Loon Makes Gas Discovery in Slovenia

Loon Energy has made a gas discovery with its Pt-123 well in Sovenia.

A gas zone, encountered in the Pt-123 wellbore at a depth of 1,530 meters, has been production tested. The zone produced dry gas at a stabilized rate of 600 mcfd (100 boepd) after a two day production test. It is expected to be producing on a regular basis by the end of October.

The producing zone has net gas pay of more than 5 meters. Based upon mapping of older wells the zone appears to occur over an area of approximately five square kilometers. The pool is expected to contain 2 to 4 Bcf of recoverable gas. However, a precise determination of recoverable reserves will only be possible after the well has been on production for some time.

The Pt-123 is the first well drilled by Loon in Slovenia. Loon paid 40% of the costs of the well and will receive 38% of net revenue prior to payout and 30% thereafter.

D-14 Well

Current well depth is 2,720 meters. Intermediate casing was set to a depth of 1,803 meters in mid-September. Logging of the shallow part of the well, prior to the running of the intermediate casing, indicated an uphole gas zone but equipment constraints and the condition of the wellbore precluded openhole testing.

The primary targets of the D-14 well are multiple reservoirs in the Petisovci-Globocki ("Pg") zone below 2,000 meters. The well location is approximately 2 kilometers northeast of, and more than 150 meters structurally higher than, wells which have produced almost 9 Bcf of natural gas from one of the Pg sands. The objectives of the well are to demonstrate continuity of both reservoir structure in the multiple gas-bearing Pg horizons expected to be encountered, to determine which of the gas-bearing zones have the most potential and to provide additional data for the design and planning of an optimal simulation program for the Pg.

The D-14 well is being 100% funded by Grove Energy Limited as parts of its Approved Work Program ("AWP"). Subsequent to completion of the AWP, Loon will have a 10.5% working interest in all of the potential reservoir sands in the Pg zone. The interest of Loon in the zones above the Pg zone, including the zone which indicated gas in the shallower part of the well, will remain at 38% before project payout and 30% after project payout.

Loon is focused on exploration and development projects in Slovenia and other countries in south-central Europe. Slovenia is bounded by Croatia (south), Hungary (east), Austria (north) and Italy (west). The principal project area is located in eastern Slovenia near to the borders with Hungary and Croatia approximately 210 kilometers south of Vienna, Austria and 180 kilometers northeast of Ljubljana, the capital of Slovenia. Slovenia joined NATO in April, 2004 and the European Union ("EU") on May 1 of this year.