Cano Petroleum Announces Recently Settled Lawsuit

Cano Petroleum announced that it recently settled the pending lawsuit with Southwestern Public Service Company d/b/a Xcel Energy, Inc. related to wildfires that occurred in the Texas Panhandle in March 2006. While the terms of the settlement were not disclosed, the result will be the dismissal of this case, which previously was set for trial on February 23, 2009 in Carson County, Texas.

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 New York Stock Exchange Alternext under the ticker symbol CFW. Additional information is available at www.canopetro.com.