Petrogrand : Year-End Report 2015 is now available on company's website

941bc94d-1b79-42f7-9437-f9625126bac5.pdf

Year-end Report January - December 2015 Petrogrand AB (publ)

11 March 2016

Fourth quarter of 2015

• During the 4th quarter, the Group had no operating income (-). The operating result for the fourth quarter amounted to TSEK -3 964 (-6 589).

  
  

• Net financial items in the 4th quarter amounted to TSEK -143 841 (13 848), including result from of sale of subsidiary (Sonoyta Ltd) TSEK -84 979, and realised change in value of Petrosibir AB (earlier Shelton Petroleum AB) shares TSEK -69 985. Currency effects amounted to TSEK 197 (15 953) in the 4th quarter 2015.

  
  

• Net result after tax for the 4th quarter amounted to TSEK -147 804 (7 259).

  
  

• Earnings per share for the 4th quarter amounted to SEK -3.67 (0.18).

  
  

  January - December 2015

  
  

• During 2015, the Group had no operating income (-). The operating result for the period amounted to TSEK -23 638 (-33 531).

  
  

• Net financial items in the period amounted to TSEK -214 739 (20 542), including sale of subsidiary (Sonoyta Ltd) -179 003, and the realised change in value of Petrosibir shares TSEK -71 875. Currency effects amounted TSEK 23 125 (20 792) in 2015.

  
  

• Net result after tax for the period amounted to TSEK -238 376 (-12 989).

  
  

• On 22 December 2015 the Group has distributed 22 200 000 shares in Petrosibir as dividend to its shareholders. Shareholders in Petrogrand have thus acquired about 53% share in Petrosibir's equity. Petrosibir is the owner of merged oil assets of both companies.

  
  

• Earnings per share for the period amounted to SEK -5.92 (-0.32).

The figures in brackets represent the corresponding period 2014

CEO's report

Dear Shareholders,

As you are aware, on 9 November 2015 the Extraordinary General Meeting of Petrogrand AB (Petrogrand) approved the board of directors' proposal to enter into a business combination with Petrosibir AB (formerly Shelton Petroleum AB) (Petrosibir), and on 16 December 2015 the deal was completed. This ended the long-lasting cross-ownership issue between Petrogrand and Petrosibir and most importantly provided the shareholders of Petrogrand with an opportunity to participate in a larger oil company with substantial production in Komi and good reserves upside in Bashkiria. As a result of the transaction Petrogrand's shareholders received 22 200 000 B shares of Petrosibir and 53% of the new company.

I believe that Petrosibir has a great potential to grow value to all shareholders including those of Petrogrand and wish good luck to the management team of the new company.

Unfortunately, in spite of Petrogrand addressing the issues raised by the Disciplinary Committee of NASDAQ Stockholm, the Disciplinary Committee on 4 December 2015 made a decision to delist the shares of Petrogrand from trading on First North on 4 February 2016. This was particularly disappointing because the decision was based on historical events, which principally took place during 2013 and 2014, before the new Board of Directors and management were appointed. We believe that the Disciplinary Committee should have taken into consideration that the breaches took place a long time ago, that the new Board of Directors and management of Petrogrand worked hard to comply with the rules of First North and that such delisting would benefit neither the Stock Exchange, not Petrogrand's shareholders. However, the decision was made, and the Board of Directors and I are actively considering alternative trading solution that would benefit all of Petrogrand's shareholders.

The new Board of Directors appointed by the Extraordinary General Meeting on 15 February 2016 and myself, the new CEO appointed on 26 February 2016, are now reviewing all available options for further development of Petrogrand and are planning to present the new strategy and rigorous business plan to the Annual General Meeting of shareholders to be held in May-June 2016. We encourage all shareholders to share their vision and ideas for the future of Petrogrand. In the meantime, we will be continuing the cutting costs regime in Petrogrand.

I appreciate your patience and support through this period and look forward to meeting you at the next Annual General Meeting so we can discuss how to grow shareholder value.

Yours sincerely,

Pavel Tetyakov,

Chief Executive Officer

Comments on the Group's result and financial position as per 31 December 2015.

Turnover and result

The Group had no operating income during the period January-December 2015 (-) and did not have any production related operating expenses (-).

The Group did not have any costs for sales and distribution during the period (-). Administration costs, which consist of personnel related expenses, professional consultancy services and other operational charges, amounted to TSEK -23 638 (-33 531).

Financial income amounted to TSEK 2 964 (3 412). On 12 December 2015, Petrogrand received 25% of the shares in Zhoda Petroleum at a value of TSEK 10 786, reported as dividend from associated company in "Consolidated income Statement". As Petrogrand has an obligation to sell or distribute these shares in the short term, the shares are reported as "Assets Held for Sale" on the Group's "Consolidated Balance Sheet".

Net financial items amounted to TSEK -214 739 (20 542), including effect of sale of Petrogrand subsidiary Sonoyta Ltd for 17 500 000 Shares in Petrosibir AB (publ) ("Petrosibir", former Shelton Petroleum AB (publ)). The shares of Petrosibir were valued per 16 December 2015 at SEK 2.26 per Share. Total result of sale amounted to TSEK -179 003, and is reported as "Profit/loss from sale of subsidiary" in the Group's Consolidated income statement (see page 8).

