Cano Petroleum Announces the Filing of Its 2011 Annual Report and Going Concern Qualification

On October 20, 2011, Cano Petroleum, Inc. (NYSE Amex: CFW) (“Cano”) announced that it has filed its Annual Report on Form 10-K with the United States Securities and Exchange Commission (the “SEC”) for the fiscal year ended June 30, 2011. Cano’s audited financial statements for the fiscal year ended June 30, 2011, included in Cano’s Annual Report on Form 10-K, contain a going concern qualification from its independent auditors. Cano’s Annual Report on Form 10-K can be accessed online at www.canopetro.com under the Investor Relations section of the website. Stockholders may receive a hard copy of Cano’s complete audited financial statements free of charge upon request by emailing [e-mail], calling [phone] or writing to Cano, Attention: Corporate Secretary, 6500 North Belt Line Road, Suite 200, Irving, Texas 75063. Cano’s filings with the SEC may also be obtained through the SEC’s website at www.sec.gov.

About Cano

Cano Petroleum, Inc. is an independent Texas-based energy producer with properties in the mid-continent region of the United States. Cano’s primary focus is on increasing domestic production from proven fields using enhanced recovery methods. Cano trades on the NYSE Amex under the ticker symbol CFW. Additional information is available at www.canopetro.com.

Forward Looking Statements

Safe-Harbor Statement — Except for the historical information contained herein, the matters set forth in this news release are “forward-looking statements” within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. Cano intends that all such statements be subject to the “safe-harbor” provisions of those Acts. Many important risks, factors and conditions may cause Cano’s actual results to differ materially from those discussed in any such forward-looking statement. These risks include, but are not limited to, estimates or forecasts of reserves, estimates or forecasts of production, future commodity prices, exchange rates, interest rates, geological and political risks, drilling risks, product demand, transportation restrictions, the ability of Cano Petroleum, Inc. to obtain additional capital, and other risks and uncertainties described in the Cano’s filings with the Securities and Exchange Commission. The historical results achieved by Cano are not necessarily indicative of its future prospects. Cano undertakes no obligation to publicly update or revise any forward-looking statements, whether as a result of new information, future events or otherwise.