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U.S. SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549

FORM 10-Q

[ X ] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934 FOR THE QUARTERLY PERIOD
ENDED SEPTEMBER 30, 2002



[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934 FOR THE TRANSITION PERIOD
FROM ___________ TO _______________


COMMISSION FILE NUMBER 0-9147




CANARGO ENERGY CORPORATION
- --------------------------------------------------------------------------------------------------------------
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)


Delaware 91-0881481
- --------------------------------------------------- --------------------------------------------------
(STATE OR OTHER JURISDICTION OF (I.R.S. EMPLOYER IDENTIFICATION NO.)
INCORPORATION OR ORGANIZATION)


CanArgo Services (UK) Limited
150 Buckingham Palace Road, London, England SW1W 9TR
- --------------------------------------------------- --------------------------------------------------
(ADDRESS OF PRINCIPAL EXECUTIVE OFFICES) (ZIP CODE)


(44) 207 808 4700
- --------------------------------------------------------------------------------------------------------------
(REGISTRANT'S TELEPHONE NUMBER)


- --------------------------------------------------------------------------------------------------------------
(FORMER NAME, FORMER ADDRESS AND FORMER FISCAL YEAR, IF CHANGED SINCE LAST REPORT)




Indicate by check whether the registrant (1) has filed all reports required to
be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months (or for such shorter period that the registrant was
required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days.

Yes [ X ] No
------- --------


The number of shares of registrant's common stock outstanding on September 30,
2002 was 97,356,206.





CANARGO ENERGY CORPORATION
FORM 10-Q
TABLE OF CONTENTS




PAGE
----


PART 1. FINANCIAL INFORMATION:


Item 1. Financial Statements
Consolidated Condensed Balance Sheets 3
Consolidated Condensed Statements of Operations 4
Consolidated Condensed Statements of Cash Flows 5
Notes to Unaudited Consolidated Condensed Financial Statements 6

Item 2. Management's Discussion and Analysis of Financial Condition,
Results of Operations and Cash flows 15

Item 3. Quantitative and Qualitative Disclosures about Market Risk 24

Item 4. Controls and Procedures 25

PART 2. OTHER INFORMATION:

Item 2. Changes in Securities and Use of Proceeds 26

Item 6. Exhibits and Reports on Form 8-K
(a) Exhibit Index 26
(b) Reports on Form 8-K 29

Signatures 30

Certifications 31



- --------------------------------------------------------------------------------

FORWARD-LOOKING STATEMENTS

The United States Private Securities Litigation Reform Act of 1995 provides a
"safe harbor" for certain forward-looking statements. Such forward-looking
statements are based upon the current expectations of CanArgo and speak only as
of the date made. These forward-looking statements involve risks, uncertainties
and other factors. The factors discussed elsewhere in this Quarterly Report on
Form 10-Q are among those factors that in some cases have affected CanArgo's
historic results and could cause actual results in the future to differ
significantly from the results anticipated in forward looking statements made in
this Quarterly Report on Form 10-Q, future filings by CanArgo with the
Securities and Exchange Commission, in CanArgo's press releases and in oral
statements made by authorized officers of CanArgo. When used in this Quarterly
Report on Form 10-Q, the words "estimate," "project," "anticipate," "expect,"
"intend," "believe," "hope," "may" and similar expressions, as well as "will,"
"shall" and other indications of future tense, are intended to identify
forward-looking statements. Few of the forward-looking statements in this Report
deal with matters that are within our unilateral control. Acquisition, financing
and other agreements and arrangements must be negotiated with independent third
parties and, in some cases, must be approved by governmental agencies. These
third parties generally have interests that do not coincide with ours and may
conflict with our interests. Unless the third parties and we are able to
compromise their various objectives in a mutually acceptable manner, agreements
and arrangements will not be consummated.

- --------------------------------------------------------------------------------

2



PART I - FINANCIAL INFORMATION
CANARGO ENERGY CORPORATION AND SUBSIDIARIES


ITEM 1. FINANCIAL STATEMENTS
CONSOLIDATED CONDENSED BALANCE SHEETS





Unaudited
---------------------------------
SEPTEMBER 30, December 31,
2002 2001
------------- --------------

ASSETS

Cash and cash equivalents $ 1,710,291 $ 5,891,038
Accounts receivable 621,382 2,007,112
Inventory 197,733 405,918
Prepayments 446,510 2,235,712
Other current assets 745,802 697,827
------------- -------------
Total current assets $ 3,721,718 $ 11,237,607


Capital assets, net (including unevaluated amounts of
$36,242,713 and $24,570,886, respectively) 61,155,382 52,535,420
Investments in and advances to oil and gas and other
ventures - net 630,734 719,308
Assets of subsidiary held for sale 7,347,104 5,819,582
------------- -------------
TOTAL ASSETS $ 72,854,938 $ 70,311,917
============= =============


LIABILITIES AND STOCKHOLDERS' EQUITY

Accounts payable $ 780,452 $ 828,461
Deferred revenue 1,000,000 --
Income taxes payable 61,000 61,000
Accrued liabilities 222,937 400,221
------------- -------------
Total current liabilities $ 2,064,389 $ 1,289,682

Provision for future site restoration 107,290 64,290
Liabilities of subsidiary held for sale 2,231,504 1,177,174

Minority shareholder advances -- 450,000
Minority interest in subsidiaries 3,357,445 1,531,191
Commitments and contingencies (Note 12)

Stockholders' equity:
Common stock, par value $0.10 per share 9,735,620 9,200,845
Capital in excess of par value 145,151,475 144,057,517
Foreign currency translation adjustment 97,938 --
Accumulated deficit (89,890,723) (87,458,782)
------------- -------------
Total stockholders' equity $ 65,094,310 $ 65,799,580
------------- -------------
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $ 72,854,938 $ 70,311,917
============= =============



See accompanying notes to unaudited consolidated condensed financial statements.


3





PART I - FINANCIAL INFORMATION
CANARGO ENERGY CORPORATION AND SUBSIDIARIES

ITEM 1. FINANCIAL STATEMENTS
CONSOLIDATED CONDENSED STATEMENTS OF OPERATIONS



Unaudited Three Months Ended Unaudited Nine Months Ended
-------------------------------- ------------------------------
SEPTEMBER 30, September 30, SEPTEMBER 30, September 30,
2002 2001 2002 2001
------------- ------------- ------------- -------------

Operating Revenues from Continuing Operations:
Oil and gas sales $ 696,406 $ 1,201,779 $ 3,159,850 $ 3,819,685
Refining -- 893,651 -- 1,981,646
Other -- -- 1,398,153 --
------------ ----------- ------------ ------------
696,406 2,095,430 4,558,003 5,801,331
------------ ----------- ------------ ------------
Operating Expenses:
Field operating expenses 261,942 452,560 1,141,304 1,566,037
Purchases of crude oil and products -- 60,419 -- 327,536
Refinery operating expenses -- 649,909 -- 846,934
Direct project costs 176,556 365,625 1,158,258 936,830
Selling, general and administrative 403,314 865,836 2,703,952 2,688,945
Depreciation, depletion and amortization 316,831 578,395 1,601,327 2,524,457
------------ ----------- ------------ ------------
1,158,643 2,972,744 6,604,841 8,890,739
------------ ----------- ------------ ------------

OPERATING LOSS FROM CONTINUING OPERATIONS (462,237) (877,314) (2,046,838) (3,089,408)
------------ ----------- ------------ ------------
Other Income (Expense):
Interest, net 34,508 143,617 31,710 646,830
Other (829,444) 8,376 (724,388) 38,731
Equity income from investments 45,494 45,431 136,485 74,292
------------ ----------- ------------ ------------
TOTAL OTHER INCOME (EXPENSE) (749,442) 197,424 (556,193) 759,853
------------ ----------- ------------ ------------

NET LOSS BEFORE MINORITY INTEREST (1,211,679) (679,890) (2,603,031) (2,329,555)
Minority interest in income (loss) of consolidated
subsidiaries (52,774) 112,899 (2,300) 183,663
------------ ----------- ------------ ------------
NET LOSS FROM CONTINUING OPERATIONS $ (1,264,453) $ (566,991) $ (2,605,331) $ (2,145,892)
============ =========== ============ ============
NET INCOME FROM DISCONTINUED OPERATIONS, NET OF
TAXES AND MINORITY INTEREST 36,608 79,628 173,390 129,007
------------ ----------- ------------ ------------
NET LOSS (1,227,845) (487,363) (2,431,941) (2,016,885)
============ =========== ============ ============
OTHER COMPREHENSIVE INCOME:
Foreign currency translation 149,195 -- 97,938 --
------------ ----------- ------------ ------------
COMPREHENSIVE LOSS $ (1,078,650) $ (487,363) $ (2,334,003) $ (2,016,885)
============ =========== ============ ============
Weighted average number of
common shares outstanding 97,356,206 91,484,823 96,479,984 81,185,630
------------ ----------- ------------ ------------
NET LOSS PER COMMON SHARE - BASIC AND DILUTED
- from continuing operations $ (0.01) $ (0.01) $ (0.03) $ (0.02)
- from discontinued operations 0.00 0.00 $ 0.00 0.00
------------ ----------- ------------ ------------
NET LOSS PER COMMON SHARE - BASIC AND DILUTED $ (0.01) $ (0.01) $ (0.03) $ (0.02)
------------ ----------- ------------ ------------



See accompanying notes to unaudited consolidated condensed financial statements.


4







PART I - FINANCIAL INFORMATION
CANARGO ENERGY CORPORATION AND SUBSIDIARIES

ITEM 1. FINANCIAL STATEMENTS
CONSOLIDATED CONDENSED STATEMENTS OF CASH FLOWS




Unaudited Nine Months Ended
------------------------------
SEPTEMBER 30, September 30,
2002 2001
------------ ------------

Operating activities:
Net income (loss) from continued operations (2,605,331) (2,145,892)
Depreciation, depletion and amortization 1,601,327 2,524,457
Equity income from investments (136,484) (74,292)
Allowance for doubtful accounts 275,000 100,000
Minority interest in income (loss) of consolidated subsidiaries 2,300 (183,663)
Changes in assets and liabilities:
Accounts receivable 1,110,730 (2,107,058)
Inventory 208,185 (380,602)
Other current assets (47,975) (168,411)
Accounts payable (48,009) (1,864,214)
Deferred revenue 1,000,000 --
China Projects payable -- 700,940
Accrued liabilities (177,284) (509,146)
Advances from joint venture partner -- (5,888,573)
------------ ------------
NET CASH GENERATED BY (USED IN) OPERATING ACTIVITIES 1,182,459 (9,996,454)
------------ ------------

Investing activities:
Capital expenditures (10,055,351) (8,751,032)
Acquisitions, net of cash acquired (25,000) (4,044,973)
Proceeds from disposition of investment -- 125,000
Investments in and advances to oil and gas and other ventures 225,058 (589,232)
Change in non cash working capital items 1,789,202 (553,457)
------------ ------------
NET CASH USED IN INVESTING ACTIVITIES (8,066,091) (13,813,694)
------------ ------------
Financing Activities:
Proceeds from sale of common stock 1,790,948 7,235,339
Share issue costs (162,215) (643,075)
Advances from minority interest 1,373,954 1,935,881
------------ ------------
NET CASH PROVIDED BY FINANCING ACTIVITIES 3,002,687 8,528,145
NET CASHFLOWS FROM SUBSIDIARY HELD FOR SALE (299,802) (3,356,524)
NET DECREASE IN CASH AND CASH EQUIVALENTS (4,180,747) (18,638,527)
CASH AND CASH EQUIVALENTS, BEGINNING OF PERIOD 5,891,038 29,696,654
------------ ------------
CASH AND CASH EQUIVALENTS, END OF PERIOD 1,710,291 $ 11,058,127
============ ============



See accompanying notes to unaudited consolidated condensed financial statements.



5




PART I - FINANCIAL INFORMATION
CANARGO ENERGY CORPORATION AND SUBSIDIARIES

ITEM 1. FINANCIAL STATEMENTS
NOTES TO UNAUDITED CONSOLIDATED CONDENSED FINANCIAL STATEMENTS
NINE MONTHS ENDED SEPTEMBER 30, 2002 AND SEPTEMBER 30, 2001 (UNAUDITED)

(1) Basis of Presentation

The interim consolidated condensed financial statements and notes
thereto of CanArgo Energy Corporation and its subsidiaries
(collectively, CanArgo) have been prepared by management without audit.
In the opinion of management, the consolidated condensed financial
statements include all adjustments, consisting of normal recurring
adjustments, necessary for a fair statement of the results for the
interim period. The accompanying consolidated condensed financial
statements should be read in conjunction with the consolidated
financial statements and notes thereto included in CanArgo's Annual
Report on Form 10-K for the year ended December 31, 2001 filed with the
Securities and Exchange Commission. All amounts are in U.S. dollars.

