Shelton Canada Corp.
TSX VENTURE : STO

Shelton Canada Corp.

June 02, 2009 17:04 ET

Shelton Reports First Quarter Results

CALGARY, ALBERTA--(Marketwire - June 2, 2009) - Shelton Canada Corp. ("Shelton" or the "Company") (TSX VENTURE:STO) is progressing well on their projects in Ukraine. The geological report on West Biruchya has been completed and the front end engineering work on North Kerchenskaya should be completed in the 2nd quarter of this year. The preparation work for the 300 km seismic run on the Black Sea, Arkchangelske project is well underway.

The Company has announced consolidated revenue from operations of $582,617 for three months ending March 31, 2009 compared to $2.035 million from operations for the three months ending March 31, 2008. In addition, the Company had a net (loss) for the first quarter of ($799,905) versus net income of 14,336 for the first quarter ending March 31, 2008. The decrease in net income reflects lower oil prices in Ukraine and an inventory write-down recognized in the first quarter 2009. Market participants in Ukrainian oil auctions, due to struggling Ukrainian economy, have decreased substantially and created a situation where pricing is at a deep discount to world market.

The Company inventory write-down of $226,151 was done in accordance with the Company's accounting policies of recognizing the lower of net realizable value or cost of inventory. The net realizable value of the oil in inventory was lower than the cost recognized, due to lower oil prices in Ukraine resulting from slowing economy and therefore lower demand for oil.

In addition, during the three months ending March 31, 2009, the Company incurred royalty costs in excess of the price received from the sale of oil. This result occurred because the oil price applied in the royalty coefficient, which is used to calculate the royalty, was derived from the Urals monthly average price of crude while the Company actually received a price substantially lower for the oil sold.

The Company has initiated discussions with Ukrnafta, our partner in Kashtan Petroleum, as well as with the Ukrainian government to resolve this temporary anomaly and develop mechanisms to adjust the royalty payments with the price of oil in Ukraine.

Shelton has also arranged for an alternative storage facility in order to reduce storage costs for the produced oil and is working on strategies to capture world prices on future sales.

Production decreased to an average of 315 boe/d for the three months ending March 31, 2009, as compared to 349 boe/d for the three months ending March 31, 2008.

About Shelton Canada Corp.:

Shelton Canada Corp. (www.sheltoncdn.com), a Canadian-based junior oil and gas company, is focused on exploring and developing the resource-rich basins of Ukraine. The company has an internationally experienced board of directors and a long history of successful operations in Ukraine. These competitive advantages have helped Shelton to build effective personal relationships, strategic regional partnerships, and a large land position and a portfolio of projects on and offshore. Shelton's long-term goals are to become the leader in oil and gas production from the resource-rich Azov and Black Sea basins in five years.

Forward-Looking Information

Except for statements of historical fact relating to the company, this news release contains certain "forward-looking information" within the meaning of applicable securities law. Forward-looking information in this news release is characterized by words such as "plan", "expect", "project", "intend", "believe", "anticipate", "estimate", and other similar words, or statements that certain events or conditions "may" "will" or "could" occur. There are uncertainties inherent in forward-looking information, including factors beyond Shelton Canada Corp.'s control, and no assurance can be given that such events will occur on time or at all. Shelton Canada Corp. undertakes no obligation to update forward-looking information if circumstances or management's estimates or opinions should change, except as required by law. The reader is cautioned not to place undue reliance on forward-looking statements. The risks and uncertainties set forth above are not exhaustive. BOEs may be misleading, particularly if used in isolation. A BOE conversion ratio of 6 Mcf: 1 bbl is based on an energy equivalency conversion method primarily applicable at the burner tip and does not represent a value equivalency at the wellhead.

The TSX Venture Exchange does not accept responsibility for the adequacy or accuracy of this release.

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