The profit increase was driven by increased oil sales for the half year of 490,220 barrels net to ARC, up from 74,041 in the previous corresponding period.

Managing director Eric Streitberg said the results reflected the value being created by oil production from the company's Hovea and Eremia fields.

"It is anticipated that the full year results will reflect both the fact that the current field production will be stable or increasing and that there will be the addition of ARC's share of the production from the recent purchases of the AWE interests in the Jingemia and Beharra Springs fields.

"Our people have done a tremendous job in generating this profit for both ourselves and our joint venture partner Origin Energy and we are very proud of having created a unique Western Australian business from scratch," said Streitberg.

Financially ARC appears to have worked itself into a secure position having repaid all its outstanding debt of $11.4 million from cash flows generated from its ordinary course of business in the last six months.

In addition, the company spent $9.75 million in development expenditure and $10.46 million in exploration expenditure. On 7 July 2003, the company also received payment of $9 million for the sale of its interest in WA286P, which was sold to ROC Oil in the previous financial year.

On 16 December 2003, ARC also entered into an agreement with Australian Worldwide Exploration (AWE) to acquire a number of Perth Basin assets. At the same time, the company raised some $18.615 million via a placement of shares to fund the acquisition of the assets.

Subsequent to the repayment of all the debt, ARC put in place a $10 million working capital facility, to allow it to take advantage of any opportunities that may arise in the short to medium term.