Certain items in the consolidated condensed financial statements have
been reclassified to conform to the current year presentation. There
was no effect on net loss as a result of these reclassifications.

In September 2002, CanArgo approved a plan to sell CanArgo Standard Oil
Products to finance Georgian and Ukrainian development projects and in
October 2002, CanArgo agreed to sell its 50% holding with legal
ownership being transferred upon receipt of final payment due in August
2003. The assets and liabilities of CanArgo Standard Oil Products have
been classified as "Assets of subsidiary held for sale" and
"Liabilities of subsidiary held for sale". The results of operations of
CanArgo Standard Oil Products have been classified as discontinued for
all periods presented. The minority interest related to CanArgo
Standard Oil Products has not been reclassified for any of the periods
presented, however net income from discontinued operations is disclosed
net of taxes and minority interest.

During 2002, the Company adopted the self-sustaining method of
accounting for CanArgo Standard Oil Products. The adoption of the
self-sustaining method was necessitated by the fact that CanArgo
Standard Oil Products was no longer financially and operationally
dependant upon its parent company. Under the self-sustaining method of
foreign currency translation, assets and liabilities are translated
into US dollars at period end exchange rates and income and expenses
are translated into US dollars at average rates in effect during the
period. Exchange gains and losses on translation are reflected as a
separate component of shareholders' equity.

(2) Need for Significant Additional Capital, Possible Impairment of Assets

CanArgo has incurred recurring operating losses, and its current
operations are not generating positive cash flows.

In order to preserve available cash resources while still maintaining
essential field operations and development activities in Georgia, a
significant cost reduction plan is being implemented. Disposal of
further non-core assets and external sources of funding are also being
pursued.

Development of the oil and gas properties and ventures in which CanArgo
has interests involves multi-year efforts and substantial cash
expenditures. Full development of these properties will require the
availability of substantial funds from external sources. CanArgo
believes that it will be able to generate funds from external sources
including quasi-governmental financing agencies, conventional lenders,
equity investors and other oil and gas companies that may desire to
participate in CanArgo's oil and gas projects, although no firm funding
commitments have been received.

Ultimate realization of the carrying value of CanArgo's oil and gas
properties will require production of oil and gas in sufficient
quantities and marketing such oil and gas at sufficient prices to
provide positive cash flow to CanArgo. This is dependent upon, among
other factors, achieving significant production at costs that provide
acceptable margins, reasonable levels of taxation from local
authorities and the ability to market the oil and gas produced at or
near world prices. In addition, CanArgo must mobilize drilling
equipment and personnel to initiate drilling, completion and production
activities. If one or more of the


6



above factors, or other factors, are different than anticipated,
CanArgo may not recover the carrying value of its oil and gas
properties.

CanArgo generally has the principal responsibility for arranging
financing for the oil and gas properties and ventures in which it has
an interest. There can be no assurance, however, that CanArgo or the
entities that are developing the oil and gas properties and ventures
will be able to arrange the financing necessary to develop the projects
being undertaken or to support the corporate and other activities of
CanArgo or that such financing if available will be on terms that are
acceptable to or are deemed to be in the best interests of CanArgo,
such entities or their respective stockholders or participants.

The consolidated financial statements of CanArgo do not give effect to
any additional impairment in the value of CanArgo's oil and gas
properties and ventures or other adjustments that would be necessary if
financing cannot be arranged for the development of such properties and
ventures or if they are unable to achieve profitable operations.
Failure to arrange such financing on reasonable terms or failure of
such properties and ventures to achieve profitability would have a
material adverse effect on the financial position, including
realization of assets, results of operations, cash flows and prospects
of CanArgo.

(3) Foreign Operations

CanArgo's future operations and earnings will depend upon the results
of CanArgo's operations in the Republic of Georgia, Ukraine and Russia.
There can be no assurance that CanArgo will be able to successfully
conduct such operations, and a failure to do so would have a material
adverse effect on CanArgo's financial position, results of operations
and cash flows. Also, the success of CanArgo's operations will be
subject to numerous contingencies, some of which are beyond management
control. These contingencies include general and regional economic
conditions, prices for crude oil and natural gas, competition and
changes in regulation. Since CanArgo is dependent on international
operations, CanArgo will be subject to various additional political,
economic and other uncertainties. Among other risks, CanArgo's
operations may be subject to the risks and restrictions on transfer of
funds, import and export duties, quotas and embargoes, domestic and
international customs and tariffs, and changing taxation policies,
foreign exchange restrictions, political conditions and regulations.

(4) Inventory

Inventory at September 30, 2002 and December 31, 2001 consisted of the
following:




SEPTEMBER 30, December 31,
2002 2001
------------- ------------

Crude oil $ 171,659 $ 373,818
Refined products 26,074 32,100
------------ ------------
$ 197,733 $ 405,918
============ ============





7






(5) Capital Assets, Net

Capital assets, net of accumulated depreciation and impairment, at
September 30, 2002 and December 31, 2001 include the following:




SEPTEMBER 30, 2002
------------------------------------------------------
ACCUMULATED December 31, 2001
DEPRECIATION -----------------
AND NET NET
COST IMPAIRMENT CAPITAL ASSETS CAPITAL ASSETS
------------ ------------ -------------- -----------------

OIL AND GAS PROPERTIES
Proved properties $31,900,462 $16,414,771 $15,485,691 $16,669,691
Unproved properties 36,286,394 -- 36,286,394 24,570,886
----------- ----------- ----------- -----------
68,186,856 16,414,771 51,772,085 41,240,577
PROPERTY AND EQUIPMENT
Oil and gas related
equipment 12,346,319 3,561,867 8,784,452 10,621,771
Office furniture,
fixtures and
equipment and other 1,093,107 605,112 487,995 562,221
----------- ----------- ----------- -----------
13,439,426 4,166,979 9,272,447 11,183,992

REFINING 4,165,067 4,054,217 110,850 110,851
----------- ----------- ----------- -----------
TOTAL $85,791,349 $24,635,967 $61,155,382 $52,535,420
=========== =========== =========== ===========




Unproved property additions relate to CanArgo's exploration activity in
the period. Oil and gas related equipment includes new or refurbished
drilling rigs and related equipment, all of which are in the Republic
of Georgia.

In July 2002, CanArgo acquired the remaining 15% interest it did not
own in IPEC, whose sole operations were the ownership of a 0.1% working
interest in the Bugruvativske field for cash consideration of $50,000.
Total cash consideration was allocated to capital assets and on
completion of the acquisition IPEC became a wholly owned subsidiary of
CanArgo. Subsequent to the purchase, in July 2002, CanArgo disposed of
its entire interest (100%) in IPEC to the nominees of a local Ukrainian
oil and gas company for $13,435 and recorded $34,742 in unproved
properties related to CanArgo's investment in the Bugruvativske field.




8



(6) Investments in and Advances to Oil and Gas and Other Ventures

CanArgo has acquired interests in oil and gas and other ventures
through less than majority interests in corporate and corporate-like
entities. A summary of CanArgo's net investment in and advances to oil
and gas and other ventures at September 30, 2002 and December 31, 2001
is set out below:





SEPTEMBER 30, December 31,
2002 2001
------------- ------------

INVESTMENTS IN AND ADVANCES TO OIL AND GAS AND OTHER VENTURES
Ukraine - Stynawske Field, Boryslaw
Through 45% ownership of Boryslaw Oil Company $ 6,613,603 $ 6,698,062
Republic of Georgia - Ninotsminda
Through an effective 50% ownership of East Georgian Pipeline Co. -- 192,500
Other Investments 75,000 75,000
------------- ------------
TOTAL INVESTMENTS IN AND ADVANCES TO OIL AND GAS
AND OTHER VENTURES $ 6,688,603 $ 6,965,562
------------- ------------

EQUITY IN PROFIT (LOSS) OF OIL AND GAS AND OTHER VENTURES

Ukraine - Stynawske Field, Boryslaw (598,076) (593,961)
Republic of Georgia - East Georgian Pipeline Co. -- (192,500)
------------- ------------
CUMULATIVE EQUITY IN PROFIT (LOSS) OF OIL AND GAS
AND OTHER VENTURES $ (598,076) (786,461)

IMPAIRMENT - STYNAWSKE FIELD, BORYSLAW (5,459,793) (5,459,793)
------------- ------------

TOTAL INVESTMENTS IN AND ADVANCES TO OIL AND GAS
AND OTHER VENTURES, NET OF EQUITY LOSS AND IMPAIRMENT $ 630,734 $ 719,308
============= ============



Under the terms of the license Boryslaw Oil Company holds in the
Stynawske field, field operations were to be transferred to Boryslaw
Oil Company effective January 1, 1999. As a result of prolonged
negotiations, which created significant uncertainty as to CanArgo's
ability to raise funds for the project or enter into a satisfactory
farm-out agreement on a timely basis, CanArgo recorded in the third
quarter of 1999 an impairment charge of $5,459,793 against its entire
investment in and advances to Boryslaw Oil Company.

In 2001 an agreement was reached to undertake a limited investment and
development program by June 2002 in respect of Boryslaw Oil Company to
increase production and to meet certain work commitments under the
Stynawske field licence. These obligations have not been fully met,
however, Boryslaw Oil Company is seeking modifications to the licence
to allow a proper assessment of the workovers and development plans
completed to date. A repayment schedule of CanArgo's advances to
Boryslaw Oil Company has also been agreed of which $250,000 was repaid
at September 30, 2002. Boryslaw Oil Company has not been given notice
by the Ukrainian licensing body of early termination of the license.
CanArgo is actively seeking to farm-out part of its interest in
Boryslaw Oil Company in return for financing to carry out the work
programme. If Boryslaw Oil Company does not proceed with the Stynawske
field development programme or if modifications to the current licence
agreement cannot be obtained, it may be in breach of obligations it has
with regard to the field license and an impairment charge against
CanArgo's investment in and advances to Boryslaw Oil Company may be
required.

CanArgo's venture in Boryslaw Oil Company is in the development stage
and accordingly, realization of this investment is dependent upon
successful development of and ultimately cash flows from operations of
the venture.

Other investments represent CanArgo's 10% interest in a Caspian Sea
exploration project.



9






(7) Accrued Liabilities

Accrued liabilities at September 30, 2002 and December 31, 2001 include
the following:


SEPTEMBER 30, December 31,
2002 2001
------------- ------------

Professional fees $ 37,600 $ 150,000
Operating costs - 90,000
Other 185,337 160,221
---------- ---------
$ 222,937 $ 400,221
========== =========



As at December 31, 2001 $90,000 represented liabilities relating to the
winding up of East Georgian Pipeline Company.

(8) Minority Shareholder Advances

In 2001 CanArgo received $731,000 and in 2002, $476,000 on issuance of
convertible loans from new minority shareholders of CanArgo's
subsidiary, CanArgo Norio Limited (Norio). The cash amount received
represented the new minority shareholders share of the cost of drilling
an exploration well under the Norio and North Kumisi production sharing
agreement. In November 2002, CanArgo reached agreement with the other
shareholders in Norio on increasing CanArgo's interest in Norio. Under
the agreement CanArgo's interest increased from 50% to 64% in Norio and
its existing Norio and North Kumisi production sharing agreement. On
finalisation of respective equity interest, the convertible loans
previously classified as minority shareholder advances, have been
reclassified to minority interest.

(9) Minority Interest

In November 2002, CanArgo reached agreement with the other shareholders
in CanArgo's subsidiary, CanArgo Norio Limited (Norio), on increasing
CanArgo's interest in Norio. Under the agreement CanArgo's interest
increased from 50% to 64% in Norio and its existing Norio and North
Kumisi production sharing agreement. As a result of the finalisation of
respective equity interest, CanArgo's interest was adjusted to reflect
its share of $6,031,070, the carrying net asset value of Norio, and in
accordance with the application of SAB 51, this gave rise to a non-
operating loss of $443,564, classified as other expenses. The nominal
value of the final shares issued in Norio were $1,250 per share which
gives a nominal value for Norio of $11,328,928 of which CanArgo share
is $7,269,023 and the minority shareholders share is $4,059,876.

J.F. Russell Hammond, a non-executive director of CanArgo, is also an
investment advisor to Provincial Securities who became a minority
shareholder in the Norio and North Kumisi Production Sharing Agreement
through a farm-in agreement to the Norio MK72 well.

