The Hill-controlled Carpenter Pacific Resources and Westgold Resources increased their combined shareholding of Arc to 5.1%, which makes them the second largest shareholder after investment fund, Packer & Co.

Westgold and Carpenter's first Arc play was buying the 4.65% stake held by Hardman Resources. Carpenter and Westgold managing director Neil Doyle said the Arc stake was considered a strategic investment as the company appeared undervalued.

"Arc says itself that Hovea is the biggest onshore oilfield yet discovered in WA," Mr Doyle said. "So basically you get all the exploration and Cliff Head for nothing - the case is pretty strong."

Arc has a 50% share of the onshore Hovea oilfield, gas producing interests in the Dongara gasfield, 7.5% of the Cliff Head discovery as well as extensive exploration acreage in the Perth Basin.