March 31, 2005
TSX-V:LEY

NEWS RELEASE

Loon Closes $20,000,000 Bought-Deal Private Placement

Calgary, Alberta, Canada, March 31, 2005 — Loon Energy Inc. ("Loon") is pleased to announce that it has completed the "bought deal" private placement originally announced on March 16, 2005. The syndicate of underwriters was led by Canaccord Capital Corporation and included Orion Securities Inc., Dundee Securities Corporation and Brant Securities Limited. Loon issued 21,052,636 common shares at $0.95 for total gross proceeds of $20,000,004.20.

The offering consisted of the 15,789,478 common shares plus an over-allotment of 5,263,158 common shares. The underwriters received a commission of 6% of the gross proceeds and were granted 500,000 broker warrants. Each broker warrant entitles its holder to acquire one common share of the Corporation at a price of $0.95 until March 31, 2006. The common shares issued at closing and any additional common shares issued on exercise of broker warrants are subject to a four month hold period.

Certain insiders participated in the private placement. Loon is exempt from the formal valuation and minority approval requirements under OSC Rule 61-501 in connection with this related party transaction as aggregate consideration paid by the insiders did not exceed 25% of the market capitalization of Loon.

The net proceeds received by the Company from the offering of common shares will be used for the drilling of exploration and development wells and the shooting of 3-D seismic in Colombia, working capital and/or expanded capital expenditures. The total number of common shares issued and outstanding as of the date hereof, after giving effect to the offering, is 67,133,364.

The major focus for Loon is its project in Colombia (news release of February 15, 2005). Loon will drill to evaluate a minimum of three separate prospects during the second and third quarter of 2005. Loon has committed to expend a minimum of $US6 million to earn a 49% interest in more than 200,000 acres (more than 312 square miles) in a hydrocarbon prone area of the Upper Magdalena basin.

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.