CanArgo Energy Corporation: Georgian Exploration Update.

Business Editors

OSLO, Norway & LONDON--(BUSINESS WIRE)--Sept. 12, 2001

CanArgo Energy Corporation ("CanArgo") (OTCBB:GUSH) (OSE:CNR.) today announced an update on its Georgian exploration operations.

CanArgo is currently involved in the drilling of the first two wells targeted for large Cretaceous gas prospects as part of a three well exploration programme partly funded by a subsidiary of AES, the large US power company.

The first of these wells, well N100, is currently experiencing mechanical problems at a depth of 4,040 metres - above the prognosed target depth. To continue operations a sidetrack of this well is to be performed, this being considered the most effective solution. This will delay completion of this well such that it is unlikely that this well will be completed before the end of November.

Well M11, the second well in the AES programme is currently drilling ahead at a depth of 2,400 metres. The primary target for this well is the Cretaceous formation at 4,500 metres, but secondary objectives include the shallower Eocene, Oligocene and Sarmatian sequences.

On a separate licence in Georgia, an agreement has been reached with CanArgo's partners in the Norio block to commence the first new exploration well on this licence in October. Site preparation for this well is now underway, with the well being targeted at a large prospect in the Eocene sequence, just to the North of the large Samgori oilfield.

Murray Chancellor, Chief Operating Officer of CanArgo commented: "We are disappointed at the delay caused by the mechanical difficulties in N100. This said, we are confident that drilling will re-commence soon and our exploration programme will be back on track. M11 is drilling ahead at a quicker rate than N100 and this should result in the completion of drilling of both wells by year-end."

CanArgo is an independent oil and gas exploration and production company operating in Eastern Europe. CanArgo's principal oil and gas operations are currently located in Georgia and in Ukraine.

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 CanArgo'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 CanArgo'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. CanArgo cannot give assurance that the results anticipated herein will be attained.