CanArgo Energy Corporation: Q2 Results 2009

GUERNSEY, BRITISH ISLES, Aug 17 (MARKET WIRE) --
CanArgo Energy Corporation ("CanArgo" or the "Company") (OSLO: CNR) (PINK
SHEETS: CANR) today reported results for the three and six months ending
June 30, 2009.

Operating Revenues from Continuing Operations for the three month period
ended June 30, 2009 deteriorated to $0.8 million from $2.6 million for
the corresponding period for 2008. This deterioration was attributable to
both a decrease in the realised price for oil sold and lower volumes of
oil sold at the Ninotsminda Field in Georgia.

The Company reported a Net Loss for the three month period ended June 30,
2009 of $1.8 million compared to a net loss of $1.0 million in the
corresponding period for 2008. This was attributable to both increases in
Operating Loss from Continuing Operations and Total Other Expense
compared to the corresponding period for 2008.

Operating Loss from Continuing Operations for the three month period
ended June 30, 2009 increased to $0.7 million compared to a small
Operating Loss of $3.1 thousand in the corresponding period for 2008.
This was due to lower Operating revenues from Continuing Operations,
despite being offset partially by reduced Field Operating Expenses,
Direct Project Costs, Selling, General and Administrative Expenses and
Depreciation, Depletion and Amortization.

Please see the tables attached to this release.

The information set forth herein and in the exhibit is preliminary in
nature, has been prepared by management and has not been reviewed or
audited by the Company's auditors. Accordingly, such information does not
necessarily reflect results of the Company's operations and financial
condition that may be reportable after completion of a review or audit
and, while management is reasonably confident that such information is
materially accurate, such preliminary results may be subject to change
and should not be regarded as a definitive report on results of
operations and financial condition of the Company as at June 30, 2009 and
as at December 31, 2008 and for the fiscal year then ended. Although
these statements have been produced on a best effort basis and management
believes they are accurate, they may not be relied upon.

As previously reported, the Company is currently in default in making
interest payments under its outstanding Senior Subordinated Convertible
Guaranteed Notes, due September 1, 2009 and its 12% Subordinated
Convertible Guaranteed Notes, due June 28, 2010. The Company is also
currently in default under the terms of its Settlement Agreement with
WEUS Holding Inc ("WEUS"), a subsidiary of Weatherford International Ltd,
as reported previously. The Company is continuing its negotiations with
its Note holders and WEUS among other creditors in respect of its
defaulted obligations with a view to arriving at a restructuring plan
which, under current expectations, will involve a possible debtor in
possession restructuring in Chapter 11 of the United States Bankruptcy
Code. There can be no assurance, however, that such negotiations and
discussions will be successfully concluded.

CanArgo is an independent oil and gas exploration and production company
with its oil and gas operations currently located in Georgia.

Status and other announcements will be posted on the Company's website,
www.canargo.com.

The matters discussed in this press release include forward-looking
statements, which are subject to various risks, uncertainties and other
factors that could cause actual results to differ materially from the
results anticipated in such forward-looking statements. Such risks,
uncertainties and other factors include, among other matters, the
uncertainties inherent in oil and gas activities; the effects of the
Company's impaired financial condition; the effects of actions by third
parties including creditors and government officials; fluctuations in
world oil prices and other risks detailed in the Company's reports on
Forms 10-K and 10-Q previously filed with the Securities and Exchange
Commission; the ability of the Company and its subsidiaries to arrive at
a successful negotiation with its creditors and to prosecute, develop and
consummate one or more plans of reorganization with respect to any
possible Chapter 11 proceeding; the effects of any possible Chapter 11
filing on the Company and the interests of various creditors, equity
holders and other constituents; Bankruptcy Court rulings in any possible
Chapter 11 case and the outcome of any such proceedings in general; the
length of time the Company will operate under a possible Chapter 11
proceeding; the risks associated with third party motions in any possible
Chapter 11 proceeding, which may interfere with the Company's ability to
develop and consummate one or more plans of reorganization; the potential
adverse effects of a possible Chapter 11 proceeding on the Company's
liquidity or results of operations; continued compliance with conditions
for funding under any secured credit facility that may be obtained to
fund the Company while in any possible Chapter 11 proceeding; the ability
to execute the Company's business and restructuring plan; management of
cash resources; restrictions imposed by, and as a result of, the
Company's substantial leverage; increased legal costs related to a
possible bankruptcy case and other litigation and the Company's ability
to maintain contracts that are critical to its operation, to obtain and
maintain normal terms with customers, suppliers and service providers and
to retain key executives, managers and employees. The forward-looking
statements are intended to help shareholders and others assess the
Company's business prospects and should be considered together with all
information available. They are made in reliance upon the safe harbour
provisions of Section 27A of the Securities Act of 1933, as amended, and
Section 21E of the Securities Exchange Act of 1934, as amended. The
Company cannot give assurance that the results will be attained.

