Cano Petroleum to Sell Pantwist for $42.7 Million

Cano Petroleum, an independent oil and natural gas company, has signed an agreement to sell its 100% membership interest in Pantwist to Legacy Reserves for $42.7 million cash, subject to closing adjustments.

The sale, effective July 1, 2008, is expected to close on October 1, 2008. Proceeds from the transaction will initially pay down all outstanding debt.

Pantwist was created in April 2006 for the sole purpose of acquiring certain leases in Carson, Gray, Hutchinson, Moore, Wheeler, and Sherman counties of the Texas Panhandle.

Pantwist was producing 322 net barrels of oil equivalent per day, with 2.4 million barrels of oil equivalent net proved reserves (78% proved developed producing) at June 30, 2008. Cano will record approximately a $20 million gain on the transaction.

Jeff Johnson, chairman and CEO of Cano Petroleum, said: “The divestiture of Pantwist enables us to eliminate all of our debt while continuing to invest in our core waterflood assets at Panhandle and Cato.”