March 24, 2004

NEWS RELEASE 
 
Loon To Increase Holdings in Slovenia
 
Loon Energy Inc. (“Loon”) (TSX-V:LEY) announces that it has entered into an agreement with Auldstone Investments Inc. to acquire Auldstone’s beneficial interest in the Petisovci-Dolina field in eastern Slovenia and all of Auldstone’s rights to participate in oil and gas exploration and development activities in this general area of south-central Europe pursuant to its current joint venture arrangements with Loon.  Auldstone is a private company based in Dubai, United Arab Emirates.
 
Under the agreement Loon has agreed to acquire all of Auldstone’s interest in the Petisovci-Dolina field together with its interest in all related agreements.  In consideration for the acquisition of this interest Loon has agreed, subject to regulatory approval, to issue to Auldstone 4,400,000 shares in the capital stock of the Loon.  Loon currently has 23,135,708 common shares issued and outstanding, debentures issued which could lead to the issue of another 8,000,000 common shares and warrants outstanding that could lead to the issue of an additional 1,600,000 shares.  On a fully-diluted basis, the total number of Loon shares prior to the Auldstone transaction and not including any options to purchase common shares is 32,735,708.  The shares held by Auldstone would represent 19% of the total number of issued and outstanding shares and 13.4 % of the fully-diluted shares.  In addition, Loon announced on March 22, 2004 a proposed private placement of up to 10,000,000 additional shares.  In the event that all of these shares were issued pursuant to the private placement, the shares held by Auldstone would represent 10.3% of the 42,735,708 fully-diluted common shares.
 
Auldstone has been a partner of Loon in development work in the Petisovsci-Dolina area for the past several years.  The acquisition of the Auldstone interests increases Loon’s net interest in the Joint Venture by from 26.25% net to 30% net.  On March 18, 2004 Loon announced that Loon and Auldstone had entered into an agreement with WPN Resources with respect to development of the deep gas reservoirs underlying the Petisovsci-Dolina area.
 
The Petisovsci and Dolina fields lie on a large anticlinal structure which continues east into Hungary.  Approximately 1/3 of the structure is in Slovenia with the balance in Hungary.  The oil field on the Hungarian side of the border, the Lovaszi field, has produced 50 million barrels and 230 Bcf of gas while the Petisovsci-Dolina field area has produced 5.6 million barrels of oil and 34.3 Bcf of gas, less than 15% of the volumes produced at Lovaszi.  The Company believes that significantly more oil and gas can be produced from the Slovenian part of the structure.
 
Slovenia is located in south-central Europe and is bounded by Croatia (south), Hungary (east), Austria (north) and Italy (west).  The project area is located in eastern Slovenia near to the borders with Hungary and Croatia approximately 210 kilometres south of Vienna, Austria and 180 kilometres northeast of Ljubljana, the capital of Slovenia. Slovenia will be joining the European Union (the “EU”) in May of this year.
 
Loon is an oil and gas exploration and production company with approximately 40 boepd of production in Canada and exploration and development projects in south-central Europe and other areas.