June 18, 2004

NEWS RELEASE 
 
Summer Drilling Program - Pt-123 Well
 
Loon Energy Inc. (“Loon”) (TSX-V:LEY) announces that all service contracts have been signed to enable the drilling of the Pt-123 well in the Petisovci field area of Slovenia. The Pt-123 will be followed by the drilling of the D-14 well in the Dolina field area, once all government permits have been obtained. The well is expected to spud in early July.

The Pt-123 well will be drilled at a location immediately to the northeast and updip of the Petisovci field to a depth of approximately 2,100 metres. The wellbore will intersect six (6) different targets, three (3) of which have produced oil and/or gas within the Petisovci field area. The remaining three (3) reservoirs having produced oil and/or gas in adjacent areas.

The primary target of the well is the Petisovci (“Pt”), a 200 metre (gross) thick reservoir sand that starts at a depth of approximately 1,600 metres. The Pt Reservoir contains multiple sand units separated by shale sequences with each sand unit being approximately 10 metres thick. The Pt-123 well will intersect seven such Pt units, four of which have produced oil from the field.

In addition, the Pt-123 wellbore is expected to intersect reservoir quality sands belonging to the Paka, Middle Ratka, Lovaszi and Lower Ratka reservoirs at depths above the Pt reservoir. Each of these reservoirs have produced oil and/or gas in the Petisovci field, the Dolina field or the adjacent Lovaszi field in Hungary and are secondary targets of the well.

Reservoirs within the Dolina field area will be tested by the D-14 well which, subject to permitting, will be drilled immediately after the Pt-123 well. The D-14 well is subject to a farmout agreement with Grove Energy Limited (TSX-V:GRV) and will be drilled at no cost to Loon. Total depth for the D-14 well will be approximately 3,000 metres. Primary target is natural gas in the Petisovci-Globocki or Pg zone.

The Petisovsci and Dolina fields lie on a large anticlinal structure approximately 18 kilometres in length which continues east into Hungary. Approximately 40% of the structure is in Slovenia. The Lovaszi oil field, on the Hungarian side of the structure, has produced 50 million barrels of oil and 230 Bcf of gas. 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.

Loon is focused on exploration and development projects in Slovenia and other countries in south-central Europe. Slovenia 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 joined NATO in April, 2004 and the European Union (“EU”) on May 1 of this year.