Preliminary Results

27 March 2012

Sefton Resources, Inc.

("Sefton" or the "Company")

Unaudited Preliminary Results for the

Year ended 31 December 2011

Sefton Resources (AIM: SER), the independent oil and gas exploitation and production company with interests in California and Kansas is pleased to announce its unaudited preliminary results for the year ended 31 December 2011.

Financial Highlights

·; Oil and gas revenue $4.140 million (2010: $3.582 million)

·; Operating income $0.515 million (2010: $0.691 million)

·; Net Cash provided by Operating activities $0.949 million (2010: $1.011 million)

·; Net income $0.237 million (2010: $0.403 million)

·; Cash at year-end $2.563 million (2010: $0.948 million)

·; Investment into Oil & Gas activities $3.532 million (2010: $1.444 million)

Operational Highlights

California

·; Oil reserves valued at US$137.8million (2010: $80.6 million)

·; Three wells drilled at 100% owned Tapia Canyon oil field

·; Production at Tapia is expected to be further improved by the current work-over programme and cyclical steaming which has recommenced

·; Core data used to enhance the geologic model on which Dr Ali Farouq's Full Steam Flood project report on Tapia is based.

·; Sefton wins operator excellence award for the third successive year

Kansas

·; Majority of LAGGS and Vanguard pipeline systems now operationally certified

·; Southern Star interconnect and transportation agreement concluded

·; Acquiring additional acreage and wellbores

·; Initial cash flow expected in mid-2012

·; Post period end, Dr Nafi Onat PV10 valuation of US$140.0 million (May 2011: $100.1 million)

Jim Ellerton, Chairman of the Board said:

"In 2011, Sefton continued to establish a solid foundation of cash flow generating oil and gas assets that forms a sound platform on which to grow our business. We ended the year with improved assets in both California and Kansas, a substantially higher stock price, improved liquidity and remained profitable despite the increased costs of an enlarged management structure which has been put in place to manage our growing business. In addition we reduced our debt and ended the year with more cash in the bank. We are now perfectly positioned to develop our existing assets even further and turn their significant value into profits; whilst accelerating our growth through suitable acquisitions and possible mergers."

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

CHAIRMAN'S STATEMENT

"Sefton is now well placed to become a far larger company based on the continued development of its current assets as well as executing the Board's recent decision to accelerate growth significantly through a programme of mergers and acquisitions".

In 2011, the Company continued to establish a solid foundation of cash flow in generating oil and gas assets that form a solid platform on which to grow our business. Ahead of Sefton's anticipated growth in both California and Kansas, the management's capability has been strengthened with the appointment of Karl Arleth as Chief Executive Officer (CEO) and Bill Brand as Financial Consultant. Karl is now responsible for the day-to-day running of the Company which allows me to focus on developing the enlarged Sefton Group through mergers and acquisitions as well as heading up the investor relations programme.

In California, we initiated the creation of a geological model of the Tapia oil field and a thermal stimulation study on the back of past drilling, a cyclic steaming pilot and a continuous steam pilot. For the third year in succession, the Californian operations, headed by Harry Barnum and Bill Yates, were awarded an Operator Excellence Award for 2011 by the California Division of Oil, Gas & Geothermal Resources. The Company continued to drill additional wells and used the information provided from this work, together with the detailed analysis of core samples obtained, to upgrade the geological model. The final thermal stimulation study for a full field steam flood will be carried out using this improved geological model to ensure the most accurate results. Once drilling of the new wells was completed, cyclic steaming recommenced throughout the field. The Engineering Report as at the year-end confirmed the value of our Californian operations and recent work at Tapia allowed a portion of Proved Undeveloped Reserves to move into the Proved Developed Reserves category. We have created value in California and our next objective is to maximise profits.

In Leavenworth County, N E Kansas, two inactive pipelines were acquired and the operations team has repaired, tested and certified critical parts of this system. A transportation agreement has been signed with Southern Star which will allow Sefton's pipeline system to be connected to their major interstate pipelines ensuring gas can get to markets throughout the USA from this area. We are putting together an operational team to replicate the operational structure we have in California, which will allow the development of our oil and gas assets and provide marketing capabilities for ourselves and for others in this area. Our objective as always is to create value, which will be used to increase profits for the Group.

