March 31, 2004

NEWS RELEASE 
 
Debentures Converted Into Loon Shares
 
Loon Energy Inc. (“Loon”) (TSX-V:LEY) announces that the holders of convertible debentures for an aggregate amount of $800,000 have exercised their right of conversion into common shares of Loon.    A total of 8,000,000 common shares will be issued to the debenture holders.  Prior to the conversion, Loon had 23,135,708 common shares issued and outstanding.   Common shares issued and outstanding after giving effect to the conversion are 31,135,708.
 
The convertible debentures were first issued in July, 2001 for a term of 2 years.  Loon announced on February 27, 2004 that it had negotiated an extension of the term of the debentures until January 1, 2006 and the debenture holders were issued 1,600,000 warrants to purchase common shares of Loon at $0.10 per share until January 1, 2006 as consideration for the extension. 
 
On March 22, 2004 Loon announced its intention to issue up to 10,000,000 common shares by way of private placement at a price of $0.15 per common share.  This issue has not closed as of the date hereof but is expected to close prior to the end of April.  On March 24, 2004 Loon announced that it had entered into an agreement with Auldstone Investments Inc. to acquire all of Auldstone’s right, title and interest in oil and gas projects in Slovenia and elsewhere in south-central Europe for 4,400,000 common shares of Loon.  This transaction has not closed as of the date hereof but is expected to close prior to the middle of April.  Once each of these transactions are completed, Loon will have a total of 45,535,708.
 
Slovenia is located in south-central Europe and is bounded by Croatia (south), Hungary (east), Austria (north) and Italy (west).  The principal 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 exploration and production company with minor oil and gas production in Canada and exploration and development projects in south-central Europe and other areas.