Arsenal Energy Inc.

Arsenal Energy Inc.

August 08, 2006 12:56 ET

Arsenal Announces Test Results at Tower Creek

CALGARY, ALBERTA--(CCNMatthews - Aug. 8, 2006) - Arsenal Energy Inc. (TSX:AEI) (FWB:A1E) ("Arsenal" or "the Company") is pleased to announce that the production flow test of the Tower Creek 2-21-55-27W5M Leduc exploration well has been completed. Initial estimates of the well's capability indicate a sandface AOF (Absolute Open Flow) of approximately 54 mmscf/d and a wellhead AOF of 34 mmscf/d. Reservoir pressure in the Leduc at 4850 meters is approximately 47,000 kPa (6,817 psi). Negotiations are underway to arrange to tie this well in to the areas gathering and processing facilities. It is anticipated that the well will commence production at a rate in excess of 20 mmscf/d by the end of first quarter of 2007.

The well was flowed for a total of 36 hours at several flow rates with a total of 21 mmscf of gas produced during the test period. A final stabilized rate of 14.7 mmscf/d at a flowing tubing pressure of 26,000 kPa (3,770 psi) was maintained. The final flow rate was restricted to comply with EUB flare permit limitations.

Downhole recorders remain in the hole to record pressure build up information that will assist in further evaluating the well and reservoir. Detailed analysis of the test results will be conducted once the pressure recorders are retrieved. Arsenal has a 14.0% working interest in the Tower Creek well.

Arsenal has an option to participate in a second well at Tower Creek. The Devonian Wabamun test located at 11-26-55-27W5M will target sweet gas from a high deliverability fractured reservoir that has been identified using high quality 3D seismic. Arsenal expects to commence drilling this well in the fourth quarter of 2006 or when a suitable drilling rig is contracted.

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