In the year the Board undertook an extensive programme of investor related activities to effectively relaunch Sefton and improve its profile within the investment community so as to allow the Company to broaden the shareholder base and raise additional funds to fuel the growth of the business. We hired an investor relations team who have helped bring the stock to the attention of a wider range of investors. Their investor relations campaign has led to improved contact with investors through an enhanced newsflow, a regular newsletter and enhanced promotional material. In addition, the Company has attended a number of investment exhibitions and made presentations to investors at conferences. The results of this programme can be seen in the improved liquidity of the shares and a higher stock price. At the same time the Board appointed a new NOMAD and Stockbroker, Northland Capital Partners, who joined our existing stockbrokers, Dowgate, and who have been critical in allowing us to raise investment funds at an acceptable price.

We will continue to improve the Company's promotional activities aimed at investors and to this end have engaged two independent research houses to publish additional assessment of our Company outside of our own broker's research. In addition I personally will be based in the UK for longer periods of time to focus on promoting Sefton within the institutional marketplace.

In the past twelve months the management team has been expanded to manage the growing business and in moving it forward. We expect this to continue and to appoint additional outside directors with excellent credentials as we grow further.

As a consequence of all of these activities, we are pleased to report that we ended the year with improved assets in both California and Kansas, a substantially higher stock price and despite the increased costs of a larger management structure which we regard as a key investment for the future, we remained profitable, reduced our debt and ended 2011 with more cash in the bank.

Outlook

Looking forward, 2012 has all the makings of being another transformational year for the Company for a number of reasons. In California, Dr Farouq Ali's report on a full steam flood project is expected to be completed in the summer, which will provide a road map to fully develop the Tapia oil field; contemporaneous with drilling the remaining wells, cyclic steaming existing wells and initiating the required permitting for a full steam flood. More extensive developments of Eureka field/lease are also scheduled. In Kansas, in the second half of the year we expect to see third party gas and Sefton's own equity gas flowing through our pipeline system into the interstate market. Our equity gas will come from a well-planned development programme which will be augmented by acquiring leases in proximity to the pipelines that have the ability to increase equity gas into the system. This programme is on the back of a geologic study to identify leases over several different oil, conventional gas and coalbed methane gas (CBM) prospects. In tandem with acquiring leases, the Company is also expected to start acquiring "bolt-on" assets, within our areas of interest.

To sum it all up, Sefton will continue to do what it does best which is to build and grow a stable platform of cash generating assets which will increase significantly in value, from being originally modest investments. A combination of workovers, cyclic steam and more development drilling at Tapia is expected to increase production in the coming months. Any higher recovery possibilities identified by Dr Ali will also allow reserves to be increased even further. As gas flows through our pipeline system in Kansas, development wells are initiated and the leasing program accelerated, we expect to improve production, reserves and grow the Kansas operations team. In addition, we will continue to push hard to increase the visibility of Sefton amongst investors with a focussed investor relations programme in place to ensure that the Company's value is fully recognised by the market, which will allow the valuable assets to be increased and transformed into profits.

Jim Ellerton

Chairman of the Board

CHIEF EXECUTIVE OFFICER'S REVIEW

Sefton's assets are located in California and Kansas and are divided into three operational businesses: oil production in California, oil and gas exploration acreage in Kansas and gas pipeline infrastructure in Kansas.

During 2011, the Company continued to drill and develop the California heavy oil asset, progressing the continuous steamflood project and re-starting the cyclic steaming program. In Kansas, Sefton took the first steps towards reactivating its 100% owned natural gas pipeline system and prepared its infrastructure so that it could begin to flow gas: both Sefton's and that of third parties.

Oil in California

Sefton's operations in California lie in the Ventura Basin where its wholly-owned subsidiary, TEG Oil & Gas USA, Inc. (Colorado) ("TEG USA"), operates both Tapia Canyon, an oil field producing heavy (17°-19° API) oil, and Eureka Canyon, an oil field producing medium gravity (28° API) oil.

