Canoro-Oil & Gas

2009 Annual Report | For the year ended March 31, 2009
b u i l d i n g t h e f o u n d a t i o n
2
PROFILE CANORO RESOURCES LTD. | 2 0 0 9 A N N UA L R E P O RT
highlights 4
message to shareholders 6
operations review 12
management’s discussion
& analysis 21
management’s report 34
auditors’ report 35
financial statements 36
notes to the
financial statements 39
corporate information 50
ANJITA KAUR LAMBA - NOIDA ANKURJYOTI CHUTIA - JORHAT ANKUSH DUTTA - JORHAT ANSHU RU
B U I L D I N G T H E F O U N D AT I O N
3
Canoro is a publicly listed independent international oil and

gas exploration and production company based in Calgary,
Canada and New Delhi, India with operations in the prolific
Assam/Arakan basin of northeast India. Having established a
core operation and infrastructure in India, the Company is well
positioned for growth, both organic and through additional
projects in the region. The Company has an inventory of
development, exploitation and exploration opportunities within
its existing asset base to drive its growth strategy. Canoro has
a full complement of experienced management, technical and
operations personnel, backed by a board of directors committed
to the disciplined growth of the Company.
USTAGI - NOIDA BABUL HANDIQUE - JORHAT BHUPEN SHAMANTA - JORHAT BIDYUT CHUTIA - JORHAT
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HIGHLIGHTS
CANORO RESOURCES LTD. | 2 0 0 9 A N N UA L R E P O RT
Highlights of FY2009 Results

• Average daily production increased 162% from an average of 298 barrels of oil
equivalent per day (boe/d) in 2008 to 781 boe/d per day in 2009.
• Amguri reserves were increased by 1.2 mmboe proved and 1.0 mmboe proved
plus probable, net of production of 0.3 mmboe.
• AA-ON/7 exploration drilling was unsuccessful after two wells, the PSC was
relinquished and 3.5 mmboe of probable reserves were written off.
• Amguri Barail appraisal drilling was very disappointing as well A-12 came in
significantly below prognosis and wet. Amguri 13B however encountered 10
meters of oil pay and 24 meters of potential gas pay yet due to operational
problems the well could not be completed.
• Amguri Tipam appraisal was successful yielding an excellent dry gas well at
A-14 testing at stabilised rates of 2.7 mmcfd.
• Amguri condensate recovery and gas injection project was
commenced and expected to be onstream in Q1 2010.
• A significant re-interpretation of Amguri field was commissioned using Pre-Stack Depth Migration
(PSDM) seismic reprocessing of 3D data to develop a new model of the field.
• Loss of $6.3 million ($0.06 per share) with funds from operations positive for the
first time at $2.0 million ($0.02 per share).
• At year end, the Company had no debt and positive working capital of $7.0 million.
• $30 million capital program spent primarily on exploration and appraisal drilling.
Subsequent to year-end and 2009/10 outlook

• Positive election results in India should allow the Company to move ahead
on its Nagaland joint venture with ONGC.
• Closed limited-recourse funding of US$4.0 million for the purchase
and installation of the gas compression.
• 2009/10 capital expenditure program of $9 million to $11 million focused primarily on gas
compression plant and well workovers.
• Outlook for average 2009/10 production of 700 boe/d to 900 boe/d with a
significant impact on cash flow towards year-end as production mix moves from
30/70 oil/gas to 60/40 oil/gas on commissioning the gas re-injection facility.
BIJU MONI DAS - JORHAT BIKRAMJEET BHATTACHARYA - JORHAT BRIAN GIENI - NOIDA BRIEN GOGO
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Highlights of FY2009 Results

