Arsenal Energy Inc.

Arsenal Energy Inc.

October 18, 2005 21:27 ET

Arsenal Announces Revised Private Placement

CALGARY, ALBERTA--(CCNMatthews - Oct. 18, 2005) -

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

Arsenal Energy Inc. ("Arsenal") (TSX:AEI)(FRANKFURT:A1E) announced today that it has amended the subscription price and number of units ("Units") which may be issued pursuant to the private placement offering (the "Private Placement") previously announced on October 3, 2005. The Private Placement has been amended to consist of up to 5,576,300 Units at a subscription price of $1.60 per Unit, for gross proceeds of up $8,922,080. All other material terms of the Private Placement remain the same.

Each Unit consists of one (1) common share ("Common Share") in the share capital of the Corporation and one-half of one (0.5) common share purchase warrant ("Warrant"). Every one (1) Warrant is exercisable into one (1) additional Common Share of the Corporation at an exercise price of $2.50 per share on or before eighteen (18) months after the initial date of issuance. The Warrants shall contain a provision that should the Common Shares of Arsenal trade on the TSX Exchange or other recognized exchange at a price of $3.00 or higher for 20 trading days, the holder of such Warrants will have 10 business days in which to exercise such Warrants, and any Warrants not so exercised within such time shall be cancelled and void.

Closing of the Private Placement is expected to occur on October 26, 2005 and is subject to normal regulatory approvals.

Arsenal Energy Inc. is an aggressive international 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".

This press release shall not constitute an offer to sell or the solicitation of an offer to buy the securities in any jurisdiction. The Units and underlying securities will not be and have not been registered under the United States Securities Act of 1933 and may not be offered or sold in the United States absent registration or applicable exemption from the registration requirements.

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