10


(10) Stockholders' Equity



COMMON STOCK
-----------------------
NUMBER OF
SHARES ADDITIONAL FOREIGN TOTAL
ISSUED AND PAID-IN CURRENCY ACCUMULATED STOCKHOLDERS'
ISSUABLE PAR VALUE CAPITAL TRANSLATION DEFICIT EQUITY
---------- ---------- ------------- ----------- ----------- -------------

TOTAL, DECEMBER 31, 2001 92,008,446 $9,200,845 $144,057,517 $ -- $(87,458,782) $65,799,580

Less shares issuable at
beginning of period (148,826) (14,883) (279,436) -- -- (294,319)

Issuance of common stock upon
exchange of CanArgo Oil & Gas
Inc. Exchangeable Shares 148,826 14,883 279,436 -- -- 294,319

Issuance of common stock
pursuant to February private
placement 5,210,000 521,000 1,241,433 -- -- 1,762,433

Issuance of common stock
pursuant to May private
placement 137,760 13,775 14,740 -- -- 28,515

Share issue costs -- -- (162,215) -- -- (162,215)
Current year adjustment 97,938 97,938
Net loss -- -- -- -- (2,431,941) (2,431,941)
---------- ---------- ------------ ------- ----------- -----------
TOTAL, SEPTEMBER 30, 2002 97,356,206 $9,735,620 $145,151,475 $97,938 (89,890,723) $65,094,310
========== ========== ============ ======= =========== ===========



On May 24, 2002 CanArgo acquired all of the Exchangeable Shares of
CanArgo Oil & Gas Inc. for shares of CanArgo Common Stock on a
share-for-share basis.


(11) Net Loss Per Common Share

Basic and diluted net loss per common share for the nine month periods
ended September 30, 2002 and 2001 are based on the weighted average
number of common shares outstanding during those periods. The weighted
average numbers of shares issued and issuable without receipt of
additional consideration for the nine month periods ended September 30,
2002 and 2001 are 97,356,206 and 91,484,823 respectively. Options to
purchase CanArgo's common stock were outstanding at September 30, 2002
but were not included in the computation of diluted net loss per common
share because the effect of such inclusion would have been
anti-dilutive.

(12) Commitments and Contingencies

OIL AND GAS PROPERTIES AND INVESTMENTS IN OIL AND GAS VENTURES

Current drilling obligations with respect to CanArgo's oil and gas
properties include, under the second phase of the preliminary work
programme for the Norio and Nazvrevi/Block XIII production sharing
contracts, the drilling of one well, unless CanArgo decides to
terminate the contracts.

CanArgo has contingent obligations and may incur additional
obligations, absolute and contingent, with respect to acquiring and
developing oil and gas properties and ventures. At September 30, 2002,
CanArgo had the contingent obligation to issue an aggregate of 187,500
shares of its common stock, subject to the satisfaction of conditions
related to the achievement of specified performance standards by the
Stynawske field project.

The shareholders agreement with the other shareholder of Norio calls
for a bonus payment of $800,000 to be paid by CanArgo should commercial
production be obtained from the Middle Eocene or older strata and a
second bonus payment of $800,000 should production from the Block from
the Middle Eocene or older strata exceed 250 tonnes of oil per day over
any 90 day period.



11


(13) Segment Information

Operating revenues from continued operations for the nine month periods
ended September 30, 2002 and 2001 by geographical area were as follows:



SEPTEMBER 30, September 30,
2002 2001
------------ -------------

OIL AND GAS EXPLORATION, DEVELOPMENT AND PRODUCTION
Eastern Europe $ 3,159,850 $ 4,726,230

REFINING
Eastern Europe -- 1,981,646

OTHER
Eastern Europe 1,398,153 --

INTERSEGMENT ELIMINATIONS -- (906,545)
----------- -----------
TOTAL $ 4,558,003 $ 5,801,331
=========== ===========



Other Eastern Europe operating revenue relates to income from the hire
of CanArgo equipment.

Operating income (loss) from continued operations for the nine month
periods ended September 30, 2002 and 2001 by geographical area was as
follows:


SEPTEMBER 30, September 30,
2002 2001
------------ -------------

OIL AND GAS EXPLORATION, DEVELOPMENT AND PRODUCTION
Eastern Europe $ 2,060,386 $ 645,542

REFINING
Eastern Europe (5,053) (355,365)

CORPORATE AND OTHER EXPENSES (4,102,171) (3,313,357)

INTERSEGMENT ELIMINATIONS -- (66,228)

------------ -----------
TOTAL OPERATING INCOME (LOSS) $ (2,046,838) $ (3,089,408)
============ ============




12


Net income (loss) before minority interest from continuing operations
for the nine month periods ended September 30, 2002 and 2001 by
geographic area was as follows:


SEPTEMBER 30, September 30,
2002 2001
------------ -------------

OIL AND GAS EXPLORATION, DEVELOPMENT AND PRODUCTION
Eastern Europe $ 1,616,824 $ 685,531

REFINING
Eastern Europe 5,680 (355,365)

CORPORATE AND OTHER EXPENSES (4,225,535) (2,593,493)

INTERSEGMENT ELIMINATIONS -- (66,228)

------------ ------------
NET INCOME (LOSS) BEFORE MINORITY INTEREST $ (2,603,031) $ (2,329,555)
============ ============



Identifiable assets of continuing and discontinued operations as of
September 30, 2002 and December 31, 2001 by business segment and
geographical area were as follows:


SEPTEMBER 30, December 31,
2002 2001
------------ -------------

CORPORATE
Eastern Europe $ 112,525 $ 3,926,930
Western Europe 3,609,193 7,310,677
----------- -----------
TOTAL 3,721,718 11,237,607

OIL AND GAS EXPLORATION, DEVELOPMENT AND PRODUCTION
Eastern Europe 61,044,532 52,424,570

REFINING
Eastern Europe 110,850 110,850

DISCONTINUED OPERATIONS
Eastern Europe 7,347,104 5,819,582

OTHER ENERGY PROJECTS
Eastern Europe 630,734 719,308
----------- -----------
IDENTIFIABLE ASSETS - TOTAL $72,854,938 $70,311,917
=========== ===========




13


(14) Discontinued Operations

In September 2002, CanArgo approved a plan to sell CanArgo Standard Oil
Products to finance Georgian and Ukrainian development projects and in
October 2002, CanArgo agreed to sell its 50% holding with legal
ownership being transferred upon receipt of final payment due in August
2003. The assets and liabilities of CanArgo Standard Oil Products have
been classified as "Assets of subsidiary held for sale" and
"Liabilities of subsidiary held for sale". The results of operations of
CanArgo Standard Oil Products have been classified as discontinued for
all periods presented. The minority interest related to CanArgo
Standard Oil Products has not been reclassified for any of the periods
presented, however net income from discontinued operations is disclosed
net of taxes and minority interest.

The results of discontinued operations at September 30, 2002 and
September 30, 2001 consisted of the following:


SEPTEMBER 30, September 30,
2002 2001
------------ -------------

Operating Revenues 5,086,458 4,842,530
Income Before Income taxes and Minority Interest 367,174 258,014
Income Taxes 20,394 --
Minority Interest in Income (173,390) (129,007)
---------- ----------
Net Income from Discontinued Operation $ 173,390 $ 129,007
========== ==========


Assets and liabilities of subsidiary held for sale at September 30,
2002 and December 31, 2001 consisted of the following:


SEPTEMBER 30, December 31,
2002 2001
------------ -------------

Assets held for sale:
Cash and cash equivalents 47,882 254
Accounts receivable 239,796 90,108
Inventory 201,451 177,931
Other current assets 135,023 35,384
Capital assets, net 6,473,952 5,149,291
Investment in other ventures, net 249,000 366,614
------------ -------------
$ 7,347,104 $ 5,819,582
============ =============
Liabilities held for sale:
Accounts payable 660,269 240,958
Current portion of long term debt 1,110,276 392,408
Income taxes payable 12,183 29,456
Accrued liabilities 200 --
Long term debt 448,576 514,352
------------ -------------
$ 2,231,504 $ 1,177,174
============ =============


Other investments include three petrol station sites in Tbilisi,
Georgia in which CanArgo has a 50% non-controlling interest. CanArgo
accounts for its interest in the three petrol station sites using the
equity method and consolidates the remaining sites in which it has
controlling interest. In 2002, CanArgo purchased the remaining 50% of
Petro-Invest, a petrol station site in which CanArgo previously held a
50% non-controlling interest. This site in now consolidated in the
results of CanArgo Standard Oil Products, above.

In 2002, the three petrol station sites that CanArgo has a 50%
non-controlling interest entered into credit facility agreements of
$550,000 with a commercial lender in Georgia. As at September, 2002
$350,000 of these facilities were drawn and as at September 30, 2002,
$263,169 under the facilities were outstanding. The loans bear interest
at 18% per annum and are secured by the assets of the petrol stations.
The full amount of the loans are to be repaid by June 2004. No company
guarantees have been provided by CanArgo with respect to these loans.



14


In November 2001, CanArgo Standard Oil Products Limited entered into a
$1 million credit facility agreement, in May 2002 a further $240,000
credit facility agreement, and in September 2002 a further $800,000
credit facility agreement with a commercial lender in Georgia to fund
further expansion of its petrol station network. In 2001, the full
amount of the first facility was drawn, in 2002 $180,000 of the second
facility was drawn, and in September 2002 the full amount of the third
facility was drawn. As at September 30, 2002, $1,558,855 of the total
facility was outstanding. The loans bear interest at 18% per annum and
are secured by the assets of five petrol stations. The full amount of
the first loan is to be repaid by December 2003, the second loan by
November 2004, and the third loan by February 2005. No parent company
guarantees have been provided by CanArgo with respect to these loans.

The remaining 50% interest in CanArgo Standard Oil Products is held by
Standard Oil Products of Georgia and an individual, Mr. Levan
Pkhakazde, who is one of the founders of Standard Oil Products and the
General Director of CanArgo Standard Oil Products.

(15) Acquisition and disposals

In July 2002, CanArgo acquired the remaining 15% interest it did not
own in IPEC for cash consideration of $50,000. Total cash consideration
was allocated to capital assets and on completion of the acquisition,
IPEC became a wholly owned subsidiary of CanArgo. There were no
material assets or liabilities within IPEC at the acquisition date
requiring fair valuing. Prior to acquisition, the historical cost of
the 85% interest that CanArgo owned in IPEC was $33,369.

In July 2002, CanArgo signed a covenant with a local Ukrainian oil and
gas company, on their participation in the Joint Investment Production
Activity agreement (JIPA) for the development of the Bugruvativske
field in Ukraine. IPEC was to provide the vehicle by which they would
become party, through their subsidiary or nominee, to the JIPA and in
September 2002, CanArgo disposed of its entire interest (100%) in IPEC
for $13,435 to their nominees.

(16) Subsequent Events

In October 2002, CanArgo agreed to sell its 50% holding in CanArgo
Standard Oil Products to finance Georgian and Ukrainian development
projects with legal ownership being transferred upon receipt of final
payment due in August 2003. The assets and liabilities of CanArgo
Standard Oil Products have been classified as "Assets of subsidiary
held for sale" and "Liabilities of subsidiary held for sale". The
results of operations of CanArgo Standard Oil Products have been
classified as discontinued for all periods presented. The minority
interest related to CanArgo Standard Oil Products has not been
reclassified for any of the periods presented, however net income from
discontinued operations is disclosed net of taxes and minority
interest.

In November 2002, CanArgo's subsidiary, CanArgo Norio Limited (Norio),
won the tender for the oil and gas exploration and production rights to
Block XI(G) (Tbilisi) and Block XI(H) (Rustavi) in Eastern Georgia. By
successfully winning the tender, under the tender conditions issued by
the Georgian State Agency for Regulation of Oil and Gas Resources,
CanArgo should be awarded a licence for these blocks following
negotiation of a Production Sharing Agreement with the Georgian State
authorities.

In November 2002, CanArgo reached agreement with the other shareholders
in Norio on increasing CanArgo's interest in Norio. Under the agreement
CanArgo's interest increased from 50% to 64% in Norio and its existing
Norio and North Kumisi production sharing agreement, as well as the two
new blocks. Convertible loans representing advances from new minority
shareholders of Norio were reclassified from advances in minority
interest to minority interest as at 30 September 2002 following
finalisation of CanArgo's equity interest in Norio. As a result of the
finalisation of respective equity interest the minority interest,
CanArgo's interest was adjusted to reflect its share of $6,031,070,
the carrying net asset value of Norio, and in accordance with the
application of SAB 51, gave rise to a non-operating loss of $443,564,
classified as other expenses. The nominal value of the final shares
issued in Norio were $1,250 per share which gives a nominal value for
Norio of $11,328,928 of which CanArgo share is $7,269,023 and the
minority shareholders share is $4,059,876.

On November 11 2002, Roger Brittain resigned as non-executive Chairman
of the Board.



15



ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS

QUALIFYING STATEMENT WITH RESPECT TO FORWARD-LOOKING INFORMATION

THE FOLLOWING INFORMATION CONTAINS FORWARD-LOOKING STATEMENTS. SEE
"FORWARD-LOOKING STATEMENTS" BELOW AND ELSEWHERE IN THIS REPORT.

