PERTH, Western Australia: ARC Energy Limited (ASX:ARQ) is...

PERTH, Western Australia: ARC Energy Limited (ASX:ARQ) is pleased to advise that formal
documentation of its gas sales agreement (GSA) with Alcoa Australia for the delivery of up to 500
petajoules of gas from future discoveries on ARC’s interests in the onshore Canning Basin has now
been completed. ARC has now received the A$40 million prepayment from Alcoa. These funds will be
used to accelerate ARC’s regional Canning Basin exploration program. Details of the GSA are set out
in ARC’s ASX release made on 11 July 2007.
ARC’s Canning Basin exploration program has now commenced with the drilling of the Valentine 1 well
with strong gas shows being observed in the secondary objectives of the Anderson and Laurel
Formations.
The GSA has established a powerful commercial alliance between Alcoa, Western Australia’s (and
Australia’s) largest domestic gas consumer and one of Australia’s leading industrial and resource
companies, and ARC, Western Australia’s largest onshore oil and gas producer and most active
onshore explorer. In addition to the commercial benefits to both ARC and Alcoa, the GSA promotes the
exploration and development of Western Australia’s onshore hydrocarbon resources and represents an
innovative and timely response to the Western Australian Government’s concerns regarding the
security of domestic gas supplies.
ARC’s Managing Director Eric Streitberg commented:
“We are delighted to have completed the documentation of the GSA and received the $40 million prepayment.
The GSA provides numerous benefits to both Alcoa and ARC, most notably the flexibility to
develop Canning Basin gas discoveries quickly and flexibly and with maximum commercial benefit to
both parties. The agreement will also underpin the infrastructure needed to deliver gas from the
Canning Basin. The wide ranging benefits to both Alcoa and ARC of this agreement for the
commercialisation of Canning Basin gas (C-Gas) are becoming even more apparent as work continues
on the operational and commercial framework for the project. We look forward to a long and fruitful
relationship with Alcoa and the success of ARC’s C-Gas program.”