In consideration for the acquisition Loon issued to Auldstone 4,400,000 shares in the capital stock of the Loon. Prior to the closing of the acquisition, Loon had 31,135,708 common shares issued and outstanding. Subsequent to the closing of the acquisition, there are 35,535,708 common shares outstanding with the holdings of Auldstone representing 12.4% of the total. Loon announced on March 22, 2004 a proposed private placement of up to 10,000,000 additional shares. In the event that all of these shares are issued pursuant to the private placement, the shares held by Auldstone would represent 9.7% of the 45,535,708 common shares then outstanding. The percentage ownership positions reported earlier were not correct.
Auldstone and Loon have been partners in development work in the Petisovsci-Dolina area for the past several years. The acquisition increases Loon's net interest in the Joint Venture from 26.25% net to 30%. On March 18, 2004 Loon announced that Loon and Auldstone had entered into an agreement with WPN Resources with respect to development of the deep gas reservoirs underlying the Petisovsci-Dolina area. With the closing of the acquisition, Loon has acquired all of Auldstone's interest in the WPN Agreement.
The Petisovsci and Dolina fields lie on a large anticlinal structure which continues east into Hungary. Approximately 1/3 of the structure is in Slovenia with the balance in Hungary. The oil field on the Hungarian side of the border, the Lovaszi field, has produced 50 million barrels and 230 Bcf of gas while the Petisovsci-Dolina field area has produced 5.6 million barrels of oil and 34.3 Bcf of gas, less than 15% of the volumes produced at Lovaszi. The Company believes that significantly more oil and gas can be produced from the Slovenian part of the structure.
Slovenia is located in south-central Europe and is bounded by Croatia (south), Hungary (east), Austria (north) and Italy (west). The project area is located in eastern Slovenia near to the borders with Hungary and Croatia approximately 210 kilometres south of Vienna, Austria and 180 kilometres northeast of Ljubljana, the capital of Slovenia. Slovenia will be joining the European Union (the "EU") in later this year and joined the North Atlantic Treaty Organization ("NATO") earlier this month.
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