CanArgo Secures $6 Million Funding Facility.

Energy Editors/Business Editors

NEW YORK--(BUSINESS WIRE)--Dec. 18, 2003

CanArgo Energy Corporation (OSE:CNR)(OTCBB:GUSH) today announced that it has signed a Standby Equity Distribution Agreement ('the Agreement') that allows it, at its option, to issue shares to US-based investment fund Cornell Capital Partners LP up to a maximum value of US$6 million.

Under the terms of the Agreement, CanArgo may, at its discretion, issue shares to Cornell at any time over the next two years. The maximum aggregate amount of the equity placements pursuant to the Agreement is $6 million. Subject to this limitation, CanArgo may draw down up to $200,000 in any seven-day period. The facility may be used in whole or in part entirely at CanArgo's discretion, subject to an effective registration.

Shares issued to Cornell will be priced at a 3% discount to the lowest daily Volume Weighted Average Price ('VWAP') of CanArgo Energy Corporation shares traded on each of the five days following a drawdown notice by CanArgo. A commission of 5% will apply to each issue of CanArgo shares under the Agreement and will be payable to Cornell at the time of issue.

Mark Angelo, President of Cornell Capital, said "We are eager to assist CanArgo in meeting its ongoing financing needs and we look forward to a long-term relationship with the company."

Managed by US-based Yorkville Advisors LLC, Cornell Capital Partners has structured equity participation agreements in the US, UK and Australian financial markets. To date, the Cornell group has made available in excess of over $600million for over 50 publicly quoted corporations.

Vincent McDonnell, Chief Financial Officer of CanArgo commented on the financing, "We are delighted to have signed this agreement that gives us the option to draw down up to $6 million over the next two years. The advantage of this way of structured financing is that although the funds are secured and available to us, any draw down of the facility will be totally at our discretion. We expect these funds, in addition to our cash flow, to enable us to accelerate our horizontal development drilling programme on the Ninotsminda Field, which is the primary focus for CanArgo."

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 the Caspian area. Further information on the Company is available at www.canargo.com and at http://www.sec.gov.

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.