Production

2011 was a busy year with three new wells drilled, two wells worked over, further cyclic steaming and a continuous steaming pilot study undertaken. In the year, the average production was 110 barrels of oil per day (BOPD), down from the previous year (150 BOPD) for two main reasons. Firstly, some wells had to be shut-in during the early part of the year for equipment repair. Secondly, to facilitate the drilling of three new wells later on in the year production had to be shut-in from some areas of the field which meant that at year-end 2011 production was temporarily reduced to 68 BOPD. Once the drilling programme was completed all wells were put back on production and cyclic steaming was resumed throughout the field.

The average realized price in 2011 was $102.62 per barrel of oil (BO); and lifting costs were $23.94 per BO for the year, with G&A and other costs totalling $56.15 per BO giving a gross margin of $22.53 per BO. It should be noted that had the 2010 production volumes been matched in 2011, then lifting costs would have been $17.70 per barrel.

The new wells drilled were the Yule #12, Yule #9 and Hartje #19. A fourth well Hartje #20 had been planned and whilst a permit from the California Division of Oil, Gas & Geothermal Resources (CA DOGGR) was in place, the Company did not receive final permit clearance from the Los Angeles County Department of Planning until January 2012. The drilling of the Hartje #20 well is now planned for the 3Q 2012 when the Snow lease at Tapia is also scheduled to be drilled.

Operational improvements

Following the successful drilling of the three new wells, the Company has embarked on a workover programme to carry out downhole repairs on three existing wells. These include replacing the corroded liners with stainless steel in Hartje #14 and #17 wells, and re-completing the Hartje #6 well in the existing zone or in a slightly deeper, fault-repeated Yule oil sand section. Once these wells are completed and come back into production, they will also contribute to an overall increase in the level of oil produced at Tapia.

Returning the Hartje #14 and #17 wells to production will provide additional primary oil production and also will make available two additional wells for cyclic steaming. These wells have not been steamed in the past but adjacent wells showed excellent response to the cyclic steaming process. Already the cyclic steaming program has recommenced on the Yule #5 well and Hartje #12 wells - both of which had good previous responses to the process as has been previously reported, after which other wells will be cyclic steamed.

Reserves

As at 30 December 2011, independent engineer Reed W. Ferrill calculated the present value of the California Proved Reserves to be approximately US$137.8 million (£87.7 million). The present value was determined by the analysis of the estimated future net cash flows from estimated proved reserves before income taxes using a 10% discount rate (PV10). This is based on year-end 2011 US GAAP, with constant prices and costs in which an oil price of US$102.10 per barrel was used for the Californian assets (average price for the year). The same analysis carried out at 31 December 2010 calculated a PV10 valuation of US$80.6 million using an oil price of US$71.37 per barrel (average price for the year). The quality of the reserves is improving and the work last year at Tapia allowed Proved Undeveloped (PUD) reserves to move up into the Proved Developed Non-Producing (PDNP) and Proved Developed Producing (PDP) category of reserves. By moving reserves from Proved Undeveloped into Proved Developed, oil is recovered more quickly, thus increasing the present day value.

Summary of the year-end engineering 2010 and 2011 by Reed W. Ferrill

Steamflood project

In 2011, Sefton continued to drill and develop our California heavy oil asset and progressed our steamflood project. Continuous steam injection commenced at Tapia Canyon in March 2011 with a central well steamed continuously (Hartje #10) and the results of five surrounding wells being closely monitored for increases in reservoir pressure, temperature and production. By the time the continuous steam pilot had come to an end in mid-November 2011 (to allow for the drilling of the new wells) our engineers had noted a good response from the steaming pilot in the Hartje #18 well. Also there were the beginnings of responses such as an increase in heat and reservoir pressure plus a slight production increase in the Yule #5 well, located north from the Hartje #18 well. Overall, the continuous steam injection increased production from these adjacent wells by approximately 25%.

Sefton is now continuing the steaming operations in the form of cyclic steaming, which will be initiated on the wells in the vicinity of the steam generator, Yule #5 and Hartje #12 followed by the two new wells on the Yule lease. Cyclic steaming will then progress, moving throughout the field based on recommendations outlined in the Thermal Simulation Study Report pending from Dr. Farouq Ali.

