August 30, 2004

NEWS RELEASE 
 
Loon Pt-123 Well Cased to Total Depth
 
Loon Energy Inc. (“Loon”) (TSX-V:LEY) is pleased to provide an update on drilling activities in Slovenia.

D-14 Well
Site preparations for the drilling of the D-14 appraisal well are complete and the well commenced drilling on Sunday, August 29, 2004. Drilling time is estimated to be 30-35 days to a projected total depth of approximately 2,900 metres. The D-14 well is being 100% funded by Grove Energy Limited (TSX-V:GRV - News) as part of its Approved Work Program obligations. Loon has a 10.50% carried working interest in the well.

Secondary targets including the Paka and Petisovci zones occur above 2,000 metres -uphole from the Pg zone. These zones will be logged and possibly tested prior to the intermediate casing of the well. Loon has a 30% interest in all of these shallower zones.

Pt-123 Well
A service rig has been moved to the location to evaluate zones indicated as prospective during the drilling, logging and MDT testing of the well. Actual testing of the first target zone will start in the next few days.

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.

Some of the statements contained in this release are 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.