LIQUIDITY AND CAPITAL RESOURCES

As of September 30, 2002, CanArgo had working capital from continuing operations
of $1,658,000 compared to working capital from continuing operations of
$9,948,000 as of December 31, 2001. The $8,290,000 decrease in working capital
from continuing operations from December 31, 2001 to September 30, 2002 is
principally due to a reduction in cash and prepayments related to capital
expenditures on the Ninotsminda, Manavi and Norio projects.

As a result of unexpected mechanical difficulties drilling exploration wells M11
and MK72 and delays in testing well N100, capital expenditures have exceeded
initial estimates and production volumes available for sale are less than
anticipated. These events have resulted in lower than expected cash resources
from which CanArgo can continue its development activities in Georgia. In order
to preserve available cash resources while still maintaining essential field
operations and development activities in Georgia, a significant cost reduction
plan is being implemented. Both direct project and general and administrative
costs are to be reduced. CanArgo's management believes that these reductions
together with a prepayment on the sale of crude oil, the selective sale of
certain non-core assets including CanArgo's generator and a portion or all of
CanArgo's drilling equipment should provide CanArgo the working capital
necessary to cover CanArgo's immediate and near term funding requirements with
respect to its activities in the Republic of Georgia. Provided funds are
available, immediate and near term development plans include the completion of
testing of well N100 and the continued drilling of wells M11 and Norio MK72, two
deep exploration wells. CanArgo has temporarily suspended further drilling of
well M11 below its current casing point at 4,182 metres in order to fully review
available technical data, and to estimate the cost to complete the well. Norio
MK72, has been cased at a depth of 2,932 metres in the Lower Sarmatian. Farm-in
partners are currently being sought to provide additional capital for completing
these wells.

In September 2002 CanArgo agreed terms with Ukrnafta, the Ukrainian State Oil
Company, on revisions to the existing Joint Investment Production Activity
agreement (JIPA) for the development of the Bugruvativske field in Ukraine and
reached an agreement with a local Ukrainian oil and gas company on the terms of
a farm-in to the JIPA. The terms of the farm-in are that the local Ukrainian oil
and gas company will invest approximately $3 million in the Bugruvativske field
over the course of 12 months in order to drill two new wells and will bear the
financial risk under the JIPA during this period. CanArgo can match up to the
amount invested by the local Ukrainian oil and gas company, prior to 31 December
2003. Additionally, agreement has been reached with Ukrnafta, on revisions to
the commercial terms of the JIPA. The revised JIPA provides that (assuming
CanArgo matches the local Ukrainian oil and gas company's initial expenditure)
the financing risk shall be shared between CanArgo and a subsidiary of the local
Ukrainian oil and gas company, IPEC. Ukrnafta shall be entitled to 25% of all
net profits distributed to the parties to the JIPA and the remainder shall be
shared between CanArgo and IPEC. Assuming that CanArgo matches the local
Ukrainian oil and gas company's initial expenditure, CanArgo will be entitled to
approximately 34.5% of net profits generated under the JIPA (or a proportionally
smaller amount if the amount invested is less than that invested by IPEC). In
the event that CanArgo decides not to invest in the project by 31 December 2003,
it will receive an ongoing project fee of between 3-4 % of the net profits
generated under the JIPA in recognition of its earlier involvement in the
project.

In September 2002, CanArgo approved a plan to sell CanArgo Standard Oil Products
to finance Georgian and Ukrainian development projects and in October 2002,
CanArgo agreed to sell its 50% holding for $4 million with legal ownership being
transferred upon receipt of the final $3 million payment due in August 2003.

In 2001 an agreement was reached to undertake a limited investment and
development program by June 2002 in respect of Boryslaw Oil Company to increase
production and to meet certain work commitments under the Stynawske field
licence. These obligations have not been fully met, however, Boryslaw Oil
Company is seeking modifications to the licence agreement to allow a proper
assessment of the workovers and development plans completed to date. A repayment
schedule of CanArgo's advances to Boryslaw Oil Company has also been agreed of
which $250,000 was repaid at September 30, 2002. Boryslaw Oil Company has so far
not been given notice by the Ukrainian licensing body of early termination of
the license. CanArgo is actively seeking to farm-out part of its interest in
Boryslaw Oil Company in return for financing to carry out the work programme. If
Boryslaw Oil


16


Company does not proceed with the Stynawske field development programme or if
modifications to the current licence agreement cannot be obtained, it may be in
breach of obligations it has with regard to the field license and an impairment
charge against CanArgo's investment in and advances to Boryslaw Oil Company may
be required.

Despite limited funding an assessment of both the Bugruvativske and Stynawske
fields and preparation of a development program with Ukrnafta continues. Based
on its efforts to date and should funding be available, CanArgo plans to
significantly increase production from these fields by investing in both
remedial workover activity and potential infill drilling, horizontal drilling
and pressure maintenance utilising appropriate technologies.

While a considerable amount of infrastructure for the Ninotsminda, Bugruvativske
and Stynawske fields has already been put in place, CanArgo cannot provide
assurance that:

o for the Bugruvativske and Stynawske fields, an adequate investment
agreement and development plan can be put in place;

o funding of field development plans will be timely;

o that development plans will be successfully completed or will increase
production; or

o that field operating revenues after completion of the development plan will
exceed operating costs.

To pursue existing projects beyond CanArgo's immediate development plan and to
pursue new opportunities, CanArgo will require additional capital. While
expected to be substantial, without further exploration work and evaluation the
exact amount of funds needed to fully develop all of our oil and gas properties
cannot at present, be quantified. Potential sources of funds include additional
equity, project financing, debt financing and the participation of other oil and
gas entities in CanArgo's projects. Based on CanArgo's past history of raising
capital and continuing discussions including those with major stockholders,
investment bankers and other institutions, CanArgo believes that such required
funds may be available. However, there is no assurance that such funds will be
available, and if available, will be offered on attractive or acceptable terms.
Should such funding not be forthcoming and CanArgo be unable to sell some or all
of its non-core assets, further cost reductions will be required in order for
CanArgo to remain a going concern.

Development of the oil and gas properties and ventures in which CanArgo has
interests involves multi-year efforts and substantial cash expenditures. Full
development of CanArgo's oil and gas properties and ventures will require the
availability of substantial additional financing from external sources. CanArgo
may also, where opportunities exist, seek to transfer portions of its interests
in oil and gas properties and ventures to entities in exchange for such
financing. CanArgo generally has the principal responsibility for arranging
financing for the oil and gas properties and ventures in which it has an
interest. There can be no assurance, however, that CanArgo or the entities that
are developing the oil and gas properties and ventures will be able to arrange
the financing necessary to develop the projects being undertaken or to support
the corporate and other activities of CanArgo. There can also be no assurance
that such financing as is available will be on terms that are attractive or
acceptable to or are deemed to be in the best interest of CanArgo, such entities
and their respective stockholders or participants.

Ultimate realization of the carrying value of CanArgo's oil and gas properties
and ventures will require production of oil and gas in sufficient quantities and
marketing such oil and gas at sufficient prices to provide positive cash flow to
CanArgo. Establishment of successful oil and gas operations is dependent upon,
among other factors, the following:

o mobilization of equipment and personnel to implement effectively drilling,
completion and production activities;

o achieving significant production at costs that provide acceptable margins;

o reasonable levels of taxation, or economic arrangements in lieu of taxation
in host countries; and

o the ability to market the oil and gas produced at or near world prices.

Subject to the raising of additional capital, above, CanArgo has plans to
mobilize resources and achieve levels of production and profits sufficient to
recover the carrying value of its oil and gas properties and ventures. However,
if one or more of the above factors, or other factors, are different than
anticipated, these plans may not be realized, and CanArgo may not recover the
carrying value of its oil and gas properties and ventures. CanArgo should be
entitled to distributions from the various properties and ventures in which it
participates in accordance with the arrangements governing the respective
properties and ventures.



17


STATEMENT OF CASH FLOWS

All balances represent results from continuing operations, unless disclosed
otherwise.

Cash and cash equivalents decreased by $4,181,000 to $1,710,000 at September 30,
2002 from $5,891,000 at December 31, 2001. The decrease was primarily due to the
cost of the Manavi and Norio exploration programmes in Georgia.

Accounts receivable decreased by $1,386,000 to $621,000 at September 30, 2002
from $2,007,000 at December 31, 2001. The decrease is primarily a result of the
receipt of $1,000,000 from AES relating to the termination of AES's
participation in a three well exploration programme, and an increase in
allowance for a doubtful debt of $275,000, generated from gas sales to the
Rustavi Plant in Georgia in 2000.

Inventory decreased by $208,000 to $198,000 at September 30, 2002 from $406,000
at December 31, 2001 primarily as result of the sale of oil by Ninotsminda Oil
Company from storage. Approximately 36,000 barrels of oil were held in storage
by Ninotsminda Oil Company at September 30, 2002 for sale to the Georgian
domestic, region or international market.

Prepayments decreased by $1,789,000 to $447,000 at September 30, 2002 from
$2,236,000 at December 31, 2001 primarily as a result of receipt of materials
and services related to CanArgo's exploration activities transferred to capital
assets in the period. This decrease is included in the statement of cash flows
as an investing activity.

Capital assets, net increased to $61,155,000 at September 30, 2002 from
$52,535,000 at December 31, 2001, primarily as a result of investment of
$10,055,000 in capital assets including oil and gas properties and equipment,
principally related to the Ninotsminda and Norio production sharing contracts.

Investments in and advances to oil and gas and other ventures, net decreased to
$631,000 at September 30, 2002 from $719,000 at December 31, 2001. The decrease
reflects repayments by Boryslaw Oil Company of CanArgo's advances in 2001
partially offset by an increase in equity income related to CanArgo's investment
in Boryslaw Oil Company.

Assets of subsidiary held for sale, of discontinued operations, increased by
$1,527,000 to $7,347,000 at September 30, 2002 from $5,820,000 at December 31,
2001 primarily due to activity at CanArgo Standard Oil Products relating to the
addition of new petrol stations in Georgia.

Accounts payable decreased to $780,000 at September 30, 2002 from $828,000 at
December 31, 2001 primarily due to an absolute fall in corporate payables.

Deferred revenue of $1,000,000 at September 30, 2002 relates to a 12 month crude
oil sales agreement for Ninotsminda Oil Company to sell its monthly share of oil
produced under the Ninotsminda production sharing contract. As security over
payment the buyer provided $1 million to be repaid by Ninotsminda Oil Company at
the end of the twelve month period through the delivery of crude oil equal to
the value of the security.

Accrued liabilities decreased by $177,000 to $223,000 at September 30, 2002 from
$400,000 at December 31, 2001 primarily due to a reduction in accrued
professional fees, and liabilities relating to the winding up of East Georgian
Pipeline Company.

Liabilities of subsidiaries held for sale, of discontinued operations, increased
by $1,055,000 to $2,232,000 at September 30, 2002 from $1,177,000 at December
31, 2001 primarily due to additional bank loans drawn by CanArgo Standard Oil
Products in Tbilisi at an effective interest rate of 18% per annum, in order to
fund the construction of new petrol stations in Georgia.

Minority shareholder advances as at December 31, 2001 related to the receipt of
convertible loans from new minority shareholders of CanArgo's subsidiary,
CanArgo Norio Limited (Norio). The cash amount received represented part of the
new minority shareholder's share of the cost of drilling an exploration well
under the Norio and North Kumisi production sharing agreement. In November 2002,
CanArgo reached agreement with the other shareholders in Norio on increasing
CanArgo's interest in Norio. Under the agreement CanArgo's interest increased
from 50% to 64% in Norio and its existing Norio and North Kumisi production
sharing agreement. Subsequently, the convertible loans have been reclassified as
minority interest on finalisation of respective equity shares.



18


Minority interest in continuing and discontinued subsidiaries increased by
$1,826,000 to $3,357,000 at September 30, 2002 from $1,531,000 at December 31,
2001 due to the reclassification of $1,207,000 from minority shareholder
advances resulting from finalisation of CanArgo's equity interest from 50% to
64% in Norio and its existing Norio and North Kumisi production sharing
agreement, an increase of $444,000 resulting from CanArgo's adjusted interest in
its final share of the carrying net asset value of Norio, and minority interest
shareholder's share of income in the period.

On February 12, 2002, CanArgo completed an offering of 5,210,000 common shares
at NOK 2.95 per share (approximately US$0.33 per share) to a financial
institution and qualified purchasers for gross proceeds of approximately
$1,762,000 in transactions intended to qualify for an exemption from
registration under the Securities Act of 1933 afforded by Regulation S
promulgated thereunder.

On May 28, 2002, CanArgo completed an offering of 137,760 common shares at NOK
1.68 per share (approximately US$0.21 per share) to David Robson, CanArgo's
Chief Executive Officer, for gross proceeds of approximately $29,000 in
transactions intended to qualify for an exemption from registration under
Section 4(2) of the Securities Act of 1933 afforded by Regulation S promulgated
thereunder. The shares have not been registered under the Securities Act of
1933 and are "restricted" as that term is defined in Rule 144 under the
Securities Act. The shares may not be offered for sale, sold or otherwise
transferred except pursuant to an effective registration statement under the
Securities Act or pursuant to an exemption from registration under the
Securities Act, the availability of which is to be established to the
satisfaction of CanArgo.