Creation of a geologic model

A highly complex geological model was developed of the Tapia field by Petrel Robertson Consulting Ltd which contained 50 layers and in excess of 500,000 data grid cells in order that study and design of the steamflood would have the greatest use and accuracy. Dr Ali's simulation analysis of the full steam flood on the Tapia field is to be carried out on this geological model. In his interim report published in November 2011, Dr Ali reconfirmed his preliminary findings and suggested that core samples taken from the drilling of the new well in Q4 2011 could provide vital data that will allow a final, more comprehensive field performance match.

The coring of the Yule Sand from two of the new wells has been followed by detailed core analysis by CoreLab of Bakersfield, California. These results will be added to the geologic model developed for the field and then Dr Ali will be able to provide a final steam flood design to be utilised in the Enhanced Oil Recovery development programme.

Steamflood stimulation study

The board commissioned Dr Farouq Ali of HOR-Heavy Oil Recovery Technologies Ltd to study and make recommendations on the potential of using thermal stimulation methods on the Tapia Canyon field in late 2010. His initial report suggested that steam flooding would potentially result in recoveries for the field in the range of 51% to 78% of the original oil in place ("OOIP"). The OOIP for the Tapia Canyon field is greater than 11 million barrels with only 1.83 million barrels having been produced to date, creating a significant opportunity for full field steam-flood recovery using these thermal stimulation methods. Dr Ali also suggested a steamflood based on a nine 5-spot pattern could generate oil production potentially of up to 1,750 barrels of oil per day (BOPD). These findings gave Sefton the confidence to take this project further.

Wayside Canyon

In the summer of 2011, Vintage Production LLC, a subsidiary of Occidental Petroleum Corporation, the fourth-largest integrated major oil company in the US, started drilling a series of horizontal wells at their Wayside Canyon oil field which is immediately adjacent to Sefton's Tapia Canyon field. In all, Vintage has permitted and drilled four wells at Wayside Canyon. Looking at the available records at the California Division of Oil, Gas & Geothermal Resources, Sefton's engineers have noted the following in relation to the two horizontal wells.

The first well (WCU #56H) was drilled during July and August of this year and was put into production in mid-August. This well produced 5,152 barrels of oil over a 13-day period (396 BOPD) ending 31 August. Since that time, the well has levelled off to 81 BOPD (December 2011). The well was programmed as a horizontal completion in the northern area of the oil field and was drilled to a vertical depth of approximately 1,300 feet below surface and a measured depth of 2,861 feet. The horizontal portion of the well measured approximately 992 feet and encountered approximately 490 feet of oil-saturated sandstone.

The second well (WCU #58H) had a longer planned horizontal section with the well entering and exiting the target sands a couple of times along its path. The entire horizontal section measured 1,765 feet in length. WCU #58H had a September 2011 initial production rate of 45 BOPD and a rate holding steady in December at 46 BOPD. The official Notice to Drill to the DOGGR indicates that the third well is being drilled from the same surface pad as the second well and will be the longest reach of all three wells. This well, named WCU#59H, reported a December 2011 initial production of 179 BOPD over a period of 22 days. Drilling of the fourth well began in January 2012 but no production is yet reported.

Eureka

TEG USA has initiated a review and modification of the Conditional Use Permit (CUP) for the Oilfield Lease. This is the first step in preparation to drill re-development wells in the area. We expect to complete this work in the Spring of 2012, at which time well planning can begin in earnest.

Operator Excellence Award

TEG USA is proud to have received an Operator Excellence Award in 2011 from the California Division of Oil, Gas & Geothermal Resources. This is the third year in succession that we have won this award.

OIL & GAS IN KANSAS

Sefton's oil and gas interests in Kansas are undertaken through a wholly-owned subsidiary, TEG MidContinent, Inc. (Colorado) ("MidContinent") and TEG Transmission Co. LLC (Transmission). MidContinent's assets include conventional oil and gas leases, and coal bed methane (CBM) leases that are located in Anderson, Franklin and Leavenworth counties. Transmission owns three pipelines in Kansas: Vanguard, LAGGS, and Waverly. In Leavenworth County, the Vanguard and LAGGS pipelines total approximately 50 miles and will allow for gas gathering and exploitation over an approximately 200 square mile area.

