Loon et al Case Colombia Well, Testing to Follow

Loon Energy Inc. reported that the Delta-1 well in Colombia has reached total depth of 8,183 feet (2,494 metres) and preparations are underway to log the well. The well, spud on December 9th, is located within a 60,817 hectare block of lands covered by the Buganviles Association Contract (the "Contract") between Holywell Resources S.A. ("Holywell") and Ecopetrol, the national oil company of Colombia. The well was drilled slightly deeper than the initial planned total depth of approximately 8,000 feet. Total well costs are expected to be in the order of $3.9 million US with Loon's share being slightly over $1 million US.

The Delta-1 was directionally drilled to intersect the target zone approximately 250 metres from the surface location of the Gualanday-3 oil discovery drilled in 1957. The Gualanday well had initial test rates of 100-393 barrels of 37 degrees API oil per day and produced approximately 300,000 barrels of oil during six years of sporadic production from a gross reservoir section of more than 170 feet within the Caballos Formation. Delta-1 encountered the primary limestone objective in the Caballos Formation approximately 254 feet lower than in the Gualanday well. The zone, with a gross thickness of approximately 156 feet, was intermittently oil-stained throughout with the best oil shows and higher gas content in the top 80 feet of the zone. The well will be tested following logging and once casing has been set.

In the event that the well is productive, fifty percent of the lands or approximately 75,000 acres will be retained for a period of two years. In the event that the well is not cased for commercial production, the lands will expire. Under the terms of an agreement with Kappa Energy Colombia Limited S.A. ("Kappa"), Loon participated through Kappa in an arrangement between Kappa and Holywell and is paying 26.4% of the costs of the drilling and completion of the Delta-1 well to earn a 20% working interest in the well and any of the retained lands.