Years ended 31 March (US$000s, US$ per share) 2009 2008 % Change
Financial
Funds generated by operations 1,969 (1,319) n/m
per share diluted 0.02 (0.01) n/m
Profit (loss) for the year (6,304) (7,088) 11%
per share diluted (0.06) (0.06) 0%
Operating netback per barrel of oil equivalent ($/boe) 29.55 33.86 (13%)
Capital expenditures 30,000 13,708 119%
Working capital 6,989 35,545 (80%)
Long-term debt – – n/m
Shareholders’ equity 78,138 82,091 (5%)
Common shares outstanding (000s) 113,709 112,992 1%
Operating
Production
Crude oil and condensate production (bbl/d) 244 106 130%
Natural gas production (mcf/d) 3,223 1,153 179%
Barrels of oil equivalent (boe/d) 781 298 162%
Commodity prices
Average crude oil price
Nigerian Bonny Light ($/bbl) 87.81 84.59 4%
Average realized crude oil price ($/bbl) 95.96 97.32 (2%)
Average natural gas price ($/mcf) 2.18 2.45 (11%)
Reserves
Volumes (mboe)
Proved 3,944 2,773 42%
Proved + probable 7,372 9,853 (25%)
Proved + probable + possible 11,287 16,417 (31%)
Net present value BTAX 10% (US$000s)
Proved 37,956 69,631 (45%)
Proved + probable 73,024 170,133 (57%)
Proved + probable + possible 98,647 286,351 (66%)
Net asset value (BTAX NPV10%) US$ per share
Proved 0.40 0.93 (57%)
Proved + probable 0.70 1.82 (62%)
Proved + probable + possible 0.93 2.85 (67%)
OI - JORHAT CHANG WON WEINGKEN - JORHAT DARCY DORSCHER - JORHAT DARREN ARCURI - CALGARY
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MESSAGE TO SHAREHOLDERS
Message to Shareholders
Canoro has been building its operation in northeast Canoro incurred a record capital spending program
India since 2003. The Company began by taking over during the year, spending $30 million primarily on
a 60% participating interest in the Amguri Produc- exploration and appraisal drilling. Drilling results
tion Sharing Contract in Assam and working over were poor, with only two of six wells successful.
the field. Much had to be done in order to create a Expectations were high for Amguri-12, which
beach head in northeast India. Much had to be done proved to be an expensive failure of both the Amguri
to realize production and revenue from our Amguri geological model and the drilling operations itself. The
field. Now our objective is to grow the Company. We well was significantly off prognosis and over budget.
have much to do. A-12 was the third well to miss the target zone along
the extremely complex fault bounding the Amguri
2009 – a year of mixed results
field. The drilling program was shut down and the
The 2009 Fiscal Year was a year of mixed results for rigs released while the geological and geophysical
your company. We suffered major disappointments group began to reassess the entire Amguri Barail
from our exploration and appraisal drilling program, zone model. The risk level of the Company’s drilling
yet we realized a strengthening of our reserve base in had proved unacceptably high and with indications
our core asset at Amguri and established a production of a failed velocity model, we have embarked on an
base with positive cash flow. extensive pre-stack depth migration (PSDM) analysis
Your Company posted a loss of $6.3 million, or of the field. We remain convinced of the potential for
$0.06 per share. However, for the first year since its Amguri, but are committed to having a significantly
inception, Canoro generated positive funds from better technical understanding before embarking on
operations of $2.0 million or $0.02 per share. Oil & another drilling program.
gas production more than doubled to average 781
As many international E&P companies have
barrels of oil equivalent (“boe”) per day. Production
experienced, Canoro suffered for having secured drilling
revenue during the year more than doubled to $11.1
rigs in an over-heated services market of 2008. Both
million as a result of the increase in production, offset
rigs ran into several major problems which resulted in
slightly by an 11% decrease in gas prices as the Indian
poor execution, costly delays and failed completions.
rupee weakened during the year. We have made
It was a difficult and expensive decision to release both
significant progress this year in establishing Canoro
rigs, however we believe that it was prudent to halt the
as an operating entity. Over the past year, we made a
program given our experience.
major investment in people and infrastructure to carry
the Company to the next level of growth. At current
levels of production, our cost structure is too high. As
the growth in production is realized, we fully expect
our metrics to be competitive. Notwithstanding, we
have made significant cost reductions throughout the
organization and will continue to do so.
DHRUBAJYOTI DUTTA - JORHAT DIPAK KALITA - JORHAT DOUG UFFEN - CALGARY DR. GAURI KANTA
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There was some good news in the drilling program As many in the industry are experiencing in the wake
however. In the shallower Tipam zone at Amguri, the of the turbulence in both commodity and capital
Company successfully completed the A-14 appraisal markets, the investment community has yet to
well. The well tested 4.8 million standard cubic feet recognize the intrinsic value in the Company. Canoro
(“mmscf ”) per day into an 8mm choke and a stabilised has been hit particularly hard, with the stock currently
rate of 2.7 mmcfd into a 6mm choke at minimal trading at approximately 20% of its net asset value.
pressure drawdown. A-14 is an important addition to Our task is to ensure that the market price of your
the well stock at Amguri, both as a source of dry gas to shares begin to reflect the true value of the Company.
facilitate the condensate recovery and gas reinjection
Outlook for 2009/10
project, as well as incremental natural gas sales to the
local market. With the potential for greater gas de- 2009/10 will be a markedly different year for Canoro
liverability, Canoro is aggressively examining the gas as we focus entirely on production operations as
marketing potential in the area. opposed to exploration and appraisal drilling.
The key project for the year will be the construction
Two exploration wells on the AA-ON/7 Block proved
and commissioning of the condensate recovery and
dry. With these results, the Company withdrew
gas reinjection facility at Amguri. This is important
from AA-ON/7, writing off 15.2 billion cubic feet
as it significantly changes the Company’s production
(“Bcf ”) of probable gas reserves (about 3.5 mmboe).
mix from 30/70 oil/gas to 60/40 oil/gas. In so doing,
The Company also withdrew its application for an
we effectively double the oil & condensate produc-
extension and effectively relinquished the block.
tion which is sold at world prices, currently around
Unique in India, a portion of AA-ON/7 extended into
$70/bbl as opposed to gas which is currently sold on
Nagaland, which portion is the subject of a new PSC
the spot market for around $12/boe. While we are
application by Canoro and its partners.
expecting a small increase in production for 2009/10
The Amguri asset continued to improve as Canoro to average approximately 700 boe/d to 900 boe/d, we
posted a 42% increase in proved reserves for the year are anticipating a significant increase in cash flow at
to 3.9 mmboe, replacing production by over five times. year end due to the change in production mix.
With the significant writeoff of AA-ON/7 reserves, We expect to exit the year in excess of 1,000 boe/d.
by the end of FY2009 Canoro’s proved and probable
reserves were down 25% to 7.4 mmboe. The AA-ON/7
writeoff did mask the improvement at Amguri where 2P
reserves increased 16% by the end of the year.
HANIQUE - NOIDA DULAL BORA - JORHAT G.P.G. BARUAH - JORHAT GAURAV CHANDRA SINGH - NOIDA
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MESSAGE TO THE SHAREHOLDERS
Building a better understanding Creating value through gas marketing

