Final Results

20 May 2013

Sefton Resources, Inc.

("Sefton" or the "Company")

Audited results for year ending 31 December 2012

Sefton Resources, Inc. (AIM: SER), the independent oil and gas exploitation and production company with interests in California and Kansas, announces its final results for the year ending 31 December 2012.

Highlights:

·; $5.2 million cash invested in asset development (2011: $3.5million)

·; Sales up 3.6% to $4.3million (2011: $4.1million)

·; $2.2 million reduction in total liabilities and bank borrowings down 8%

·; Increased revenue sources and reserves following significant development of Kansas assets

·; $1.0 million earnings before non-cash items (2011: $1.1million)

·; $0.02 million profit (2011: $0.24 million)

Commenting today, Jim Ellerton, Chairman of the board said:

"Sefton has remained profitable while continuing to fund development and expansion of its assets and operations. From here, the Company expects to add outside capital to continue this momentum."

In accordance with the Company's articles of association, the full audited financial statements for the year to 31 December 2012 will be posted on the Company's website today and will be followed by the 2012 Annual Report to Shareholders, which will also be posted to the website and to shareholders on 25 May 2012. For further information please visit www.seftonresources.com or contact:

CHAIRMAN'S STATEMENT

Dear Shareholder,

Sefton has completed the first year of a two-year transition period, in which the board has been strengthened, the number of revenue sources increased and new reserves added. In addition, liabilities have been reduced and the Company has remained profitable.

In 2013, the Company believes that an additional revenue source can be added along with further increases in revenues and reserves. Identifying suitable third party financing to fully develop existing assets will be an additional focus, in order to realise the value created at Tapia, which is intended to be the first example of one of Sefton's assets going through the full cycle of acquisition, development and value realisation. The next cycle will be the Kansas Exploration & Production ("E&P") assets where the same process cycle has begun.

In summary, by owning and operating its assets 100%, Sefton controls its own destiny.

Operations

EOR (California)

TEG Oil & Gas USA Inc (wholly owned subsidiary of Sefton Resources, Inc - "TEG USA") is producing oil from both the Tapia Canyon oil field and the Eureka oil field in California.

At Tapia in 2012, the pilot cyclic steam programme continued and the geologic model for use in Dr Ali's thermal simulation study was completed.

This year (2013), the plan is to re-drill a replacement salt water disposal well in addition to drilling the Hartje #20 well which should result in the ability to produce and handle more fluids (oil and water), thus increasing oil production significantly.

Reserves will be re-engineered at Tapia on the back of Dr Ali's final thermal simulation report, from which an increase in the cyclic steaming operations will ensue as the report will also contain the specifications for a larger second steam generator. Moving ahead, we will look to find partners with both steam expertise and capital to fully develop Tapia, in the manner outlined by Dr Ali's reports and updated engineering.

Meanwhile at the Eureka Canyon oil field, the plan for 2013 is to complete the permitting process to drill new wells, in addition to offering third parties a seismic option followed by the drilling of a wildcat well, based on the results of recent geochemical surveys and seismic results.

TRANSMISSION (Kansas)

In an area (Leavenworth County) with little access to national natural gas markets, TEG Transmission LLC (a wholly owned subsidiary of Sefton Resources, Inc - "Transmission") acquired two inactive pipelines (LAGGS and Vanguard).

In 2012, Transmission certified both the LAGGS and Vanguard pipelines and put in place a transportation agreement and a physical "interconnect" between the LAGGS pipeline and Southern Star Central Gas Pipeline, Inc. ("Southern Star") interstate pipeline system. This agreement and physical interconnect allows Transmission to gather, transport and sell between 350 Mcf/d and 10,000 Mcf/d of natural gas from both its own and third party gas wells beyond local markets and into national markets via Southern Star's interstate pipeline system. This transmission facility will provide a third revenue stream for Sefton.

The operational team is in the process of joining the Vanguard pipeline to the LAGGS pipeline as permitting is completed and construction is now underway. In joining these two pipelines together, the area of gathering, transportation and selling gas will be expanded. This will mean that gas associated with oil can also be gathered, transported and sold, thus increasing oil production in this area.

The initial throughput is expected to be between 500 Mcf/d and 1,500 Mcf/d of natural gas which is sufficient to provide good cash flow for Transmission. Over the coming years, the plan is to increase throughput to 10,000 Mcf/d and beyond.

Transmission owns another inactive pipeline (Waverly) in Anderson County which lies about 60 miles south of Transmission's LAGGS/Vanguard pipelines. This is similar to its northern counterpart and expectations are to certify Waverly and negotiate a transportation agreement/interconnect to another interstate pipeline system once the LAGGS-Vanguard-Southern Star system is flowing gas economically.

