CanArgo Energy Corporation Announces Results For 1998.

CALGARY, ALBERTA, HOUSTON, TEXAS AND OSLO, NORWAY --(BUSINESS WIRE)--March 31, 1999--CanArgo(OTC Bulletin Board:GUSH) CanArgo Energy Corporation (OTC Bulletin Board: GUSH, OSE: CNR) announced today the results of operations for the year ended December 31, 1998. The net loss for the year ended December 31, 1998 amounted to US$6,110,000, or $0.39 per share compared to a net loss of US$27,683,000, or $2.47 per share for the year ended December 31, 1997. The improvement in the operating loss relates primarily to the restructuring in 1998 of the Company's operations, the acquisition of producing properties in the Republic of Georgia and the impairment in 1997 of oil and gas ventures, properties and equipment following the Company's decision in 1997 to effectively terminate its involvement in certain Eastern European oil and gas ventures.

CanArgo recorded operating revenue of $821,000 during the year ended December 31, 1998, compared with $313,000 for the year ended December 31, 1997. Revenue increased following the Company's acquisition July 15, 1998 of CanArgo Oil & Gas Inc. and the subsequent recognition in 1998 of oil production in the Republic of Georgia by the company's subsidiary, Ninotsminda Oil Company. Revenue in 1998 from the Ninotsminda field in the Republic of Georgia and the Company's Sylvan Lake property in Alberta, Canada was $603,000 and $202,000 respectively. Revenue for 1999 should be substantially higher since Ninotsminda field operating results will be included for the full twelve months and the Company plans further development of the Ninotsminda field.

CanArgo Energy Corporation is an independent oil and gas exploration and production company operating in Eastern Europe. On February 12, 1999 the Company filed a registration statement on Form S-1 with the United States Securities and Exchange Commission. The proposed public offering is to fund development plans in Eastern Europe and provide working capital and is intended to provide the holders of Company Common Stock and the holders of Exchangeable Shares issued by CanArgo Oil & Gas Inc. with priority rights to subscribe in this offering for a number of shares equal to the number of shares held. The Company expects to decide the record date for determining those stockholders entitled to priority rights and the period during which the priority rights will apply when the timing of the proposed offering becomes more predictable. The offering will be made only by means of a prospectus after the registration statement is declared effective.

In addition to Ninotsminda field operations, the Company has interests in several other oil and gas prospects and refining, marketing, independent power production and oilfield technology activities. The Company's strategy is to develop locally managed business units with a focus on early cash flow and business upside. As part of this strategy, the Company is pleased to announce the appointment of Mr. Stuart Gammell as President of its Uentech International Inc. (formerly EOR International Inc.) subsidiary. The Company, through Uentech and other subsidiaries, holds several patents in the United States and Canada with respect to down hole electrically enhanced oil recovery technology.

Commenting on the results for the year, Mr. Michael Binnion, President and Chief Financial Officer noted, "1998 and the early part of 1999 has been a significant period of transition for the Company. During this time I believe we have been successful in laying the foundation for what we anticipate will be an exciting new stage in the Company's development."

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 report on Form 10-K filed with the Securities and Exchange Commission. The forward looking statements are intended to help shareholders 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.

A registration statement related to the securities described above has been filed with the Securities and Exchange Commission but has not yet become effective. These securities may not be sold nor may offers to buy be accepted prior to the time the registration statement becomes effective. This news release shall not constitute an offer to sell or the solicitation of an offer to buy nor shall there be any sale of these securities in any jurisdiction in which such offer, solicitation or sale would be unlawful prior to registration or qualification under the securities laws of any such jurisdiction.

A written prospectus meeting the requirements of Section 10 of the Securities Act of 1933, as amended, may be obtained when available from Susan E. Palmer, Corporate Secretary, CanArgo Energy Corporation, 1400 Broadfield Boulevard, Houston, Texas 77084. -0-

CANARGO ENERGY CORPORATION
CONSOLIDATED BALANCE SHEET
As of December 31, 1998 and December 31, 1997

                                December 31,     December 31,
                                   1998             1997
                                -----------      -----------
ASSETS

Cash and cash equivalents       $ 1,924,908      $ 14,164,177
Restricted cash                          --         9,700,000
Accounts receivable                 424,367                --
Advances to operator                376,890                --
Inventory                           170,405                --
Other current assets                453,476           761,904
                                  ---------        ----------
  Total current assets            3,350,046        24,626,081