The foreign currency translation is due to the Company adopted the
self-sustaining method of accounting for CanArgo Standard Oil Products. The
adoption of the self-sustaining method was necessitated by the fact that CanArgo
Standard Oil Products was no longer financially and operationally dependant upon
its parent company. Under the self-sustaining method of foreign currency
translation, assets and liabilities are translated into US dollars at period end
exchange rates and income and expenses are translated into US dollars at average
rates in effect during the period. Exchange gains and losses on translation are
reflected as a separate component of shareholders' equity.

CONTRACTUAL OBLIGATIONS AND COMMERCIAL TERMS

CanArgo has contingent obligations and may incur additional obligations,
absolute or contingent, with respect to the acquisition and development of oil
and gas properties and ventures in which it has interests that require or may
require CanArgo to expend funds and to issue shares of its Common Stock.

At September 30, 2002, CanArgo had a contingent obligation to issue 187,500
shares of common stock to a third party upon satisfaction of conditions relating
to the achievement of specified Stynawske field project performance standards.
As CanArgo develops current projects and undertakes other projects, it could
incur significant additional obligations.

Current drilling obligations with respect to CanArgo's oil and gas properties
include, under the third phase of the preliminary work programme for the
Nazvrevi/Block XIII production sharing contract, the drilling of one well,
unless CanArgo decides to terminate the contract. There is no depth or financial
commitment relating to this well. The second phase of the preliminary work
programme under the Norio and North Kumisi production sharing agreement
commenced in January 2002 with the first exploration well at an estimated cost
of up to $4.4 million of which CanArgo's estimated share of costs is $3.2
million. The State Agency for Oil and Gas Regulations in Georgia has confirmed
that CanArgo has satisfied all drilling and work obligations under the terms of
the Norio and Kumisi production sharing agreement. The well is currently
suspended while CanArgo actively seeks partners for funding to deepen the well
to the target zone.

The shareholders agreement with the other shareholder of Norio calls for a bonus
payment of $800,000 to be paid by CanArgo should commercial production be
obtained from the Middle Eocene or older strata and a second bonus payment of
$800,000 should production from the Block from the Middle Eocene or older strata
exceed 250 tonnes of oil per day over any 90 day period.

In 2001 an agreement was reached to undertake a limited investment and
development program by June 2002 in respect of Boryslaw Oil Company to increase
production and to meet certain work commitments under the Stynawske field
licence. These obligations have not been fully met, however, Boryslaw Oil
Company is seeking modifications to the licence agreement to allow a proper
assessment of the workovers and development plans completed to date. A repayment
schedule of CanArgo's advances to Boryslaw Oil Company has also been agreed of
which $250,000 was repaid by September 30, 2002. Boryslaw Oil Company has so far
not been given notice by the


19


Ukrainian licensing body of early termination of the license. CanArgo is
actively seeking to farm-out part of its interest in Boryslaw Oil Company in
return for finance to carry out the work programme. If Boryslaw Oil Company does
not proceed with the Stynawske field development programme or if modifications
to the current licence agreement cannot be obtained, it may be in breach of
obligations it has with regard to the field license and an impairment charge
against CanArgo's investment in and advances to Boryslaw Oil Company may be
required.

In August 2002, Ninotsminda Oil Company entered into a 12 month crude oil sales
agreement to sell its monthly share of oil produced under the Ninotsminda
production sharing contract. As security for payment the buyer has paid to
Ninotsminda Oil Company $1 million to be repaid at the end of the twelve month
period through the delivery of additional crude oil equal to the value of the
security. Under the agreement, crude oil will be sold at dated Brent less a
fixed discount per barrel depending on the Brent price. The discount ranges from
a minimum of $6.00 per barrel when dated price is less than $15.00 per barrel to
a maximum $7.50 per barrel when dated Brent is greater than $25.01 per barrel.

RESULTS OF CONTINUING OPERATIONS

Nine Month Period Ended September 30, 2002 Compared to Nine Month Period Ended
September 30, 2001

CanArgo recorded operating revenue from continuing operations of $4,558,000
during the nine month period ended September 30, 2002 compared with $5,801,000
for the nine month period ended September 30, 2001. The decrease is attributable
to declines in oil and gas and refining revenues offset by other revenue,
representing rental of CanArgo equipment in Georgia. No new equipment rental
contracts have been signed, although the company has established a well services
subsidiary, which will bid in local tenders for drilling contracts.

Ninotsminda Oil Company generated $3,160,000 of revenue in the nine month period
ended September 30, 2002 compared with $3,820,000 for the nine month period
ended September 30, 2001. Its net share of the 217,608 (797 barrels per day) of
gross oil production for sale from the Ninotsminda field in the period amounted
to 141,445 barrels. In the period 41,844 barrels of oil were removed from
storage and sold. For the nine month period ended September 30, 2001 Ninotsminda
Oil Company's net share of the 323,000 barrels (1,183 barrels per day) of gross
production was 193,689 barrels. The decline in production is due to limited
workover investment resulting in a natural reservoir rate of decline.

Ninotsminda Oil Company's entire share of production was sold locally in Georgia
under both national and international contracts Net sale prices for Ninotsminda
oil sold during the first nine months of 2002 averaged $16.61 per barrel as
compared with an average of $19.79 per barrel in the first nine months of 2001.
Its net share of the 143,233 mcf of gas delivered was 93,101 mcf at an average
net sale price of $1.25 per mcf of gas. For the nine month period ended
September 30, 2001, Ninotsminda Oil Company's net share of the 951,688 mcf of
gas delivered was 618,600 mcf at an average net sales price of $1.14 per mcf of
gas. Gas deliveries for the nine months ended September 30, 2002 declined
significantly due to lower oil and gas production and the temporary shutdown by
AES of its thermal power generating station following an accident at the
facility. Although AES has now re-opened, its demand for gas is too great for
CanArgo to meet from current production.

Refining revenues for the nine month period ended September 30, 2001 related
solely to the refinery owned by Georgian American Oil Refinery. Currently only
naphtha, diesel and mazout can be produced and of these products, an excise tax
on naphtha sales remains in place. As a result of these taxes and the local
market for naphtha in the Republic of Georgia, CanArgo deemed production of
naphtha as commercially uneconomic and suspended refining activity in the fourth
quarter of 2001. In 2002 CanArgo entered into a short-term lease of the refinery
to a third party for nominal revenue. During the lease period, all operating
costs of the refinery were borne by the lessee. This lease expired in May 2002
and has not been renewed. CanArgo continues to monitor demand for product able
to be produced by the refinery and is seeking changes to the legislation in
support of indigenous refining activities, although no assurance can be given
that such changes can be made. The refinery is now in a care and maintenance
condition.

Operating loss from continuing operations for the nine month period ended
September 30, 2002 was $2,049,000 compared with an operating loss of $3,089,000
for the corresponding period in 2001. The decrease in operating loss is
attributable primarily to refining activity, profit generated from rental of
CanArgo equipment and reduced depreciation, depletion and amortization in the
period.



20


Field operating expenses decreased to $1,141,000 for the nine month period ended
September 30, 2002 as compared to $1,566,000 for the nine month period ended
September 30, 2001. The decrease is primarily a result of decreased activity at
the Ninotsminda field offset partially by costs relating to sales of oil from
storage in the nine months of the year.

Purchases of crude oil and products and Refinery operating expenses for the nine
month period ended September 30, 2001 related solely to refining activity which
was suspended in the fourth quarter of 2001.

Direct project costs increased to $1,158,000 for the nine month period ended
September 30, 2002, from $937,000 for the nine month period ended September 30,
2001, reflecting additional costs associated with the rental by others of
CanArgo equipment.

General and administrative costs increased to $2,704,000 for the nine month
period ended September 30, 2002, from $2,689,000 for the nine month period ended
September 30, 2001 primarily as a result of additional corporate costs.

The decrease in depreciation, depletion and amortization expense to $1,601,000
for the nine month period ended September 30, 2002, from $2,524,000 for the nine
month period ended September 30, 2001 is attributable principally to lower
production, due to limited workover investment resulting in a natural reservoir
rate of decline, and lower sales from the Ninotsminda oil field.

CanArgo recorded net other expense of $556,000 for the nine months ended
September 30, 2002, as compared to other income of $760,000 during the nine
months ended September 30, 2001 primarily due to CanArgo's adjusted interest in
its share of the carrying net asset value of its subsidiary CanArgo Norio
Limited (Norio) giving rise to a non-operating loss of $444,000, in accordance
with the application of SAB 51, following agreement with the minority
shareholders on the finalization of respective equity interest in Norio, lower
cash balances in 2002, an allowance for doubtful accounts of $275,000 from
previous gas sales, and an allowance for doubtful accounts of $93,000 relating
to the rental of CanArgo equipment.

Equity income from investments increased to $136,000 for the nine month period
ended September 30, 2002 from $74,000 for the nine month period ended September
30, 2001 as a result of equity income from production and sales of crude oil by
Boryslaw Oil Company.

The net loss from continuing operations of $2,432,000 or $0.03 per share for the
nine month period ended September 30, 2002 compares to a net loss of $2,017,000,
or $0.02 per share for the nine month period ended September 30, 2001. The
weighted average number of common shares outstanding was substantially higher
during the nine month period ended September 30, 2002 than during the nine month
period ended September 30, 2001, due in large part to private placements in July
2001, February and May 2002.

Three Month Period Ended September 30, 2002 Compared to Three Month Period Ended
September 30, 2001

CanArgo recorded operating revenue continuing operations of $696,000 during the
three month period ended September 30, 2002 compared with $2,095,000 for the
three month period ended September 30, 2001. The decrease is due to declines in
oil and gas and refining revenues.

Ninotsminda Oil Company generated $696,000 of revenue in the three month period
ended September 30, 2002. Its net share of the 74,924 barrels (814 barrels per
day) of gross oil production for sale from the Ninotsminda field in the period
amounted to 48,700 barrels. 17,438 barrels of oil were added to storage in the
period. For the three month period ended September 30, 2001, Ninotsminda Oil
Company's net share of the 90,800 barrels (987 barrels per day) of gross
production was 53,500 barrels. The decline in production is due to limited
workover investment resulting in a natural reservoir rate of decline.

Ninotsminda Oil Company's entire share of production in Georgia was sold under
both national and international contracts. Net sale prices for Ninotsminda oil
sold during the third quarter of 2002 averaged $20.28 per barrel as compared
with an average of $19.69 per barrel in the third quarter of 2001. Its net share
of the 74,797 mcf of gas



21


delivered was 48,618 mcf at an average net sale price of $1.27 per mcf of gas.
For the three month period ended September 30, 2001, Ninotsminda Oil Company's
net share of the 588,303 mcf of gas delivered was 382,397 mcf at an average net
sales price of $1.18 per mcf of gas. Gas deliveries for the three months ended
September 30, 2002 declined significantly due to lower oil and gas production
and the temporary shutdown by AES of its thermal power generating station
following an accident at the facility. Although AES has now re-opened, its
demand for gas is too great for CanArgo to meet from current production.

Refining revenues for the three month period ended September 30, 2001 relate to
the refinery owned by Georgian American Oil Refinery. Currently only naphtha,
diesel and mazout can be produced and of these products, an excise tax on
naphtha sales remains in place. As a result of these taxes and the local market
for naphtha in the Republic of Georgia, CanArgo deemed production of naphtha as
commercially uneconomic and suspended refining activity in the fourth quarter of
2001. In 2002 CanArgo entered into a short-term lease of the refinery to a third
party for nominal revenue which expired in May 2002. During the lease period,
all operating costs of the refinery were borne by the lessee. This lease expired
in May 2002 and has not been renewed. CanArgo continues to monitor demand for
product able to be produced by the refinery and is seeking changes to the
legislation in support of indigenous refining activities, although no assurance
can be given that such changes can be made. The refinery is now in a care and
maintenance condition.

The operating loss continuing operations for the three month period ended
September 30, 2002 amounted to $462,000 compared with an operating loss of
$877,000 for the corresponding period in 2001. The decrease in operating loss is
attributable to a reduced general and administrative cost and a reduced
depreciation, depletion and amortization charge in the period, partially offset
by a decline in refining income and oil and gas revenue.

Field operating expenses decreased to $261,000 for the three month period ended
September 30, 2002 as compared to $453,000 for the three month period ended
September 30, 2001. The decrease is primarily a result of decreased activity at
the Ninotsminda field.

Purchases of crude oil and products and Refinery operating expenses for the
three month period ended September 30, 2001 related solely to refining activity
which was suspended in the fourth quarter of 2001.

