Loon Energy Abandons Kristie #1 in Colombia

Loon Energy says that the Kristie #1 exploratory well in Colombia has been drilled to a total depth of 2,252 meters (7,390 feet) and abandoned without testing after logging. The well was drilled to evaluate the oil potential of a large combination structural-stratigraphic prospect in the Revancha Sur area of the approximately 62,500 acre Abanico Block. The well was paid for through a farmout arrangement with Prospero Hydrocarbons Inc. ("Prospero"). Under the terms of the farmout agreement, Loon agreed to assign a 25% interest in the Kristie prospect in consideration for Prospero funding 50% of the well costs. In addition Loon has agreed to assign to Prospero a 25% interest in a second prospect to be drilled in the Abanico Block in consideration for Prospero funding 50% of the cost and expense of drilling a well to test that prospect. Loon will retain a 24% interest in each of the prospects and a 49% interest in the rest of the Abanico Block excluding the interest of the operator (Kappa Resources Colombia Ltd.) in the existing Abanico Oilfield. In addition, Prospero shall have the right to participate in any future wells drilled in the block with a 25% working interest, in which case Loon shall drop from 49% to 24%. Drilling of the second well under the farmout agreement is expected to occur during the first quarter of 2008.
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