Cano Announces Two New Credit Facilities

FORT WORTH, Texas--(BUSINESS WIRE)--Cano Petroleum, Inc. (AMEX:CFW) today announced that it has signed commitment letters for two new credit facilities with its existing bank group of Union Bank of California and Natixis. Both facilities’ commitments are subject to satisfactory documentation. The facilities will replace the existing first lien revolver and the subordinated term loan that was retired with proceeds from the sale of Pantwist, LLC.

Pursuant to the commitment, the new four year first lien facility will be a $120 million Senior Secured Revolving Credit Facility (up from $100 million) with an initial borrowing base of $60 million. Union Bank of California will serve as Administrative Agent. The existing first lien facility was set to expire in November 2009.

The commitment for the new four and one half year Subordinated Term Credit Facility will be a $25 million delayed draw facility with an initial borrowing base of $15 million. Union BanCal Equities, Inc. will serve as Sole Arranger and Administrative Agent.

Jeff Johnson, Cano Petroleum’s Chairman and CEO stated, “We are extremely pleased to have secured binding commitments for these two long-term sources of liquidity for our company. We are excited to continue building our relationship with our two outstanding energy banks, UBOC and Natixis. Signing commitments for these two new facilities, along with our previously taken steps of raising equity and the sale of non-core assets, is all part of our commitment to providing long-term liquidity for Cano in these challenging times.”

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.