Diverse Assets with Multi-Zone Potential
The central Alberta core area is comprised of a diverse group of assets with multi-zone potential. Production consists of oil and of high liquid-yield natural gas. Total daily average production for the area averaged 8,206 boe/d in 2006 a small increase from 8,041 boe/d production in 2005.

The most significant activity in ARC's Central Alberta area during 2006 was the completion of ARC's first commercial NGC project at Delburne. The characteristics of NGC wells - low pressure, low rate stable production with low declines, is similar to shallow gas and ARC believes that it can use the expertise gained in operating shallow gas production to its benefit as it begins the development of its NGC resources. ARC drilled, completed and tied-in 23 NGC wells in 2006 as well as built a new low pressure gas gathering system and compressor station for this project. A second phase of this project is underway with seven wells drilled in early 2007 and nine more wells to be drilled. With this activity, our NGC production has increased to 1.5 mmcf per day. While this is still a small component of ARC's total production, it has great potential to become a more meaningful component in the future.

ARC will pursue other drilling and re-completion opportunities throughout the Central Alberta area in 2007 and has allocated a budget of $31 million with $10 million of that being targeted specifically at NGC projects.

• Information updated to year end 2006

Superintendent: Reo Van Maarion
Box 6330, Drayton Valley, Alberta T7A 1R8
Tel: (780) 542-5552-----Fax: (780) 542-7552