In 2012, the focus will be on reactivating our acquired pipeline systems in Leavenworth County, Kansas, recompleting wells for Sefton's own equity gas production, identifying third party gas opportunities and expanding our exploration program to ensure future gas volumes.

Reactivating the pipelines

A program of inspection, repair, and operational certification was undertaken on our acquired pipeline systems in Leavenworth County, Kansas starting in March 2011. By the year-end the majority of both the LAGGS and Vanguard pipelines had been operationally certified so that these lines can become joined and reactivated and flow gas into an interstate pipeline system. Strategically, the LAGGS pipeline, is the most critical segment of the system as this is where the first gas volumes will be produced about mid-2012 providing the Company with initial cash flow.

Southern Star Interconnect

In November 2011, TEG Transmission signed a contract with interstate gas transportation carrier Southern Star for an interconnect and transaction agreement, calling for activation of the TEG Transmission's pipeline system at approximately mid-year 2012. This is a significant step forward in the pipeline program in Kansas because, once the interconnect with the Southern Star Interstate Pipeline is achieved, it will allow Sefton to gather and sell its gas and that of others to the major markets throughout the USA.

Initially, the interstate connection will be capable of accepting gas volumes from 360 thousand cubic feet per day (mcfd) increasing over time up to 10 million cubic feet per day (mmcfd) with some change in compression and metering capabilities. Construction of the interconnect and metering is scheduled to start in spring of 2012 after all easement, landowner, legal, and regulatory reporting requirements are met. The estimated in-service date for the interconnect is summer of 2012. Once the TEG Transmission's LAGGS and Vanguard pipeline systems are connected to the Southern Star Interstate Pipeline System, TEG Transmission will eventually control all of the gas gathering, transmission, and marketing capability over an approximately 200 square mile area. The ability of another party to replicate this system would be very difficult and costly.

Third party and equity gas

With the LAGGS and Vanguard pipelines joined, operational and the system connected to the Interstate Pipeline, TEG Transmission will be in a position to transport two types of natural gas: its own gas (equity gas) and also gas produced by other operators (3rd party gas). Currently, the TEG MidContinent is acquiring additional acreage and wellbores with the intent of recompleting existing wells and drilling new wells along the LAGGS and Vanguard pipelines, in order to produce equity gas into the pipeline system. Sefton is also talking with several interested parties along the LAGGS and Vanguard systems with respect to transporting their 3rd party gas through our pipeline system.

Competent Persons Report

In May 2011, Dr. Nafi Onat, of Denver-based Sure Engineering, LLC, published a Competent Persons Report (CPR) which provided an independent geo-technical review and economic evaluation of the conventional oil and gas and unconventional CBM projects in TEG MidContinent's Kansas areas of interest. The CPR was updated and published in March 2012. On activating the Leavenworth County pipelines (LAGGS and Vanguard); some contingent resources and possible reserves are expected to move to the proved reserve category. The plan to eventually join these two pipeline systems together, will allow TEG Transmission to strategically move larger volumes of gas to market and to benefit from multiple regional sources of gas.

Summary table of the Competent Persons Report on Kansas as at 31 December 2011

Regional exploration plan

In April 2011, TEG MidContinent acquired additional assets from Cholla Production Company (leases, wellbores and equipment) and also a proprietary database from Cholla which has provided vital data allowing Sefton to better define the recompletion program for equity gas and focus on new exploration. Acreage acquisition and exploration programs are continuing with the priority of acquiring oil leases as well as leases with gas wells that can be brought back into production economically by low cost workover programs. Management has developed a new regional exploration plan based on regional trend surface mapping; and this will be pursued in 2012, once the pipelines are activated and a recompletion program in place. In addition, the Group has additional infrastructure and acreage in Anderson/Franklin Counties and the timing to commence this similar project is late 2012-2013.

