Arc Energy Secures Rig for Drilling Program

ARC Energy Limited has secured Century Resources Rig 18 on a twelve month contract with options to extend the contract for an additional year.

Following the geological and geophysical studies undertaken in the Perth Basin over the last six months, up to twenty possible drilling candidates have been identified. Many of these have been or are expected to mature to drillable status during the term of the rig contract. ARC is working co-operatively with its Joint Venture partners to drill a mixture of development/appraisal and exploration wells in the Basin as part of the 2006/07 Perth Basin drilling program. Drilling is scheduled to commence in the first week of July with the Origin operated Jingemia 8 well, followed by the Hovea 12 development well and a possible Eremia 5 appraisal/development well prior to commencing exploration drilling.

It is also planned that the rig will be mobilized to the Canning Basin to conduct a program of between six and eight exploration wells at the commencement of the "dry" season, namely from April 2007. This program will focus on areas with existing oil and gas discoveries where large in-place resources of oil and gas and numerous exploration targets have already been defined.

After completing the Canning Basin drilling program and prior to the onset of the "wet" season, the rig will return to continue the Perth Basin 2006/07 drilling program.

Commenting on the contract with Century, ARC Managing Director, Eric Streitberg, said:

"We are delighted to continue our association with Century Resources who have been working hard with us to ensure we are able to continue our unblemished health and safety record in the Perth Basin. The commitment of Century management and in particular the Century operational management and drilling crews to a high standard of operations on Rig 18 is particularly pleasing. We are also very pleased to have secured a rig which is capable of drilling all of our planned wells and the contract will give us considerable flexibility in undertaking our Perth and Canning Basin exploration programs."