Loon Energy Inc.: Settlement of Brunei Block L Disputes

CALGARY, ALBERTA (TSX VENTURE: LEY) is pleased to advise that Loon and Loon Brunei Limited ("Loon Brunei") have entered into a settlement agreement which resolves all outstanding legal issues with Integra Mining (B) Sendirian Berhad ("Integra") and Bumico Sendirian Berhad ("Bumico").

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

On August 7, 2007 Loon disclosed the outcome of the High Court proceedings. The High Court confirmed that neither Integra nor Bumico had any rights in Block L under the written agreements that were subject to English law ("English Law Agreements"), save for Integra's residual entitlement ("Original Entitlement") 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.

Since April 20, 2007 Bumico and Integra have also pursued arbitration proceedings against Loon and Loon Brunei pursuant to the terms of the initial agreement between the Loon and Integra which is governed by the laws of Texas. These proceedings are terminated as a part of the settlement between the parties.

Loon, Loon Brunei, Bumico and Integra have now entered into a settlement agreement ("Settlement Agreement"), pursuant to which all of Bumico's and/or Integra's disputes with Loon and/or Loon Brunei over Block L have been resolved.

The Settlement Agreement provides that, without admission of liability, Loon will pay to Integra and Bumico: (i) US$1.2 million; (ii) US$800,000 in quarterly installments over the following 18 months; and (iii) US$3.5 million out of 10% of Loon's entitlement to profit oil that is produced and sold under the terms of the Production Sharing Agreement. Integra, Bumico and its directors will, in return, give up the Original Entitlement and make no further claim or assertion of any right whatsoever against Loon or Loon Brunei in connection with Block L or any other Brunei concession area, other than to those rights provided for in the Settlement Agreement.

Loon is an international oil and gas exploration and production company having direct interests in Brunei, Syria, Colombia, Peru, Tunisia and Slovenia and exposure to a major exploration and development program in Pakistan through its shareholding interest 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 (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 neither approves nor disapproves of the information contained herein.

Contacts: Loon Energy Inc. (Calgary) Norman W. Holton Executive Chairman (403) 264-8877 Email: nholton@loon-energy.com Loon Energy Inc. (Dubai) Timothy M. Elliott President and Chief Executive Officer +971-4-339-5212 Email: telliott@loon-energy.com Loon Energy Inc. (Dubai) Jock M. Graham Executive Vice President +971-4-339-5212 Email: jgraham@loon-energy.com Brisco Capital Partners Corp. (Calgary) Gordon Aldcorn Investor Relations (403) 262-9888 Email: galdcorn@shaw.ca

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