CANARGO ENERGY CORPORATION AND SUBSIDIARIES

Financial Statements
Consolidated Condensed Balance Sheets
Expressed in United States dollars

June 30, December 31,
2009 2008
------------------------------
(Unaudited) (Unaudited)

ASSETS
-------

Current Assets
---------------
Cash and cash equivalents $ 507,353 $ 1,854,507
Accounts receivable 141,623 145,646
Crude oil inventory 182,839 534,688
Prepayments 222,439 70,949
Assets to be disposed 121,857 144,252
Other current assets 138,329 131,411
------------------------------
Total current assets $ 1,314,440 $ 2,881,453

Non Current Assets
Prepaid financing fees - 20,960

Capital assets, net 1,334,749 1,395,095
------------------------------

Total Assets $ 2,649,189 $ 4,297,508
------------------------------
------------------------------

LIABILITIES AND STOCKHOLDERS' EQUITY
-------------------------------------

Accounts payable - trade $ 814,809 $ 1,052,233
Loans payable - short term 14,314,618 3,895,202
Accrued liabilities 4,427,138 6,882,833
Liabilities to be disposed 10,399 10,399
------------------------------
Total current liabilities $ 19,566,964 $ 11,840,667

Long term debt - 9,511,295

Provision for future site restoration 266,302 253,702
------------------------------

Total Liabilities $ 19,833,265 $ 21,605,664
------------------------------

Temporary Equity $ 2,119,530 $ 2,119,530
------------------------------

Stockholders' equity:
Common stock, par value $0.10;
authorized - 1,000,000,000 shares
at March 31, 2009 and 1,000,00,000
at December 31, 2008; shares
issued, issuable and
outstanding - 254,469,277 at
June 30, 2009 and at December
31, 2008 25,446,927 25,446,927
Capital in excess of par value 244,453,949 244,428,613
Accumulated deficit (289,204,482) (289,303,226)
------------------------------
Total stockholders' equity (deficit) $(19,303,606) $(19,427,686)
------------------------------

Total Liabilities, Temporary Equity and
Stockholders' Equity $ 2,649,189 $ 4,297,508
------------------------------

This unaudited financial information was produced internally and has not
been reviewed or audited by the Company's external auditors.

CANARGO ENERGY CORPORATION AND SUBSIDIARIES

Financial Statements
Consolidated Condensed Statement of Operations - Unaudited
Expressed in United States dollars

Unaudited Unaudited
---------------------------------------------------
Three Months Ended Six Months Ended
June 30, June 30, June 30, June 30,
2009 2008 2009 2008
---------------------------------------------------
(Expressed in United States dollars)
(Unaudited) (Unaudited) (Unaudited) (Unaudited)

Operating Revenues from
Continuing Operations:
Oil and gas sales $ 756,761 $ 2,640,234 $ 2,269,472 $ 5,230,996
---------------------------------------------------
756,761 2,640,234 2,269,472 5,230,996
---------------------------------------------------

Operating Expenses:
Field operating
expenses 124,025 433,149 921,550 798,085
Direct project costs 217,917 268,302 567,477 518,275
Selling, general and
administrative 961,867 1,255,357 2,200,076 2,711,952
Depreciation, depletion
and amortization 100,887 686,583 201,774 1,433,842
---------------------------------------------------
1,404,695 2,643,391 3,890,877 5,462,154
---------------------------------------------------

Operating Loss from
Continuing Operations (647,935) (3,157) (1,621,405) (231,158)
---------------------------------------------------

Other Income (Expense):
Interest income 42 9,161 1,007 37,975
Interest and amortization
of debt discount and
expense (1,152,659) (844,703) (2,069,600) (1,704,187)
Foreign exchange gains
(losses) (11,725) (100,623) (61,436) (190,627)
Settlement of accounts
payable - - 3,920,481 -
Other (6,069) (20,741) (48,049) (57,153)
---------------------------------------------------
Total Other Income
(Expense) (1,170,411) (956,906) 1,742,403 (1,913,992)
---------------------------------------------------

Income (Loss) from
Continuing Operations
Before Taxes (1,818,346) (960,063) 120,998 (2,145,150)

Income taxes - - - -
---------------------------------------------------

Income (Loss) from
Continuing Operations (1,818,346) (960,063) 120,998 (2,145,150)

Net Income (Loss) from
Discontinued Operations,
net of taxes and
minority interest 9,951 (10,871) (22,254) (30,665)
---------------------------------------------------

Net Income (Loss) $(1,808,395) $ (970,934) $ 98,744 $ (2,175,815)
---------------------------------------------------
---------------------------------------------------
Weighted average
number of common
shares outstanding
- Basic 254,469,277 242,120,974 254,469,277 242,120,974
---------------------------------------------------
- Diluted 254,469,277 239,053,232 254,469,277 242,120,974
---------------------------------------------------

Basic Net Income (Loss)
Per Common Share
- from continuing
operations $ (0.01) $ (0.00) $ 0.00 $ (0.01)
- from discontinued
operations $ 0.00 $ (0.00) $ (0.00)$ (0.00)
---------------------------------------------------

Basic Net Income (Loss)
Per Common Share $ (0.01) $ (0.00) $ 0.00 $ (0.01)
---------------------------------------------------

Diluted Net Income (Loss)
Per Common Share
- from continuing
operations $ (0.01) $ (0.00) $ 0.00 $ (0.01)
- from discontinued
operations $ 0.00 $ (0.00) $ (0.00)$ (0.00)
---------------------------------------------------

Diluted Net (Income)
Loss Per Common Share $ (0.01) $ (0.00) $ 0.00 $ (0.01)
---------------------------------------------------

This unaudited financial information was produced internally and has not
been reviewed or audited by the Company's external auditors.

Contacts:
CanArgo Energy Corporation
Website: www.canargo.com

Copyright 2009, Market Wire, All rights reserved.

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