Canoro Updates Development and Exploration Activity

Canoro Resources' 2005 development and exploration programs are well underway. The Company has commenced re-entry and testing operations at its Amguri Field, while site construction work nears completion for the South Jorhat exploration well on the AA-ON/7 exploration block, both in northeast India.

Amguri Field Development Update - One Oil Zone and One Gas Zone Tested

On the Amguri development block, Canoro has re-entered and started testing a possible new hydrocarbon interval at Amguri 1 and an existing hydrocarbon interval at Amguri 5 to begin rehabilitating production from the field. In the Amguri 1 and 5 wells, well log analysis indicates that up to three potential hydrocarbon bearing zones are available for testing at each well.

The wellheads on Amguri 1 and Amguri 5 were restored to an operational state and the well bores have been found to be mechanically sound. To date, one new zone was tested in Amguri 1 and found to contain natural gas. The original producing zone was tested in Amguri 5 and found to contain oil. Both zones require further work before determining their productive capability. Work over activity, including testing of more zones and the additional work on the tested zones, is expected to continue until late this summer. Once operations on Amguri 1 are complete, the service rig will be moved to Amguri 5 to complete testing and re-work operations before moving to Amguri 6.

Engineering and re-design work for upgrading of the gathering system and facilities has commenced and is ahead of schedule.

All of the existing seismic that is available for reprocessing has been processed and preliminary results indicate that the structurally highest part of the Amguri Field has not yet been drilled. A 40 km2 3-D seismic acquisition program has been budgeted for later this year to provide the best possible seismic mapping of the field thus enabling future development wells to be properly located.

AA - ON/7 Block Exploration Update - South Jorhat Drilling to Commence Shortly

South Jorhat, one of several large structures identified on the AA-ON/7 exploration block, is Canoro's first exploration prospect to be drilled. Construction is nearing completion on the access road and pad, with the drilling rig expected to be moved on location towards the end of next week. Once on location, the monsoon season should have little impact on operations, with a spud date planned later in June. The well results are expected in the next quarter.

Also, on AA-ON/7, a new 200 km 2-D seismic program is budgeted. This program will focus on the north-western half of the block, including the area around the Dergaon 1 well, which Canoro re-entered and tested earlier this year. These tests established that a hydrocarbon bearing structure exists at the Dergaon 1 location. Based on current seismic coverage, Canoro is unable to determine if the Dergaon 1 well (drilled in 1973 by ONGC) was drilled in the optimum location. The new seismic is expected to identify the full extent of the Dergaon 1 play and other structures in the area and to further develop leads found using the existing seismic coverage.

India NELP-V Bid

A consortium composed of GeoPetrol International (30%) (a French oil and gas company), NTPC (40%) (India's largest power company) and Canoro (30%) bid on a 295 km2 onshore block, in Arunachal Pradesh, northeast India, as part of India's latest NELP V licensing round. GeoPetrol is currently a Joint Operator in an adjoining block where production is being realized from the Kharsang field. The Indian government announced recently that it plans to announce the NELP V block winners by July 31, 2005.

Closure of Russian Office

As a result of the changing business environment in Russia, Canoro's Board of Directors has determined that it is no longer appropriate for the Company to pursue business development opportunities in this market. Despite experiencing significant deal flow, it is believed that a project coming out of Russia is no longer financiable. Effective June 1, 2005, Canoro closed its Moscow office.

Canoro is continuing to focus its operations and business interests in India and is developing a business strategy for the greater region to take advantage of existing resources in place and the highly prospective basins located in the area.


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