of Amguri
Canoro has begun to develop significant gas
Amguri is a very complex field. Bounded by a production potential, which could be expanded
significant fault, the various reservoirs have proved with additional Tipam drilling. The Company has
elusive geological targets. The Company has struggled however been restricted to low priced spot market
with three wells drilled along the fault, all of which sales and large seasonal swings in demand from the
were problematic. Two wells, A-10 and A-13, missed neighbouring tea gardens. We have begun a major
the target initially and needed to be sidetracked into initiative to secure more lucrative markets for the
the main reservoir. A-12 having come in significantly Company’s gas production. There is the potential for
lower than prognosis was definitive proof that the direct marketing of gas to regional consumers as well
geological model of the field was seriously flawed. as the possibility of developing a gas-fired power plant.
With well results in hand, we determined that the Gas marketing will be a key objective for the Company
seismic velocity model was unable to accurately going into 2009/10.
predict the various formation tops. A key issue was
New ventures and strategic partnerships
the velocity differences across the fault which resulted
in depth errors. To develop a better model of the field As an integral component of the Company’s strategy
and negate the velocity problems, a depth-migrated going forward, Canoro will be actively pursuing a
seismic volume needed to be generated by way of variety of new business initiatives aimed at acquiring
PSDM reprocessing of the Amguri 3D seismic data. production and development assets. The expansion
The PSDM work is underway and we expect to be and diversification of the asset base is critical to the long
completing a full reinterpretation of Amguri by the term success of Canoro. We plan to build out of our
end of the year. On the basis of this reinterpretation, core operations in the North East and move into other
we expect to have a clearer picture of the field and be regions of India and beyond. The immediate objective
able to pick well locations to fully develop Amguri at for the Company is to close its deal with ONGC on
significantly lower risk. Changpang and the adjacent exploration blocks in
Nagaland. This transaction has been considerable time
in the making as it has involved gaining the support of
many levels of stakeholders. During the recent general
elections in India, a majority government was elected
in Nagaland, which we believe will clear the way for
the necessary agreements between the Nagaland
government and ONGC. While there is no assurance
that the transaction will be ultimately consummated,
we are working ahead in earnest to bring the deal
together both from a stakeholder and a financing
perspective. Success with Changpang would have a
material impact on the operations and value of the
Company.
GAUTAM NEOG - JORHAT GAUTAM SAIKIA - JORHAT HEMANTA TAMULY - JORHAT HEMNATH PHUKON
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In addition to Changpang, we have a number of Building a Platform for Growth

strategic initiatives aimed at gaining strong partners
Over the last year Canoro has built a platform for
and a broader suite of assets. Over the course of the
future growth that allows us to be positioned to
year, it is our objective to secure a strategic partner or
seize high potential opportunities that are beginning
acquisition and make the next step in the growth of
to present themselves. We have the beginnings of a
your Company.
significant asset base in India, high value prospects and
Building a better organization the technical and management expertise to explore
and develop the opportunities in front of us.
During the course of the year, we added two new
directors to the board, James N. Smith and Robert S. We appreciate the investment of our shareholders,
Wynne, both of whom have significant experience in the continued loyalty of our employees, the ongoing
building successful E&P companies and realising the support of the Government of India, the support of
intrinsic value for the shareholders. We have also made the communities in which we work and the strength of
some significant changes to our management team to our co-venturers in building a truly substantial inter-
better execute the strategy. In particular, Brian Gieni national oil and gas production company.
has moved into the Country Manager role reflecting
On behalf of the board and management,
the need for senior executive in exerting greater control
and guidance in country. Ryan Ellson has assumed the
role of Vice President Finance and will assume much of
the financial responsibilities of Mr. Gieni.
Douglas R. Martin Les B. Kondratoff
Chairman of the Board President and Chief

