October 19, 2005 19:47 ET

Arapahoe Energy Corporation Completes Acquisition of Banks Energy Inc.

CALGARY, ALBERTA--(CCNMatthews - Oct. 19, 2005) - Arapahoe Energy Corporation ("Arapahoe") (TSX VENTURE:AAO) is pleased to announce it has completed its previously announced acquisition of Banks Energy Inc. ("Banks") (TSX VENTURE:BKL) by way of the amalgamation of Banks and Arapahoe's wholly owned subsidiary, 38659 Yukon Inc. ("38659") (the "Amalgamation"). Pursuant to the Amalgamation, Arapahoe issued 0.5 of an Arapahoe common share in exchange for each Banks common share, resulting in an aggregate of 15,299,416 Arapahoe common shares being issued to Banks shareholders upon the closing of the transaction. Arapahoe now has 38,140,265 common shares outstanding.

In addition, Arapahoe is pleased to announce that Mr. D. Barry Lee, former President and Chief Executive Officer of Banks, has been appointed to the Board of Directors of Arapahoe. Mr. Lee replaces Mr. Ross Moulton, who stepped down from Arapahoe's Board of Directors as a term of the Amalgamation but who will continue to serve as Vice-President, Exploration of Arapahoe. Mr. Lee brings to the Arapahoe Board a wealth of both domestic and international oil and gas experience. In addition to his experience with Banks, Mr. Lee is the co-founder and a former director and COO of Choice Resources Corp., producing natural gas in Alberta, co-founder, director and former President of Watch Resources Ltd., with oil and gas production in Alberta, and a co-founder of Northern Sun Exploration Company Inc., exploring for and producing oil and natural gas in Alberta, Saskatchewan, and the Northwest Territories.

Arapahoe believes that the acquisition of Banks will create a number of corporate synergies in addition to a balanced exploration and drilling portfolio. The Banks assets provide shallow depth, low cost and lower risk prospects; and the Arapahoe prospects, which consist of high graded, deeper depth prospects, will provide significant reward opportunities. Arapahoe will actively explore Banks' 17,705 Hectare (43,745 Acre) land base, which will include drilling five new oil locations in the Freemont Area, Saskatchewan, selected from the Banks' proprietary 3D seismic program. Up to four new gas exploration targets will be drilled on the Senlac Area, Saskatchewan property, and at least two additional Colony gas locations will be drilled on the Poundmaker Area, Saskatchewan property. There is currently one well being completed on the Arapahoe properties, being the high impact C1 et al. Sarcee 12-13 Mississippian Test Well. Arapahoe also recently completed two successful wells in central Alberta. Please refer to Arapahoe's October 5, 2005 news release. These wells are anticipated to provide numerous multi zone oil and gas development drilling locations. Arapahoe will begin shooting several new 2D and 3D seismic programs on previously acquired exploration lands on both the Arapahoe and Banks prospects. Arapahoe will continue to participate in wells in accordance with its natural gas exploration program targeting prospects containing larger gas reserve potential. Arapahoe's forward looking strategy will continue to be focused on exploration weighted towards natural gas, negotiating and acquiring access to larger aboriginal land bases on a joint venture basis, plus adding to its management team in order to continue to create new drilling, land and corporate acquisition opportunities.

On a consolidated basis, Arapahoe now has a production base of approximately 300 BOE/D with combined loss carry forwards and tax pools of approximately $9,000,000, outstanding debt of approximately $3,000,000 and approximately $500,000 in cash.

Private Placement

As previously announced in September 2005, Arapahoe is conducting a private placement financing with Dominick & Dominick Securities Inc. as its agent. As a result of stronger than anticipated demand, the flow-through and non-flow components of the private placement have each been increased, with a maximum of 2,666,667 flow-through shares at the price of $0.75 per share ($2,000,000) and 4,615,385 common shares without flow-through attributes at the price of $0.65 per share ($3,000,000) being available for sale, for maximum proceeds of $5,000,000.

Arapahoe is a junior oil and gas exploration company engaged in the exploration, development and production of oil and natural gas in Western Canada. Arapahoe's primary areas of exploration focus are the Alberta Foothills, specifically on the Tsuu T'ina First Nation (Sarcee Area) immediately west of the City of Calgary and in western Saskatchewan on Poundmaker Cree Nation lands.

BOE's may be misleading, particularly if used in isolation. A BOE conversion ratio of 6 Mcf: 1 Bbl is based on an energy equivalency conversion method primarily applicable at the burner tip and does not represent a value equivalency at the wellhead.

Information provided herein contains forward-looking statements. The reader is cautioned that assumptions used in the preparation of such information, which are considered reasonable by Arapahoe at the time of preparation, may prove to be incorrect. Actual results achieved will vary from the information provided and the variations may be material. There is no representation by Arapahoe that actual results achieved will be the same in whole or in part as those indicated in the forward-looking statements.

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

Contact Information

  • Arapahoe Energy Corporation
    Jeffrey L. Standen
    Chief Executive Officer and President
    (403) 920-0040 (ext.1)