Loon Energy Inc.: Santana Well Spuds in Colombia

CALGARY, ALBERTA (TSX VENTURE: LEY) announces that the Santana-1 well commenced drilling on July 16th, 2008. The well will evaluate possible gas sands within the Honda and Barzalosa Formations as well as deeper potential within the Lower Cretaceous Caballos Formation in a potentially large seismically-defined combination structural-stratigraphic prospect in the Abanico Block of central Colombia. Targeted total depth is 7,000 feet (2,130 metres) and the well is expected to reach total depth in late August. The well is located approximately 6.5 kilometres to the south of the Ventilador-2 (Loon 49%) producing gas well and 15 kilometres southeast of the Delta-1 (Loon 20%) indicated oil discovery announced on June 14th, 2008.

The well will be drilled at no cost to Loon under an agreement with Prospero Hydrocarbons Inc. ("Prospero"). Under the terms of the agreement, Loon is assigning a 25% interest in the Santana prospect in consideration for Prospero and Kappa funding 100% of the well costs. Completion and testing expenses will be proportionally split amongst the partners. Loon will retain a 24% interest in the Santana prospect and a 49% interest in the rest of the Abanico Block excluding the interest of the operator (Kappa Resources Colombia Ltd.) in the existing Abanico Oilfield and the interest of Loon in the Ventilador-2 well.

Loon is an international oil and gas exploration and production company having direct interests in Brunei, Syria, Colombia, Peru and Slovenia and with exposure to a major exploration and development program in Pakistan through its shareholding in Jura Energy Corporation.

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.

Contacts: Loon Energy Inc. - Calgary, Canada Norman W. Holton Executive Chairman [phone] [phone] (FAX) Email: [e-mail] Loon Energy Inc. - Dubai, UAE Timothy M. Elliott President and Chief Executive Officer [phone] Email: [e-mail] Loon Energy Inc. - Dubai, UAE Jock M. Graham Executive Vice President [phone] [phone] (FAX) Email: [e-mail] Website: www.loon-energy.com Brisco Capital Partners Corp. (Calgary) Gordon Aldcorn Investor Relations [phone] Email: [e-mail]