Loon Drills Gas Well in Colombia

Loon Energy says that it has drilled, logged and cased the Ventilador-2 well. Ventilador-2, the first well drilled by Loon in Colombia, is part of an on-going drilling program on the Abanico Block, located in the Upper Magdalena Valley in central Colombia.

The well, which targeted a possible gas accumulation in the Barzalosa Sand of Tertiary age, was spud in late August and drilled and logged to a total depth of 518 metres (1,700 feet). Casing was run to total depth. Petrophysical analysis indicates the Barzalosa sands have thickened and improved in reservoir quality relative to offset wells. The Barzalosa gas sand encountered in Ventilador-2 has a total of 80 feet (24.4 metres) of net pay out of a 90 foot gross sand interval.

The gas zone was perforated in two separate intervals prior to being flow tested. The initial flow rate of 850 Mcfd increased during the course of a 51 hour flow period to over 2.5 MMcfd at a stable pressure of 575 psi. The well has now been shut-in for pressure build-up and a comprehensive technical analysis will be performed when final pressure data is available.

The Ventilador-2 well was the first or three wells planned during 2005 which are being drilled to evaluate three separate prospects. The drilling will fulfil, in part, Loon's commitment to expend a minimum of US$6 million to earn a 49% interest in the Association Contract of Kappa Resources Colombia Ltd. which covers more than 200,000 acres ( greater than 300 square miles) in a hydrocarbon prone area of Colombia.

A portion of the gas production from the Ventilador-2 well will be sold to Kappa for use in the operation of a nearby producing field. Subsequent tie-in of the gas into existing infrastructure, which comes to within several kilometres of the well, will facilitate future sales of excess gas production capacity to local utilities.