Executive Officer
July 27, 2009
N - JORHAT HENRY SHEN - CALGARY JAMIRATDDIN AHMED - JORHAT JINU MONI BORDOLOI - JORHAT
10 CANORO RESOURCES LTD. | 2 0 0 9 A N N UA L R E P O RT
TURKMENISTAN TAJIKISTAN
AFGHANISTAN
Kabol
Islamabad
Amritsar
Delhi
New Delhi NEPAL
PAKISTAN Kathmandu Thimpu
BHUTAN
TROPIC DU CANCER
India BANGLADESH
Kolkata
MYANMAR
(BURMA)
Mumbai
Yangon
INDIAN
OCEAN GOA
Bengaluru Chennai
INDIAN
PUDUCHERRY
OCEAN
Trivandrum
SRI LANKA
JITENDER RAKHRAI - NOIDA JOHN BILSLAND - NOIDA K.C. GUPTA K.K BURAGOHAIN - JORHAT KA
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Amguri, India
ATRINA VEYSEY - CALGARY KEN READ - JORHAT KISHORE KUMAR - NOIDA KUMUD HAZARIKA - JORHAT
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OPERATIONS REVIEW
Operations Review
LES KONDRATOFF - CALGARY M.C.ROYCHOUDHARY - JORHAT MAHIPAL SINGH - NOIDA MANJU GIRI
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AMGURI – CANORO’S CORE ASSET

Background
On November 27, 2003, the State of Assam granted the petroleum mining lease to the owners of the Amguri
Production Sharing Contract (PSC). An amendment to the Amguri PSC recognizing Canoro as a 60% owner and
operator of the Amguri PSC was executed in September 2004. Canoro physically took over operations of the Amguri
field in November 2004. With the transfer of operations came one producing natural gas well, Amguri 8A. During the
year ended March 31, 2006, this well produced natural gas at a rate
of 430 thousand standard cubic feet per day (“mcf/d”).
In April 2005, Canoro began its work program for reentering the three
suspended wells to re-establish production and test new potential
hydrocarbon bearing zones. Work over operations were completed
on the first well, Amguri 1. Canoro completed the testing of three
potential hydrocarbon zones in this well and temporarily suspended
the well as a potential gas producer. The well tested natural gas at
rates exceeding 1 mmcf/d. In September, Canoro re-entered Amguri
5 and tested the original producing zone at gross oil rates of 588
barrels per day (“bbl/d”) of 44° API oil and 0.8 mmcf/d of natural
gas. Amguri 6 was re-entered and tested next, with gross oil rates of
405 bbl/d of 56° API oil and 2.6 mmcf/d of natural gas. In light of the
success of reentries at Amguri 5 and 6, Canoro re-entered Amguri
2 and did not encounter any hydrocarbons. This well has now been
converted into a water disposal well.
In July 2007, Canoro announced that the Amguri 10B well

encountered a 32 meter thick gas-condensate reservoir at a depth
of 2,882 meters to 2,914 meters in the Barail formation. This
interval is also approximately 26 meters higher and 12 meters thicker than the same sands in the producing Amguri
6 well. The well tested in two intervals with the lower 13 meter interval being tested first. This interval flowed at a
clean-up test rate of 375 bbl/d of 50° API condensate and 1.1 mmcf/d of natural gas through a 12/64 inch choke and
tubing head pressure of 2,200 psi with less than 5% BS&W.
In early August 2007, Canoro began drilling operations at the Amguri 11 appraisal location on the Amguri development
block. Later that month, Canoro announced that it drilled Amguri 11 through the Barail to a depth of 3327 meters.
The well discovered two new reservoirs and the main sand (totaling 65 meters of net pay), and flowed at a total of
1,190 bbl/d of condensate and 12 mmcf/d of natural gas, or 3,190 barrels of oil equivalent per day (“boe/d”).
Key features of the Amguri PSC

