A year ago the company was barely into the black with an after tax profit of just $118,000. The year to 30 June, 2003 posted an extraordinary turnaround with Arc announcing an overall profit of $8,791,000, illustrating the company's transformation into a substantial oil and gas producer.

The result is due to a number of factors, the most telling of which was a dramatic increase in oil production to a net 350,508 barrels, up from 15,170 barrels last year as the Hovea field came onto full production in March.

Hovea production targets were achieved with completion of the Hovea Production Facility and production increased to over 5,000 barrels of oil per day.

The Eremia discovery well was also put onto test production only six weeks after the rig was released.

The current production rates of 5,000 barrels of oil per day are budgeted to continue for the next year, and depending on oil prices, this is liable to result in substantially higher operating profits for 2003/04.

This will fund an aggressive Perth Basin exploration program on the company's licences with over 30 prospects and leads defined on the existing data.

The L1/L2 joint venture alone has another five slots available to it on the Century 24 drilling rig when it returns from its current Jingemia drilling program.

Financially Arc was also able to reduce the balance sheet net debt to zero with the sale of the company's Cliff Head interest resulting in a substantial profit.

A further milestone was the inclusion of the company in the ASX 200, which is sure to produce interest from the wider investment community.