Update regarding the interim report for January-September 2015


Following the recent shareholder approval of the agreement between
Shelton Petroleum and Petrogrand, the development on the oil and gas
market, depreciation of the Ukrainian currency and share price
development in Petrogrand, Shelton Petroleum provides an update on
several accounting items that affect the upcoming interim report. The
items, which include both adjustment of values and reclassifications, do
not by themselves affect the group’s cash flows. The interim report will
be published on 20 November 2015 in accordance with the previously
announced financial calendar.


As previously announced, extraordinary shareholders’ meetings in both
Shelton Petroleum and Petrogrand on 9 November 2015 have approved an
agreement between the two companies. As part of this agreement, Shelton
Petroleum will acquire Petrogrand’s ownership in its Russian oil assets
for a consideration to be paid in Shelton Petroleum shares. Prior to
this, Shelton Petroleum will distribute its Ukrainian operations to its
shareholders and these operations are therefore not included in the
transaction with Petrogrand.

Ukrainian operations

Due to the upcoming distribution of the Ukrainian operations to the
Shelton Petroleum shareholders, these operations will in accordance with
IFRS 5 be accounted for as discontinued operations in the financial
reporting starting from the third quarter 2015. The Ukrainian operations
will therefore be reported in the group’s income statement on a single
line below those of continuing operations.

In the preparation of the interim report, it is the opinion of the
company that the oil price and the geopolitical situation in Ukraine
will continue to be volatile. The board has therefore decided to adjust
the group’s value attributed to the Ukrainian operations from SEK 78
million to SEK 35 million in the upcoming interim report. An amount of
approximately SEK 43 million will therefore be charged to the line for
discontinued operations.

Furthermore, the weakening of the Ukrainian currency is no longer
regarded as temporary. Previous adjustments (amounting to SEK 84
million) of the value of the Ukrainian operations due to the
depreciation of the Ukrainian currency will therefore be reclassified
(from other comprehensive income to the line for discontinued
operations).

The Ukrainian operations show continued profitability despite the drop
in the oil price. In the latest published interim report for
January-June 2015, these operations recorded revenue of SEK 27 million
and an operating profit of SEK 7 million, equivalent to an operating
margin of 24 per cent. The operations have been profitable also in the
third quarter.

Shares in Petrogrand

Shelton Petroleum is Petrogrand’s largest shareholder and holds
11,585,308 shares equivalent to approximately 29% of the capital. Due to
the development in the Petrogrand share price, Shelton Petroleum has in
previous interim reports written down the book value of the shareholding
by SEK 38 million. The third quarter has evidenced a further drop by SEK
11 million. In the preparation of the upcoming interim report, it is the
opinion of the company that the share price development is no longer
temporary. Adjustments made in previous quarters and in the third
quarter of the value of the shares in Petrogrand amounting to
approximately SEK 49 million will therefore be reclassified from other
comprehensive income to financial items in the group’s income statement.

The amounts mentioned above, connected to both the Ukrainian operations
and the Petrogrand shareholding, relate to the group’s financial
statements. The effects on the parent company’s financial statements
will be described in the upcoming publication of the interim report.

 

For more information, please contact:

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

 

About Shelton Petroleum

Shelton Petroleum is a Swedish company focused on exploring and
developing concessions in Russia and Ukraine. In Russia, the company
holds 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. Shelton Petroleum oil
and gas 2P reserves amount to 34 million barrels. The company’s share is
traded on Nasdaq Stockholm under the symbol SHEL B.

The information provided herein is such that Shelton Petroleum AB is
obligated to disclose it pursuant to the Securities Markets Act and/or
the Financial Instruments Trading Act. The information was submitted for
publication at 8:30 CET on 17 November 2015.

 

This is an English translation of the Swedish original. In case of
discrepancies, the Swedish original shall prevail.

Attachments

PR151117___Update_regarding_the_interim_report_for_January_September_2015_3d124.pdf