The Company’s interests in the Amguri field are governed by a production sharing contract between the Government
of India (“GOI”), Canoro (60%) and its partner, Assam Company Limited (40%). The Amguri PSC contains a
number of key provisions in that:
i. it enables the Amguri partners to recover all exploration, development and production costs and expenses
incurred (collectively, the “Investment”) in a field or block from the petroleum produced from that field;
ii. it establishes formulas for sharing the petroleum produced over and above the amount required for
Investment recovery (the “Profit Petroleum”). In the Amguri Field, the GOI is entitled to a 10% net profits
interest in the Profit Petroleum once the Company and its partner have recovered 100% of its investment
in the block from cash flows from the block. The GOI’s net profits interest increases to a maximum of 35%
once 300% of the Investment has been recovered;
iii. it grants the Amguri partners the right to market natural gas to third parties at market determined prices;
iv. the partners are required to sell crude oil produced to the GOI at international prices;
v. it provides a term of 25 years with provision for the GOI to grant extensions for oil and gas production for
such terms as mutually agreed between the parties considering the balance of recoverable reserves;
GOSWAMI - NOIDA MANOJ KUMAR GUPTA - NOIDA MRIGANKA BORGOHAIN - JORHAT

14
REVIEW OF OPERATIONS
vi. it provides that at the end of the contract life, all of the wells, facilities, and infrastructure equipment
associated with a particular block or field be returned to the GOI;
vii. a 10% royalty assumed by the natural gas purchaser, payable to the GOI on natural gas production;
viii. a combination of royalty and cess payments of 1,455 Indian rupees (“Rs”) per metric tonne of oil (ap-
proximately $3.88 per barrel of condensate using an exchange rate of Rs 50 = US$1 as at March 31, 2009)
is payable on crude oil production; and
ix. it provides that the GOI has the right to terminate the Amguri PSC on 90 days notice upon the occurrence
of certain events, including certain breaches of the Amguri PSC by the Amguri partners.
Operational review
Production for the year ending 31 March 2009 averaged 781 boe/d net to Canoro representing a 162 percent increase
over the prior year. Production consisted of 3.2 mmcf/d gas and 244 bbls/d of condensate production, a ratio of
69/31 gas to oil. Canoro received an average gas price of $2.45 mcf for gas and $97.32 bbl of condensate. Production
originated from the Main Barail sand formation in wells A-6, A-10B, A-11 (known as the “A” pool), the Main Barail
Sand in A-5 and also from the Tipam formation in the A-8A well, prior to this zone watering out and being suspended
in September 2008.
PVT (Pressure – Volume – Temperature) data acquired in March 2008 clearly identified the Amguri “A” pool
as defined by wells A-6, A-10B and A-11, as a retrograde gas condensate reservoir. The condensate from the “A”
pool measures 56-60 degree API and receives a premium price to Nigerian Bonny Light due to the high quality of
condensate produced. As a result of prudent reservoir management practices, a detailed Front End Engineering
Deisgn (“FEED”) study was conducted in Q1 FY2008 to discern the feasibility of installing compression for the “A”
pool. The facility went through detail design and orders have been placed for compression equipment fabrication. The
gas recycling scheme is projected to have a material impact on Canoro’s funds flow from operations as its production
mix is projected to change from approximately 30% condensate to over 60% condensate. The recycling scheme should
also mitigate the impact of seasonal demand factors as the Company will still be able to extract condensate regardless
of natural gas demand in the region.
During the year, the Company drilled three wells in the Amguri field with mixed results:
Amguri 13 - Canoro spud Amguri 13A in early February and unfortunately the well came in 10 meters lower than
anticipated based on seismic interpretation. The Company decided to sidetrack the well. Amguri 13B encountered two
hydrocarbon-bearing zones in the Barail formation, based on log and drilling results. A 13-B well came in approximately 10
meters structurally higher than the original Amguri 1 discovery well. The well had approximately 10 meters of net oil pay and
24 meters of potential net gas pay in the Barail formation. The oil pay correlates to the main Barail sand in Amguri 1, while the
gas pay correlates to the upper gas zone previously tested in Amguri 1. Drilling complications prevented the completion and
testing of the well. Based on a full re-interpretation of the field, the Company will determine the possibility of whipstocking
the well or performing a slim hole completion.
Amguri 12 - the Company had high expectations for the Amguri-12 well, however, after production testing, the
two main Barail intervals were unsuccessful despite log analysis indicating the presence of hydrocarbons. The well
tested water in both target Barail sands. The A-12 well came in significantly lower than prognosis and appears to be in a
separate compartment and not connected to the “A” pool as defined by the A-11, A-10B and A-6 producers. The disap-
pointing results of A-12 led the Company to cease further drilling and completely re-evaluate its geologic structural
model with the aid of Pre-Stack Depth Migration (“PSDM”) seismic processing.
NAREN KONWAR - JORHAT NILKANT DHINGIA PHUKAN - JORHAT NITUL ALI - JORHAT NITUL KAK
15
AMGURI FIELD
Canoro Low Pressure Gas Pipeline

