Cano Petroleum Announces Upcoming Conference Call, Fourth Quarter Production and New Hedges

Cano now qualifies as a non-accelerated filer for its Form 10-K as its equity market capitalization at December 31, 2008 did not meet the accelerated filer threshold of $50 million. Due to its status as a non-accelerated filer, Cano has 90 days to file its Form 10-K as compared to 75 days for accelerated filers.

Fourth Quarter Production

For the three months ended June 30, 2009, Cano reported net daily production of 1,309 BOEPD, up 4% as compared to the third quarter of the 2009 Fiscal Year and 15% compared to the fourth quarter of 2008 Fiscal Year. Crude oil production was up 6% as compared to the third quarter and 21% compared to the prior year fourth quarter due to increased production from the Cato Field. This was partially offset by reductions in our natural gas sales, particularly at our Barnett Shale property, where we continue to experience normal operating declines having ceased drilling activity in early 2008 and having shut-in natural gas wells due to low commodity prices.

Cano last drilled a producing well in October 2008. Response from prior capital investments has increased production, fully offsetting normal field declines at our properties where we have not recently invested capital.

New Hedges

On September 11, 2009, Cano entered into two WTI NYMEX fixed price swaps with its counterparty Natixis (one of its senior lenders). The first swap covers 700 barrels of oil per day for the period April through December 2011 at a price of $75.90 per barrel. Cano also locked in a swap for 700 barrels of oil per day for the full calendar year 2012 at a price of $77.25 per barrel.

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 NYSE Amex 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.

SOURCE: Cano Petroleum, Inc.

Cano Petroleum, Inc. 
Ben Daitch, 877-698-0900 
Senior Vice President & CFO 
INFO@canopetro.com