Canoro and ONGC Form Nagaland Partnership

Canoro Resources Ltd. has signed a Joint Study Agreement ("JSA") with Oil and Natural Gas Corporation Ltd. ("ONGC"). This significant agreement has four main purposes:

--Strategically align interests between ONGC and Canoro, for exploration, development and production activities in six blocks held by ONGC in the State of Nagaland, India
--Establish a Joint Study Group with ONGC to review all available information and prepare recommendations for joint participation and operatorship in the blocks, along with the details of such joint participation
--Explore the possibility of collaboration between ONGC and Canoro in additional assets in Northeast India, and
--Future participation in NELP VII offerings in Northeast India.

Of the six blocks identified, there is one producing block and five exploration blocks. The producing block contains the Changpang field (a development block granted to ONGC on a nominated basis), which was suspended in 1994. Prior to the suspension of the field, Changpang was reported to be flowing in excess of 1,000 bbl/d of 30 degrees API oil from four formations: Kopili, Sylhet, Basal Sandstone and fractured Basement.

The exploration blocks are:

--AA-ONN-2001/4 (a PSC awarded under NELP III) and 645 km2 in area
--AA-ONN-2002/4 (a PSC awarded under NELP IV) and 1,060 km2 in area
--SINGPHAN (an exploration block granted to ONGC on a nominated basis) and 320 km2 in area
--BHAGTY-BHANDARI (an exploration block granted to ONGC on a nominated basis) and 620 km2 in area and
--DIMAPUR (an exploration block granted to ONGC on a nominated basis) and 650 km2 in area.

ONGC and Canoro have agreed to complete the technical review and subsequent Joint Study Group recommendation for Canoro's participation in the blocks within 45 days of signing the JSA. Any future funding requirements by Canoro resulting from participation in the blocks will be based on the level and basis of participation by Canoro in those blocks. To meet any future capital requirements, the company is currently evaluating several non-dilutive financing options.

This JSA follows closely behind the foundation Joint Collaboration Agreement signed with the State of Nagaland in December 2006, and is very positive for Canoro, ONGC and the State of Nagaland. For Canoro, it represents the possibility of gaining an operating interest in six attractive assets in the Northeast, thus possibly tripling the number of blocks in Canoro's focus area in India. For ONGC, it represents the possibility of accelerating exploration, development and production activity on its Nagaland assets. For the State of Nagaland, it represents the possibly of significant capital expenditures and economic development, along with the associated benefits to the citizens of the State.

Despite being geographically located in one of the most prospective areas in the Assam-Arrakan sedimentary basin, there has been limited exploration or development activity in Nagaland. The State's geology is very similar to the thrusting and folding found in the foothills of the Rocky Mountains of Alberta - an area familiar to Canoro's management and technical team. The sub-thrust belt in Nagaland contains numerous areas with multiple oil seeps. The Nagaland blocks are situated next to the main source rocks (the area that generates most of the hydrocarbons in the basin) of the Assam-Arrakan basin.

"This foundation agreement has the potential to transform Canoro into a significant onshore India operator, and solidifies Canoro's position as the largest independent in Northeast India," stated Les Kondratoff, Canoro's President and CEO. "We have created a successful operating niche by focusing on the Northeast and plan to continue to leverage that success through agreements like the Joint Study Agreement with ONGC and the Joint Collaboration Agreement with the State of Nagaland."

Canoro is a Canadian-based international oil and gas company operating in the Assam/Arakan basin of northeast India. Canoro is the operator of Amguri field with a 60% working interest. Canoro is the operator with a 65% working interest in the AA-ON/7 exploration block. Canoro also has a 15% non-operated working interest in the AA-ONN 2003/2 exploration block.

ONGC is the largest exploration and production company in India and a major player in the global energy market. The company has the Government of India as its majority shareholder. ONGC controls more than half of the oil and natural gas assets in India. ONGC has discovered over 300 oil and gas fields, while producing over 80% of India's oil and natural gas.