ARAPAHOE ENERGY CORPORATION

ARAPAHOE ENERGY CORPORATION

March 16, 2005 14:22 ET

Arapahoe Energy Corporation: Sarcee Farmout and Bridge Loan


NEWS RELEASE TRANSMITTED BY CCNMatthews

FOR: ARAPAHOE ENERGY CORPORATION

TSX VENTURE SYMBOL: AAO

MARCH 16, 2005 - 14:22 ET

Arapahoe Energy Corporation: Sarcee Farmout and Bridge
Loan

CALGARY, ALBERTA--(CCNMatthews - March 16, 2005) - Arapahoe Energy
Corporation (TSX VENTURE:AAO) (the "Corporation") is pleased to announce
that it has entered into a Farmout Agreement with Tsuu T'ina Energy
Corporation pursuant to which it has acquired a 100% working interest in
certain petroleum and natural gas rights underlying approximately 21,000
acres (the "Sarcee Farmout Lands") located on the Tsuu T'ina First
Nation west of Calgary, Alberta. The Corporation is obliged to drill at
least two wells per year on the Sarcee Farmout Lands. The Corporation
will issue a further news that provides additional information regarding
the Sarcee Farmout Lands and the Corporation's 2005 exploration drilling
program.

Quest Capital Corp. ("Quest") provided the Corporation with a loan in
the principal amount $2,495,820 (the "Loan"), which was used by the
Corporation to acquire the Sarcee Farmout Lands and for working capital
purposes. Interest accrues on the amount outstanding under the Loan at
the amount of 12% per annum, calculated and compounded monthly, not in
advance, and is payable to Quest on the last business day of every month
commencing March 31, 2005. The outstanding balance of the Loan,
including any accrued interest, is due September 30, 2005. The
Corporation issued 1,181,000 Common Shares to Quest as additional
consideration for the advance of the Loan. In support of its obligation
to repay the Loan, the Corporation provided Quest with a security
interest in all of its assets, including its interest in the Sarcee
Farmout Lands.

Concurrent with the completion of the financing with Quest Capital
Corp., Jeffrey L. Standen was appointed as the Chief Executive Officer
and President of the Corporation, Michael Atkinson was appointed as a
Director of the Corporation and Yvonne Petkovic resigned her position as
a Director of the Corporation. As a result, the members of the Board of
Directors of the Corporation are presently Jeff Standen, Chief Executive
Officer and President, Ross Moulton, Vice President - Exploration, Barry
Hemsworth and Michael Atkinson. Michael Atkinson is Director of Business
Development for Quest Capital Corp. Quest Capital Corp. is a merchant
banking organization that focuses on providing financial services,
specifically bridge loans to small and mid-cap companies in North
America. Quest's primary expertise is providing asset backed commercial
bridge loans of between Cdn$500,000 and Cdn$20,000,000 to publicly
listed companies, generally operating in industries such as mining, oil
and gas, real estate and manufacturing. Mr. Atkinson's experience
includes over 10 years in the financial services sector as well as an
education in Administrative and Commercial Studies from the University
of Western Ontario.

The Corporation is a publicly traded junior oil and natural gas
exploration company with its shares listed on the TSX Venture Exchange
under the trading symbol "AAO". The Corporation is engaged in the
exploration, development and production of oil and natural gas in
Western Canada.

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Contact Information

  • FOR FURTHER INFORMATION PLEASE CONTACT:
    Arapahoe Energy Corporation
    Jeffrey L. Standen
    Chief Executive Officer and President
    (403) 920-0040 (ext. 1)
    Website: www.arapahoe-energy.com
    The TSX Venture Exchange does not accept responsibility for the adequacy
    or accuracy of this news release.