CanArgo Announces Successful Settlement of Law Suits.

CALGARY, Alberta/OSLO, Norway--(BUSINESS WIRE)--Sept. 21, 1999--

CanArgo Energy Corporation (OTC BB:GUSH)(OSE:CNR) is pleased to announce it has now settled all legal proceedings previously outstanding against the company.

Michael Binnion, President of CanArgo reported, "Since our merger with Fountain Oil last July, our shareholders have expressed concern over these claims and potential claims which totaled over US$10 million. The net of all settlement amounts totals less than $150,000 in cash, shares and equipment and extricates the company from the Kashtan project in Ukraine. With all this now behind us, we can now focus on the development of our Ninotsminda field, and in particular our current gas testing program."

As part of its settlement agreement with Zhoda Corporation, Zhoda accepted CanArgo's entire interest in the Kahtan project together with all associated liabilities and obligations. CanArgo agreed to transfer to Zhoda cash and equipment with a combined value of approximately US$83,000 together with an assignment of our remaining deposit with the International Chamber of Commerce. Zhoda also assumed certain liabilities associated with the equipment.

CanArgo has also settled the Ribalta Holdings, Inc. and Engine & Equipment Ltd. litigation. This litigation related primarily to the Company's interest in the Maykop field in the Republic of Adygea and the delivery of rigs and associated equipment. It has been resolved to CanArgo's satisfaction; however a confidentiality agreement prohibits the disclosure of any additional information on the settlement.

The litigation relating to Zhoda Corporation and Ribalta Holdings, Inc. are described in greater detail on the Company's Form 10-K/A for the fiscal year ended December 31, 1998 and Form 10-Q for the six months ended June 30, 1999.

Additionally, two wrongful dismissal suits with former employees of Fountain Oil have also been settled.

CanArgo Energy Corporation is an independent oil and gas exploration and production company operating in Eastern Europe. CanArgo's principal oil and gas operations are located in the Republic of Georgia. The Company's activities at its primary field in Georgia, the Ninotsminda field, are conducted through its 68.5 percent owned subsidiary Ninotsminda Oil Company Limited. In addition, the Company has interests in several other oil and gas prospects and in refining, marketing, independent power production and oilfield technology activities.

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 anticipated herein will be attained.