Arsenal Announces Closing of Private Placement of Common Shares and Flow-Through Shares

NOT FOR DISSEMINATION IN THE UNITED STATES OR DISTRIBUTION TO UNITED STATES
NEWSWIRES.


Arsenal Energy Inc. (TSX:AEI) (FRANKFURT:A1E) ("Arsenal") is pleased to announce
that it has closed its previously announced brokered private placement (see
Arsenal's press release of November 30, 2009) and has issued 8,000,000 common
shares ("Common Shares") at a subscription price of $0.50 per share and
2,500,000 common shares on a "flow-through share" basis at a subscription price
of $0.60 per flow-through share ("Flow-Through Share") for aggregate gross
proceeds of (Cdn) $5,500,000.


Wellington West Capital Markets Inc. acted as sole agent in respect of the
placement of Common Shares and Flow-Through Shares and was paid a cash
commission in respect of the shares issued.


All of the Common Shares and Flow-Through Shares are subject to a hold period
under applicable securities laws until April 18, 2010.


The proceeds from the Flow-Through Shares will, where appropriate, be used to
incur certain types of Canadian Exploration Expense ("CEE") as defined in the
Income Tax Act (Canada) and renounce, for the 2009 taxation year, such CEE in
favour of original holders of the Flow-Through Shares in an amount equal to the
subscription price for each Flow-Through Share. The proceeds from the sale of
Common Shares will be used to reduce debt and for general corporate purposes.


Under the private placement closing, officers of Arsenal subscribed for an
aggregate of 1,680,700 Common Shares.


In December, Arsenal closed the acquisition of approximately 5 net sections of
land and approximately 10 barrels of oil per day in its Evi, Alberta core area
for $460,000 (subject to adjustment). As a result of the acquisition, Arsenal
has increased its expected drilling program in the area from 5 to 8 gross (3.5
net) wells. The drilling program began in late October and initial results are
expected in early 2010.


Arsenal is a junior oil and gas company engaged in the exploration for, and
development and production of natural gas and oil reserves primarily in Alberta
and Saskatchewan and North Dakota, U.S.A. Arsenal's common shares trade on the
Toronto Stock Exchange under the symbol "AEI".


Certain statements and information contained in this press release, including
but not limited to statements regarding the use of proceeds contain
forward-looking statements. All statements other than statements of historical
fact may be forward looking statements. These statements, by their nature, are
subject to numerous risks and uncertainties, some of which are beyond Arsenal's
control including the effect of general economic conditions, industry
conditions, changes in regulatory and taxation regimes, volatility of commodity
prices, escalation of operating and capital costs, currency fluctuations, the
availability of services, imprecision of reserve estimates, geological,
technical, drilling an processing problems, environmental risks, weather, the
lack of availability of qualified personnel or management, stock market
volatility, the ability to access sufficient capital from internal and external
sources and competition from other industry participants for, among other
things, capital, services, acquisitions of reserves, undeveloped lands and
skilled personnel that may cause actual results or events to differ materially
from those anticipated in the forward looking statements. Such forward-looking
statements although considered reasonable by management at the time of
preparation, may prove to be incorrect and actual results may differ materially
from those anticipated in the statements made and should not unduly be relied
on. These statements speak only as of the date of this press release. Arsenal
does not intend and does not assume any obligation to update these
forward-looking statements, whether as a result of new information, future
events or otherwise, except as required by applicable law. Arsenals business is
subject to various risks that are discussed in its filing on the System for
Electronic Document Analysis and Retrieval (SEDAR).