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

CanArgo Energy Corporation

November 09, 2005 18:06 ET

CanArgo Energy Corporation Third Quarter Results Announced

GUERNSEY, CHANNEL ISLANDS--(CCNMatthews - Nov. 9, 2005) - CanArgo Energy Corporation ("CanArgo") (OSE:CNR)(AMEX:CNR) today announced its unaudited results for the nine-month period ended September 30, 2005. A summary of these results is attached.

Operations Update

Georgia

The Ninotsminda Field horizontal well N100H2 has been completed and is currently being tested. The well was drilled by CanArgo using its own rig and equipment while utilising directional equipment and services provided by Baker Hughes. The well is a horizontal sidetrack from an existing well bore in the Middle Eocene reservoir at approximately 2,640 metres (8,659 feet) TVD. The horizontal section extends some 508 metres (1,667 feet) in the central area of the field and a pre-perforated production liner has been run over a 433 metres (1,421 feet) interval furthest from the original well bore. Another rig is already erected on well N97 where operations have commenced on the next horizontal sidetrack well. This well will take longer to complete than the N100H2 well as it is located on the northern flank of the field and it will be necessary to first sidetrack the well towards the crest of the field before the horizontal section can be drilled through the reservoir in a westerly direction along the crest of the structure. Results for N97H are expected in January 2006.

In the meantime negotiations are continuing with a number of service companies to move forward with the planned horizontal well development program in 2006 using under-balanced drilling technology. Management still believe that under-balanced drilling will minimise formation damage and lead to a longer-term sustainable production from the fields.

On the M11Z appraisal well, CanArgo continues to consult with Schlumberger well completions experts who have advised on the best techniques with which to re-establish communication with the formation in the well by removing near-wellbore damage. It has been concluded to acidise the Cretaceous Limestone interval using coiled tubing, and if necessary perforate. Preparations are being made to recommence these testing operations within the next week.

On the Norio MK72 well we are drilling ahead and are currently at a depth of 4,832 metres (15,853 feet).

In Kazakhstan, testing has been completed on well KYZ104 on the Kyzyloi Field which flowed gas at a rates of up to 96,000 cubic metres (3.4 million cubic feet) per day on a 16 mm (40/64 inch) choke, and is now shut in waiting for the installation of field development equipment. In the surrounding Akkulka contract area, exploration well AKK04 has reached total depth of 600 metres (1,961 feet) with good gas shows whilst drilling and there is a clear indication of the presence of gas bearing sands on wireline logs. The well will be tested in due course as part of a co-ordinated testing program including the Kyzyloi Field development wells.

CanArgo's Chairman, President and CEO Dr. David Robson commented, "We have completed the N100H2 horizontal well and look forward to the test results within the next month. We also look forward to the next horizontal well results in January 2006 and to re-commencing our comprehensive program using under-balanced equipment. The delay in testing the M11Z appraisal well has been frustrating for us, but we now believe we will be applying the most efficient methodology to enable communication with the reservoir. The MK72 Norio well is drilling ahead and is near to the prognosed target zone. This is an exciting exploration prospect and we are delighted that together with Saipem we have made good progress in what has been very difficult drilling conditions."

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

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 harbor 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 (Unaudited)
Consolidated Condensed Balance Sheets

-------------------------------
September 30, December 31,
2005 2004
-------------- --------------
(Unaudited) (Audited)
ASSETS
------

Cash and cash equivalents $ 27,020,001 $ 24,617,047
Restricted cash 3,155,269 1,400,000
Accounts receivable 2,162,635 2,526,442
Crude oil inventory 611,693 253,858
Prepayments 3,856,708 1,517,836
Assets held for sale 600,000 600,000
Other current assets 129,415 121,610
-------------- --------------
Total current assets $ 37,535,721 $ 31,036,793

Capital assets, net (including
unevaluated amounts of $42,383,952
and $25,102,945 respectively) 109,118,307 72,995,666
Prepaid financing fees 300,082 648,507
Investments in and advances to oil
and gas and other
ventures - net - 478,632

-------------- --------------

Total Assets $ 146,954,110 $ 105,159,598
-------------- --------------
-------------- --------------
LIABILITIES AND STOCKHOLDERS'
-----------------------------
EQUITY
------

Accounts payable - trade $ 1,931,035 $ 2,331,945
Loans payable 930,943 1,500,000
Other liabilities 37,043 3,080,839
Accrued liabilities 6,015,933 172,117
-------------- --------------
Total current liabilities $ 8,914,954 $ 7,084,901

Long term debt 25,000,000 832,165
Other non current liabilities 439,156 -
Provision for future site
restoration 699,650 422,000
-------------- --------------
Total Liabilities $ 35,053,760 $ 8,339,066
-------------- --------------

