Loon Energy Inc.
TSX VENTURE : LEY

Loon Energy Inc.

November 16, 2005 09:00 ET

Loon Energy Inc.: Aleli-D1 Drilling Update

CALGARY, ALBERTA--(CCNMatthews - Nov. 16, 2005) - Loon Energy Inc. ("Loon") (TSX VENTURE:LEY) is in the process of drilling the Aleli-D1 well to evaluate one of several large targets defined on the Abanico Block, located within the Magdalena Valley in Colombia. This is the second well to be drilled as part of Loon's work program at Abanico.

The Aleli-D1 re-entry was spud September 21st, 2005 and had reached a depth of 6,633' as of November 3rd, 2005. At this point the traveling block and its coupling were damaged and have just been repaired. Due to the stoppage of operations, the drill string has become stuck and the JV is working to free the string and resume drilling operations. The targeted total depth for the Aleli-D1 well is 7,800'.

The drilling rig has been on the well for 55 days. The original drilling program anticipated a total of 31 days to reach total depth. Penetration rates, which were slower than anticipated below approximately 4,500' due to numerous thick chert beds, were responsible for some of the extra time. Rig maintenance and repair and associated issues, including the recent damage to the traveling block, caused the additional delays.

Loon expects to make a determination by the end of this week on whether to continue drilling to the targeted depth or evaluate the open hole section of the well. Oil and gas shows were being encountered at the point of stoppage of operations and oil shows were encountered in various intervals below approximately 4,000'.

The drilling of Aleli-D1 will fulfil, in part, Loon's commitment to expend a minimum of US$6 million to earn 49% interest of the interest of Kappa Resources Colombia Ltd. ("Kappa") in the Abanico Association Contract. Drilling operations are operated by Kappa. Earning is subject to the approval of Ecopetrol, the Colombian national oil company. The Contract area covers greater than 200,000 acres (greater than 300 square miles) in the Upper Magdalena Valley.

Loon expects to spud the next well in the Abanico program during the first quarter of 2006. A recently completed 3-D survey has defined several potential locations for the third Loon well.

Loon's first well in the on-going drilling program, Ventilador-2, encountered 80' of gas pay and tested up to 2.5 MMcf/d. Kappa has advised that they expect to be able to tie-in the Ventilador-2 well during the first quarter of 2006.

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 or Jock M. Graham
    +971-4-339-5212