Direct project costs decreased to $177,000 for the three month period ended
September 30, 2002, from $365,000 for the three month period ended September 30,
2001 reflecting additional costs associated with the rental by others of CanArgo
equipment.

General and administrative costs decreased to $403,000 for the three month
period ended September 30, 2002, from $866,000 for the three month period ended
September 30, 2001 principally due to the reclassification of an allowance for
doubtful accounts of $275,000 from previous gas sales to other expenses and the
reversal of a $125,000 severance provision from the previous quarter.

The decrease in depreciation, depletion and amortization expense to $317,000
from $578,000 for the three month period ended September 30, 2002 is
attributable principally to lower production, due to limited workover investment
resulting in a natural reservoir rate of decline, and lower sales from the
Ninotsminda field.

The equity income from investments at $45,000 for the three month period ended
September 30, 2002 reflected equity income from production and sales of crude
oil by Boryslaw Oil Company.

CanArgo recorded net other expense of $749,000 for the three months ended
September 30, 2002, as compared to other income of $197,000 during the three
months ended September 30, 2001. The principal reason for the decrease is due to
CanArgo's adjusted interest in its share of the carrying net asset value of its
subsidiary CanArgo Norio Limited (Norio) giving rise to a non-operating loss of
$444,000, in accordance with the application of SAB 51, following agreement with
the minority shareholders on the finalization of respective equity interest in
Norio, the reclassification of an allowance for doubtful accounts of $275,000
from previous gas sales previously recorded in general and administrative costs,
an allowance for doubtful accounts of $93,000 relating to the rental of CanArgo
equipment, and lower interest income on cash balances.



22



The net loss from continuing operations of $1,228,000 or $0.01 per share for the
three month period ended September 30, 2002 compares to a net loss of $487,000,
or $0.01 per share for the three month period ended September 30, 2001. The
weighted average number of common shares outstanding was higher during the three
month period ended September 30, 2002 than during the three month period ended
September 30, 2001, due in large part to a private placement in July 2001,
February and May 2002.

RESULTS OF DISCONTINUED OPERATIONS

Nine Month Period Ended September 30, 2002 Compared to Nine Month Period Ended
September 30, 2001

The net income from discontinued operations, net of taxes and minority interest
for the nine month period ended September 30, 2002 amounted to $174,000 compared
with income of $129,000 for the corresponding period in 2001. The increase in
net income from discontinued operations, net of taxes and minority interest
relates entirely to the activities of CanArgo standard Oil Products.

Three Month Period Ended September 30, 2002 Compared to Three Month Period Ended
September 30, 2001

The net income from discontinued operations, net of taxes and minority interest
for the three month period ended September 30, 2002 amounted to $37,000 compared
with income of $80,000 for the corresponding period in 2001. The decrease in net
income from discontinued operations, net of taxes and minority interest relates
entirely to the activities of CanArgo standard Oil Products.

NEW ACCOUNTING STANDARDS

In April 2002, the FASB issued SFAS No. 145, "Rescission of FASB Statements No.
4, 44, and 64, and Amendment of FASB No. 13, and Technical Corrections (FAS
"145"). This statement removes the requirement that a gain or loss on the early
extinguishment of debt must be reported as an extraordinary activity. In
addition, the statement requires sales-leaseback accounting for certain lease
modifications that have economic effects that are similar to sales-leaseback
transactions. There are numerous other modifications to existing authoritative
guidance under this standard. This statement is effective for financial
statements issued on or after May 15, 2002. CanArgo does not expect the adoption
of this standard to have a material effect on its financial statements.

In July 2002, the FASB issued SFAS No. 146, "Accounting for Costs Associated
with Exit or Disposal Activities" ("FAS 146"). This standard will require
companies to recognize costs associated with exit or disposal activities when
they are incurred rather than at the date of a commitment to an exit or disposal
plan. The standard replaces the existing guidance provided by EITF Issue No.
94-3, "Liability Recognition for Certain Employee Termination Benefits and Other
Costs to Exit an Activity (including Certain Costs Incurred in a
Restructuring)." The statement is effective for fiscal years beginning after
December 31, 2002. CanArgo does not expect the adoption of this standard to have
a material effect on its financial statements.

FORWARD LOOKING STATEMENTS

The forward looking statements contained in this Item 2 and elsewhere in this
Form 10-Q are subject to various risks, uncertainties and other factors that
could cause actual results to differ materially from the results anticipated in
such forward looking statements. Included among the important risks,
uncertainties and other factors are those hereinafter discussed.

Operating entities in various foreign jurisdictions must be registered by
governmental agencies, and production licenses for development of oil and gas
fields in various foreign jurisdictions must be granted by governmental
agencies. These governmental agencies generally have broad discretion in
determining whether to take or approve various actions and matters. In addition,
the policies and practices of governmental agencies may be affected or altered
by political, economic and other events occurring either within their own
countries or in a broader international context.

CanArgo does not have a majority of the equity in the entity that is the
licensed developer of some projects, such as the Bugruvativske and Stynawske
field projects, that CanArgo may pursue in Eastern Europe, even though we may be
the designated operator of the oil or gas field. In these circumstances, the
concurrence of co-venturers may be



23


required for various actions. Other parties influencing the timing of events may
have priorities that differ from ours, even if they generally share our
objectives. As a result of all of the foregoing, among other matters, any
forward-looking statements regarding the occurrence and timing of future events
may well anticipate results that will not be realized. Demands by or
expectations of governments, co-venturers, customers and others may affect
CanArgo's strategy regarding the various projects. Failure to meet such demands
or expectations could adversely affect CanArgo's participation in such projects
or our ability to obtain or maintain necessary licenses and other approvals.

CanArgo's ability to finance all of its present oil and gas projects and other
ventures according to present plans is dependent upon obtaining additional
funding. An inability to obtain financing could require CanArgo to scale back or
abandon part or all of CanArgo's project development, capital expenditure,
production and other plans. The availability of equity or debt financing to
CanArgo or to the entities that are developing projects in which CanArgo has
interests is affected by many factors, including:

o world economic conditions;

o international relations;

o the stability and policies of various governments;

o fluctuations in the price of oil and gas, the outlook for the oil and
gas industry and competition for funds; and

o an evaluation of CanArgo and specific projects in which CanArgo has an
interest.

Rising interest rates might affect the feasibility of debt financing that is
offered. Potential investors and lenders will be influenced by their evaluations
of us and our projects and comparisons with alternative investment
opportunities.

The development of oil and gas properties is subject to substantial risks.
Expectations regarding production, even if estimated by independent petroleum
engineers, may prove to be unrealized. There are many uncertainties inherent in
estimating production quantities and in projecting future production rates and
the timing and amount of future development expenditures. Estimates of
properties in full production are more reliable than production estimates for
new discoveries and other properties that are not fully productive. Accordingly,
estimates related to CanArgo's properties are subject to change as additional
information becomes available.

Most of CanArgo's interests in oil and gas properties and ventures are located
in Eastern European countries. Operations in those countries are subject to
certain additional risks including the following:

o enforceability of contracts;

o currency convertibility and transferability;

o unexpected changes in tax rates;

o sudden or unexpected changes in demand for crude oil and or natural gas;

o availability of trained personnel; and

o availability of equipment and services and other factors that could
significantly change the economics of production.

Production estimates are subject to revision as prices and costs change.
Production, even if present, may not be recoverable in the amount and at the
rate anticipated and may not be recoverable in commercial quantities or on an
economically feasible basis. World and local prices for oil and gas can
fluctuate significantly, and a reduction in the revenue realizable from the sale
of production can affect the economic feasibility of an oil and gas project.
World and local political, economic and other conditions could affect CanArgo's
ability to proceed with or to effectively operate projects in various foreign
countries.

Demands by, or expectations of governments, co-venturers, customers and others
may affect CanArgo's strategy regarding the various projects. Failure to meet
such demands or expectations could adversely affect CanArgo's participation in
such projects or its ability to obtain or maintain necessary licenses and other
approvals.

ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

CanArgo's principal exposure to market risk is due to changes in oil and gas
prices and currency fluctuations. As indicated elsewhere in this Report, as a
producer of oil and gas CanArgo is exposed to changes in oil and gas prices as
well as changes in supply and demand which could affect its revenues. CanArgo
does not engage in any commodity hedging activities. Due to the ready market for
its production in the Republic of Georgia, CanArgo does



24


not believe that any current exposures from this risk will materially affect
CanArgo's financial position at this time, but there can be no assurance that
changes in such market will not affect CanArgo adversely in the future.

Also as indicated elsewhere in this Report, because all of CanArgo's operations
are being conducted in Eastern Europe, CanArgo is potentially exposed to the
market risk of fluctuations in the relative values of the currencies in areas in
which it operates. At present CanArgo does not engage in any currency hedging
operations since, to the extent it receives payments for its production,
refining and marketing activities in local currencies, it is utilizing such
currencies to pay for its local operations. In addition, it currently has
contracts to sell its production from the Ninotsminda field in the Republic of
Georgia which provide for payment in dollars.

While CanArgo Standard Oil Products marketing revenue is denominated in Lari,
the local Georgian currency, and is used to pay Lari denominated operating
costs, its long term debt is denominated in dollars. As a result, changes in the
exchange rate could have a material adverse effect on its ability to pay off
non-Lari denominated indebtedness such as its existing credit facility. The
sensitivity to changes in exchange rates for CanArgo Standard Oil Products was
determined using current market pricing models. We estimate that a 10%
appreciation or devaluation in the foreign exchange rate of the Lari against the
dollar in 2002 would not have had a significant impact on operations.

CanArgo had no material interest in investments subject to market risk during
the period covered by this report.

ITEM 4. CONTROLS AND PROCEDURES

Based upon an evaluation within the 90 days prior to the filing date of this
report, our Chief Executive Officer and Chief Financial Officer have each
concluded that our disclosure controls and procedures as defined in Rules 13a-14
and 15d-14 of the Securities Exchange Act of 1934, as amended, are effective, as
of the evaluation date, in timely alerting them to material information relating
to our Company required to be included in our reports filed or submitted under
the Exchange Act. Since the date of the evaluation, there have been no
significant changes in our internal controls or in other factors that could
significantly affect such controls, including any corrective actions with regard
to significant deficiencies and material weaknesses.



25



PART II - OTHER INFORMATION
CANARGO ENERGY CORPORATION AND SUBSIDIARIES

ITEM 2. CHANGES IN SECURITIES AND USE OF PROCEEDS


(a) On February 12, 2002, CanArgo completed an offering of 5,210,000
shares of common stock at Norwegian Kroner 2.95 per share
(approximately US$0.33 per share) to a financial institution and
qualified purchasers for gross proceeds of approximately
$1,762,000 in transactions intended to qualify for an exemption
from registration under the Securities Act of 1933 afforded by
Regulation S promulgated thereunder. ABG Sundal Collier ASA acted
as placement agent for this transaction. The placement agent
received a commission of 5.75% of the gross proceeds of the
placement. Proceeds from the offering will be used for working
capital and future capital expenditures in Georgia following
termination of the AES Participation Agreement

(b) On May 28, 2002, CanArgo completed an offering of 137,760 common
shares at NOK 1.68 per share (approximately US$0.21 per share) to
David Robson, CanArgo's Chief Executive Officer, for gross
proceeds of approximately $29,000. The shares have not been
registered under the Securities Act of 1933 and are "restricted"
as that term is defined in Rule 144 under the Securities Act. The
shares may not be offered for sale, sold or otherwise transferred
except pursuant to an effective registration statement under the
Securities Act or pursuant to an exemption from registration under
the Securities Act, the availability of which is to be established
to the satisfaction of CanArgo.


ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K

(a) EXHIBITS

Management Contracts, Compensation Plans and
Arrangements are identified by an asterisk (*) Documents
filed herewith are identified by a cross (+).

1(1) Escrow Agreement with Signature Stock Transfer, Inc.
(Incorporated herein by reference from Form S-1
Registration Statement, File No. 333-72295 filed on
September 9, 1999).

1(2) Selling Agent Agreement with each of Credifinance
Securities Limited, David Williamson Associates Limited,
and Orkla Finans (Fondsmegling) ASA (Incorporated herein
by reference from Form S-1 Registration Statement, File
No. 333-72295 filed on September 9, 1999).

1(3) Escrow Agreement with Orkla Finans (Fondsmegling) ASA
(Incorporated herein by reference from Form S-1
Registration Statement, File No. 333-72295 filed on
September 9, 1999).

1(4) Selling Agent Agreement with National Securities
Corporation (Incorporated herein by reference from
Post-Effective Amendment No. 1 to Form S-1 Registration
Statement, File No. 333-72295 filed on July 29, 1999).

1(5) Escrow Agreement with Continental Stock Transfer & Trust
Company (Incorporated herein by reference from
Post-Effective Amendment No. 1 to Form S-1 Registration
Statement, File No. 333-72295 filed on July 29, 1999).