EXPLORATION & PRODUCTION (Kansas)

With the ability to sell natural gas and natural gas associated with oil production beyond local markets in Leavenworth County, NE Kansas, TEG MidContinent Inc ("MidContinent" - a wholly owned subsidiary of Sefton Resources, Inc.) has embarked on a mineral leasing program, based on an in-house geologic study. MidContinent is acquiring mineral leases in proximity to Transmission's LAGGS/Vanguard pipelines within an area that has been inactive for some time due to lack of pipeline infrastructure and low commodity prices.

By acquiring such mineral leases with existing wells that have the ability to bring oil and gas production back on stream, MidContinent has established at least a dozen project areas which have such capabilities. The initial focus in 2012 was on wells capable of producing oil (until LAGGS joined to Vanguard) and a workover, recompletion and surface equipment refurbishment program in several old but non-depleted fields was initiated. By the end of 2012, production was established which created a second revenue stream for Sefton.

In 2013, production is expected to increase, as this reactivation program continues, which will be expanded by the acquisition of additional leases, "step-out drilling" for extending existing fields and ultimately new fields are expected to be discovered which will enhance this revenue stream further.

In addition to the pipeline system for gathering natural gas, MidContinent has sufficient water disposal facilities already in place plus a water tanker truck which provides ample water disposal capacity to allow for significant increases in water, oil and gas volumes.

As the Waverly pipeline system becomes operational, the exploration/production capabilities of this area (Anderson County) will also be activated.

J. ELLERTON

CHAIRMAN

FINANCIAL REPORT

Revenues

During the year ended 31 December 2012, revenue rose by 3.6% to $4.3 million, assisted by a marginal increase in realised oil prices despite slightly lower volumes being sold compared to 2011.

The realised oil prices maintained an average of $103 a barrel in 2012 - virtually the same average as for 2011, due to worldwide oil prices being maintained along with a favourable premium paid for heavy oil in California.

Oil volume sold in California was 39,158 barrels, compared to 40,323 barrels achieved in 2011, although due to the timing difference between production and sale of oil, production in 2012 was actually higher than the previous year at 42,498 barrels (2011 40,176 barrels).

A small amount of oil (yielding revenue of $12,000) was also sold from tanks in Kansas towards the end of the year. Although oil production was initiated in late 2012, sales of produced oil in Kansas didn't commence until early in 2013.

Profit for the year

Cost of sales (lease operating expenses and royalties) was $1.5 million compared to $1.2 million in 2011. The increase in costs despite the marginal increase in production, is due to fixed costs not decreasing, higher repairs and maintenance expenses and an increase in royalties payable resulting from the improved revenues.

After deducting the cost of sales from revenue, the gross profit from oil sales in 2012 is $2.8 million, compared to $2.9 million in 2011.

General and administrative expenses recognised in 2012 have decreased by $0.2 million compared to 2011, which has mitigated much of the increase in cost of sales.

Earnings before non-cash charges, interest and taxes were $962,000 in 2012 compared to $1,052,000 in 2011.

Non-cash depletion, depreciation and amortization and share-based payment charges combined at $0.7 million compared to $0.5 million in 2011, mainly due to increased depletion charges resulting from the Group's increased investment in non-current assets.

After deducting these costs, the net operating income for the year was $0.3 million compared to $0.5 million in 2011. However, if we consider that in 2011 there was an unusual retirement obligation credit of $142,000 compared to a charge in the current year of $56,000 then operating income, excluding the retirement obligation, is comparable year-on-year.

Net profit for the year after deducting finance costs from operating income was $21,000 compared with $0.2 million in 2011.

The Group therefore continued to remain profitable while continuing to fund development and expansion of operations with slightly lower oil sales compared to 2011.

Cash flow

The Group's cash flow statement has been reformatted in the 2012 financial statements to become more compliant with IAS 7. The main differences being that:

1) The cash flow now reconciles back to the operating profit number (instead of earnings before non-cash charges, interest and taxes) and

2) Interest paid on borrowings is now included within financing activities rather than operating activities.

As can be seen in the first part of the Group's cash flow statement, the Group generated $0.6 million from operating cash flow in 2012 compared to the generation of $1.1 million of operating cash flow in 2011.

However if we look at cash flows before changes in operating assets and liabilities the Group generated $1.0 million in 2012 compared to $0.7 million in 2011 - the difference in total operating cash flows between 2012 and 2011 being due to the combination of an increase in receivables and a decrease in payables during the year.

The Group had $947,000 in cash on hand at 31 December 2012 as compared to approximately $2.6 million at the end of 2011.

