Loon Says Drilling Commenced on Kristie #1 in Columbia

Loon Energy spuds the Kristie #1 well in Colombia. The well will evaluate the oil potential of a large combination structural-stratigraphic prospect in the Revancha Sur area of the approximately 62,500-acre Abanico Block. Geological and geophysical information used to develop the prospect suggest potential for recoverable reserves in the order of 65 million barrels if the well and subsequent development is successful. The total depth of the well is expected to be more than 2,000 meters or approximately 6,300 feet.

The Kristie #1 well, along with a second exploratory well, will be paid for through a farmout arrangement with Prospero Hydrocarbons Inc. Under the terms of the farmout agreement, Loon has agreed to assign a 25% interest in the Kristie prospect in consideration for Prospero funding 50% of the well costs. In addition Loon has agreed to assign to Prospero a 25% interest in a second prospect to be drilled in the Abanico Block in consideration for Prospero funding 50% of the cost and expense of drilling a well to test that prospect. Loon will retain a 24% interest in each of the prospects and a 49% interest in the rest of the Abanico Block excluding the interest of the operator (Kappa Resources Colombia Ltd.) in the existing Abanico Oilfield. In addition, Prospero shall have the right to participate in any future wells drilled in the block with a 25% working interest, in which case Loon shall drop from 49% to 24%.

The consortium has identified a number of prospects to target subsequent to the Kristie #1 well and to this end is in the process of permitting and surveying several surface locations in order to keep its options open in this regard.