2(1) Agreement Relating to the Sale and Purchase of All the
Issued Share Capital of Gastron International Limited
dated August 10, 1995 by and among Ribalta Holdings,
Inc. as Vendor and Fountain Oil Incorporated as
Purchaser, and John Richard Tate as Warrantor
(Incorporated herein by reference from October 19, 1995
Form 8-K).

2(2) Supplemental Agreement Relating to the Sale and Purchase
of All the Issued Share Capital of Gastron International
Limited dated November 3, 1995 by and among Ribalta
Holdings, Inc. as Vendor and Fountain Oil Incorporated
as Purchaser, and John Richard Tate as Warrantor
(Incorporated herein by reference from October 19, 1995
Form 8-K).



26



2(3) Supplemental Deed Relating to the Sale and Purchase of
All the Issued Share Capital of Gastron International
Limited dated May 29, 1996 by and among Ribalta
Holdings, Inc. as Vendor and Fountain Oil Incorporated
as Purchaser, and John Richard Tate as Warrantor
(Incorporated herein by reference from September 30,
1997 Form 10-Q).

2(4) Memorandum of Agreement between Fielden Management
Services Pty, Ltd., A.C.N. 005 506 123 and Fountain Oil
Incorporated dated May 16, 1995 (Incorporated herein by
reference from December 31, 1997 Form 10-K/A).

2(5) Amended and Restated Combination Agreement between
Fountain Oil Incorporated and CanArgo Energy Inc. dated
as of February 2, 1998 (Incorporated herein by reference
from Form S-3 Registration Statement, File No. 333-48287
filed on September 9, 1998).

2(6) Voting, Support and Exchange Trust Agreement
(Incorporated herein by reference as Annex G from Form
S-3 Registration Statement, File No. 333-48287 filed on
September 9, 1998).

2(7) Offer Circular relating to a proposed purchase all of
the outstanding common shares of Lateral Vector
Resources, Inc. dated March 20, 2001 (Incorporated
herein by reference from Form 14D-1F dated March 21,
2001).

2(8) Notice of Extension and Variation amending Registrant's
offer to purchase all of the outstanding common shares
of Lateral Vector Resources, Inc. dated April 9, 2001
(Incorporated herein by reference from Amendment No. 1
to Form 14D-1F dated April 11, 2001).

3(1) Registrant's Certificate of Incorporation and amendments
thereto (Incorporated herein by reference from July 15,
1998 Form 8-K).

3(2) Registrant's Bylaws (Incorporated herein by reference
from Post-Effective Amendment No. 1 to Form S-1
Registration Statement, File No. 333-72295 filed on July
29, 1999).

4(1) Registration Rights Agreement between Registrant and JKX
Nederland B.V. dated September 28, 2000, relating to
purchase of 21.2% interest in Ninotsminda Oil Company
(Incorporated herein by reference from July 20, 2000
Form 8-K).

*10(1) Form of Option Agreement for options granted to certain
persons, including Directors (Incorporated herein by
reference from August 31, 1994 Form 10-KSB, filed by
Electromagnetic Oil Recovery, Inc., the Company's
predecessor).

*10(2) Amended and Restated 1995 Long-Term Incentive Plan
(Incorporated herein by reference from Post-Effective
Amendment No. 1 to Form S-1 Registration Statement, File
No. 333-72295 filed on July 29, 1999).

*10(3) Amended and Restated CanArgo Energy Inc. Stock Option
Plan (Incorporated herein by reference from September
30, 1998 Form 10-Q).

10(4) Agreement between Georgian American Oil Refinery Company
and CanArgo Petroleum Products Ltd. dated September 26,
1998 (Incorporated herein by reference from Form S-1
Registration Statement, File No. 333-72295 filed on
February 12, 1999).

10(5) Terrenex Acquisition Corporation Option regarding
CanArgo (Nazvrevi) Limited (Incorporated herein by
reference from Form S-1 Registration Statement, File No.
333-72295 filed on February 12, 1999).


10(6) Production Sharing Contract between (1) Georgia and (2)
Georgian Oil and JKX Navtobi Ltd. dated February 12,
1996 (Incorporated herein by reference from Form S-1
Registration



27



Statement, File No. 333-72295 filed on September 7,
1999).

10(7) Agreement on Financial Advisory Services between CanArgo
Energy Corporation, Orkla Finans (Fondsmegling) A.S and
Sundal Collier & Co. ASA dated December 8, 1999
(Incorporated herein by reference from December 28, 1999
Form 8-K).

10(8) Form of Subscription Agreement (Incorporated herein by
reference from December 28, 1999 Form 8-K).

10(9) Agreement between CanArgo Energy Corporation and JKX
Nederland BV dated January 19, 2000 (Incorporated herein
by reference from December 31, 1999 Form 10-K).

10(10) Agreement between Ninotsminda Oil Company and AES
Gardabani dated March 10, 2000 (Incorporated herein by
reference from December 31, 1999 Form 10-K).

10(11) Term Sheet dated September 27, 2000 relating to sale of
15,660,916 shares of Registrant's common stock
(Incorporated herein by reference from July 20, 2000
Form 8-K).

10(12) Form of Subscription Agreement relating to sale of
15,660,916 shares of the Registrant's common stock
(Incorporated herein by reference from July 20, 2000
Form 8-K).

10(13) Subscription Agreement between Registrant and JKX
Nederland B.V. dated September 15, 2000 relating to
purchase of 21.2% interest in Ninotsminda Oil Company
(Incorporated herein by reference from July 20, 2000
Form 8-K).

*10(14) Employment Agreement between CanArgo Energy Corporation
and Dr. David Robson dated September 29, 2000
(Incorporated herein by reference from September 30,
2000 Form 10-Q).

10(15) Tenancy Agreement between CanArgo Energy Corporation and
Grosvenor West End Properties dated September 8, 2000
(Incorporated herein by reference from September 30,
2000 Form 10-Q).

10(16) Agreement between CanArgo Energy Corporation and Roger
Brittain dated August 18, 2000 (Incorporated herein by
reference from December 31, 2000 Form 10-K).

*10(17) Employment Agreements between CanArgo Energy Corporation
and Murray Chancellor dated September 22, 2000
(Incorporated herein by reference from December 31, 2000
Form 10-K).

*10(18) Employment Agreements between CanArgo Energy Corporation
and Anthony Potter dated October 1, 2000 (Incorporated
herein by reference from December 31, 2000 Form 10-K).


10(19) Production Sharing Contract between (1) Georgia and (2)
Georgian Oil and CanArgo Norio Limited dated December
12, 2000 (Incorporated herein by reference from December
31, 2000 Form 10-K) (Incorporated herein by reference
from December 31, 2000 Form 10-K).

10(20) Agreement between CanArgo Energy Corporation and
Georgian British Oil Services Company dated November 10,
2000 relating to the purchase of 9.35% interest in
Georgian American Oil Refinery (Incorporated herein by
reference from December 31, 2000 Form 10-K).

10(21) Share Exchange Agreement between CanArgo Energy
Corporation and Argonaut Oil and Gas Limited dated
November 10, 2000, related to the purchase of 28.7%
interest in Georgian American Oil Refinery (Incorporated
herein by reference from December 31, 2000 Form 10-K).

*10(22) Employment Agreements between CanArgo Energy Corporation
and Vincent McDonnell



28



dated December 1, 2000. (Incorporated herein by
reference from December 31, 2001 Form 10-K).

10(23) Agreement Number 1 dated March 20, 1998 on Joint
Investment Production Activity for further development
and further exploration of Bugruvativske Field
(Incorporated herein by reference from September 30,
2001 Form 10-Q).

10(24) Crude Oil Sales Agreement dated August 13, 2002
(Incorporated herein by reference from June 30, 2000
Form 10-Q).

+ 10(25) Covenant on terms and conditions of participation in
investment activity under the Joint Investment
Production Activity agreement dated of March 20, 1998,
dated July 23, 2002.

+ 10(26) Stock sale purchase contract of IPEC between Lateral
Vector Resources and Northern Industrial Development
dated July 25, 2002.

+ 10(27) Amendments of and Additions to Joint Investment
Production Activity agreement of March 20, 1998, dated
August 8, 2002.

+ 10(28) Amendment of Clause 9.3.1 of Amendments of and Additions
to the Joint Investment Production Activity agreement of
March 20, 1998, dated September 17, 2002.

+ 10(29) Stock sale purchase contract of IPEC between Lateral
Vector Resources Inc. and Lystopad dated September 24,
2002.

+ 10(30) Stock sale purchase contract of IPEC between Lateral
Vector Resources Inc. and Lyutyi dated September 24,
2002.

+ 10(31) Sale agreement of CanArgo Petroleum Products Limited
between CanArgo Limited and Westrade Alliance LLC dated
October 14, 2002.

21 List of Subsidiaries (Incorporated herein by reference
from September 30, 2001 Form 10-Q)

+ 99(1) Certification of Chief Executive Officer pursuant to
18.U.S.C. Section 1350, as adopted pursuant to section
906 of the Sarbanes-Oxley Act of 2002.

+ 99(2) Certification of Chief Financial Officer pursuant to
18.U.S.C. Section 1350, as adopted pursuant to section
906 of the Sarbanes-Oxley Act of 2002.




(b) Reports on Form 8 K:

The following current reports on form 8-K were filed during the quarter ended
September 30, 2002.

On September 17, 2002, CanArgo Energy Corporation announced that it agreed terms
with Ukrnafta, the Ukrainian State Oil Company, on revisions to the existing
Joint Investment Production Activity Agreement for the development of the
Bugruvativske Field in Ukraine and reached agreement with a local Ukrainian oil
and gas company, on the terms of a farm-in to the JIPA.

On September 23, 2002 CanArgo announced the appointment of Vincent McDonnell as
Chief Financial Officer.

On October 17 2002, CanArgo announced that it agreed binding terms for the sale
of its interest in its Georgian gasoline station business, CanArgo Standard Oil
Products, for a cash consideration of US$ 4 million.



29




On November 12 2002 CanArgo announced that its subsidiary, CanArgo
Norio Limited, has won the tender for the oil and gas exploration and
production rights to Block XI(G) (Tbilisi) and Block XI(H) (Rustavi) in
Eastern Georgia ("the Blocks"). CanArgo also announced that it has
reached agreement with the other shareholders in CanArgo Norio on
increasing CanArgo's interest in CanArgo Norio.

On November 12 2002 CanArgo announced the resignation of Roger
Brittain, non-executive Chairman of the Board.



SIGNATURES

In accordance with the requirements of the Exchange Act, the registrant caused
this report to be signed on its behalf by the undersigned, thereunto duly
authorized.


CANARGO ENERGY CORPORATION


Date: November 14, 2002 By: /s/Vincent McDonnell
-----------------------
Vincent McDonnell Chief Financial Officer





30



CERTIFICATIONS

I, David Robson, certify that:

1. I have reviewed this quarterly report on Form 10-Q of CanArgo Energy
Corporation;

2. Based on my knowledge, this quarterly report does not contain any untrue
statement of a material fact or omit to state a material fact necessary to make
the statements made, in light of the circumstances under which such statements
were made, not misleading with respect to the period covered by this quarterly
report;

3. Based on my knowledge, the financial statements, and other financial
information included in this quarterly report, fairly present in all material
respects the financial condition, results of operations and cash flows of the
registrant as of, and for, the periods presented in this quarterly report;

4. The registrant's other certifying officer and I are responsible for
establishing and maintaining disclosure controls and procedures (as defined in
Exchange Act Rules 13a-14 and 15d-14) for the registrant and we have:

a) designed such disclosure controls and procedures to ensure that material
information relating to the registrant, including its consolidated subsidiaries,
is made known to us by others within those entities, particularly during the
period in which this quarterly report is being prepared;

b) evaluated the effectiveness of the registrant's disclosure controls and
procedures as of a date within 90 days prior to the filing date of this
quarterly report (the "Evaluation Date"); and

c) presented in this quarterly report our conclusions about the effectiveness of
the disclosure controls and procedures based on our evaluation as of the
Evaluation Date;

5. The registrant's other certifying officer and I have disclosed, based on our
most recent evaluation, to the registrant's auditors and the audit committee of
registrant's board of directors (or persons performing the equivalent function):

a) all significant deficiencies in the design or operation of internal controls
which could adversely affect the registrant's ability to record, process,
summarize and report financial data and have identified for the registrant's
auditors any material weaknesses in internal controls; and

b) any fraud, whether or not material, that involves management or other
employees who have a significant role in the registrant's internal controls; and

6. The registrant's other certifying officer and I have indicated in this
quarterly report whether or not there were significant changes in internal
controls or in other factors that could significantly affect internal controls
subsequent to the date of our most recent evaluation, including any corrective
actions with regard to significant deficiencies and material weaknesses.



