April 18, 2007 17:59 ET

Arapahoe Energy Corporation Announces Closing of Private Placement and Settlement Agreements With Trade Creditors

CALGARY, ALBERTA--(CCNMatthews - April 18, 2007) - ARAPAHOE ENERGY CORPORATION (the "Corporation") (TSX VENTURE:AAO) is pleased to announce that the first closing of the brokered private placement previously announced on March 12, 2007 has been completed for gross proceeds of $8,650,000 (the "Offering"). The Corporation issued 8,650,000 debenture units (the "Debenture Units") at the issue price of $1.00 per Debenture Unit. For every $1.00 invested under this Offering, a subscriber of Debenture Units was issued (i) a convertible secured debenture ("Debenture") in the amount of $1.50 and (ii) four (4) purchase warrants ("Warrants"). The Debentures and Warrants are subject to a four month hold period that expires on August 12, 2007. For further information with respect to the Debenture Units please see the Corporation's news release dated March 12, 2007. It is expected that a second closing of the Offering will occur prior to April 30, 2007 for proceeds of up to an additional $500,000. The Offering is subject to final acceptance of the TSX Venture Exchange, to be satisfied on filing of customary post-closing documentation.

D & D Securities Company (the "Agent") acted as the Corporation's Agent in connection with the Offering and received a cash commission of 7% of the gross proceeds of the Offering and Broker Warrants permitting the Agent to purchase Common Shares representing a number equal to 10% of the total number of Common Shares issuable to the holders of Debentures at the time of conversion of the Debentures. The Broker Warrants are exercisable into one Common Share of the Corporation at an exercise price of $0.0833 per share for a period of 24 months from Closing.

The net proceeds of the Offering will allow the Corporation to remedy its defaults under its credit facility with its principal lender and will be used to satisfy outstanding indebtedness owed to its trade creditors as previously announced on April 10, 2007, with the balance to be used to fund capital expenditures and general working capital obligations.

Settlement with Creditors

The Corporation has entered into agreements with creditors owed the principal amount of $7,040,013 which will result in the Corporation paying $4,623,362 and delivering 923,734 Debenture Units in full and final satisfaction of the amounts owed to such creditors. Its is anticipated that the all such settlement transactions will be completed prior to April 30, 2007 .

Corporate Governance Agreement

The Corporation is also pleased to announce that in connection with the Offering the Corporation has entered into a corporate governance agreement (the "Corporate Governance Agreement") dated April 11, 2007 with Steele Consulting, acting as the agent of the holders of Debentures and Robert Chenery, a director of the Corporation. The purpose of the Corporate Governance Agreement is to provide oversight and direction over the Corporation's expenditures and business activities until such time as a "Business Combination Transaction" has been completed by the Corporation, or no less than two thirds of the Repayment Amount secured by the Debenture Units has been paid. A copy of the Corporate Governance Agreement will be available at

Arapahoe Energy Corporation is a publicly traded junior oil and gas exploration, development and production company with operations in Western Canada. Arapahoe's shares trade on the TSX Venture Exchange under the symbol "AAO".

The TSX Venture Exchange does not accept responsibility for the adequacy or accuracy of this news release.

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