CanArgo Provides Georgian Exploration Update

CanArgo is currently involved in the drilling of the first two wells targeted for large Cretaceous gas prospects as part of a three well exploration program partly funded by a subsidiary of AES, the large US power company.

The first of these wells, well N100, is currently experiencing mechanical problems at a depth of 4,040 metres - above the prognosed target depth. To continue operations a sidetrack of this well is to be performed, this being considered the most effective solution. This will delay completion of this well such that it is unlikely that this well will be completed before the end of November.

Well M11, the second well in the AES program is currently drilling ahead at a depth of 2,400 meters. The primary target for this well is the Cretaceous formation at 4,500 meters, but secondary objectives include the shallower Eocene, Oligocene and Sarmatian sequences.

On a separate licence in Georgia, an agreement has been reached with CanArgo's partners in the Norio block to commence the first new exploration well on this licence in October. Site preparation for this well is now underway, with the well being targeted at a large prospect in the Eocene sequence, just to the North of the large Samgori oilfield.

Murray Chancellor, Chief Operating Officer of CanArgo commented: "We are disappointed at the delay caused by the mechanical difficulties in N100. This said, we are confident that drilling will re-commence soon and our exploration program will be back on track. M11 is drilling ahead at a quicker rate than N100 and this should result in the completion of drilling of both wells by year-end."