Kashtan JV Increases Oil Production Volume at Lelyaki Oil Field in Ukraine

Shelton has provided an operational update on its projects in Ukraine.

Kashtan Petroleum Joint Venture -- Lelyaki Oil Field

Well No.307 has been cased for production and well completion procedure has been completed. The well was drilled to total depth of 1,960 meters and encountered measured depth oil saturated porous zones of 5.0 meters in the lowermost K zone and 8.6 meters in the dolomite reservoir of the P1+P2 zone. The well has been completed in the K zone and initial well productivity after cleanup is approximately 38 metric tonnes of fluid per day with oil cut ranging from 96% to 97.5% (average gross 284 barrels of oil per day and net Shelton of 128 barrels of oil per day).

Shelton's net volume of production from the Lelyaki Oil Field is now in excess of 400 barrels of light, 41 degree, oil per day.

Lease construction is nearing completion for the next well No.304 A, with planned spud date early in 2009. This well will be followed later in 2009 with the drilling of well No.308.

This work is an ongoing part of the Kashtan Petroleum Joint Ventures plan to fully exploit the remaining oil reserves in the Lelyaki field through optimal placement of infill production wells. In addition, the Joint Venture anticipates re-entering and sidetrack drilling of 4 other suspended wells in different parts of the field during 2009. These well interventions show very good economics as the capital cost is much lower than new drilling.