CanArgo Successfully Concludes US$6 Million Financing Agreement With IFC.

CALGARY, Alberta--(BUSINESS WIRE)--Dec. 22, 1998--CanArgo Energy Corporation (Nasdaq:GUSH)(OSE:CNR) is pleased to announce that CanArgo's subsidiary, Ninotsminda Oil Company ("NOC") has entered into a convertible loan agreement with International Finance Corporation ("IFC").

Proceeds from the US$6 million loan, which has a term of five years, will be used for further development of the Ninotsminda oil field in the Republic of Georgia.

The loan may be converted at the option of the IFC, into 20 percent of the shares in NOC on a fully diluted basis. The minimum work program agreed with IFC for this project includes, the drilling and completion of five development wells over an 18 month period and the installation of necessary facilities to increase the production to at least 4,500 bopd. The Ninotsminda field development will be carried out by NOC and its operating company, Georgian British Oil Company ("GBOC"). Draw down of the loan is subject to specific and ongoing conditions. Presently NOC is owned by CanArgo Energy Corporation (68.5 percent) and JKX Nederland B.V. (31.5 percent).

IFC, part of the World Bank Group, fosters growth in the developing world and in emerging economies by financing private sector investments, mobilizing capital in the international financial markets, and providing technical assistance and advice to governments and businesses.

Michael Binnion, President and Chief Financial Officer of CanArgo, stated, "The successful conclusion of this transaction is the linchpin in our plan to make this project self-financing. We are pleased with the progress to date on the Ninotsminda field. Our first well N96 came in ahead of schedule and under budget, and we fully expect wells N97 and N98 to meet or exceed our cost expectations, despite recent power irregularities."

CanArgo Energy Corporation is an independent oil & gas exploration and production company operating in Eastern Europe and Asia. The Company's activities include downstream operations such as independent power production, oil refining and marketing. CanArgo's corporate strategy is to develop locally managed business units with a focus on early cash flow and business upside.

The Company has made forward-looking statements in this release. These 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 within the meaning 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 discussed herein will be attained due to many factors both in and outside of the control of the Company and its management. Certain important factors that may cause actual results to differ materially are contained in the Company's publicly available filings with the Securities and Exchange Commission.