Drilling and Optimization Activity Boost Production
ARC has held a presence in this area since 1999 when it acquired the Jenner shallow gas assets. In 2002, ARC completed 12 small acquisitions and expanded its ownership in existing lands. The assets in the area are comprised of sweet gas fields with low operating costs. Through the Star acquisition, ARC gained three important new properties in southwest Saskatchewan – Hatton, Horsham and Crane Lake. Thru 2004 to 2006 ARC has embarked on extensive shallow gas drilling in this area. 2006 marked the third consecutive year that ARC has drilled greater than 100 shallow gas wells. Average daily production in 2006 decreased slightly to 10,743 boe/d from 11,298 boe/d in 2005.

ARC's production in the SE Alberta/SW Saskatchewan area is dominated by shallow natural gas. Shallow gas is an excellent trust asset as it provides large scale development opportunities with low risk and stable production. As most of the production comes from depths of between 375 and 675 metres, these are low cost wells with predictable production characteristics. Success in this area is dependent upon the successful execution of a large scale drilling, completion and tie-in program. ARC drilled 104 wells in the Crane Lake area of Saskatchewan and 57 wells in the Jenner area of Alberta. With a $28 million budget for 2007, ARC expects to make it four years in a row. Importantly, ARC has at least a five year inventory of shallow gas wells to be drilled to take our lands to an eight well per section drilling density at a time when many of the offsetting lands have been drilled at 12 or even 16 wells per section. Through drilling and acquisitions, ARC's shallow gas production in this area has grown from just 35 mmcf per day in 2001 to 57 mmcf per day in 2006.

• Information updated to year end 2006

Superintendent: Kevin Jones
Box 970, 1751 Highway Avenue SE, Red Cliff, Alberta T0J 2P0
Tel: (403) 548-0014-----Fax: (403) 548-0088