Meanwhile the company has continued to record gas readings at its Valentine-1 exploration well, as drilling nears the Virgin Hills primary target.
Arc has acquired 10% interests and operatorship in five blocks, consisting of four permits (EP 442, EP 443, EP 450 and EP 451) and one application area (App 9-98-9), all of which are held by a private unlisted company, New Standard Exploration.
Arc will earn another 35% in each of the blocks at the completion of the acquisition of 1000km of 2D seismic data over the blocks.
“The seismic data will be apportioned over the blocks so as to satisfy the government work commitments (800km) and to confirm prospects for drilling,” the company said.
“It is anticipated the seismic program will be acquired during the 2008 dry season. Arc may then earn up to a further 30 percent interest in all of the blocks by drilling up to three wells, with a 10 percent interest being earned upon the completion of each well.”
On completion of the three-well earning program, Arc will have earned a 75% interest in each block.
Most of Arc’s newly acquired interests are in the Canning’s Kidson Sub-basin.
Arc’s structured exploration program in the greater Canning Basin covers each of the other major sub-basins, with this year’s program targeting the Fitzroy Trough in the north of the Basin where the Valentine well is being drilled.
But the Kidson Sub-basin contains a unique petroleum system not adequately covered by Arc’s Canning Basin interests, according to Arc.
“This farm-in will provide an opportunity to systematically test the prospectivity of this petroleum system and the Kidson Sub-basin,” the company said.
The sub-basin’s petroleum system has never been systematically tested. However, Arc said several wells have encountered significant oil columns, and the region contains a widespread salt horizon (the Mallowa Salt of the Carribuddy Formation) that provides a regional top seal to good source and reservoir rocks beneath.
“Similar petroleum systems in the Middle East are extremely prolific,” Arc said.
As part of the agreement with New Standard, Arc has agreed to subscribe for 8,333,333 new ordinary shares in the company with a total value of $A1.5 million, giving Arc about 20% of the junior explorer.
New Standard will also have the right to raise up to a further $A1 million with outside parties on the same terms as the Arc investment.
On completion of its share purchase, Arc will have the right to nominate one director to the New Standard and will also have a right of first refusal over future fund raisings undertaken by the junior.
Meanwhile, in a well update, Arc as operator said at 6am (WST) this morning Valentine-1was drilling ahead at a depth of 3038m.
The primary objective is expected to be intersected at a depth of 3222m, with total depth planned at 3407m.
Since last week, the well had drilled through inter-bedded limestones and thin claystones, Arc said.
“Lithologies encountered are predominantly tight limestones and minor claystones of Devonian age with minor mud gas shows observed,” the company said.
According to Arc, drilling results to date from the high-impact well had positive implications for the updip Stokes Bay well and the basin's regional prospectivity.
Arc said the results had confirmed a significant hydrocarbon system in the Fitzroy Trough of the greater Canning Basin, as well as reservoir quality sands and high quality shale seals.
Participants in Valentine-1 are Arc Energy (operator – 38.95%), Empire Oil & Gas (14.8%), Emerald Oil & Gas (12.75%), Pancontinental Oil & Gas (10%), Phoenix Resources (10%), First Australian Resources (8%) and Indigo Oil (5.5%).
