Loon Energy Inc.

Loon Energy Inc.

October 29, 2007 11:30 ET

CEPSA and Loon Energy Inc. Announce the Signature of an Agreement for the Assignment of an Interest in Block 127 in Peru

- On August 21st, 2007, Loon Energy was granted the exploration and production rights for Block 127. - Subject to Peruvian regulatory approval, Loon has agreed to assign to CEPSA a working interest of 80% and CEPSA will be designated to act as the operator of the block. - The initial exploration program will last 24 months, with the option of continuing with the exploration of the area for up to an additional 5 years.

CALGARY, ALBERTA and MADRID, SPAIN--(Marketwire - Oct. 29, 2007) - CEPSA Peru S.A., a wholly-owned subsidiary of CEPSA, and Loon Peru Limited, a wholly-owned subsidiary of Calgary-based Loon Energy Inc. (TSX VENTURE:LEY), have entered into a farm-in agreement whereby CEPSA Peru will acquire a working interest in a hydrocarbon exploration and exploitation license contract that Loon Peru holds in Block 127, in the Maranon Basin area of northeast Peru.

The exploration and exploitation license contract, signed by and between Loon Peru and Perupetro in August 2007, grants Loon Peru the right to explore for and produce hydrocarbons in Block 127, measuring 9,675 square kilometers. According to the terms of the contract, Loon Peru undertakes, in the initial phase of the contract, to acquire, process and interpret 390 kilometers of 2D seismic survey, reprocess existing seismic data on an additional 2,000 kilometers and prepare the corresponding technical studies.

Under the terms of the farm-in agreement, CEPSA Peru will repay to Loon certain costs already incurred and disproportionately fund the first and (if it remains a partner) second exploration period work commitment in order to earn an 80% working interest in Block 127.

Pursuant to the farm-in agreement with Loon, CEPSA Peru will be the operator of the block and acquire an 80% working interest in the license, which involves a work commitment that includes an initial phase of 24 months and four subsequent periods until completing an exploration term of 7 years.

Loon Energy is an international oil and gas exploration and production company whose common shares trade on the TSX Venture Exchange under the trading symbol "LEY". Loon holds direct interests in Brunei, Syria, Colombia, Peru, Tunisia and Slovenia and has an exposure to a major exploration and development program in Pakistan through its shareholding in Jura Energy Corporation. Loon has offices in Calgary (Canada), Dubai (United Arab Emirates) and Bandar Seri Begawan, (Brunei Darussalam). For further information, please refer to the Loon website (www.loon-energy.com).

CEPSA is a diversified energy company whose core business is the refining and marketing of petroleum products. The Company is also involved in other energy-related activities, such as oil and gas exploration and production, natural gas operations and electric power generation, and it has a world-class petrochemicals segment that is highly integrated with its refining activities, where it manufactures and sells intermediates for products used in a wide variety of industries.

Not only is CEPSA a major energy player in Spain, but it also has an expanding global portfolio of operations in countries such as Algeria, Brazil, Canada, Colombia, Egypt, Panama and Portugal, selling its products on all five continents. CEPSA regards Peru as one if its new focus areas and is actively pursuing additional exploration opportunities in that country.

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