Clearview will offer of up to 37.5 million new shares at an issue price of $0.20 per share to raise A$7.5 million to fund its exploration activities, starting with the Timor Sea’s Magnolia prospect in AC/P32.

Arc has agreed to subscribe for 17.5 million of the shares in the Clearview offer, giving it a 25% stake, and three of Clearview’s initial four directors will be from Arc, managing director Eric Streitberg told Energy Review.Net at Arc's company's West Perth office.

“Arc will control Clearview and will support Clearview commercially and technically,” he said.

The two Perth-based companies formed this alliance for good reasons, according to Streitberg.

“Clearview needed a project to stay ASX compliant, and we saw a good project that didn’t fit into the Arc portfolio,” he said.

“This lets Arc gain exposure to a high risk, high reward portfolio without compromising our ability to derive value from our existing portfolio and without losing our focus on our core Perth Basin assets.

Arc and Clearview will also enter into a cooperation agreement in relation to their activities in the oil and gas sector, according to Streitberg.

“We have a shortlist of other projects in mind and will be working very proactively to find more domestic and international prospects down the track,” he said.

Clearview will launch its prospectus on Friday 3 December. It will also change its name to one approved by Arc that better reflects its new focus and direction.

Streitberg was not sure what Clearview Capital’s new name would be but said Clearview Energy was an obvious default option. “Got any ideas?,” he asked.

Anyway whatever the company’s new name is, its first project will be a farmin in which it obtains a 25% interest in the Timor Sea AC/P32 permit. The stake has been acquired from minnows Norwest Energy and Bounty Oil in return for funding 37.5% of the costs of drilling one well.

Exploration licence AC/P32 is located in the Ashmore-Cartier area which lies in the western Timor Sea in waters that are unambiguously Australian. The permit covers most of the Skua Trough/Montara Terrace within the Vulcan Sub-basin.

The primary reservoir objectives are the Early to Middle Jurassic Plover Formation and Montara Sands. Secondary objectives are the Late Cretaceous Puffin Sandstone and Late Jurassic Vulcan Formation.

Drilling of a well is planned for early 2005. Source is likely to be from the Late Jurassic marine shales in the Skua Trough and northern Browse Basin.

The depleted Skua oil field is 35km to the west of the permit and the Challis/Cassini oil fields are 20km to the northeast. The undeveloped Talbot gas field and Montara oil and gas field are also located less than 10km from the permit.

The permit is covered by 3D seismic data which has recently been reprocessed and has allowed the mapping of a number of large structures of which the largest and best defined is the Magnolia feature. This has the potential to hold 80 to 100 million barrels of recoverable oil if hydrocarbons are present, according to Arc managing director Eric Streitberg.

“Magnolia is the biggest target structure in the permit,” Streitberg told Energy Review.Net.

“If Magnolia is dry it will downgrade the prospectivity of the other targets.”

The well has about a 20% to 25% chance of success, Streitberg said.

“Future projects that come into the company will tend to be higher risk, higher reward,” he said.

Arc won’t allow its investment in Clearview to distract it from its core business, Streitberg said.

“We have a very focused business model,” he said.

“We operate our projects and have high equities in them. They are in areas where we understand the prospectivity well and there is good infrastructure.”

While Arc’s base is very much in the Perth Basin, it was looking at prospects in other areas of Australia, including some offshore prospects, where it could apply its business model, he said. Current projects were also keeping the company busy.

“Arc’s running at a million miles an hour,” Streitberg said.

“We have a rig that’s been drilling continuously for over a year now and will be for the next year. That’s a very unusual situation for a small onshore company.

“We do projects in a very short timeframe. We get them done, then move on to the next one.”

Arc also has high expectations for its Denison seismic program in the northern Perth Basin.

“We’ve drilled three wells in the area and found three oilfields,” Streitberg said.

“It could be drilled on 2D seismic but we’ve decided to acquire 3D as that allows us to go straight to development drilling.

“We rely on good 3D seismic and that gives us excellent results. We’ve got the best success rate in onshore Australia.”

And good drilling results deliver good financial results.

“We’re getting good cashflow from our Perth basin oilfields and our gas business will be much more profitable now that Xyris is on tap,” Streitberg said.