Arc Successfully Completes $90M Placement

Arc Energy Limited has successfully completed a $90.4 million placement through the issue of 64.6 million shares to institutional investors ("Placement").

There was very strong demand for the Placement, which was heavily oversubscribed. The proceeds of the Placement will be used to partially fund Arc's acquisition of Wandoo Petroleum Pty Ltd's portfolio of exploration and production assets announced on 24 April 2007 ("Acquisition").

The Placement was conducted through a bookbuild process lead managed by Macquarie Equity Capital Markets with a final price of $1.40 per share. The final price represents a 3.8% discount to the volume-weighted average price of Arc's shares in the five trading days immediately prior to Placement. The final price was also a 5.3% premium to the closing price of Arc shares of $1.33 on the day immediately prior to the announcement of the Acquisition.

Eric Streitberg, Managing Director of Arc, said:

"The support by new and existing shareholders for the Acquisition is a strong endorsement of the Company's strategy and the price we paid for the assets has been validated by the pre-emption of the Wandoo Oilfield interest. We are also very happy that the Placement was conducted substantially above the Company's pre-announcement share price, indicating the value created by the Acquisition for all shareholders. The Acquisition and its successful execution ensures that we can continue to drive our strategy of both high value exploration and targeted asset acquisitions with confidence."

The Placement will be settled in two equal tranches:

  • Tranche 1 - an unconditional tranche equal to Arc's available 15% placement capacity to be settled on 16 May; and
  • Tranche 2 - a conditional tranche for the balance of the Placement shares which will be settled subject to approval at an extraordinary general meeting ("EGM") of Arc shareholders, expected to be held in late June 2007.

In recognition of the fact that only institutional investors participated in the Placement, Arc is undertaking a share purchase plan ("SPP") under which each Arc shareholder will be able to apply for up to $5,000 worth of shares at an attractive price. It is intended that Macquarie Equity Capital Markets will underwrite the SPP up to $25 million. It is currently expected that the "record date" for the SPP will be Wednesday, 16 May 2007, or shortly thereafter. Shareholders registered on Arc's share register at the close of business on the "record date" will be entitled to participate in the SPP. It is currently expected that shares issued under the SPP will be received by participating shareholders at the same time as shares issued under Tranche 2 of the Placement in late June 2007.

Further details of the EGM and SPP, including pricing and application forms, will be sent to shareholders shortly.

Arc Energy is one of Australia's pre-eminent energy companies, owning and operating oil and gas interests in the Bass, Perth and Canning basins and internationally. Listed on the Australian Securities Exchange with a current market capitalization of approximately A$340 million, Arc has a portfolio of long life production assets complemented by an aggressive onshore and offshore exploration and development drilling program. It continues to drive increased shareholder value by the early adoption of innovative technical and commercial practices.


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