Shelton Petroleum’s Board of Directors recommends the

This statement is made by the Board of Directors of Shelton Petroleum in accordance with NASDAQ OMX Stockholm’s takeover rules regarding public offers. On 21 March 2014 Petrogrand announced a public cash offer to acquire all shares of series A at a price of SEK 18.6 per share, all shares of series B at a price of SEK 18.6 per share, all convertible bonds of series 2013/2014 at a price of SEK 17.5 plus accrued interest per convertible bond and all warrants at a price of SEK 3 per warrant in Shelton Petroleum (the "Offer"). The offer has been extended and ends on 1 July 2014. The completion of the Offer is conditional upon, among other things, that Petrogrand becomes the owner of more than 50% of the total outstanding shares in Shelton Petroleum on a fully diluted basis. Petrogrand chose to announce the Offer without prior contacts with the Board of Directors of Shelton Petroleum. The Board of Directors of Shelton Petroleum has in its evaluation of the Offer carried out analysis and evaluation of the company’s own assets. The Board of Directors has also assessed the structure of the Offer, the bidder’s intentions with the Offer and the bidder’s actions in connection with the Offer.   1. The structure of the Offer In its evaluation of the Offer, the Board of Directors has, among other things, carefully analyzed the conditions in the Offer and their implications for the shareholders, holders of convertible bonds and warrants. As a part of this process the Board of Directors has asked the Swedish Securities Council (Sw. Aktiemarknadsnämnden) several questions regarding ambiguities in the Offer. The purpose was to clarify the structure of the Offer, which is a prerequisite to being able to give a recommendation on the Offer, and to obtain clarity whether the Offer is in accordance with good practice on the stock market. A fundamental principle of the takeover rules is that a bidder may announce a public cash offer only after ensuring that the cash consideration can be paid in full. The takeover rules also state that a bidder must have serious intentions to complete the offer and must make careful and adequate preparations in order to be able to complete the offer. The Swedish Securities Council has in its statement AMN 2014:15, among other things, stated that it cannot be considered that Petrogrand has made the necessary preparations in relation to financing an offer where all shares in Shelton Petroleum are to be acquired, and in this respect, Petrogrand has acted in breach of good practice on the stock market. In addition to this statement the Securities Council also stated, among other things, that the completion conditions in Petrogrand’s Offer related to the maximum number of shares in Shelton Petroleum and the reservation regarding adjustment of the consideration in the Offer were in breach of the takeover-rules and good practice on the stock market (see AMN 2014:15). Following the statement by the council Petrogrand has made a correction of the completion condition regarding the number of shares in Shelton Petroleum. The Board of Directors of Shelton Petroleum notes that the Offer has been prolonged with an unjustifiably long acceptance period, that there have been ambiguities in the Offer and its financing, that the Securities Council has made several statements regarding the Offer and the actions of Petrogrand in relation to the Offer and that Petrogrand has been found to violate the takeover-rules and good practice on the stock market and has received criticism on a number of points. Furthermore, the Offer is structured in a way which makes it difficult to understand. The Board of Directors therefore sees an uncertainty whether Petrogrand has made the careful preparations that evidence Petrogrand’s ability to complete the Offer and if Petrogrand has serious intentions to complete the Offer.   2. Future prospects for Shelton Petroleum and the effects of the Offer on the company’s operations In the Annual Report for 2013 and in the interim report for January – March 2014, Shelton Petroleum reports the operational results the company has achieved and the opportunities and risks which are connected to the company’s business. The new drillings on the Rustamovskoye field has strengthened the company’s view on the field’s potential in terms of reserves and resources. This view has been presented in a geologic update which was made public on 13 February 2014. The company has also announced production and profitability of the Ukrainian operations and the increased risk level that is related to the geopolitical development in Ukraine. Due to the fact that Petrogrand has not communicated any strategic plan the Board of Directors cannot comment on what effects a completed offer may have on Shelton Petroleum or its employees. However, considering Petrogrand’s actions in conjunction with the offer, Petrogrand’s lack of operational progress in its own business operations and Petrogrand’s weak financial results and large cost base, combined with the unclear financing of the Offer at full acceptance, it is the opinion of the Board of Directors in Shelton Petroleum that the risk level in Shelton Petroleum would increase should the Offer be completed.   3. Independent valuation The Board of Directors has obtained an independent valuation from Remium Nordic, which includes valuations based on 1. future cash flows discounted to net present value and 2. a relative valuation based on a comparison of Shelton Petroleum with comparable listed companies’ valuation multiples including among others price to earnings and enterprise value to reserves. Remium Nordic concludes that the Offer is not fair from a financial perspective for holders of shares, convertible bonds and warrants in Shelton Petroleum.   4. Summarized assessment of the Offer The Board considers that there are several uncertainties regarding Petrogrand’s intentions with the Offer as well as Petrogrand’s ability and willingness to complete the Offer. The Board finds that the offered consideration in the Offer, in particular considering the ambiguities in the Offer, does not correspond to the underlying long-term value in Shelton Petroleum. This is confirmed by the independent valuation carried out by Remium Nordic. The Board’s summarized assessment is thus to advise Shelton Petroleum’s holders of shares, convertible bonds and warrants not to accept the Offer.   Stockholm, 9 June 2014 Shelton Petroleum AB (publ) The Board of Directors   For more information, please contact: Robert Karlsson, CEO Shelton Petroleum, +46 709 565 141 robert.karlsson@sheltonpetroleum.com www.sheltonpetroleum.com   The information provided herein is such that Shelton Petroleum AB is obligated to disclose it pursuant to the Securities Markets Act (2007:528) and the Takeover rules. The information was submitted for publication at 13:25 (CET) on 9 June 2014.   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 symbol SHEL B. This is an English translation of the Swedish original. In case of discrepancies, the Swedish original shall prevail.