels, but will, as previously announced, implement the development program at a pace where the company balances investment against its finances.
2011 was an eventful year for Shelton Petroleum with both positives and negatives. Our team will continue its efforts to increase production and further establish our position on the Russian and Ukrainian oil and gas markets in 2012.
For more information, please contact:
Robert Karlsson, CEO, +46-709565141,
Shelton Petroleum AB
Swedish corporate identity number: 556468-1491
SE-111 48 Stockholm
Tel: +46 8407 18 50