Cano Petroleum, Inc. Announces Preliminary Results from Research Alliance with University of Texas at Austin to Develop Next Generation of Enhanced Oil Recovery Technology.

FORT WORTH, Texas -- Cano Petroleum, Inc. (AMEX:CFW) today announced preliminary testing results from a previously established research alliance with the University of Texas at Austin for the development of new technologies to increase the volume of oil recovery from its mature Davenport, Nowata, Panhandle and Desdemona oil fields.

The alliance, which was formed in January of 2007, has focused on the development of enhanced oil recovery (EOR) technologies, specifically, surfactants and polymers. These technologies target oil reserves that have been trapped and bypassed by conventional recovery methods. In addition, the alliance has worked to develop numerical models that can accurately simulate enhanced oil recovery processes for evaluation. As Principal Investigator, Dr. Quoc Nguyen leads the effort in the Center for Petroleum and Geosystems Engineering at the University of Texas at Austin. Dr. Nguyen is an Assistant Professor in the Department of Petroleum and Geosystems Engineering.

"The Cano business model is based on acquiring mature fields that typically have recovered less than one-third of the original oil in place, so applying advanced technologies to increase recovery factors will be the major source of reserve and production growth for the company," said Patrick McKinney, Senior Vice President of Engineering and Operations at Cano. McKinney adds, "This alliance will allow Cano to leverage the leadership position that the University of Texas has established as a result of its work with many of the majors such as Chevron, Occidental and Shell. Perhaps the most tangible benefit of this alliance to a company of Cano's size is that the time to market for these innovative and quality solutions is substantially expedited."

"Cano brings to the alliance excellent mature fields, with very compelling reservoir characteristics, in which to perform our research," said Dr. Gary Pope, Co-Principal Investigator and Director of the Center for Petroleum and Geosystems Engineering, which is reputed to be the leading national academic research program in enhanced oil recovery. Drs. Nguyen and Pope have already presented preliminary results to Cano on the Davenport, Nowata, Panhandle and Desdemona fields. These results have revealed potential cost effective solutions in all four fields that could enable Cano to pursue additional EOR projects in these areas. Drs. Nguyen and Pope will also be involved in the implementation of these solutions via the field pilot and other supplemental testing applications.

Jeff Johnson, Cano's Chairman and Chief Executive Officer states, "This alliance furthers the Cano strategy of increasing oil production and reserve development in the United States' mature oil fields. This strategy should increase our country's access to economically important resources and reduce its dependence on foreign oil."

Safe-Harbor Statement -- Except for the historical information contained herein, the matters set forth in this news release are "forward-looking statements" 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 intends that all such statements be subject to the "safe-harbor" provisions of those Acts. Many important risks, factors and conditions may cause the company's actual results to differ materially from those discussed in any such forward-looking statement. These risks include, but are not limited to, estimates or forecasts of reserves, estimates or forecasts of production, future commodity prices, exchange rates, interest rates, geological and political risks, drilling risks, product demand, transportation restrictions, the ability of Cano Petroleum, Inc. to obtain additional capital, and other risks and uncertainties described in the company's filings with the Securities and Exchange Commission. The historical results achieved by the company are not necessarily indicative of its future prospects. The company undertakes no obligation to publicly update or revise any forward-looking statements, whether as a result of new information, future events or otherwise.