Arch Petroleum Inc. announces success in Canadian drilling program.

FORT WORTH, Texas--(BUSINESS WIRE)--Aug. 28, 1996--Arch Petroleum Inc. (NASDAQ:ARCH) today announced exploration successes from two prospects at its Morinville area in Alberta, Canada.

These prospects are among those being developed by Arch through its early 1996 purchase of Trax Petroleums, Ltd., headquartered in Calgary.

The Cometra et al Morinville 11-13 has logged 128 feet of productive Leduc Reef at 5,400 feet. The well is flowing water free at the rate of 590 barrels of oil per day on a 15/64ths-inch choke. Arch owns a 16 percent working interest in this well and full production has begun. Initial estimates of gross reserves attributable to this well range up to one million barrels of oil.

On a separate prospect, the company operated and 90 percent owned Trax et al Morinville 10-23 has logged 28 feet of productive Leduc Reef at 5,350 feet and has tested at a rate in excess of 1,100 barrels of oil per day. Production from this well will also begin immediately. Reserve estimates from this well are at 250,000 gross barrels of oil.

A third well drilled in this area, the Trax et al Morinville 2-25, encountered the Leduc Reef but tested wet.

At the company's Nordegg prospect, the Apache et al Saunders 14-28, has reached total depth in the Leduc Reef at approximately 3,800 feet and has been abandoned. This acreage earning well brought an interest in an additional 5,120 acres, building the company's gross land position in this highly prospective area to 8,320 acres. Further study on this area is ongoing.

At the Butte prospect, the Garrington 4-8 has reached total depth of 11,500 and has logged 278 feet of Leduc Reef. Testing has begun and results will be announced within the next several days.

Larry Kalas, Arch's president, stated: "We are pleased with the results of this first phase of our Canadian drilling program and are developing plans for the next four or five projects for the year. Including the costs of the two abandoned wells, these first prospects have added significantly to Arch's reserves at a finding cost of about U.S. $2 per barrel of oil equivalent. We consider reserve additions at this cost to be very attractive and hope the next phase of Canadian drilling will be just as successful. We continue to pursue the opportunity to expand our Canadian asset base through an aggressive program of exploration as well as through corporate acquisitions."

Arch Petroleum Inc. is an independent oil and gas exploration and production company headquartered in Fort Worth, Texas. It owns interests in domestic producing properties located in Texas and New Mexico and in Canadian producing properties in Alberta through its wholly owned subsidiary, Trax Petroleums Limited. Arch also holds interests in gas gathering and transmission through its subsidiaries, Saginaw Pipeline Company, L.C. and Onyx Pipeline Company, L.C.

CONTACT: Arch Petroleum Inc., Fort Worth

Ralph Manoushagian, 817/332-9209 or 800/772-8558