Date: November 14, 2002 /s/ David Robson
-------------------
David Robson
Chief Executive Officer




31



I, Vincent McDonnell, certify that:

1. I have reviewed this quarterly report on Form 10-Q of CanArgo Energy
Corporation;

2. Based on my knowledge, this quarterly report does not contain any untrue
statement of a material fact or omit to state a material fact necessary to make
the statements made, in light of the circumstances under which such statements
were made, not misleading with respect to the period covered by this quarterly
report;

3. Based on my knowledge, the financial statements, and other financial
information included in this quarterly report, fairly present in all material
respects the financial condition, results of operations and cash flows of the
registrant as of, and for, the periods presented in this quarterly report;

4. The registrant's other certifying officer and I are responsible for
establishing and maintaining disclosure controls and procedures (as defined in
Exchange Act Rules 13a-14 and 15d-14) for the registrant and we have:

a) designed such disclosure controls and procedures to ensure that material
information relating to the registrant, including its consolidated subsidiaries,
is made known to us by others within those entities, particularly during the
period in which this quarterly report is being prepared;

b) evaluated the effectiveness of the registrant's disclosure controls and
procedures as of a date within 90 days prior to the filing date of this
quarterly report (the "Evaluation Date"); and

c) presented in this quarterly report our conclusions about the effectiveness of
the disclosure controls and procedures based on our evaluation as of the
Evaluation Date;

5. The registrant's other certifying officer and I have disclosed, based on our
most recent evaluation, to the registrant's auditors and the audit committee of
registrant's board of directors (or persons performing the equivalent function):

a) all significant deficiencies in the design or operation of internal controls
which could adversely affect the registrant's ability to record, process,
summarize and report financial data and have identified for the registrant's
auditors any material weaknesses in internal controls; and

b) any fraud, whether or not material, that involves management or other
employees who have a significant role in the registrant's internal controls; and

6. The registrant's other certifying officer and I have indicated in this
quarterly report whether or not there were significant changes in internal
controls or in other factors that could significantly affect internal controls
subsequent to the date of our most recent evaluation, including any corrective
actions with regard to significant deficiencies and material weaknesses.



Date: November 14, 2002 /s/ Vincent McDonnell
----------------------
Vincent McDonnell
Chief Financial Officer




32

EXHIBIT INDEX




FILED
HEREWITH EXHIBIT
- ----------------------------------------------------------------------------------------------------

Management Contracts, Compensation Plans and Arrangements are
identified by an asterisk (*) Documents filed herewith are identified
by a cross (+).

1(1) Escrow Agreement with Signature Stock Transfer, Inc. (Incorporated
herein by reference from Form S-1 Registration Statement, File No.
333-72295 filed on September 9, 1999).

1(2) Selling Agent Agreement with each of Credifinance Securities Limited,
David Williamson Associates Limited, and Orkla Finans (Fondsmegling)
ASA (Incorporated herein by reference from Form S-1 Registration
Statement, File No. 333-72295 filed on September 9, 1999).

1(3) Escrow Agreement with Orkla Finans (Fondsmegling) ASA (Incorporated
herein by reference from Form S-1 Registration Statement, File No.
333-72295 filed on September 9, 1999).

1(4) Selling Agent Agreement with National Securities Corporation
(Incorporated herein by reference from Post-Effective Amendment No. 1
to Form S-1 Registration Statement, File No. 333-72295 filed on July
29, 1999).

1(5) Escrow Agreement with Continental Stock Transfer & Trust Company
(Incorporated herein by reference from Post-Effective Amendment No. 1
to Form S-1 Registration Statement, File No. 333-72295 filed on July
29, 1999).

2(1) Agreement Relating to the Sale and Purchase of All the Issued Share
Capital of Gastron International Limited dated August 10, 1995 by and
among Ribalta Holdings, Inc. as Vendor and Fountain Oil Incorporated
as Purchaser, and John Richard Tate as Warrantor (Incorporated herein
by reference from October 19, 1995 Form 8-K).

2(2) Supplemental Agreement Relating to the Sale and Purchase of All the
Issued Share Capital of Gastron International Limited dated November
3, 1995 by and among Ribalta Holdings, Inc. as Vendor and Fountain Oil
Incorporated as Purchaser, and John Richard Tate as Warrantor
(Incorporated herein by reference from October 19, 1995 Form 8-K).

2(3) Supplemental Deed Relating to the Sale and Purchase of All the Issued
Share Capital of Gastron International Limited dated May 29, 1996 by
and among Ribalta Holdings, Inc. as Vendor and Fountain Oil
Incorporated as Purchaser, and John Richard Tate as Warrantor
(Incorporated herein by




FILED
HEREWITH EXHIBIT
- ----------------------------------------------------------------------------------------------------

reference from September 30, 1997 Form 10-Q).

2(4) Memorandum of Agreement between Fielden Management Services Pty, Ltd.,
A.C.N. 005 506 123 and Fountain Oil Incorporated dated May 16, 1995
(Incorporated herein by reference from December 31, 1997 Form 10-K/A).

2(5) Amended and Restated Combination Agreement between Fountain Oil
Incorporated and CanArgo Energy Inc. dated as of February 2, 1998
(Incorporated herein by reference from Form S-3 Registration
Statement, File No. 333-48287 filed on September 9, 1998).

2(6) Voting, Support and Exchange Trust Agreement (Incorporated herein by
reference as Annex G from Form S-3 Registration Statement, File No.
333-48287 filed on September 9, 1998).

2(7) Offer Circular relating to a proposed purchase all of the outstanding
common shares of Lateral Vector Resources, Inc. dated March 20, 2001
(Incorporated herein by reference from Form 14D-1F dated March 21,
2001).

2(8) Notice of Extension and Variation amending Registrant's offer to
purchase all of the outstanding common shares of Lateral Vector
Resources, Inc. dated April 9, 2001 (Incorporated herein by reference
from Amendment No. 1 to Form 14D-1F dated April 11, 2001).

3(1) Registrant's Certificate of Incorporation and amendments thereto
(Incorporated herein by reference from July 15, 1998 Form 8-K).

3(2) Registrant's Bylaws (Incorporated herein by reference from
Post-Effective Amendment No. 1 to Form S-1 Registration Statement,
File No. 333-72295 filed on July 29, 1999).

4(1) Registration Rights Agreement between Registrant and JKX Nederland
B.V. dated September 28, 2000, relating to purchase of 21.2% interest
in Ninotsminda Oil Company (Incorporated herein by reference from July
20, 2000 Form 8-K).

*10(1) Form of Option Agreement for options granted to certain persons,
including Directors (Incorporated herein by reference from August 31,
1994 Form 10-KSB, filed by Electromagnetic Oil Recovery, Inc., the
Company's predecessor).

*10(2) Amended and Restated 1995 Long-Term Incentive Plan (Incorporated
herein by reference from Post-Effective Amendment No. 1 to Form S-1
Registration Statement, File No. 333-72295 filed on July 29, 1999).




FILED
HEREWITH EXHIBIT
- ----------------------------------------------------------------------------------------------------

*10(3) Amended and Restated CanArgo Energy Inc. Stock Option Plan
(Incorporated herein by reference from September 30, 1998 Form 10-Q).

10(4) Agreement between Georgian American Oil Refinery Company and CanArgo
Petroleum Products Ltd. dated September 26, 1998 (Incorporated herein
by reference from Form S-1 Registration Statement, File No. 333-72295
filed on February 12, 1999).

10(5) Terrenex Acquisition Corporation Option regarding CanArgo (Nazvrevi)
Limited (Incorporated herein by reference from Form S-1 Registration
Statement, File No. 333-72295 filed on February 12, 1999).


10(6) Production Sharing Contract between (1) Georgia and (2) Georgian Oil
and JKX Navtobi Ltd. dated February 12, 1996 (Incorporated herein by
reference from Form S-1 Registration Statement, File No. 333-72295
filed on September 7, 1999).

10(7) Agreement on Financial Advisory Services between CanArgo Energy
Corporation, Orkla Finans (Fondsmegling) A.S and Sundal Collier & Co.
ASA dated December 8, 1999 (Incorporated herein by reference from
December 28, 1999 Form 8-K).

10(8) Form of Subscription Agreement (Incorporated herein by reference from
December 28, 1999 Form 8-K).

10(9) Agreement between CanArgo Energy Corporation and JKX Nederland BV
dated January 19, 2000 (Incorporated herein by reference from December
31, 1999 Form 10-K).

10(10) Agreement between Ninotsminda Oil Company and AES Gardabani dated
March 10, 2000 (Incorporated herein by reference from December 31,
1999 Form 10-K).

10(11) Term Sheet dated September 27, 2000 relating to sale of 15,660,916
shares of Registrant's common stock (Incorporated herein by reference
from July 20, 2000 Form 8-K).

10(12) Form of Subscription Agreement relating to sale of 15,660,916 shares
of the Registrant's common stock (Incorporated herein by reference
from July 20, 2000 Form 8-K).

10(13) Subscription Agreement between Registrant and JKX Nederland B.V. dated
September 15, 2000 relating to purchase of 21.2% interest in
Ninotsminda Oil Company (Incorporated herein by reference from July
20, 2000 Form 8-K).




FILED
HEREWITH EXHIBIT
- ----------------------------------------------------------------------------------------------------

*10(14) Employment Agreement between CanArgo Energy Corporation and Dr. David
Robson dated June 29, 2000 (Incorporated herein by reference from
September 30, 2000 Form 10-Q).

10(15) Tenancy Agreement between CanArgo Energy Corporation and Grosvenor
West End Properties dated September 8, 2000 (Incorporated herein by
reference from September 30, 2000 Form 10-Q).

10(16) Agreement between CanArgo Energy Corporation and Roger Brittain dated
August 18, 2000 (Incorporated herein by reference from December 31,
2000 Form 10-K).

*10(17) Employment Agreements between CanArgo Energy Corporation and Murray
Chancellor dated September 22, 2000 (Incorporated herein by reference
from December 31, 2000 Form 10-K).

*10(18) Employment Agreements between CanArgo Energy Corporation and Anthony
Potter dated October 1, 2000 (Incorporated herein by reference from
December 31, 2000 Form 10-K).

10(19) Production Sharing Contract between (1) Georgia and (2) Georgian Oil
and CanArgo Norio Limited dated December 12, 2000 (Incorporated herein
by reference from December 31, 2000 Form 10-K) (Incorporated herein by
reference from December 31, 2000 Form 10-K).

10(20) Agreement between CanArgo Energy Corporation and Georgian British Oil
Services Company dated November 10, 2000 relating to the purchase of
9.35% interest in Georgian American Oil Refinery (Incorporated herein
by reference from December 31, 2000 Form 10-K).

10(21) Share Exchange Agreement between CanArgo Energy Corporation and
Argonaut Oil and Gas Limited dated November 10, 2000, related to the
purchase of 28.7% interest in Georgian American Oil Refinery
(Incorporated herein by reference from December 31, 2000 Form 10-K).

*10(22) Employment Agreements between CanArgo Energy Corporation and Vincent
McDonnell dated December 1, 2000. (Incorporated herein by reference
from December 31, 2001 Form 10-K).

10(23) Agreement Number 1 dated March 20, 1998 on Joint Investment Production
Activity for further development and further exploration of
Bugruvativske Field (Incorporated herein by reference from June 30,
2001 Form 10-Q).




FILED
HEREWITH EXHIBIT
- ----------------------------------------------------------------------------------------------------

10(24) Crude Oil Sales Agreement dated August 13, 2002 (Incorporated herein
by reference from June 30, 2000 Form 10-Q).

+ 10(25) Covenant on terms and conditions of participation
in investment activity under the Joint Investment
Production Activity agreement of March 20, 1998, dated July 23, 2002.

+ 10(26) Stock sales purchase contact of IPEC between Lateral Vector
Resources and Northern Industrial Development dated July 25, 2002.

+ 10(27) Amendments of and Additions to Joint Investment Production
Activity agreement of March 20, 1998, dated August 8, 2002.

+ 10(28) Amendment of Clause 9.3.1 of Amendments of and Additions to the
Joint Investment Production Activity agreement of March 20,1998, dated
September 17, 2002.

+ 10(29) Stock sale purchase agreement of IPEC between Lateral Vector
Resources Inc. and Lystopad dated September 24, 2002.

+ 10(30) Stock sale purchase agreement of IPEC between Lateral Vector
resources Inc. and Lyutyi dated September 24, 2002.

+ 10(31) Sale of CanArgo Petroleum Products Limited between CanArgo
Limited and Westrade Alliance LLC dated October 14, 2002

21 List of Subsidiaries (Incorporated herein by reference from June 30,
2001 Form 10-Q)

+ 99(1) Certification of Chief Executive Officer pursuant to 18.U.S.C.
Section 1350, as adopted pursuant to section 906 of the Sarbanes-Oxley
Act of 2002.

+ 99(2) Certification of Chief Financial Officer pursuant to 18.U.S.C.
Section 1350, as adopted pursuant to section 906 of the Sarbanes-Oxley
Act of 2002.