October 27, 2005 19:42 ET

Arapahoe Energy Corporation Completes Initial Tranche of Private Placement for $4,883,559

CALGARY, ALBERTA--(CCNMatthews - Oct. 27, 2005) - Arapahoe Energy Corporation (TSX VENTURE:AAO) (the "Corporation") is pleased to announce that it has closed the first tranche of its previously announced private placement. An aggregate of 3,619,317 Common Shares at a price of $0.65 per share ($2,352,556) and 3,374,670 Flow-Through Shares at a price of $0.75 per share ($2,531,003) were issued for gross proceeds of $4,883,559. The securities issued are subject to a statutory restricted period of four months, which expires on February 27, 2006. The final tranche of the private placement is expected to be completed shortly.

Dominick & Dominick Securities Inc. acted as the Corporation's Canadian agent and financial advisor in connection with the private placement. Dominick & Dominick Securities Inc. was paid aggregate fees of $299,032 cash and issued an aggregate of 679,051 broker and advisory warrants. In addition, S&P Investors, Inc. of Dallas, Texas will be paid a finder's fee of $41,400 cash and issued 91,007 warrants. The warrants issued to Dominick & Dominick Securities Inc. and S&P Investors, Inc. are exercisable for a period of 12 months at an exercise price of $0.75 per share.

The net proceeds of the private placement will fund the Corporation's 2005 and 2006 exploration and development program and for general working capital purposes.

The Corporation issued 178,336 common shares to Woodstone Capital Inc. in satisfaction of amounts owed under the Financial Advisory Services Agreement entered into between Woodstone Capital Inc. and Banks Energy Inc. in connection with the acquisition of Banks Energy Inc. by the Corporation.

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.

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

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