Equity fundraising

During 2012, the Group raised a net total of $3.7 million ($4.3 million before expenses) in equity funding compared with $5.4 million ($5.7 million before expenses) in 2011.

A single placing in May 2012 raised over $3 million before costs.

In July, a £15 million Equity Financing Facility ("EFF") was agreed with Darwin Strategic Limited ("Darwin"), a subsidiary of the Alphagen Volantis fund ("Henderson") part of the fund management group Henderson Global Investors. Warrants to purchase shares in Sefton were issued to Darwin as part of this arrangement.

The EFF provides Sefton with a facility which, subject to certain limited restrictions, can be drawn down at any time over the next three years; the timing and amount of any drawdown is at the discretion of Sefton.

Sefton is under no obligation to make a drawdown and may make as many drawdowns as it wishes, up to the total value of the EFF, by way of issuing subscription notices to Darwin.

This EFF facility gives Sefton the financial flexibility to continue to develop its operations and assets, thus ultimately delivering value for shareholders.

The Company considered a number of possible financing options and it was concluded that this route not only gives the Group maximum flexibility, but has the potential to deliver a lower level of dilution to existing shareholders as the Company controls the drawdown rate.

In December, a drawdown was made on the EFF raising a approximately $1 million before costs.

Investments

The Group invested $5.2 million in cash in the development of its oil and gas and natural gas gathering and transportation projects during the year - compared to $3.5 million invested in cash in the previous year.

This investment was split between the operations in California ($3.8 million invested in cash in 2012) and Kansas ($0.9 million invested in oil and gas development activities and $0.5 million invested in gas pipeline projects during 2012). $1.7 million of this cash investment related to the payment of additions recorded in 2011, significantly reducing the trade payables.

In California oil production volumes improved towards the end of the year as the benefits were reaped from the investments made in the acidisation and steaming of the Yule wells ahead of the resolution of the water disposal issues, and good progress has also been made on the thermal simulation report on Tapia.

In Kansas, an additional licence was acquired during the year with a number of oil wells already drilled. The Group is investing in a workover and recompletion programme that will see oil, gas and CBM wells brought back into production with first revenues from oil whilst additional gas assets are being assembled for the future development as all the pipelines become operational.

Investment during 2012 in three pipelines owned by the Group is proving positive with the Vanguard pipeline system certified as ready to flow in late 2012.

The LAGGS pipeline in Leavenworth County has been fully refurbished and is now connected to the Southern Star Interstate Pipeline system which allows sales outside the local Kansas market.

Plans are to join the Vanguard pipeline to the LAGGS system in Leavenworth County which will increase the scale of this gathering system. This means the Group will be able to transport its own gas as well as third party gas to market and generate additional revenues.

Non-current assets increased by 13% during 2012 to $26.1 million at 31 December 2012 from $23.0 million at the end of 2011 due to the continued successful asset development in both California and Kansas. Total assets increased to $27.9 million from $26.1 million in the previous year.

Total liabilities decreased by 21% to $8.1 million from $10.3 million in 2011 due principally to further payments reducing the outstanding long-term borrowings and a significant reduction (75%) in trade and other payables at 31 December 2012 compared to the previous year.

Net assets at 31 December 2012 increased to $19.8 million from $15.8 million in 2011.

Liquidity & risk management

Although new short-term loan notes were issued during 2012 to the value of $129,000, overall debt was reduced as the Group repaid $600,000 of bank borrowings during the year (2011: $1.2 million). At 31 December 2012, total borrowings had fallen to $5.6 million from $6.1 million at the end of 2011.

The Group has prepared cash flow and profit forecasts into 2014 covering its operational activities, further investment in its oil and gas production and transportation assets and the replacement repayment in early 2014 of the outstanding bank borrowings which the Group is confident can be achieved whilst maintaining profitability.

For these reasons, the Company continues to prepare the Group's financial statements on a going concern basis.

Risk management

The Group's activities expose it to a variety of financial risks that arise as a result of its exploration, development, production, and financing activities. The Group's overall risk management programme focuses on the unpredictability of financial markets and seeks to minimise potential adverse effects on the Group's financial performance.

Commodity price risk

The Group is exposed to commodity price risk as it sells its oil and gas production on a floating price basis, and may consider partially mitigating this risk in the future through hedging instruments.

Interest rate risk

The Group has a $10 million revolving credit facility (2011: $10 million) with a $5.45 million borrowing base (2011: $6.05 million) with its primary bank lender at a variable interest rate. The Group does not currently hedge its interest rate exposure and consequently, its net income or loss is directly affected by changes in interest rates.

