Resaca Updates Status of Merger with Cano Petroleum

Resaca has provided a status update regarding its proposed merger with Cano Petroleum, Inc. (NYSE Amex: CFW) (“Cano”). As announced on September 30, 2009, Resaca and Cano executed an agreement and plan of merger on September 29, 2009. The merger, which comprises a reverse takeover of Resaca under the AIM Rules, is subject to the following closing conditions: (i) Resaca's Registration Statement on Form S-4 must have become effective with the U.S. Securities and Exchange Commission ("SEC"), (ii) the merger must be approved by shareholders of both companies, (iii) Resaca must become listed on the NYSE Amex, (iv) Resaca must be approved and re-admitted for listing on the AIM, (v) refinancing of existing bank debt, and (vi) other customary closing conditions.

Form S-4 Registration Statement Status

On October 23, 2009, Resaca filed a Form S-4 with the SEC related to the merger for the SEC's routine review and comment. Resaca received comments from the SEC regarding its Form S-4 filing on November 19, 2009. Resaca is currently preparing responses to these SEC comments and expects to file an amended Form S-4 the week of December 14, 2009. Once approved by the SEC, the Form S-4 will serve as a prospectus for Resaca shareholders as well as a joint proxy statement for both Resaca shareholders and Cano stockholders to vote on the proposed merger of the two companies, in addition to other matters to be voted on as discussed therein. Those interested in reading the Form S-4 submission to the SEC can find it at www.sec.gov under Resaca Exploitation, Inc. filings or on Resaca's website at www.resacaexploitation.com.

Shareholder Approval Status

The merger must be approved by a majority of Resaca's common shareholders and by a majority of Cano's common stockholders. In addition, a majority of Cano's preferred shareholders must approve the merger. Cano received approval of the merger from a majority of its preferred shareholders in October 2009. Upon the finalization of the SEC registration process, shareholders of both companies will vote on the merger. Resaca's best estimate is that the vote will occur sometime in the first calendar quarter of 2010.

U.S. Listing Status

Resaca is in discussions with the NYSE Amex and the NASDAQ OMX regarding obtaining a listing. Both exchanges are reviewing the Company's S-4 and monitoring the status of Resaca's U.S. registration process. Resaca's management is confident that Resaca will be able to obtain a U.S. exchange listing once the SEC registration process is completed.

AIM Readmission Status

Since the merger will constitute a reverse takeover under the AIM rules, Resaca is required to complete an Admission Document to be readmitted to the AIM and maintain its AIM listing. This Admission Document is currently being prepared in conjunction with the finalization of the Form S-4 Registration Statement.

Bank Refinancing Status

Resaca is working with the current bank groups for each company's credit facility. We anticipate that the combined bank group will enter into a new credit facility that will be effective in conjunction with the merger. This process is ongoing and Resaca anticipates a satisfactory result.

Integration

Since the announcement of the merger, the management teams of Resaca and Cano have been working closely together on cost reduction analysis, integration efforts and the sharing of best practices. These efforts have already identified cost saving strategies in addition to those previously announced. In addition, the companies are currently reviewing development capital programs to select the highest impact projects to pursue in the near-term as a combined enterprise.