Loon Energy Inc.
TSX VENTURE : LEY

Loon Energy Inc.

March 16, 2007 10:58 ET

CORRECTION FROM SOURCE: Loon Producing Gas in Colombia

CALGARY, ALBERTA--(CCNMatthews - March 16, 2007) - A correction from source is issued with respect to the Loon Energy Inc. release issued March 15, 2007 at 17:27 ET. In the third paragraph "US$1.65/MMbtu" should have read "US$1.65/Mbtu." The corrected release follows:

Loon Energy Inc. ("Loon") (TSX VENTURE:LEY) is pleased to provide an update on its activities in Colombia. Loon is in the process of earning a 49% interest in the exploration area of the Abanico Block which is located in Colombia's Magdalena Valley and is operated by Loon's 51% partner, Kappa Resources Colombia Ltd. ("Kappa"). To date, Loon has fulfilled approximately 90 % of its US$6 million earning obligation.

Ventilador-2: On September 19th, 2005 Loon announced that it had drilled, logged and cased the Ventilador-2 well - the first well Loon drilled in Colombia. The Barzalosa gas sand encountered in Ventilador-2 contained 80 feet (24.4 metres) of net pay out of a 90 foot gross sand interval. The Barzalosa has a reservoir pressure of 640 psi. It was perforated in two separate intervals prior to being flow tested at an equipment constrained rate of 2.2 MMcfd.

On March 9, 2007, the Ventilador-2 well was tied-in and began producing gas to the national grid at an initial rate of 1.4 MMcf/d. Gas is being sold to Ecopetrol (Colombia's National Oil Company) and the consortium is receiving US$1.65/Mbtu for the gas as part of a gas sales agreement signed on March 5, 2007.

As part of the farm-in arrangement between Loon and Kappa, Loon will receive 65% of the consortium's share of Ventilador gas revenue until such time as it has recovered its associated costs. Ecopetrol is still evaluating the well to determine whether-or-not to exercise their 50% back-in option. If they elect to participate, the consortium will receive 100% of the well's production until such time as it has recovered its costs and thereafter Ecopetrol and the consortium will share revenue on a 50/50 basis. If Ecopetrol elects not to participate in the well at this time, the consortium will be in a sole risk scenario until such time that Ecopetrol decides to participate and their share of costs as specified in the Association Contract have been recovered by the consortium.

Additional Activity: Loon and Kappa are in the process of detailing several prospects that the consortium is planning to drill this year. Standard contractual acreage relinquishments are in process with a final release, excluding Commercial Areas, scheduled for mid-2008.

Some of the statements contained in this release may be forward-looking statements. Forward-looking statements may include, but are not limited to, statements concerning estimates of recoverable hydrocarbons, expected hydrocarbon prices, expected costs, statements relating to the continued advancement of the Company's projects and other statements which are not historical facts. When used in this document, and in other published information of the Company, the words such as "could," "estimate," "expect," "intend," "may," "potential," "should," and similar expressions are indicative of a forward-looking statement. Although the Company believes that its expectations reflected in the forward-looking statements are reasonable, the potential results suggested by such statements involve risk and uncertainties and no assurance can be given that actual results will be consistent with these forward-looking statements. Various factors, which could cause actual results to differ from these forward-looking statements, include the potential that the Company's projects will experience technical and mechanical problems, geological conditions in the reservoir which may negatively impact levels of oil and gas production and changes in product prices and other risks not anticipated by the Company or disclosed in the Company's published material. Since forward-looking statements address future events and conditions, by their very nature, they involve inherent risks and uncertainties.

The TSX Venture Exchange neither approves nor disapproves of the information contained herein.

Contact Information

  • Loon Energy Inc. (Calgary)
    Norman W. Holton
    (403) 264-8877
    or
    Loon Energy Inc. (Dubai)
    Timothy M. Elliott
    +971-4-339-5212
    or
    Loon Energy Inc. (Dubai)
    Jock M. Graham
    +971-4-339-5212