CanArgo Wins Exploration License in Eastern Georgia

CanArgo Norio has won the tender for the oil and gas exploration and production rights to Block XI(G) (Tbilisi) and Block XI(H) (Rustavi) in Eastern Georgia ("the Blocks").

By successfully winning the tender (under the tender conditions issued by the Georgian State Agency for Regulation of Oil and Gas Resources), CanArgo Norio will be awarded a license for these blocks following negotiation of a Production Sharing Agreement with the Georgian State authorities.

The Blocks lie adjacent to CanArgo's existing acreage and in total cover some 486 km sq. Potential exists in the Upper, Middle and Lower Eocene formations, as well as the Cretaceous, with oil and gas shows and limited production being obtained in the past. Following negotiation of the PSA CanArgo will carry out further exploration and appraisal activities on the Blocks in line with its ongoing programs in its adjacent acreage.

CanArgo also announced that it has reached agreement with the other shareholders in CanArgo Norio on increasing CanArgo's interest in CanArgo Norio in light of investments made in the Norio MK72 exploration well. Under this agreement CanArgo's interest will increase from 50% to 64% in the company, and its existing PSA on the Norio (Block XI(c)) and North Kumisi area, as well as the new Blocks. The Norio well MK72, targeted at a large oil prospect located close to the 180 million barrel Samgori field, is currently suspended at a depth of 2,932 metres. CanArgo Norio is actively seeking a partner to complete the well, with the target being prognosed at approximately 4,200 meters (based on recently acquired downhole seismic data).

Murray Chancellor, Chief Operating Officer of CanArgo said, "We are extremely pleased to have been successful in this tender. The new blocks will complement our existing acreage portfolio in the area, and have significant potential. The potential of the Norio block itself is extremely high, and we are very pleased to have increased our equity position in CanArgo Norio ahead of testing the first large oil prospect. We have also now agreed plans to move forward with further short term development activity on our Ninotsminda oilfield, and given the stable production achieved from our current horizontal well we have plans for further horizontal drilling commencing early in the New Year."