The Group's bank deposits bear interest at nominal rates, and changes in these rates do not have any significant impact on its financial results.

Credit risk

The Group sells its production to a purchaser which it believes demonstrates strong financial ability. Due to the concentration of oil and gas production in the Group's main producing area and the availability of alternate markets, the loss of its significant purchaser would not adversely affect the Group's operations.

Liquidity risk

Liquidity risk is the risk that the Group will not have sufficient funds to meet liabilities. The Group manages its liquidity needs through forecasts which are reviewed regularly to ensure sufficient funds exist to finance the Group's current operational and investment cash flow requirements.

At 31 December 2012 the Group held approximately $947,000 in cash (2011: $2.6 million).

There have been no substantive changes in the Group's exposure to financial instrument risks, as objectives, policies and processes for managing those risks or the methods used to measure them from previous periods have not changed.

Market risk

Due to the nature of the Group's operations during 2012 and 2011, it is mainly exposed to risk arising from fluctuations in the price of oil. During the periods under review, the following oil prices (per barrel) applied:

Ms A Ovens FCCA

Financial Consultant

Consolidated statement of comprehensive income

Consolidated balance sheet

Consolidated statement of changes in equity

Consolidated statement of cash flows

Notes:

1. Financial statements

The summary financial statements set out above have been prepared in accordance with International Financial Reporting Standards ("IFRS"). These summary financial statements do not constitute financial statements in accordance with IFRS as they omit substantially all the disclosures required by IFRS. A full set of audited financial statements will be published prior to Sefton's Annual General Meeting and will be available at www.seftonresources.com

2. Earnings per share

The Group applies the provisions of IAS 33 Earnings per Share. All dilutive potential common shares have an immaterial effect on diluted earnings per share and consequentially have been excluded in determining earnings per share. The Group's basic and diluted earnings per share is therefore equivalent and accordingly one basic earnings per share has been presented.

3. Dividends

The Company is not recommending the payment of a dividend.

About Sefton

Sefton Resources is an oil and gas exploitation and production company with significant scope to develop its three major areas of interest in onshore United States. Sefton's business strategy is to acquire long life, partially developed reserves with controlling interests, and maximize shareholder value through asset development using the Company's own funds initially then involve third party capital, farm-out or merger. At this time, all Sefton assets are 100% owned and operated.

Currently Sefton has a market capitalisation of approximately £3.1 million and a higher PV(10) value for its unrisked proved reserves and unproved resources. The key operational focus at this time is on developing three revenue sources from both California and Kansas:

Enhanced Oil Recovery (EOR) projects in California

Sefton owns 100% of two oil fields in the East Ventura Basin, California - Tapia (heavy gravity oil) and Eureka Canyon (medium gravity oil). The current operational focus is to develop Tapia with an active well drilling and work-over programme in conjunction with the use of cyclic steam production enhancement. Sefton engaged Petrel Robertson Consulting to construct a geologic model to be utilised by Dr Farouq Ali, a recognised expert, in a thermal simulation study to fully optimise production and reserve development of the Tapia field.

Tapia generates the majority of Sefton's revenue at this time and has 2012 year-end estimated Proved Reserves (P1) of 3.5 million barrels.

Natural Gas Transmission in Kansas

Three gas pipelines have been acquired by Sefton in North East Kansas. The LAGGS pipeline in Leavenworth County has been fully refurbished and is now connected to the Southern Star Interstate Pipeline system which allows gathering, transportation and sales of natural gas outside local Kansas markets. Plans are to join the Vanguard pipeline to the LAGGS system (Leavenworth County) which will increase the scale of this gathering system. This means Sefton will be able to transport its own and third party natural gas to a national market and generate additional revenues. A third pipeline in Anderson County is planned to be connected to an interstate pipeline system in the future, which will provide additional opportunities for redevelopment of oil and natural gas.

Exploration and Production in Kansas

In North East Kansas (Forest City Basin), Sefton has a significant and growing acreage position (Leavenworth and Anderson Counties) where conventional oil, gas and coal bed methane (CBM) prospects have been identified. The current operational focus is in Leavenworth County where a workover, recompletion, surface equipment replacement and leasing programme is under way that will see oil, gas and CBM wells brought back into production. Initial revenues are from oil whilst additional gas assets are being assembled for future development as pipelines become operational. Estimated 2012 year-end Proved Reserves (P1) for the Leavenworth portion of our Kansas assets are 82,653 barrels of oil and 2.06 Bcf of gas; and Total unrisked Proved Reserves and Unproved Resources of 832,485 barrels of oil and 14.4 Bcf of gas for the same area.