(alternative)
Assam Gas Company Ltd.
(AGCL) Oil Pipeline

(AGCL) Oil Pipeline (alternative)
Existing pools
Amguri 13B Block boundary
(alternative)
Railway
A-9 Amguri 5 A-13B A-1
(AGCL)
Rivers Oil Pipeline
/ Waterbodies
A-5 Assam Gas Company Ltd.
Tea Gardens
A-13 (AGCL) Oil Pipeline (alternative)
Tipam B Faults
Existing pools
A-8a A-2 Dry and abandoned
Amguri 13B Block boundary
A-8 Abandoned O&G
HW-1 Railway
A-10B A-3
A-6
A-9 Amguri 5
Suspended
A-13B A-1 Rivers / Waterbodies
Amguri A A-5 Suspended Oil
A-13 Tea Gardens
Pool
A-14 Tipam B Suspended Gas
Tipam A A-11 A-10 Faults
A-8a A-2 Gas

Dry with
and condensate
abandoned
A-12 A-8 Gas
Abandoned O&G
HW-1
REC-7 A-10B A-3
TK-5 A-6 Suspended
Amguri A Suspended Oil
Pool
A-14 Suspended Gas
Tipam A A-11 A-10
Gas with condensate
A-12 Gas
REC-7 TK-5
Amguri 14 - the appraisal well was flow tested in the upper Tipam formation. A three-day production test yielded
maximum rates of 4.8 mmscfd on an 8mm choke with a tubing head pressure of 2100 pounds per square inch (“psi”),
and a stabilized final rate of 2.7 mmscfd on a 6 mm choke with a tubing head pressure of 2,180 psi. These results
combined with a subsequent pressure build-up test, support the Company’s view that the A-14 well is an excellent dry
gas well. This well re-establishes the Tipam formation as a viable producing zone at Amguri. This Tipam formation
production enables the Company to utilize the well as a swing producer to service the local cyclical gas markets while
also assisting with voidage replacement within the Main Barail gas condensate reservoir once compression is installed.
The Company completed the construction of a four-inch diameter sales gas flow line in Q2 2009 to service local markets.
The A-14 well is planned to be connected to the gas re-injection flow-lines for compression support to the “A” pool by
early 2010. Additionally, the A-14 well assists the Company to observe prudent reservoir management practices for the
“A” pool by supporting local gas markets until compression is installed beginning in Q1 2010.
Development of Amguri Field

The following development activities are planned for 2009/10:
Earlier in the year, the Company completed the evaluation of bids for gas re-injection and condensate extraction
facilities at Amguri. The main equipment packages have been awarded for manufacture with commissioning expected
by early 2010 based on manufacturers’ current delivery dates;
l The Amguri-II well is planned to be recompleted as a dual producer/injector;
l
Completion of the Pre-Stack Depth Migration Analysis of existing 3D seismic in progress and reconstruction of
the geological model along with 2D reinterpretation is also proposed to be taken up and completed by Q4 2009;
l
Construction of new oil receiving facility at Moran to receive and pump enhanced oil production to the Oil India–
operated pump station through a 1.2 km four-inch pipeline – this is expected to decrease the oil treatment costs
of the condensate production and allow for increased netbacks;
l
Installation of produced water treatment and conditioning facilities to facilitate produced water disposal into the
Amguri-2 well using a water injection pump.
OTI - JORHAT NITYAM THAKURIA - JORHAT PALLAV BARUAH - JORHAT PANKAJ TAXALI - NOIDA
16
Canoro is focusing all efforts in 2009/10 on development projects to increase production on a low cost basis and
lower operating costs. Once the interpretive results of the PSDM are known, the Company plans to embark upon
another cycle of drilling activity in 2010/11 that will be reflected in an updated Plan of Development document to
be submitted to industry regulators in Q4 2009.
EXPLORATION blocks
AA-ONN-2003/2 (CANORO 15% WI) On the Arunachal Pradesh Block AA-ONN-2003/2, the operator has
contracted a drilling rig and commenced location and road building. Canoro and its joint venture partners have a
commitment under the PSC to drill seven wells. At present, however, based on current interpretation of the 3D
seismic, only three drillable prospects have been identified and approved for drilling to date. It is anticipated that the
operator will complete the three wells by early 2010 with estimated expenditures of $3.0 million net to Canoro’s 15%
working interest.
AA-ON/7 (canoro 65% wi) Unique to the oil & gas industry in India, the AA-ON/7 block boundaries are
spread over the two adjoining states of Assam and Nagaland. One Petroleum Exploration License was issued for each
state in 2001 and 2006 respectively. The Exploration period for the PEL issued in 2001 ended in March 2008. The
Company had filed an application for extension of this period by one year to take up additional activities.
During the year, the Company drilled two wells, Borkathani and Deragon II on the Assam portion of AA-ON/7. Both
exploration wells failed to find commercial hydrocarbons and were plugged and abandoned.
Subsequent to drilling and abandonment of the Bhorkatani and the Deragon II wells, the Company withdrew its
application to the Government of India seeking an extension of the exploration phase thereby relinquishing the Assam
portion of the AA-ON/7 Block. As a result of the relinquishment, probable reserves of 21.2 BCF (3.5 MMBOE) net
to Company’s 65% working interest and possible reserves of 15.8 BCF (2.6 MMBOE) net have been written off by the
Company. Proven reserves are unaffected by this relinquishment.
With respect to the PEL issued in 2006 for the Nagaland area, the Company’s application on behalf of the partners for
a new PSC has been submitted to the Government of India.
AA-ONN-2004/3 & AA-ONN-2004/5 In Q4 2008, Canoro entered into a farm-in agreement with a large Indian
industrial company on two blocks in Northeast India. Blocks AA-ONN-2004/3 and AA-ONN-2004/5 have a
combined area totaling 1,285 km2 and are subject to GOI approvals. These blocks have a Phase I commitment that
require 2D and 3D seismic programs, which is proposed to be taken up in late 2009 or early 2010 and the drilling of
one exploration well on each block. The estimated capital expenditures required on these blocks for Phase I over the
next three years is approximately $6.8 million net to Canoro’s 30% working interest. Procedures for the transfer of the
30% interest and operatorship to Canoro are subject to certain agreements being completed along with approvals of
the Government of India. However, there is no guarantee the Government of India will approve the transaction and
therefore Canoro would not have an interest in the blocks. On completion, Canoro would have a 30% participating
interest and would be the operator of both blocks. Initial exploration of these blocks is anticipated to commence in
2009/10 with Phase I commitments that require 2D and 3D seismic programs, which will be deferred to later this year
or early 2010, and the drilling of one exploration well on each block.
POOJA AERON - NOIDA POOJA AWASTHI - NOIDA PRAMODE CHETIA - JORHAT PRANJIT BORAH - JO
17
RESERVES
Sproule Associates Limited (Sproule), an independent petroleum engineering firm, has evaluated the crude oil, natural
gas and natural gas liquids reserves of the Company as at March 31, 2009 and prepared a reserves report in accordance
with National Instrument 51–101 “Standards of Disclosure for Oil and Gas Activities”. Sproule based its evaluation
on land data, well and geological information, reservoir studies, estimates of onstream dates, contract information,
operating cost data, capital budgets and future operating plans provided by the Company, information obtained from
public records and Sproule’s internal non–confidential files and commodity price forecast. The Reserves Committee,
with the mandate of reviewing the independent engineering report, recommended the acceptance of the Sproule
reserve estimates and it has been approved by the Board of Directors for the purposes of the Annual Report. See the
Company’s Annual Information Form (AIF) for additional reserve information.
Reserve Reconciliation (forecast prices)

