CanArgo Commences Samgori Drilling Program.

TBILISI, Georgia -- CanArgo Energy Corporation (AMEX:CNR) (OSLO STOCK EXCHANGE:CNR) announced today that it has commenced drilling operations on a new Samgori Field development well (S302), the first new well to be drilled on the field for several years.

The well is targeting a previously undrilled area of the field in the region of Sartichala village in the central part of the Samgori Field complex. CanArgo obtained exploitation rights to the Samgori Field earlier this year, and this well marks the commencement of drilling operations under those agreements. The well will be drilled to a planned depth of 8,202 feet (2,500 metres) and is expected to be completed in October 2004, after which it is intended to place the well on test production. It is further planned to recomplete the well with one or more horizontal sidetracks utilising the Weatherford under balanced coiled tubing drilling ("UBCTD") unit which is expected to arrive in Georgia later in the year.

Sidetrack operations are also progressing on the Manavi M11 Cretaceous oil discovery, with the M11Z well being drilled to the top of the reservoir sequence at 13,715 feet (4,180 metres) whereupon the well will be cased awaiting arrival of the UBCTD equipment. Deepening of this well to fully test and evaluate the Cretaceous oil discovery made in the original hole will be the first operation for the UBCTD. Work is underway on road preparation and site preparation activities for the Manavi M12 appraisal well. However, as the planned location for this well is in a mountainous area these activities are taking longer than anticipated. This delay would result in drilling operations potentially extending into the winter and as operations in this area are difficult in the winter months commencement of drilling on M12 will now probably not commence until next spring.

On the Norio MK72 well, the results of the vertical seismic profile ("VSP") have now been interpreted and drilling operations are expected to recommence when the drill crew completing the Manavi M11Z well are available.

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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.