Loon Energy Inc. announces that the Santana-1 well commenced drilling on July 16, 2008. The well will evaluate possible gas sands within the Honda and Barzalosa Formations as well as deeper potential within the Lower Cretaceous Caballos Formation in a potentially large seismically-defined combination structural-stratigraphic prospect in the Abanico Block of central Colombia. Targeted total depth is 7,000 feet (2,130 metres) and the well is expected to reach total depth in late August. The well is located approximately 6.5 kilometers to the south of the Ventilador-2 (Loon 49%) producing gas well and 15 kilometrers southeast of the Delta-1 (Loon 20%) indicated oil discovery announced on June 14, 2008.
The well will be drilled at no cost to Loon under an agreement with Prospero Hydrocarbons Inc. ("Prospero"). Under the terms of the agreement, Loon is assigning a 25% interest in the Santana prospect in consideration for Prospero and Kappa funding 100% of the well costs. Completion and testing expenses will be proportionally split amongst the partners. Loon will retain a 24% interest in the Santana prospect 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 and the interest of Loon in the Ventilador-2 well.
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