CanArgo Energy Corporation
OSLO STOCK EXCHANGE : CNR
NYSE Alternext US : CNR

CanArgo Energy Corporation

February 28, 2009 15:37 ET

CanArgo Announces Preliminary Unaudited 2008 Year End Results

GUERNSEY, BRITISH ISLES--(Marketwire - Feb. 28, 2009) - CanArgo Energy Corporation ("CanArgo" or the "Company") (NYSE Alternext US:CNR) (OSLO:CNR) today announced its preliminary unaudited consolidated results of operations for the fiscal year ended December 31, 2008.

Operating Revenues from Continuing Operations for 2008 increased by approximately 29% over 2007 to $9.3 million. The increase in revenue was attributable to an increase in the realised price for its oil sold offset partially by lower volumes of oil sold at the Ninotsminda Field in Georgia.

The Company reported a net loss for 2008 of $57.8 million compared to a net loss for 2007 of $53.8 million. This was due to lower Income from Discontinued Operations, net of taxes and minority interest offset partially by improved Losses from Continuing Operations before taxes.

Operating Loss from Continuing Operations for 2008 increased to $54.2 for 2008 compared to $46.6 million in 2007. This was due higher Field Operating Expenses, Direct Project Costs, Depreciation, Depletion and Amortization and Impairment of Oil and Gas Properties, Ventures and Other Assets, partially offset by improved Operating Revenues from Continuing Operations and lower Selling, General and Administrative Expenses.

The Company performed its annual assessment of its costs classified as unproved property to determine if they should be transferred to the cost pool. After evaluating a number of factors including the length of time that these costs remained classified as unproved property, the Company determined that all of the $9.4 million relating to exploration properties should be moved to the cost pool. The Brent spot price for crude oil of $36.45 as at December 31, 2008 (compared to $94.00 as at December 31, 2007) contributed significantly to a revised estimate of value of the Company's proved reserves as assessed by the Company's independent reserve engineers, although the volume of these reserves were not significantly reassessed. Subsequently, the quarterly "ceiling test" determined that the net capitalized costs in the cost pool should be impaired to $nil and this was reflected by a $51.7m charge to Impairment of Oil and Gas Properties, Ventures and Other Assets in the last quarter of 2008.

The information set forth herein is preliminary in nature, has been prepared by management and has not been audited by the Company's auditors. Accordingly, such information does not necessarily reflect financial results of operations that may be reportable after completion of an 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 of the Company for the 2008 fiscal year.

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 continuing its negotiations with certain of the Note holders with a view to addressing such defaults. There can be no assurance, however, that such negotiations 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.

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 the uncertainties inherent in oil and gas development and production activities, the effect of actions by third parties including government officials, fluctuations in world oil prices and other risks detailed in the Company's reports on Forms 10-K and 10-Q filed with the Securities and Exchange Commission. 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.



Consolidated Condensed Statement of Operations
Expressed in United States dollars

Three Months Ended Year Ended
December 31, December 31, December 31, December 31,
2008 2007 2008 2007
--------------------------------------------------------
(Unaudited) (Unaudited) (Unaudited) (Audited)
Operating Revenues
from Continuing
Operations:
Oil and gas sales $ 1,123,146 $ 3,813,858 $ 9,319,803 $ 7,208,666
--------------------------------------------------------
1,123,146 3,813,858 9,319,803 7,208,666
--------------------------------------------------------
Operating Expenses:
Field operating
expenses 848,171 679,302 2,100,604 1,370,153
Direct project
costs 205,229 146,859 790,849 662,798
Selling, general
and administrative 1,724,375 1,836,212 5,979,564 7,163,951
Depreciation,
depletion and
amortization 814,608 1,076,285 2,950,882 2,592,531
Impairment of oil
and gas properties,
ventures and other
assets 51,697,680 42,000,000 51,697,680 42,000,000
--------------------------------------------------------
55,290,063 45,738,658 63,519,579 53,789,433
--------------------------------------------------------

Operating Loss from
Continuing
Operations (54,166,917) (41,924,800) (54,199,776) (46,580,767)
--------------------------------------------------------
Other Income
(Expense):
Interest income 1,186 65,156 42,034 315,302
Interest and
amortization of
debt discount and
expense (854,189) (901,356) (3,425,433) (6,208,660)
Loss/Cost on debt
extinguishment - - - (12,127,494)
Foreign exchange
losses 163,676 (35,057) (237,532) (73,863)
Other 53,718 122,092 (19,143) (639,104)
--------------------------------------------------------
Total Other Expense (635,609) (749,165) (3,640,074) (18,733,819)
--------------------------------------------------------

Loss from Continuing
Operations Before
Taxes (54,802,526) (42,673,965) (57,839,850) (65,314,586)

Income taxes - - - -
--------------------------------------------------------
Loss from Continuing
Operations (54,802,526) (42,673,965) (57,839,850) (65,314,586)
Net Income from
Discontinued
Operations, net of
taxes and minority
interest 91,097 43,687 56,195 11,537,372
--------------------------------------------------------
Net Loss $(54,711,429) $(42,630,278) $(57,783,655) $(53,777,214)
--------------------------------------------------------
--------------------------------------------------------
Weighted average
number of
common shares
outstanding
- Basic 248,335,465 241,245,192 243,369,300 239,442,275
--------------------------------------------------------
- Diluted 248,335,465 241,245,192 243,369,300 239,442,275
--------------------------------------------------------
Basic Net Income
(Loss) Per Common
Share
- from continuing
operations $ (0.22) $ (0.18) $ (0.24) $ (0.27)
- from discontinued
operations $ 0.00 $ 0.00 $ 0.00 $ 0.05
--------------------------------------------------------
Basic Net Income
(Loss) Per Common
Share $ (0.22) $ (0.18) $ (0.24) $ (0.22)
--------------------------------------------------------
Diluted Net Income
(Loss) Per Common
Share
- from continuing
operations $ (0.22) $ (0.18) $ (0.24) $ (0.27)
- from discontinued
operations $ 0.00 $ 0.00 $ 0.00 $ 0.05
--------------------------------------------------------
Diluted Net (Income)
Loss Per Common
Share $ (0.22) $ (0.18) $ (0.24) $ (0.22)
--------------------------------------------------------


Consolidated Balance Sheet
Expressed in United States dollars

December 31, December 31,
2008 2007
-------------------------------
(Unaudited) (Unaudited)

Cash and cash equivalents $ 1,854,507 $ 6,869,381
Assets held for sale 144,252 71,294
Other current assets 882,694 1,231,979
Capital assets 1,395,095 51,304,619
Other Intangible assets 20,960 74,804
-------------------------------
Total Assets $ 4,297,508 $ 59,552,077
-------------------------------
-------------------------------

Liabilities held for sale 10,399 336,446
Other current liabilities 11,830,268 7,121,552
Long term liabilities 9,764,997 11,965,729
Stockholders' equity (deficit) (17,308,156) 40,128,350
-------------------------------
Total liabilities and stockholders' equity $ 4,297,508 $ 59,552,077
-------------------------------


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