Karl F. Arleth

President and Chief Executive Office

FINANCIAL OVERVIEW

Revenue reaches $4.1 million

During the year ended 31 December 2011, revenue rose by 7.5% to $4.1 million assisted by higher realised oil prices even though a lower volume of oil was sold. The realised oil prices increased from an average of $73 a barrel in 2010 to an average of $103 in 2011 due to higher worldwide oil prices coupled with a favorable premium paid for heavy oil in California. Oil volume sold was 40,343 barrels, compared to 54,567 barrels, achieved in 2010 owing to the Tapia field being shut-in towards the beginning of 2011 due to necessary repairs coupled with additional work on wells and the year-end drilling programme which required some wells to be temporarily shut-in for operational reasons.

Gross profit climbs to $2.9 million

Cost of sales (lease operating expenses and royalties) was $1.2 million compared to $1.0 million in 2010. With lower production, fixed costs remaining largely unchanged and the repairs and maintenance work which are included in the lease operating expense; the overall lease operating cost per barrel was $23.94 against $14.59 in 2010, resulting in the gross profit from oil and gas sales being $2.9 million, compared to $2.8 million in 2010. Had 2010 volumes matched those in 2011 the lease operating expense would have been $17.70 per barrel.

Enlarged management team in place to run a far larger business

Sefton grew its management team in 2011 with the appointment of Karl Arleth as Chief Executive Officer (CEO) and Bill Brand as Financial Consultant. In addition, a number of additional consultantswere employed in London, Kansas and our head office in Denver to assist moving the Group forward in its management, promotion, growth, and development of assets. These moves were taken so that the Company has the team in place to manage a far larger business and resulted in general and administrative expenses, including retirement, rising by 17% from $1.6 million in 2010 to $1.9 million in 2011.

Investor relations programme delivering results

The investor relations programme has helped achieve a higher profile for the Group reflected in the share price, increased liquidity and the ability to raise $5.4 million of fresh capital in what was a difficult year for small companies. The Chairman and the CEO have spent more time in London to drive the investment relations programme forward. There has also been participation at conferences, investor exhibitions, together with establishing a regular shareholder and investor newsletter.

Profitable with $2.6 million cash at the year-end

Earnings before non-cash charges, interest and taxes were 15% lower to $1.1 million in 2011 from $1.2 million in 2010 due to increases in lease operating expenses, higher administration expenses and lower production. Non-cash depletion, depreciation and amortization and share-based compensation combined at $0.5 million, consistent with 2010. Net income was $0.2 million compared with $0.4 million in 2010, but the Group continued to remain profitable despite having to fund a larger operation with lower oil production. The Group generated approximately $0.9 million in operating cash flow in 2011 consistent with the 2010 results, and had $2.6 million in cash on hand as compared to approximately $0.9 million at the end of 2010.

Invested $3.5 million in oil and gas developments

In 2011 the Group raised a total of $5.4 million (net of expenses) in equity funding compared with $1.3 million in 2010. Sefton invested $3.5 million in the development of its oil and gas and natural gas gathering and transportation projects in 2011 compared with $1.4 million in the previous year. The $3.5 million invested was split between the operations in California and Kansas. In California, three development wells were drilled at its Tapia Canyon field in California and a continuous steam flood pilot programme and a cyclic steaming pilot programme was undertaken which served to increase reserves at the year-end and is expected to increase production in 2012. In Kansas, gas gathering and transportation projects were advanced which included the signing and funding an interconnection agreement with interstate pipeline operator Southern Star that will allow the Group to gather, transport and market natural gas during 2012.

Debt reduced by $1.2 million from cash flow

Debt was reduced as Sefton used $1.2 million from operational cash flow to reduce indebtedness to note holders and on its Credit Agreement (2010, $0.2 million). At year-end 2011, borrowings had fallen to $6.1 million against $7.2 million as of 31 December 2010.

Assets up 34% at $26.1 million due to successful project development

Total assets increased significantly to $26.1 million from $19.5 million in the previous year largely as a result of successful asset development in both California and Kansas. Total liabilities increased to $10.3 million, from $9.6 million in 2010, due to payables from drilling at Tapia at year end. Net assets at the year-end 2011 increased to $15.8 million from $10.0 million in 2010.

