Loon Energy Begins Fracture Stimulation Program in Slovenia

Loon Energy has started its fracture stimulation program on the D-14 appraisal well in eastern Slovenia. The program comprises the perforation and fracturing of 4 intervals plus the perforation of a fifth interval which is not expected to require stimulation. These sandstone zones lie at a depth range of 2,350 to 2,785 meters within the Petisovci-Globocki ("Pg") formation. Perforation of the zones commenced on December 5th, 2004 and was completed on the morning of December 6th, 2004. It is anticipated that the fracture stimulation will commence on December 8th and be completed around December 15th, 2004.

Extended well test operations will commence following completion of the stimulation program. These tests will be designed to assess reservoir flow properties, well drainage radius and ascertain long term deliverability. Data gathered from this program will be used to design future drilling and development activities. Initial results of the fracture stimulation program are expected during the week commencing December 20th, 2004.

D-14 was drilled in September / October 2004 to a depth of 2,805 meters and cased to total depth. The well is being 100% funded by Grove Energy Limited as part of its commitment to spend no less than 4 million Euros to evaluate the gas potential of the Pg zone underlying Loon lands in eastern Slovenia. Upon the completion of this expenditure obligation, interest of Loon in the deep gas reservoirs will be 10.5%.