Arsenal Energy Inc.

Arsenal Energy Inc.

November 08, 2006 20:10 ET

Arsenal Announces Increase and Completion of Private Placement of Flow-Through Shares

CALGARY, ALBERTA--(CCNMatthews - Nov. 8, 2006) -

Not for distribution to the United States newswire services or for dissemination in the United States.

Arsenal Energy Inc. ("Arsenal") (TSX:AEI) (FWB:A1E) is pleased to announce that it has increased and completed its previously announced (October 11, 2006) non-brokered private placement and has issued 7,328,148 common shares, issued on a "flow-through share" basis ("Flow-Through Shares"), at a subscription price of $1.10 per share for aggregate gross proceeds of $8,060,962.80. Due to the strong demand from investors, Arsenal increased the previously announced private placement from 5,454,545 Flow-Through Shares ($6,000,000) to 7,328,148 Flow-Through Shares ($8,060,962.80). The private placement securities are subject to a hold period of four months, expiring March 9, 2007.

The proceeds from the Flow-Through Shares will, where appropriate, be used to incur certain types of Canadian Exploration Expense ("CEE") and/or deemed CEE as defined in the Income Tax Act (Canada) and renounce, for the 2006 taxation year, such CEE in favour of original holders of the Flow Through Shares in an amount equal to the subscription price for each Flow Through Share.

Arsenal is an aggressive junior oil and gas company engaged in the exploration for, and development and production of natural gas and oil reserves primarily in the provinces of Alberta and Saskatchewan, North Dakota, U.S.A. and Egypt. Arsenal's common shares trade on the TSX Exchange under the symbol "AEI" and on the Frankfurt Stock Exchange under the symbol "A1E" and following the completion of the private placement has 73,580,551 common shares issued and outstanding.

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