Cano Petroleum Further Updates Panhandle Field Status Due to Fires.

FORT WORTH, Texas -- As a supplement to its releases of yesterday, Cano Petroleum, Inc. (AMEX:CFW) ("Cano") provided additional information regarding production (approximately 800 barrels of oil equivalent per day) from its Panhandle Field located in the Texas panhandle counties of Hutchinson, Gray and Carson that has been affected due to significant grass fires in the area.

Approximately 150 barrels of oil equivalent of production per day has been unaffected by the fires and current projections show that all production from the field will be restored to pre-fire levels within 30 days at an estimated out-of-pocket cost of $250,000.

Crews have begun replacing damaged production equipment and flowlines with replacements delivered to the area yesterday afternoon and this morning. The local electric utility is restoring power and it is anticipated that additional crews will be brought in to facilitate and hasten that process. Gas purchasers have also re-established operations in the field.

Jeff Johnson, Cano's Chairman and CEO, stated: "The response of John Lacik, Vice President of Operations; Scott White, Director of Panhandle Business Development; and Tommy Hefner, Panhandle Field Superintendent, has been phenomenal. Replacement production equipment was on site within hours. Our team's focus on a quick response to this event is indicative of our employees' commitment to Cano assets and our shareholders."

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 onshore fields using secondary and 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.