Cano Petroleum Announces Results of Annual Stockholder Meeting.

FORT WORTH, Texas -- Cano Petroleum (AMEX:CFW) announced the results of the voting at its Annual Stockholder Meeting held on December 28, 2006 in Fort Worth, Texas.

The stockholders overwhelmingly elected S. Jeffrey Johnson, Donnie D. Dent, Gerald W. Haddock, Randall Boyd, Patrick W. Tolbert, Dennis McCuistion, and Dr. Jim Underwood to the Board of Directors who will serve for a term of one (1) year and who shall hold office until their successors are elected and qualified.

The stockholders also approved the issuance of additional shares of common stock upon conversion of Cano Series D Convertible Preferred stock, approved an amendment to the Company's Certificate of Incorporation to increase the number of shares of authorized common stock from 50,000,000 to 100,000,000 shares and approved an amendment to the 2005 Cano Petroleum, Inc. Long Term Incentive Plan which increased to 3,500,000 the number of shares allocated to the plan.

The stockholders also ratified the appointment of Hein & Associates LLP as the Company's independent registered public accounting firm for the fiscal year ending June 30, 2007.

Jeff Johnson, Cano's Chairman and CEO, stated, "Our stockholders continue to support our business model and execution of our business plan to date. Cano's significant accomplishments during this last fiscal year are a continuing testament to our management team and staff. We remain focused on continuing to add stockholder value through the diligent application of our corporate strategy and look forward to an outstanding year ahead."

ABOUT CANO PETROLEUM:

Cano Petroleum Inc. is an independent Texas-based energy producer with properties in the mid-continent region of the United States. Led by an experienced management team, Cano's primary focus is on increasing domestic production from proven fields using enhanced recovery methods. Cano trades on the American Stock Exchange under the ticker symbol CFW. Additional information is available at www.canopetro.com.

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.