Property and equipment, net       6,201,936         5,942,273
Oil and gas properties, net,
 full cost method (including
 unevaluated amounts of
 $13,266,368 and $324,500
 respectively)                   30,137,573         1,478,974
Investments in and advances
 to oil and gas and other
 Ventures - net                   6,877,974         5,386,707
                                 ----------        ----------
Total Assets                     46,567,529        37,434,035
                                 ----------        ----------
                                 ----------        ----------

LIABILITIES AND STOCKHOLDERS' EQUITY

Accounts payable                $   821,761       $   328,171
Accrued liabilities               1,162,050        10,326,608
                                 ----------        ----------
  Total current liabilities     $ 1,983,811       $10,654,779

Minority interest in subsidiaries 4,552,285                --

Commitments and contingencies
 (Notes 8 and 11)                        --                --

Stockholders' equity:
 Preferred stock, par value
  $0.10 per share, 5,000,000
  shares authorized: 100 shares
  issued and outstanding                 --                --
 Common Stock, par value $0.10
  per share, 50,000,000 shares
  authorized: 15,157,868 and
  11,223,744 shares issued
  and outstanding respectively;
  5,856,775 additional shares
  issuable on demand at December 31,
  1998 without receipt of further
  consideration                   2,101,464         1,122,374
 Capital in excess of par value 101,545,941        83,162,531
 Accumulated deficit            (63,615,972)      (57,505,649)
                                 ----------        ----------
  Total stockholders' equity    $40,031,433       $26,779,256
                                 ----------        ----------
Total Liabilities and
 Stockholders' Equity           $46,567,529       $37,434,035
                                 ----------        ----------
                                 ----------        ----------

CANARGO ENERGY CORPORATION CONSOLIDATED STATEMENT OF OPERATIONS
For the Years Ended December 31, 1998 and 1997
and August 31, 1996

                                 1998       1997       1996
                               --------   --------   --------
Operating Revenues:
 Oil and gas sales         $   804,552 $   313,301 $   26,562
 Other                          16,400          --      8,615
                            ----------  ----------  ----------
Total revenues                 820,952     313,301     35,177
                            ----------  ----------  ----------

Operating expenses:
 Lease operating expenses      843,169     200,321     10,988
 Cost of sales                   7,888          --     31,991
 Direct project costs        1,157,163   1,753,166  1,267,555
 General and administrative  3,887,386   3,903,446  3,853,972
 Depreciation, depletion and
  amortization                 238,924     344,666     77,253
 Equity loss from investments
  in unconsolidated
  subsidiaries                 161,180   3,778,287     13,272
 Impairment of notes
  receivable                        --     186,611         --
 Impairment of property and
  equipment                    113,000   3,243,997         --
 Impairment of oil and gas
  properties                   900,000     257,407    419,835
 Impairment of oil and gas
  ventures                          --  15,735,592         --
                             ---------  ----------  ---------
Total operating expenses     7,308,710  29,403,493  5,674,866
                             ---------  ----------  ---------
Operating loss
                            (6,487,758)(29,090,192)(5,639,689)
                             ---------  ----------  ---------
Other (expense) income:
 Interest income               782,596   1,615,066    332,071
 Interest expense             (479,932)    (69,286)(1,016,465)
 Other                         (76,540)    (72,714)    12,551
 Loss on disposition of
  equipment and property       (30,333)   (271,205)  (182,020)
                                ------     -------    -------
Total other (expense) income   195,791   1,201,861   (853,863)
                               -------   ---------    -------
Net loss before income tax
 expense                    (6,291,967)(27,888,331)(6,493,552)

Income tax expense                  --          --         --
                             ---------  ----------  ---------
Net Loss before minority
 interest                   (6,291,967)(27,888,331)(6,493,552)

Minority interest in loss of
 consolidated subsidiaries     181,644     205,380         --
                               -------     -------   --------
Net Loss                 $(6,110,323)$(27,682,951)$(6,493,552)
                           ---------   ----------   ---------
Net Loss Per Common Share
 - Basic                 $     (0.39)$     (2.47) $     (1.04)
                           ---------   ----------   ---------
Net Loss Per Common Share
 - Diluted               $     (0.39)$     (2.47) $     (1.04)
                           ---------   ----------   ---------
Weighted average number
 of common shares
 outstanding              15,783,889  11,206,506   6,247,568
                          ----------  ----------   ---------