bidders statement

Overview of reasons why you
should ACCEPT this Offer

1 The Offer Price is a significant premium to market price

2 AEL is offering cash for your Adelphi Shares which provides you with certainty compared with retaining your Adelphi Shares

3 The Offer is unconditional and you can sell your Adelphi Shares immediately

4 AELs existing 33.79% Relevant Interest in Adelphi precludes any other party from acquiring 100% of Adelphi,
without AELs support


Why you should ACCEPT this Premium Offer

1. The Offer Price is a significant premium to market price
AELs Offer gives you the opportunity to sell your Adelphi Shares for $0.40, a significant premium to their current price.

The Offer Price of $0.40 per Adelphi Share represents:
a 60% premium to the 11 May 2010 placement price o (a) f $0.25 per Adelphi Share;

(b) a 42.9% premium to the closing price of $0.28 per Adelphi Share on ASX on the last trading day before
the Announcement Date; and

(c) a 38.9% premium to the three month volume weighted average price of $0.288 per Adelphi Share on ASX
on the last trading day before the Announcement Date.

2. AEL is offering cash for your Adelphi Shares which provides you with certainty compared with retaining your Adelphi Shares AELs Offer is to acquire your Adelphi Shares for 100% cash consideration.

Key attributes of the Offer are:

the on market bid is an unconditional offer of $

(a) 0.40 cash per Adelphi Share;

(b) you may sell your Adelphi Shares on market at the Offer Price from 17 May 2010 until the Offer is scheduled
to close being the close of trading on ASX on 9 July 2010 unless extended or withdrawn; and

(c) you will receive a cash payment three trading days after your acceptance (T+3 basis).

The certainty provided by receiving cash at an attractive price under the Offer should be compared with the risks
and uncertainties associated with remaining an Adelphi Shareholder including:

(a) Adelphis uncertain earnings profile and uncertainty of Adelphis ability to generate future earnings,positive cashflow or dividends;
(b) oil and gas price risk;
(c) the geological, exploration and development risks of Adelphis exploration portfolio;
(d) the operational and technical risk of hydrocarbon operations;
(e) additional funding and capital investment risk which, if Adelphi Shareholders do not participate in those
additional funding arrangements, may lead to the dilution of their interests; and
(f) country political risks, regulatory risks and foreign exchange risks.

You can choose, in effect, AELs all cash offer at a significant premium which is available now, over the
uncertainties of retaining your Adelphi Shares.

3. The Offer is unconditional and you can sell your
Adelphi Shares immediately

There are no conditions attached to the Offer and you can sell your Adelphi Shares at the Offer Price on market now.
Accordingly, you can accept the Offer knowing that you will be paid in cash on a T+3 basis.

4. AELs existing 33.79% Relevant Interest in Adelphi precludes any other party from acquiring 100% of Adelphi, without AELs support AELs current shareholding in Adelphi precludes any other bidder from acquiring the 90% minimum ownership threshold required under the Corporations Act to proceed to compulsory acquisition and precludes any other party from acquiring 100% of Adelphi through a scheme of arrangement or reduction of capital without AELs support.


Chairmans Letter

ARC ENERGY LIMITED LEVEL 4, 679 MURRAY STREET WEST PERTH 6005 AUSTRALIA

Chairman's Letter

Dear Adelphi Shareholder

On Market Cash Offer for your Adelphi Shares

On 17 May 2010, Macquarie Securities (Australia) Limited on behalf of ARC Energy Limited (AEL)announced our Offer to acquire all of your Adelphi Shares by an on market bid. AEL has appointed Macquarie Securities to act as its on market broker.

The ultimate holding company of AEL is AWE Limited, an Australian publicly listed oil and gas company with a market capitalisation of approximately $1.2 billion as at 14 May 2010.

AEL's Offer for your Adelphi Shares is an unconditional offer and is for cash. As the Offer has no conditions it is able to be accepted immediately on market, with cash payment three trading days after your acceptance. I believe that AEL's Offer of $0.40 for each Adelphi Share is a compelling proposition for Adelphi shareholders as it enables you to realise:
(a) a 60% premium to the 11 May 2010 placement price of $0.25 per Adelphi Share;
(b) a 42.9% premium to the closing price of $0.28 per Adelphi Share on ASX on the last trading day before the Announcement Date; and
(c) a 38.9% premium to the three month volume weighted average price of $0.288 per Adelphi Share on ASX on the last trading day before the Announcement Date.

I ask that you read this Bidder's Statement carefully and give full consideration to AEL's Offer to acquire your Adelphi Shares.

I encourage you to accept the Offer as soon as possible. The Offer is scheduled to close at close of trading on ASX on 9 July 2010 unless extended or withdrawn. To accept the Offer, you should follow the instructions set out in section 3 of this Bidder's Statement.

If you have any questions in relation to the Offer please contact the AEL Offer Information Line on 1300 086 730 within Australia or +61 3 9415 4198 from outside Australia.
Yours sincerely
.
Bruce McKay
Chairman


6.5 AELs intentions on obtaining less than 50%

If AEL does not obtain at least a Relevant Interest in 50.1% of Adelphi Shares, then AEL intends to reassess its position
with respect to Adelphi in light of the outcome of the Offer and the AWE group of companies position at that time.


7.1 Capital structure of Adelphi

Based on publicly available information as at the date of this Bidders Statement, the total number of securities
in Adelphi is as follows:

(a) 169,271,380 Shares; and

(b) 6,000,000 Options.

The Options have an expiry date of 25 November 2012 and an exercise price of $0.23 each.

7.3 Acquisition of Adelphi Shares by AEL during previous four months Except as set out below, during the period beginning four months before the date of this Bidders Statement and ending the day before that date, neither AEL nor any associate of AEL has provided, or agreed to provide,
consideration for Adelphi Shares.

On 11 May 2010, AEL was allotted 7,150,120 Adelphi Shares at $0.25 per Adelphi Share pursuant to a placement of Shares by Adelphi.

AEL has bought the following Adelphi Shares on market:

(a) 404,129 on 12 May 2010 at an average price of $0.26 per Adelphi Share;
(b) 1,176,652 on 13 May 2010 at an average price of $0.275 per Adelphi Share; and
(c) 605,632 on 14 May 2010 at an average price of $0.28 per Adelphi Share.



8. Sources of Cash Consideration

The total amount that AEL would be required to pay for Adelphi Shares under the Offers if AEL acquires all of the Adelphi Shares in which it does not already have a Relevant Interest, assuming that none of the Options are exercised, is $44,828,338.80 plus brokerage.

The total amount that AEL would be required to pay for Adelphi Shares under the Offers if AEL acquires all of the
Adelphi Shares in which it does not have a relevant interest, assuming that all of the Options are exercised and the resulting Adelphi Shares are sold into the Offer is, $47,228,338.80 plus brokerage.

As of 14 May 2010, the AWE group of companies has available cash balances of approximately $127 million,
an amount sufficient to cover the cash consideration.
Further, AWE Finance Pty Ltd has an undrawn corporate debt facility, with a banking syndicate, the agent for which
and a participant in is an authorised deposit taking institution, of $150 million immediately available for drawdown

if required. This corporate debt facility is subject to standard events of default, undertakings, representations and warranties and other provisions usual for facilities of this nature. AWE has no reason to believe that any of the events of default will occur such that a drawdown will not be able to be made.

AWE has agreed to provide and procure, and will in particular procure its subsidiary AWE Finance Pty Ltd to provide AEL with all money that AEL requires to pay for the Adelphi Shares acquired under this Offer. The money will be
made available to AEL through intercompany subscription for equity or by intercompany loans, as appropriate.