October 2, 2008
TSX-V:LEY

NEWS RELEASE

Second Quarter Financial Statements and MD&A & Update

Calgary, Alberta, Canada, October 2, 2008 – Loon Energy Inc. (“Loon” or the “Company”) (TSX-V:LEY) announces that the acquisition of seismic data on a 350 square kilometre 3D survey onshore Brunei has commenced. Field work preparatory to the shooting of data including surveying, bridging and the drilling of shot holes has been underway since April. Field acquisition operations are expected to be completed by the end of the year. A substantial amount of the data processing will occur while the shooting continues and the completion of the processing, a final interpretation of the data and a decision with respect to the drilling of the first Loon well on Block L is expected prior to the end of the second quarter of 2009.

Block L is 550,000 acres (2,253 km²) in size covering much of eastern onshore Brunei and also containing an offshore component. There has been some historic production on Block L, however, no exploration or development activities have been undertaken in this area in approximately 20 years. The giant Champion and Seria oil fields are both located within 25 kilometres of Block L and Brunei Shell Petroleum Co. Sdn Bhd announced a new gas discovery late last year at Bubut, less than 1 kilometre from the block.

A production sharing agreement on Block L, signed in August, 2006, granted Loon Brunei Limited (“Loon Brunei”), a wholly-owned subsidiary of Loon, as to 90% and QAF Sdn Bhd (“QAF”) as to 10%, the rights to explore and develop the block. The 3D survey is being conducted by Nations Petroleum SE Asia Limited (“Nations SE Asia”) as a part of their commitment to fund the first US$20.5 million of expenditures in the exploration of Block L in return for a 50% working interest. Accordingly, the interests of the partners in Block L are Loon Brunei 40%, Nations SE Asia 50% and QAF Brunei Sdn Bhd10%.

Loon is an international oil and gas exploration and production company having direct interests in Brunei, Syria, Colombia, Perú and Slovenia with exposure to a major exploration and development program in Pakistan through its shareholding in Jura Energy Corporation. For further information, please refer to the Loon website (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.