Loon Energy Inc.

Loon Energy Inc.

March 16, 2005 07:51 ET

Loon Energy Inc.: $15,000,000 Bought-Deal Private Placement


NEWS RELEASE TRANSMITTED BY CCNMatthews

FOR: LOON ENERGY INC.

TSX VENTURE SYMBOL: LEY

MARCH 16, 2005 - 07:51 ET

Loon Energy Inc.: $15,000,000 Bought-Deal Private
Placement

CALGARY, ALBERTA--(CCNMatthews - March 16, 2005) - Not for distribution
to United States newswire services or for dissemination in the United
States.

Loon Energy Inc. ("Loon") (TSX VENTURE:LEY) is pleased to announce that
it has entered into a bought-deal private placement financing agreement
with a syndicate of underwriters led by Canaccord Capital Corporation
and including Orion Securities Inc., Dundee Securities Corporation and
Brant Securities Limited. The offering will consist of 15,789,478 common
shares at $0.95 for gross proceeds of $15,000,000. Loon has granted the
underwriters an over-allotment option for 5,263,158 common shares at
$0.95 for additional gross proceeds of $5,000,000 in the event that 100%
of the option is exercised. The offering is subject to normal regulatory
approval and is expected to close on or about March 30, 2005.

The net proceeds received by the Loon from the offering of common shares
will be used for the drilling of exploration and development wells and
the shooting of 3-D seismic in Colombia, working capital and/or expanded
capital expenditures.

Loon announced on February 18th that it had entered into an agreement to
explore for and develop hydrocarbons in the Republic of Colombia. Under
the terms of the agreement with Kappa Energy Colombia Limited S.A., a
private company, Loon will expend a minimum of US$6 million on drilling
and seismic and will earn a 49% interest in the Abanico Association
Contract. The Abanico Association Contract area encompasses more than
310 square miles (approximately 200,000 acres) in the central Magdalena
Valley area of central Colombia.

Loon is focused on developing international oil and gas projects in
south-central Europe and in Colombia. The total number of common shares
issued and outstanding as of the date hereof is 46,092,708.

Forward Looking Statements - 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.

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Contact Information

  • FOR FURTHER INFORMATION PLEASE CONTACT:
    Loon Energy Inc. (Calgary)
    Norman W. Holton
    (403) 264-8875
    or
    Loon Energy Inc. (Dubai)
    Timothy M. Elliott
    +971-4-339-5212
    The TSX Venture Exchange neither approves nor disapproves of the
    information contained herein.