Commitments and contingencies

Stockholders' equity:
Common stock, par value $0.10;
authorized - 300,000,000 shares;
shares issued, issuable and
outstanding - 222,586,867 at
September 30, 2005 and 195,212,089
at December 31, 2004 22,258,685 19,521,208
Capital in excess of par value 204,595,666 184,141,618
Deferred compensation expense (2,415,920) (1,976,102)
Accumulated deficit (112,538,081) (104,866,192)
-------------- --------------
Total stockholders' equity $ 111,900,350 $ 96,820,532
-------------- --------------

Total Liabilities and Stockholders'
Equity $ 146,954,110 $ 105,159,598
-------------- --------------



CANARGO ENERGY CORPORATION AND SUBSIDIARIES
Financial Statements (Unaudited)
Consolidated Condensed Statements of Operations

Unaudited Unaudited
--------------------------- ---------------------------
Three Months Ended Nine Months Ended
September 30, September 30, September 30, September 30,
2005 2004 2005 2004
------------- ------------- ------------- -------------

Operating Revenues
from
Continuing
Operations:
Oil and
gas sales $ 2,580,847 $ 2,007,838 $ 5,147,056 $ 7,446,862
------------- ------------- ------------- -------------
2,580,847 2,007,838 5,147,056 7,446,862
------------- ------------- ------------- -------------
Operating
Expenses:
Field
operating
expenses 778,242 457,663 1,747,472 1,690,623
Direct
project
costs 349,646 591,454 1,130,842 1,218,589
Selling,
general and
administrative 2,354,045 1,602,983 5,712,782 3,728,290
Non-cash stock
compensation
expense 920,720 158,446 1,762,890 158,446
Depreciation,
depletion and
amortization 769,909 458,833 1,800,947 2,265,878
Impairment of
oil and gas
ventures and
other assets - 139,552 - 139,552
Income on
dispositions - - - (335,014)
------------- ------------- ------------- -------------
5,172,562 3,408,931 12,154,933 8,866,364
------------- ------------- ------------- -------------

Operating Loss
from Continuing
Operations (2,591,715) (1,401,093) (7,007,877) (1,419,502)
------------- ------------- ------------- -------------
Other Income
(Expense):
Interest,
net (458,084) (408,259) (435,264) (664,645)
Other 107,869 (834,521) (73,732) (933,241)
Equity Loss
from
investments - - (155,016) -
------------- ------------- ------------- -------------
Total Other
Expense (350,215) (1,242,780) (664,012) (1,597,886)
------------- ------------- ------------- -------------
Loss from
Continuing
Operations
Before Minority
Interest and
Taxes (2,941,930) (2,643,873) (7,671,889) (3,017,388)

Minority
interest in
loss (income)
of consolidated
subsidiaries - (301) - -
------------- ------------- ------------- -------------
Loss from
Continuing
Operations (2,941,930) (2,644,174) (7,671,889) (3,017,388)
Net Income
from
Discontinued
Operations,
net of taxes
and minority
interest - 95,384 - 542,210
------------- ------------- ------------- -------------
Net Loss $ (2,941,930) $ (2,548,790) $ (7,671,889) $ (2,475,178)
------------- ------------- ------------- -------------
------------- ------------- ------------- -------------
Weighted
average number
of common
shares
outstanding
- Basic 221,485,695 120,589,698 207,880,022 113,468,383
------------- ------------- ------------- -------------
------------- ------------- ------------- -------------
- Diluted 221,485,695 120,589,698 207,880,022 113,468,383
------------- ------------- ------------- -------------
------------- ------------- ------------- -------------

Basic Net Loss
Per Common
Share
- from
continuing
operations $ (0.01) $ (0.02) $ (0.04) $ (0.03)
- from
discontinued
operations $ - $ 0.00 $ - $ 0.00
------------- ------------- ------------- -------------

Basic Net Loss
Per Common $ (0.01) $ (0.01) $ (0.04) $ (0.02)
------------- ------------- ------------- -------------

Diluted Net
Loss Per
Common Share
- from
continuing
operations $ (0.01) $ (0.02) $ (0.04) $ (0.03)
- from
discontinued
operations $ - $ 0.00 $ - $ 0.00
------------- ------------- ------------- -------------

Diluted Net
Loss Per
Common $ (0.01) $ (0.01) $ (0.04) $ (0.02)
------------- ------------- ------------- -------------

Other
Comprehensive
Income:
Foreign
currency
translation - 90,708 - 310,231
------------- ------------- ------------- -------------

Comprehensive
Loss $ (2,941,930) $ (2,458,082) $ (7,671,889) $ (2,164,947)
------------- ------------- ------------- -------------



Contact Information

  • CanArgo Energy Corporation
    Julian Hammond
    Investor Relations Manager
    +44 7740 576 139
    +44 1481 729 982 (FAX)
    info@canargo.com
    or
    NORWAY
    Regina Jarstein
    Gambit H&K AS
    + 47 95213451
    or
    USA
    Michael Wachs
    CEOcast.com
    + 1 212 732 4300