Drilling manager Brad Girdwood said Arc now operated most of the onshore northwest Canning, a very lightly explored basin in the north of Western Australia, and the blocks in dispute with Rey Resources comprised only a fraction of its holdings in the basin.

“We have enough good targets in our other blocks to keep us busy for quite a while,” he told PetroleumNews.net.

“The exploration team is just going to get on with its work and let other people worry about the dispute.”

Girdwood said Arc had identified many large structures in the Canning.

“Hardened professionals in their 50s look at the seismic and get as excited as kids in a toy store,” he said.

Arc managing director Eric Streitberg said the company’s move into the Canning had created a lot of interest in the Australian oil and gas community.

“We’ve had a lot of feedback, running the gamut from ‘You’ll find a billion barrels of oil’ to ‘Your bones will bleach in the hot Canning sun’,” Streitberg said.

The company will be hoping that it is the former scenario that eventuates.

Chairman David Griffiths told the company’s annual general meeting on Friday that reserves replacement had posed problems for Arc.

“We did not succeed in replacing our production last year,” Griffiths said.

“Arc’s relatively small but very valuable reserves base means that we must ensure we continue with an aggressive, high quality and focused exploration program.

Griffiths also expressed concern over the company’s share price.

“Despite the fact we are extremely sound financially, we have a proven and successful operational model, and the fact we are building a very high quality exploration portfolio, we have been unable to perform as well in the stock market over the past year as some of our peers,” Griffiths said.

“This has been very frustrating for us and for our shareholders.”

Arc’s shares have a 12-month high/low range of $1.93.5/$1.24.5 and were steady at $1.43.5 on Friday.

The company is hoping that its new assets in the Canning and in Yemen will address these problems.

“These assets and others we are seeking to acquire this year, will give us the exploration depth in our portfolio that we need to pursue our exploration goals,” Griffiths said.

“Our exploration program is gathering serious momentum and represents the key value driver for the company going forward.”

Arc is planning a year-round Perth Basin/Canning Basin drilling program. The company has a long-term lease on Century Rig 18, and will drill the Perth Basin in spring and summer, and the Canning in autumn and winter, avoiding both regions’ wet seasons.

Its Canning drilling program starts in April next year. In the meantime, Arc is busy prioritising targets.

Arc and Rey Resources struck a deal in June that would have delivered Arc 100% of the oil and gas rights to two Canning Basin permits, while giving Rey rights to any coal seam methane discovered.

But in September, Rey said Arc had failed to meet its obligations by the required date and so it had instead farmed-out the relevant interests to majority shareholder, Gujarat NRE Mineral Resources.

Indian newspapers have since reported that Gujarat paid $A500,000 for a 90% stake in the two oil exploration blocks, with Rey to hold the remaining 10% stake.

Gujarat became Rey’s major shareholder when it acquired a 19.9% stake in the company last year.

Arc is considering legal action against Rey Resources over the termination of its farm-in agreement into the Canning Basin.

“We feel we have a legally enforceable agreement and we’ll be taking whatever steps we need to enforce it,” Streitberg said at the time.