CanArgo Finalizes Kazakhstan Deal

CanArgo Energy announced that its previously reported Kazakhstan deal has now been finalized with the registration of CanArgo's interest in BN Munai LLP ("BNM").

CanArgo has acquired this interest through an associated company, Tethys Petroleum Investments Limited ("TPI") in which CanArgo is currently a 45% shareholder. TPI's wholly owned subsidiary Tethys Kazakhstan Ltd ("TKL") has now become officially registered as the owner of a 70% interest in BNM. BNM's interests centre on the Akkulkovsky exploration area and the Kyzyloy gas field, located in western Kazakhstan, just to the west of the Aral Sea. Negotiations are ongoing with the Kazakh authorities regarding the Kyzyloy production license and an extension to the Akkulkovsky exploration license.

BNM have drilled two deep exploration wells in the Akkulkovsky area over the past four years, these wells being plugged and abandoned with hydrocarbon shows. However, CanArgo believe that the short term potential may lie in the shallower Kyzyloy gas field. This is a discovered shallow gas field, located some 35 km from the main Bukhara - Urals gas pipeline system, and close to the Bazoy gas storage and compression facility. Additional shallow gas indicators are apparent on seismic data, which potentially could be added to any development of the Kyzyloy field. Financing by TPI of this project is intended to come primarily from third party investment into TPI or directly into the project, with no significant funding planned to come from CanArgo itself.