Loon Starts Natural Gas Production in Slovenia

Loon Energy reports that the Pt-123 well, which was drilled during July and August of this year, commenced commercial production on November 9, 2004. The gas is being delivered through existing field lines to a power plant owned and operated by a subsidiary of Nafta Lendava d.o.o., the state-owned company that is one of Loon's partners in Slovenia.

The well is producing at an initial rate of 350 Mcfd. Production will slowly increase to an ultimate target rate of more than 500 Mcfd during the next 3 months. The producing gas zone tested dry gas at a stabilized rate of 600 Mcfd (100 boepd) upon completion. The well will be produced for a period of 3 months at which time the well will be shut-in for a brief period to conduct a pressure buildup test to enable a more precise determination of reserves. Current estimates of potential gas reserves in the pool tapped by the Pt-123 well, based on mapping, range from 2 Bcf to 4 Bcf for this particular zone.

The company is evaluating the potential of either re-entering old wells elsewhere in the field to develop this zone and/or the drilling of new wells. 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.