Proved
Proved + +Probable
Proved Probable +Possible
AMGURI GROSS RESERVES (1)

March 31, 2008 (mboe) 2,773 6,329 10,263
Net additions / revisions 1,456 1,328 1,309
Production (285) (285) (285)
March 31, 2009 (mboe) 3,944 7,372 11,287
Production replacement (%) 511 466 459
AA-ON/7 GROSS RESERVES (1)

March 31, 2008 (mboe) – 3,525 6,154
Relinquishment (2) – (3,525) (6,154)
Production – – –
March 31, 2009 (mboe) – – –
Production replacement (%) – – –
COMPANY GROSS RESERVES (2), (3)

March 31, 2008 2,773 9,853 16,417
Net additions 1,456 (2,196) (4,845)
Production (285) (285) (285)
March 31, 2009 3,944 7,372 11,287
Production replacement (%) 511 (770) (1,700)
(1) Gross reserves represent the Company’s 60% interest before deducting royalties
(2) During the year the Company relinquished the Assam portion of the AA-ON/7 block
(3) Includes both Amguri and AA-ON/7 reserves
ORHAT PRASANTHA PHUKAN - JORHAT PROSENNJIT PHUKAN - JORHAT RAHUL AWASTHI - NOIDA
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AMGURI GROSS RESERVES (1), (3)
2009 2008 % change

Proved producing oil and NGL (mbbls) 391 356 10
Proved producing natural gas (mmcf) 7,582 4,692 62
Total proved producing (mboe) 1,655 1,138 45
Proved developed not producing oil and NGL (mbbls) – 32 (100)
Proved developed not producing natural gas (mmcf) 4,239 63 6,597
Total proved developed not producing (mboe) 707 42 1,580
Proved undeveloped oil and NGL (mbbls) 392 527 (26)
Proved undeveloped (mmcf) 7,146 6,401 12
Total proved undeveloped (mboe) 1,583 1,594 (1)
Total proved (mboe) 3,944 2,773 42
Probable oil and NGL (mbbls) 953 1,031 (8)
Probable natural gas (mmcf) 14,848 15,148 (2)
Total probable (mboe) 3,428 3,555 (4)
Proved + probable oil and NGL (mbbls) 1,736 1,945 (11)
Proved + probable natural gas (mmcf) 33,815 26,304 29
Total proved plus probable (mboe) 7,372 6,329 16
Possible oil and NGL (mmbls) 839 1,944 (57)
Possible natural gas (mmcf) 18,456 11,947 54
Total possible (mboe) 3,915 3,935 (0)
Proved + probable + possible oil and NGL (mbbls) 2,575 3,888 (34)
Proved + probable + possible natural gas (mmcf) 52,271 38,250 37
Proved + probable + possible (mboe) 11,287 10,263 10
AA-ON/7 GROSS RESERVES (1), (3)

