Shelton Petroleum AB: Comment to Petrogrand’s request to convert Convertible 2

Petrogrand AB has requested the conversion of Convertible Debenture 2 of 185,249,280 SEK to 9,262,464 new B-shares in Shelton Petroleum. Since the conditions agreed by the parties in July 2013 have not been fulfilled, Petrogrand’s request for conversion is a breach of contract.

As both Shelton Petroleum and Petrogrand have previously announced, the right to convert Convertible 2 according to the agreement is subject to the completion of a particular transaction. In the fall of 2013, shareholders of both Petrogrand and Shelton Petroleum approved, at extraordinary general meetings, Convertible 2 with this specific condition for conversion. Since this condition has not been fulfilled, Petrogrand’s request for conversion constitutes a breach of contract. In previous contacts with Petrogrand, Shelton Petroleum has clearly communicated that conversion without a fulfillment of this condition constitutes a breach of the contractual agreement between the companies.