Plans to increase oil production

In California, Sefton plans to increase oil production at Tapia Canyon through drilling more new wells, cyclic steaming, a series of planned workovers and recompletions on two of the wells which were drilled in the Q4 2011 and on other pre-existing wellbores. In addition, further exploration and development projects will be pursued to increase oil production and reserves at Tapia Canyon and Eureka Canyon, from its 2012 capital budget.

Opportunity to add significant low cost reserves and cash flow in Kansas

In Kansas, it is expected that construction will be completed and final operational certifications on the pipeline system will be obtained in 2012, which will to allow Sefton to begin sales of its own natural gas and provide gathering and transportation services to third parties. Kansas operations will include workovers, recompletions, pipeline extensions and connections, as well as oil and gas field acquisitions that are contiguous to pipeline infrastructure.

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 program focuses on the unpredictability of financial markets and seeks to minimize potential adverse effects on the Group's financial performance.

Commodity price risk

Sefton 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 with a $6.05 million borrowing base 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.

Sefton'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. Sefton 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 2011 the Group had $50 thousand available under its revolving credit agreement with its primary lender and approximately $2.6 million in cash.

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 Sefton's operations during 2010 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:

Bill Brand

Financial Consultant

Consolidated unaudited statement of comprehensive income

Consolidated unaudited balance sheet

Consolidated unaudited statement of changes in equity

* The opening balances as of 1 January 2010 have been amended to reflect cumulative share - based compensation expense being recorded to retained deficit rather than share capital.

Consolidated unaudited statement of cash flows

Notes to the consolidated unaudited financial statements

General information

Sefton Resources, Inc. (the "Group") was incorporated on January 17, 1995, as a British Virgin Islands corporation and has been primarily engaged in the exploration, development, and production of oil and natural gas and gathering and transporting natural gas in the continental United States. The Group's properties are located in California and Kansas, USA.

Accounting Policies

Basis of preparation

Sefton Resources (the "Group") has prepared the unaudited financial statements and is presenting these unaudited financial statements in this release. The financial information above, which was approved by the Board of Directors on 26 March 2012, does not constitute full accounts. The financial information presented above has been prepared in accordance with the accounting policies published in the financial statements for the year ended 31 December 2010. The full financial statements for the year ended 31 December 2010 contained an unqualified audit report.

The preliminary statement of results has been reviewed and agreed with the Company's auditor, Chantrey Vellacott DFK LLP, who have indicated that they will be giving an unqualified opinion in their report on the statutory financial statements

The consolidated unaudited financial statements for the year ended 31 December 2011 and the consolidated audited financial statements for the year ended 31 December 2010 have been prepared in accordance with international Financial Reporting Standards (IFRS) as adopted by the EU. All accounting standards and interpretations issued by the International Accounting Standards Board and the IFRIC effective for the periods covered by these financial statements have been consistently applied to all years presented, unless otherwise stated. The consolidated unaudited financial statements have been prepared under the historical cost convention, applying the successful effort method of accounting, as modified by the revaluation of certain financial assets and liabilities at fair value through profit and loss.

Basis of consolidation

The consolidated financial statements incorporate the assets and liabilities of all subsidiaries of the Group as of 31 December 2011 and the results of all subsidiaries for the year then ended.

Subsidiaries are all entities over which the Group has the power to govern the financial and operating policies, so as to obtain benefits from its activities, generally accompanying a shareholding of more than one half of the voting rights. The existence and effect of potential voting rights that are currently exercisable or convertible are considered when assessing whether the Group controls another entity.

Intercompany transactions, balances and unrealized gains on transactions between Group entities (the Group and its subsidiaries) are eliminated.

At 31 December 2011, the Group's subsidiaries, all of which are registered and incorporated in the United States, and included in the consolidated Group financial statements, were:

TEG Oil & Gas USA, Inc. 100%

TEG MidContinent, Inc. 100%

TEG Transmission, Co., LLC 100%

Going concern

The consolidated financial statements have been prepared on the going concern basis as the Directors have concluded that the Group will continue to have access to sufficient funds in order to meet its obligations as they fall due for at least the foreseeable future.