Kansas Exploration & Production Operations Report

08 February 2013

Sefton Resources, Inc.

("Sefton" or the "Company")

Kansas Exploration & Production Operations Report

Sefton Resources (AIM: SER), the independent oil and gas exploitation and production company with interests in California and Kansas is pleased to announce an update of oil & gas exploration and production ("E&P") operations via its wholly-owned subsidiary TEG MidContinent Inc, and also its gas pipeline transmission operations via its wholly owned subsidiary TEG Transmission LLC ("Transmission").

Highlights

·; Oil production has been established in north east Kansas by putting in place surface facilities (tanks, flow lines, water disposal system etc.), working over and re-equipping existing oil and gas wells and providing a gas gathering system which should allow for a significant growth in oil production.

·; 550 barrels of oil have been sold since operations began in the latter part of 2012, which includes 300 barrels of oil sold in January 2013 with production coming primarily from two leases.

·; Current monthly production is estimated to average 300 barrels of oil. Production is planned from two additional leases in the near term which should add to this level of production.

·; Vanguard pipeline is now certified and in the process of being joined to the LAGGS-Southern Star pipeline system.

·; Discussions with two potential suppliers of 3rd party gas are continuing concerning deals to transport their gas to market, through Transmission's pipeline system.

Jim Ellerton, Chairman of the Board said:

"Kansas E&P operations are now generating revenue from oil sales with plans for a steady increase of such. The scope for growth in Kansas is considerable, especially as gas sales are added over the coming months. We look forward to being able to make regular production updates from Kansas and demonstrate the validity of our growth strategy for this business. "

For further information please visit www.seftonresources.com or contact:

Kansas E&P

Background

In East Kansas, TEG MidContinent (Sefton's 100%-owned subsidiary - "MidContinent") has prioritised the development of its oil and gas leases in Leavenworth County where installation of surface facilities and a workover and recompletion programme has resulted in oil and gas wells being brought back into production. Transmission (Sefton's 100%-owned subsidiary) has already joined its LAGGS pipeline with the Southern Star interstate system which will allow gas sales beyond local markets.

Average production statistics have been investigated by Competent Person Dr Nafi Onat with his analysis based on the Kansas Geological Survey data to determine the production characteristics of the formations which are Midcontinent's exploration targets. His analysis reveals:

Mississippian Formation

Although Mississippian limestone is a major reservoir in Kansas producing from hundreds of fields, potential of the Mississippian limestone has not been extensively explored in Leavenworth County. This creates an attractive opportunity for Midcontinent. Only one Mississippian field is located in Midcontinent's target area. Although gas production from the Mississippian Formation has not been reported, the field's initial oil production rate varies from 5 to 35 barrels of oil per day (BOPD). The field has produced 419,564 barrels of oil from the Mississippian limestone.

McLouth Formation (above the Mississippian surface)

Sandstone reservoirs of the McLouth Formation have produced more than 2.9 million barrels of oil and more than 23.75 billion cubic feet of natural gas from depths less than 1400 feet in Northeast Kansas (Beene, 1994). Some McLouth fields produce dry gas and some produce oil with associated gas. Although previously reported initial production averaged approximately 27 BOPD and 350 Mcf/d during the first month of operation, such rates for the McLouth wells can vary from 5 to 45 BOPD and from 15 to 400 Mcf/d.

CBM coals (above McLouth Formation)

In excess of 276 Bcf of natural gas has been produced from coal seams in Allen, Atchison, Bourbon, Chase, Chautauqua, Cherokee, Cowley, Crawford, Elk, Greenwood, Labette, Montgomery, Neosho, Wilson and Woodson counties. In Southeast Kansas coalbed methane gas initial production rates (IP) varies from 5 Mcf/d to 300 Mcf/d.

In Leavenworth, Atchison and Jefferson counties where Midcontinent's operations are located, coalbed methane gas production has been combined with McLouth gas production, therefore a report indicating coalbed methane gas production rates is not available from public sources. Based on our in-house data which has been collected from private sources and based on our experience in Leavenworth and Atchison counties, coalbed methane gas initial production rates of individual wells varies from 10 to 250 Mcf/d. Approximately 1 Bcf of gas production is estimated to have been recovered from a 10 well field (0.1 Bcf per well).

