August 7, 2007
TSX-V:LEY

NEWS RELEASE

Judgment of UK Court - Brunei Block L

Calgary, Alberta, Canada, August 7, 2007 – Loon Energy Inc. (“Loon”) (TSX-V: LEY) is pleased to provide information on the status of its interest in Brunei.

On April 24, 2007 Loon disclosed that on March 14, 2007 it had commenced legal proceedings in the High Court in London, England (the "High Court"), seeking appropriate declaratory relief to protect its 90% interest in the rights awarded by Brunei National Petroleum Company Senderian Berhad (“PetroleumBRUNEI”) to Loon's wholly-owned subsidiary Loon Brunei Limited (“Loon Brunei”), in respect of Block L in Brunei Darussalam (“Brunei”), against allegations made by Bumico Sendirian Berhad ("Bumico") and Integra Mining (B) Sendirian Berhad ("Integra") that those entities were entitled to a 40% interest in respect of Block L.

The proceedings were heard by the High Court on July 17 and 19, 2007. In the course of the proceedings, Bumico and Integra abandoned their claim to a 40% interest in Block L. The High Court issued its final judgment on July 31, 2007 and made the following declaration in favour of Loon:

"On a true construction of the contracts between the parties which are subject to English law (‘the English Law Contracts’) in the context of all the relevant agreements (including, for the avoidance of doubt, the Confidentiality and Non-Circumvention Agreement) and other relevant matrix, [Integra and Bumico] have neither an actual or contingent interest in Block L nor an entitlement to assert now or in the future any rights or claims against Loon or Loon Brunei in relation to Block L pursuant to the English Law Contracts, save for the First Defendant’s entitlement under Clause 5.2 of the Trust Agreement."

The effect of this declaration is to confirm that neither Integra nor Bumico have any rights in Block L pursuant to the written agreements regarding Block L that are subject to English law (save for a residual entitlement of Integra to receive US$1.5 million out of 50% of Loon's entitlement to hydrocarbons produced and sold under the terms of the Production Sharing Agreement). The High Court declined to grant wider declarations claimed by Loon aimed to prevent Integra and Bumico from making claims outside the scope of the written agreements regarding Block L that are subject to English law. Importantly, however, Integra and Bumico confirmed at the trial that they do not currently assert that they have any other rights in relation to Block L arising other than pursuant to the written agreements that are governed by English law and the Confidentiality Agreement which is the subject of the arbitration proceedings commenced by Integra/Bumico (see April 24, 2007 News Release of Loon).

Accordingly, following the conclusion of the High Court proceedings, the only continuing dispute between the parties is the Texan arbitration proceedings. Although this residual dispute will fall to an arbitrator to determine, the High Court referred to Integra's claim in those proceedings as "on any view, a strange claim", and remarked that if Integra succeeded in its latest claim in the arbitration, that "would truly be a remarkable and wholly un-commercial outcome."

In order to fully and expeditiously protect their legitimate interests, Loon will vigorously defend the arbitration. A copy of the judgment of the High Court may be obtained on the internet from
http://www.bailii.org/ew/cases/EWHC/Comm/2007/1876.html.

Loon is an international oil and gas exploration and production company having direct interests in Brunei, Syria, Colombia, Peru and Slovenia and an indirect interest in Pakistan through its shareholding in Jura Energy Corporation.  Loon has offices in Calgary, Alberta, Canada, Dubai, United Arab Emirates and Bandar Seri Begawan, Brunei Darussalam.  For further information, please refer to the Loon website http://www.loon-energy.com or contact the following.

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 has neither approved nor disapproved of the information contained herein.