The Group has also realised loss from holding the shares of Petrosibir. On 22 December 2015 the Group has distributed 22 200 000 Shares in Petrosibir AB (publ) as dividend to its shareholders, at

2.6 SEK per share. On the group level the total realised loss amounted to TSEK -71 875. This effect is reported as "result from sale of financial assets that can be sold" in "Consolidated Income Statement", see page 8. As TSEK 33 954 of unrealised change in value have been accrued in 2014, the total effect on the equity caused by holding the Petrosibir shares in 2015 amounted to TSEK - 37 921. Please see "Consolidated statement of profit or loss and other comprehensive income" on page 9 and "Statement of Changes in Equity" on page 12 for further details.

On 22 December 2015 the total value of dividend has amounted to TSEK -59 940. Subsequent to the distribution of shares in Petrosibir the shareholders in Petrogrand have acquired about 53% share in Petrosibir's equity. Among other, Petrosibir's assets include assets sold by Petrogrand during December 2015.

The Group reports currency effects of TSEK 23 125 (20 792) for January- December 2015.

Result before tax amounted to TSEK -238 376 (-12 989). There was no tax charged for the period. Total Net result after tax amounted to TSEK -238 376 (-12 989).

Earnings per share for the period amounted to SEK -5.92 (-0.32).

Investment in Ripiano Holdings Ltd

Petrogrand in April 2015 acquired a 49% interest in the Cyprus Company Ripiano Holdings Ltd. The total acquisition price amounted to MUSD 21.5 and the final payment was made on 9 April 2015. Petrogrand's interest in Ripiano was held through the Cyprus subsidiary Sonoyta Ltd. Ripiano Holdings, through subsidiaries fully owns and operates three producing oil fields in Russia

The interest was held during the period 9 April 2015 - 16 December 2015 and the holding was not consolidated into the Petrogrand group.

During the Extraordinary General Meeting in Petrogrand, held on 9 November 2015, the shareholders approved the agreement with Petrosibir. The agreement involved the divestment of the interest in Ripiano Holdings.

The divestment of the interest in Ripiano Holdings was finalized on 16 December 2015, and thus "result from participation in associated company" is not included in the report. The interest was divested through the sale of subsidiary company Sonoyta Ltd to Petrosibir. As a consideration Petrogrand subscribed for 17 500 000 newly issued shares in Petrosibir. The subscription occurred on 16 December 2015.

Distribution of shareholding in Petrosibir AB

Following the agreement with Petrosibir with subsequent subscription of shares Petrogrand held a total of 22 200 000 class B shares in Petrosibir. On 22 December 2015, as a part of the agreement, all of the shares were distributed to the shareholders of Petrogrand AB.

Shareholding in Zhoda Petroleum Ukraine AB

On 11 December 2015 Petrosibir performed a dividend of their subsidiary company Zhoda Petroleum Ukraine AB to their shareholders, including Petrogrand. At the time of distribution Petrogrand AB held 4 700 000 shares in Petrosibir. After the performed dividend Petrogrand received 4 700 000 shares in Zhoda Petroleum Ukraine AB. These shares are reported as "Assets Held for Sale" in the group's "Consolidated Balance Sheet" at total value of TSEK 10 786, page 9.

Delisting from NASDAQ First North

The Disciplinary Committee of NASDAQ Stockholm has resolved in a decision dated 4 December 2015 that the Petrogrand shares shall be delisted from trading on First North on 4 February 2016. The Disciplinary Committee has also decided that Petrogrand shall pay a fine in the amount of SEK 50,000 for having breached the takeover-rules applying to the marketplace.

The decision by the Disciplinary Committee deals with events that principally took place during 2013 and 2014. The Committee holds that Petrogrand regarding the circumstances reported by the marketplace has - with one exception - breached the disclosure and information requirements in the First North rulebook and the takeover rules of the marketplace. The breaches have occurred in connection with the disclosure of information pertaining to the cross takeover bids between Petrogrand and Petrosibir.

Investments

Investments during the period amounted to 21 500 TUSD and consist of the acquired interest in Cyprus Company Ripiano Holdings Ltd.

Financing and liquidity

As of 31 December 2015 the Group's available liquid assets in total amounted to TSEK 35 632 (158 708)

Operations

As described under Investments above, Petrogrand acquired a 49% interest in Ripiano Holdings Ltd in early April 2015. On 16 December 2015 the 49% interest was formally divested and from that time onwards Petrogrand no longer has any operations associated with Ripiano Holdings Ltd.

Petrogrand held two licence areas in the Tomsk region in Russia. The exploration work performed on both these licence blocks in 2012 was not successful and one of the licenses, Muromsky- 2 was relinquished in December 2015. The other license, Nizhnepaninsky, has been on offer to potentially interested parties and is expected to be sold as soon as a reasonable agreement is achieved, or otherwise relinquished.