Arapahoe Energy Corporation- Corporate Update

CALGARY, ALBERTA--(CCNMatthews - Sept. 28, 2006) - Arapahoe Energy Corporation (TSX VENTURE:AAO) ( "Arapahoe" or the "Corporation") announces that effective June 1, 2006 it has closed the disposition and sale of a 12.5% working interest in 15-33-54-25W4M Campbell well and associated lands to Blue Parrot Energy. The Corporation maintains a 65% working interest and is the Operator of the 15-33 well and the associated lands. Surveying has commenced for the pipeline right of way and construction necessary for tie-in. The 15-33 well is expected to be tied in and producing in November 2006. The Corporation's independent reserve evaluators have evaluated the Corporations 65% interest in the Campbell 15-33 well and surrounding 80 acres (effective June 30, 2006) and has estimated the future net revenues of this well and land at $9,564,000 on a 10% discounted cash flow basis consisting of $8,000,000 proved developed non-producing reserves and $1,564,000 probable reserves. The estimated values do not represent fair market value. For further information on Arapahoe's interest in the 15-33 Campbell well please refer to Arapahoe's previous news releases including those dated June 6, 2006 and May 23, 2006.

Arapahoe announces that CBM Solutions Inc. ("CBM"), consultants to the Corporation, has analyzed all of the well, core and sample data information generated from the Corporation's wells located at 102/4- 30 -23-3W5M and 9-21-23-3W5M on the Sarcee Area, Alberta Project. The 102/4-30 and 9-21 wells were drilled to evaluate the coal bed methane natural gas potential from the Horseshoe Canyon formation and associated Edmonton Sands formation, each formation of the Cretaceous age. Based on gas desorbtion measurements derived from cores and cutting samples CBM has estimated a minimum of 5 billion cubic feet (BCF) of coal bed methane natural gas in place to the 102/4-30 well and the surrounding 640 acre spacing unit and a minimum of 9.6 BCF of coal bed methane natural gas in place to the 9-21 well and the surrounding 640 acre spacing unit. The estimated Horseshoe Canyon coal bed methane gas reserves appear to be water free in these wells. Arapahoe's interest in the 102/4-30 well is 25% (160 net acres) and Arapahoe's interest in the 9-21 well is 50% (320 net acres). Completion /fracing operations will commence on the 102/4-30 and 9-21 wells within seven (7) days. A third Horseshoe Canyon/Edmonton Sands test well, to be located at 11-11-23-4W5M, is licensed to a depth of 1,200 meters subsurface and is scheduled to commence drilling within ten (10) days and is anticipated to take approximately 10 days to be drilled and completed. Arapahoe has a 50% interest in the 11-11 well.

Arapahoe has a 25% interest in a total of six (6) sections (3,840 gross acres and 960 net acres) and a 50% interest in another thirty (30) sections (19,200 gross acres and 9,600 net acres) prospective for oil and natural gas production from the Edmonton Sands, Horseshoe Canyon, Belly River, Cardium, Viking and Blairmore formations of the Cretaceous age on the Sarcee Area, Alberta Project. A recent 18.5 square mile 3D seismic survey has been shot on these prospective lands and the data from the 3D seismic survey is currently being processed and interpreted.

In addition to the aforementioned acreage the Corporation also has a 19.25% interest in the 12-13-23-4W5M Mississippian test well and surrounding four (4) sections (2,560 gross acres, 492.8 net acres) on the Sarcee Area, Alberta Project. Prior to year end 2006 the Corporation intends to attempt to rectify the previously reported completion problems associated with the original C1 Sarcee 12-13-23-4W5M Mississippian test well by sidetracking and re-drilling the Mississippian/Turner Valley formation. The intention is for the sidetracked well to be cased to total depth and selected zones within the Mississippian/Turner Valley formation and be perforated and acidized to determine the deliverability and the commercial feasibility of the 12-13 Mississippian test well and surrounding lands.

The Corporation has recently completed the drilling of thirteen (13) new wells and two (2) re-completion wells in the Freemont, Senlac and Poundmaker areas of southwest Saskatchewan. The new wells resulted in twelve (12) wells being cased for potential production and one well (1) being abandoned. Arapahoe has a 50% interest in three (3) of the new wells and a 100% interest in the balance of the new wells and the re-completion wells. The two (2) re-completion wells were unsuccessful in establishing any new production but as a result of the operations the Corporation earned a 100% interest in 3.25 sections (2,080 gross and net acres) directly adjacent to the Corporation's 100% Freemont area project lands. Completion and tie-in operations for the twelve (12) new wells are underway and are expected to be completed by December 31, 2006.

The Corporation announces that it has retained the services of Mr. Leigh Muir, P.Eng., as its Consulting Operations Manager. Mr. Muir will have the responsibility for all of the Corporations day to day engineering functions including drilling, facilities, completions, tie-ins and coordination of third party consultants. Mr. Muir is a professional engineer with over 30 years related industry experience. Mr. Muir is a 1976 graduate of the University of Calgary and a member of APEGGA since 1977.

Arapahoe announces that it has retained the services of Ms. Debra Foster in the capacity of consulting Controller for the Corporation. Ms. Foster brings in excess of twenty two (22) years of related industry experience to the Corporation. Ms. Foster will report directly to Brenda Stanger, the Corporation's Chief Financial Officer.

The Corporation is a publicly traded junior oil and natural gas exploration company with its shares listed on the TSX Venture Exchange under the trading symbol "AAO". The Corporation is engaged in the exploration, development and production of oil and natural gas in Western Canada, primarily on First Nations.


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