Speaking at a Corporatefile open briefing today, Streitberg said Arc expected to report production of about 1.2 million barrels net to the company for the 2007 financial year.

“The timing of bringing the Hovea-12 and Jingemia-8 wells on production will allow us to produce pretty much at the same level in FY07 as in FY06,” Streitberg said.

“That will maintain Arc’s very significant cash flows and consolidate the company's extremely strong financial position.

“This is a very encouraging position to be in as we are able to fully fund our exploration programs in the Canning Basin and in Yemen and it also lets us easily fund follow-on development activity.”

Streitberg also said the Perth market was “crying out” for additional gas, and Arc’s strategy in the Perth Basin will be to alternate between drilling gas and oil exploration wells.

“We have seen very strong price increases and believe there’s a market for probably an extra 100 terajoules a day in Perth and a similar amount in the Mid-West of Western Australia,” he said.

“We’re keen to supply some of that demand, but it means we will need to drill additional gas wells.”

He said after drilling Lyginia in the Perth Basin, the company would probably drill a Dongara gas well while completing the final preparations for the next oil exploration well at the Drakea location.

“The Dongara gas well should give us substantial additional gas production capacity that will allow us to meet our current sales and also capture some additional sales volume.”

Streitberg said the company was also building its understanding of the full extent of the prospectivity of the Canning Basin.

He said Arc wants to make sure it has covered off enough acreage in all the prospective areas of the Canning Basin to ensure it has all of the “sweet spots” in its portfolio.

“What we’re seeing so far in the Canning Basin is very exciting,” Streitberg said.

“It’s the first time the basin has been looked at using modern exploration techniques and we have identified some very large prospects.

“It is a big challenge given the size of the basin and the numerous petroleum systems involved but we will be carrying out a thorough and systematic exploration program that will give us the best chance of success.”

He said Arc is on track to begin its Canning Basin exploration program in late April 2007.