The matters discussed in this Current Report on Form 8-K include forward looking statements, which 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. Such risks, uncertainties and other factors include the uncertainties inherent in oil and gas development and production activities, the effect of actions by third parties including government officials, fluctuations in world oil prices and other risks detailed in the Company’s Reports on Forms 10-K and 10-Q filed with the Securities and Exchange Commission. The forward-looking statements are intended to help shareholders and others assess the Company’s business prospects and should be considered together with all information available. They are made in reliance upon the safe harbor provisions of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. The Company cannot give assurance that the results will be attained.

Section 1 — Registrant’s Business and Operations

Item 1.02.      Termination of a Material Definitive Agreement

On February 17, 2006 CanArgo Energy Corporation (“CanArgo”) issued a press release announcing that its wholly owned subsidiary CanArgo Samgori Limited (“CSL”) was not proceeding with further investment in the eastern Georgia Samgori (Block XI^c) Production Sharing Contract dated May 2001 (the “Project”) originally among (1) the State Agency of Georgia, (2) the Georgian state oil company JSC NOC Georgian Oil (“Georgian Oil”); and (3) National Petroleum Limited (“NPL”) and associated farm-in, and accordingly had withdrawn from the Project with effect from February 16, 2006.

In late 2003 Georgian Oil Samgori Ltd (“GOSL”), a wholly owned commercial subsidiary of Georgian Oil, acquired 100% of the Contractor Share in the Project pursuant to an assignment agreement (the “NPL Agreement”) with NPL, a Swiss company, who held the contractor’s interest in the Project at that time. CSL acquired 50% of GOSL’s interest in the Contractor Share pursuant to an agreement between CSL and GOSL dated January 8, 2004. The NPL Agreement contained several work obligations, including the drilling of 10 horizontal well sections on the Samgori Field, and payment to NPL of its prior costs totalling over $37 million, as well as an ongoing payment to NPL of a fixed percentage of any net profits generated from the Project. It was originally planned to commence the program of 10 horizontal wells by March 2005. Under the terms of the NPL Agreement in the event that certain conditions were not met within a specified timescale, NPL had the right to claw-back 100% of the Contractor Share in the Project from GOSL.

Under the Project, up to 50% of petroleum produced under the contract is allocated to the Contractor parties for the recovery of cumulative allowable capital, operating and other project costs associated with the Samgori Field and exploration Block XI(B) (“Cost Recovery Oil”). The Cost Recovery Pool includes the approximately $37 million of costs previously incurred by NPL. The balance of production (“Profit Oil”) is allocated on a 50/50 basis between the State and the Contractor parties respectively. While GOSL and CSL had unrecovered costs they were entitled to receive 75% of total production (net 37.5% to CSL). After recovery of their cumulative capital, operating and other allowable project costs including the NPL costs, the Contractor parties receive 30% of Profit Oil (net 15% to CSL). The allocation of a share of production to the State relieves the Contractor parties of all obligations they would otherwise have to pay Georgia for taxes, duties and levies related to activities covered by the Project.

The decision by CSL not to proceed with further investment under the current farm-in arrangements was due to the inability of CSL’s partner in the project, GOSL, to provide its share of funding to further the development of the Project. CSL consider that there would have been insufficient time to meet the commitments under the NPL Agreement, and was not prepared to fund this Project, which is not without risk, on a 100% basis without different commercial terms and an extension to the commitment period. It was not possible to negotiate a satisfactory position on either matter. CSL has now been informed that, given this, NPL have indicated that they now intend to exercise their right to take back 100% of the Contractor Share in the Project from GOSL and, accordingly, effective February 16, 2006 CSL has withdrawn from the Project. CanArgo has decided to focus its resources on what it views as potentially more significant projects: its Ninotsminda horizontal program, the Manavi Oil discovery, the upcoming Norio MK72 Oligocene test, and its development and exploration projects in Kazakhstan where it has recently made new discoveries.

Section 9—Financial Statements and Exhibits

Item 9.01.     Financial Statements and Exhibits.

     (c) Exhibits:

Exhibit No.		Exhibit Description
99.1		Press Release dated February 17, 2006 issued by CanArgo Energy Corporation.

	CANARGO ENERGY CORPORATION
Date: February 21, 2006	By:	/s/ Elizabeth Landles
		Elizabeth Landles, Corporate Secretary