ARC Energy Spuds Dongara 31 Appraisal Well

ARC Energy Limited reports that drilling operations at the Dongara 31 appraisal well located in the Dongara Field in onshore Perth Basin Production License L2 commenced this week using the Century 11 drilling rig.

The well is being drilled directionally from a surface location adjacent to the Dongara 24 well to a target bottom hole location approximately 250 meters to the east of the surface location.

The vertical depth to the prognosed top of the primary objective Arranoo Sandstone is 1388m, (1526m measured depth). The proposed total depth of the well is 1,705m measured depth, with two 200m laterals planned from the main well bore. The well is expected to take 18 days to drill and complete.

ARC Energy holds a 100% stake in this well and is the operator.

Managing Director's comment: "Dongara 31 is designed to test the oil and gas production potential of the Arranoo Sandstone reservoir of the Dongara Field. The Arranoo reservoir lies above the Dongara Sandstone reservoir and has produced both gas and oil. The Dongara 31 well has been designed to test the production potential of this reservoir using a combination of high angle well bores and laterals.

The well is being drilled adjacent to the Dongara 24 well which currently produces both gas and oil from the Arranoo reservoir and this will allow the Dongara 31 well to be quickly brought into production. A successful well will allow us to both convert 3P reserves into 2P reserves and to prove a technique which may be able to be used on other similar reservoirs in the area. The well has been brought forward in the drilling sequence as joint venture approval was not forthcoming for the Hovea 12 appraisal well which ARC had proposed to follow the recent successful Xyris South 1 well. Although Dongara 31 is an ARC project on ARC's 100% owned Dongara Field and may lead to further ARC wells, ARC will continue to work with the joint venture to establish an agreed program going forward."