Update regarding Convertible 2 and constructive talks between Shelton Petroleum and Petrogrand

Shelton Petroleum has been informed that Petrogrand has requested conversion of
Convertible 2. The parties are in disagreement regarding the right to convert.
The board of directors of Shelton Petroleum and Petrogrand are now holding
constructive talks and believe that a new solution that potentially could
create significant value for both companies is close at hand.


On 14 June 2013 Shelton Petroleum and Petrogrand announced that management of
the companies had agreed to enter into an agreement on the issuance of two
convertible debentures and on 10 July 2013 the two companies announced that the
agreement had been signed. During the fall of 2013, the shareholders in both
Shelton Petroleum and Petrogrand approved the transaction.

The first convertible, K1, was unconditional and amounted to SEK 30 million
with expiration on 31 December 2013. Both parties had the right to call for
conversion. K1 was intended for investments in Shelton Petroleum’s Russian
operations. Shelton Petroleum has received the proceeds from K1 and the
investments have been made with strong drilling results. The convertible was
later converted to shares.

The second convertible, K2, is conditional and amounts to SEK 185 million with
expiration on 31 December 2013. K2 is intended for a specific acquisition. K2
amounts to SEK 185 249 280 and corresponds to 9 262 464 new B shares in Shelton
Petroleum, should it be converted. In accordance with the conditions in the
agreement Petrogrand has the right to call for conversion, provided that the
conditions are fulfilled. Shelton Petroleum has received the proceeds from K2,
but the funds are kept on a blocked account, and not available for Shelton
Petroleum, until conversion is completed. If there has been no conversion by
the expiration date, the funds should be paid back to Petrogrand. The parties
are in disagreement regarding the right to convert.

The board of directors of Shelton Petroleum and Petrogrand are now holding
constructive talks and believe that a new solution that potentially could
create significant value for both companies is close at hand. The solution
entails a capital injection into Shelton Petroleum that exceeds the amount in
K2. It would be done at an average stock price significantly higher than the
conversion price of K2. Shelton Petroleum has a license portfolio with
increasing production and a significant exploration potential offshore in
Ukraine. The oil and gas markets present several attractive expansion
opportunities. The board of directors of the companies have a common view on
how to capitalize on the company’s assets and opportunities.

 

For more information, please contact:  

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

www.sheltonpetroleum.com

 

Facts 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.