Workover and recompletion programme

MidContinent has acquired a series of leases with wells that have the capability of producing oil and gas in economic quantities with the use of newer equipment and completion technology. The Company has targeted six initial areas for immediate development which includes 46 wells (100% working interest (WI) on 34 wells and 42% WI on 14 wells).

Early work has been focused on 3 key leases with wells capable of economic oil production. Work has included: replacing and repairing surface facilities (tanks, flow lines, salt water disposal facilities etc.), electrical service, down hole equipment and surface pumps. All the workovers have been focused on the McLouth and all the wells have uphole potential in CBM.

A truck has been purchased to transport water from several leases to our water disposal facilities (Dark Horse operations adjacent to the LAGGS pipeline). MidContinent has also acquired a second lease with Kansas Corporation Commission (KCC) approved water disposal facilities which are strategically located for economic disposal of produced water from wells acquired adjacent to Vanguard pipeline.

Oil production

In the latter part of 2012 in addition to rehabilitating surface facilities, the team worked over several wells and during this process 250 barrels of oil were sold. In early 2013, with water disposal facilities in place and the equipment to transport water, further wells have been worked over and MidContinent is now producing primarily from two leases and has sold 300 barrels of oil so far this year. All oil production has been from the McLouth wells.

Current monthly production is estimated to average 300 barrels of oil. This figure should be seen as the base line level of production on which to build. The third lease is planned to be producing oil by the end of February and should add to this level of production.

In the second quarter, a fourth oil producing lease is planned to become operational after the initial workovers, testing and evaluations are completed. However, it is important to stress that with the ongoing recompletions and upgrades to surface equipment there will be periods of operational downtime that will affect the estimated daily production and it will be some time before production is truly consistent.

Measures to improve oil production

Although production from these workovers is limited at this time because MidContinent is producing from partially depleted reservoirs. Production is expected to increase from improvements to the surface facilities and the workover programme, while also increasing the inventory of leases which are compatible to our prototype geologic/engineering study and geologic maps. Moving ahead the team will be seeking to not only stimulate existing producing formations but also recomplete in other zones within the existing wells.

Recompletions are likely to be followed by step out drilling from existing wells, where less depletion will have occurred and thus better production rates can be expected. Finally, there is the drilling of new exploratory wells. Certainly the ability to dispose of water and associated gas (through LAGGS/Vanguard-Southern Star system) will allow for a significant growth in oil production.

Kansas Transmission

The Vanguard pipeline system has been certified and will be joined to the LAGGS system by a new two mile section of pipeline which is in the process of being built. Once these two pipeline systems are connected, it will allow gas to flow through the Vanguard/LAGGS system and into the Southern Star interstate system.

Discussions are being held with two potential suppliers of 3rd party gas concerning deals to transport their gas to an interstate market through our system.

Newsletter

Sefton's next newsletter will be posted on the Company's website and provide more detail on the Kansas E&P operations accompanied by a map and photographs.

About Sefton

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

Currently Sefton has a market capitalisation of approximately £6 million and an unrisked PV(10) proved reserves and resources value of $278 million (approximately £173 million) based on its assets as at the end of December 2011. The key operational focus at this time is on developing three opportunities in California and Kansas:

Enhanced Oil Recovery (EOR) projects in California

Sefton owns 100% of two oil fields In East Ventura County - Tapia (heavy gravity oil) and Eureka Canyon (medium gravity oil). Estimated 2011 year-end proved reserves stood at 3.8 million barrels. The current operational focus is to fully develop Tapia with an active well drilling and work-over programme in conjunction with the use of cyclic steam production enhancement. Sefton engaged Petrel to construct a geologic model to be utilised by Dr Farouq Ali, a recognised expert, in a thermal stimulation study to optimise production and reserve development for Tapia. Of all Sefton's operations, Tapia generates the majority of the revenues, at this time.

Exploration and Production in Kansas

In East Kansas, Sefton has a significant and growing acreage position (Leavenworth and Anderson Counties) in the Forest City Basin, where conventional oil and gas deposits as well as Coal Bed Methane (CBM) prospects have been identified. The current operational focus is in Leavenworth County where a workover and recompletion programme is under way 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.

Natural Gas Transmission in Kansas

Three gas pipelines have been acquired by Sefton. 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 Sefton is able to transport its own gas as well as third party gas to market and generate additional revenues.

A third pipeline in Anderson County is planned to be connected to an interstate pipeline system in the future to provide additional opportunities for redevelopment of oil, equity and third party gas.