Loon Granted Well License

Loon Energy has received a permit to drill a new well on its lands in the Petisovsci-Dolina area of eastern Slovenia. The PT-123 well, to be drilled to a projected depth of 2,100 metres, will evaluate multiple oil and gas targets. The primary target is the Petisovsci zone which has produced approximately 5.6 million barrel from an area downdip from, and to the west of, the PT-123 location. The Petisovsci reservoir is estimated to have oil-in-place of approximately 30 million barrels. Drilling is expected to commence during June, 2004. Loon will pay 40% of the costs of the well and will have a 30% working interest after cost recovery.

The Petisovsci and Dolina fields lie on a large anticlinal structure, approximately one-third of which is in Slovenia. The Lovaszi Field, which underlies the eastern two-thirds of the structure on the Hungarian side of the border, has produced 50 million barrels of oil and 34.3 Bcf of natural gas. The Petisovsci/Dolina area has produced 5.6 million barrels of oil and 34.3 Bcf of natural gas, less than 15% of the volumes produced at Lovaszi. Loon believes that potentially significant additional volumes of oil and natural gas remain to be produced from the Slovenian portion of the anticline covered by the permits granted to Loon et al.