Arsenal Energy Inc.
TSX : AEI
FRANKFURT : A1E

Arsenal Energy Inc.

November 16, 2005 21:01 ET

Arsenal Completes CDN$6,499,520 Private Placement

CALGARY, ALBERTA--(CCNMatthews - Nov. 16, 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) is pleased to announce that it has completed the second and final closing of its previously announced (see press releases dated October 4, 2005, October 18, 2005 and October 27, 2005) brokered private placement and has issued 206,700 units ("Units") at a subscription price of $1.60 per Unit for aggregate gross proceeds of $330,720. As a result of the two closings, Arsenal has issued 4,062,200 Units for aggregate gross proceeds of $6,499,520. 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 May 15, 2007. The Warrants contain a provision that should the Common Shares of Arsenal trade on the Toronto Stock Exchange or other recognized exchange at a price of $3.00 or higher for 20 non-consecutive 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. The private placement securities are subject to a hold period of four months, expiring March 16, 2006.

The net proceeds from the sale of the Units will be used to fund the acceleration of Arsenal's exploration and development drilling, repayment of bank debt and for general corporate purposes.

The Units were issued through a syndicate of agents led by Wellington West Capital Inc. and Research Capital Corporation and including PowerOne Capital Markets Limited. The agents were paid a cash commission and received non-transferable compensation warrants (the "Agent's Warrants") to acquire up to 14,468 common shares of Arsenal at an exercise price of $1.60 per share on or before May 15, 2007. The Agent's Warrants contain a provision that should the Common Shares of Arsenal trade on the Toronto Exchange or other recognized exchange at a price of $3.00 or higher for 20 non-consecutive trading days, the holder of such Agent's Warrants will have 10 business days in which to exercise such Agent's Warrants, and any Agent's Warrants not so exercised within such time shall be cancelled and void.

Arsenal Energy Inc. 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 Toronto 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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