2010-11-05-2010-10-27

Canceled merger, instead enters farm-in agreement with in Peruvian and Colombian projects.

In what's starting to look like a recurring motif for Loon Energy Corp., Calgary, (CDNX: LNE), South America-focused E&P's merger with Petrodorado Energy Ltd. Calgary, (Toronto Venture: PDQ) in a deal valued at approximately C$13.2 million in shares and will instead enter a farm-in agreement with Petrodorado.

Petrodorado planned to issue 19.2 million shares to Loon, valued at approximately C$10.2 million, and an additional C$3 million in shares following Loon's completion of 300 kilometers of 3-D seismic covering Loon's Block 127 in Peru and spudding of the initial well on the prospect.

Loon's assets include the 2.4-million acre Block 127 in the Marañon Basin of northeastern Peru and 49% interest in the 65,000-acre Abanico Block in central Colombia.

Petrodorado has now entered a farm-in agreement with Loon to acquire a 10% working interest in the Buganviles block in Colombia. The block includes well El Visure 1 targeting the upper and lower Guadalupe formations at a planned depth of 3,600 feet and is currently at a depth of 1,500 feet. Tuqueuque 1X is expected to spud shortly.

Petrodorado will have a 59.5% beneficial interest in the Visure prospect and a 55% beneficial interest in the Tuqueque prospect.

Petrodorado will pay Loon's 20% share of the AFE cost to drill and complete two wells in Colombia to earn 75% working interest (net 15%) of Loon in the Buganviles contract. The Farmout provides for a reduction in the earning of Petrodorado from net 15% to net 10% upon payment by Loon of 10% of the completion costs of both wells.