2009 2008 % change
Proved producing oil and NGL (mbbls) – – –
Proved producing natural gas (mmcf) – – –
Total proved producing (mboe) – – –
Proved developed not producing oil and NGL (mbbls) – – –
Proved developed not producing natural gas (mmcf) – – –
Total proved developed not producing (mboe) – – –
Proved undeveloped oil and NGL (mbbls) – – –
Proved undeveloped (mmcf) – – –
Total proved undeveloped (mboe) – – –
Total proved (mboe) – – –
Probable oil and NGL (mbbls) – – –
Probable natural gas (mmcf) – 21,147 (100)
Total probable (mboe) – 3,525 (100)
Proved + probable oil and NGL (mbbls) – –
Proved + probable natural gas (mmcf) – 21,147 (100)
Total proved plus probable (mboe) – 3,525 (100)
Possible oil and NGL (mmbls) – –
Possible natural gas (mmcf) – 15,776 (100)
Total possible (mboe) – 2,629 (100)
Proved + probable + possible oil and NGL (mbbls) – – –
Proved + probable + possible natural gas (mmcf) – 36,923 (100)
Proved + probable + possible (mboe) – 6,154 (100)
RAJEEV KUMAR SINGH - NOIDA RAJEN CHANDRA SARMAH - JORHAT RAJEN GOGOI - JORHAT RAJE
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COMPANY GROSS RESERVES (1), (2), (3)

2009 2008 % change
Proved producing oil and NGL (mbbls) 391 356 10
Proved producing natural gas (mmcf) 7,582 4,692 62
Total proved producing (mboe) 1,655 1,138 45
Proved developed not producing oil and NGL (mbbls) – 32 (100)
Proved developed not producing natural gas (mmcf) 4,239 63 6,597
Total proved developed not producing (mboe) 707 42 1,580
Proved undeveloped oil and NGL (mbbls) 392 527 (26)
Proved undeveloped (mmcf) 7,146 6,401 12
Total proved undeveloped (mboe) 1,583 1,594 (1)
Total proved (mboe) 3,944 2,773 42
Probable oil and NGL (mbbls) 953 1,031 (8)
Probable natural gas (mmcf) 14,848 36,295 (59)
Total probable (mboe) 3,428 7,080 (52)
Proved + probable oil and NGL (mbbls) 1,736 1,945 (11)
Proved + probable natural gas (mmcf) 33,815 47,451 (29)
Total proved plus probable (mboe) 7,372 9,853 (25)
Possible oil and NGL (mmbls) 839 1,944 (57)
Possible natural gas (mmcf) 18,456 27,723 (33)
Total possible (mboe) 3,915 6,564 (40)
Proved + probable + possible oil and NGL (mbbls) 2,575 3,888 (34)
Proved + probable + possible natural gas (mmcf) 52,271 75,173 (30)
Proved + probable + possible (mboe) 11,287 16,417 (31)
(1) Gross reserves represent the Company’s interest before deducting royalties
(2) Includes both Amguri and AAON/7 reserves
(3) Columns may not add due to rounding
RESERVE LIFE INDEX

The reserve index of Canoro has been calculated by using the average 2009 production of 781 boe/d. Accordingly, the
reserve life index is 26 years on a proved plus probable basis.
Proven +
Reserves – March 31, 2009 Proved Probable Probable
Reserves 3,944 3,428 7,372
Production 285 285 285
Reserve life index (years) 13.8 12.0 25.8

Net present value – before tax – forecast prices (US$000)

as at March 31, 2009 0% 5% 10% 15%
Proved developed producing 31,388 27,248 23,995 21,388
Proved developed non–producing 5,381 3,932 2,953 2,269
Proved undeveloped 24,255 16,279 11,008 7,443
Total proved 61,024 47,459 37,956 31,100
Total probable 77,253 51,319 35,068 24,494
Total proved + probable 138,277 98,778 73,024 55,594
Total possible 66,438 39,022 25,623 18,312
Total proved + probable + possible 204,715 137,800 98,647 73,906
ESH MADAN - NOIDA RAJIB BORAH - JORHAT RAJIB KUMAR PHUKAN - JORHAT
20
Net present value – AFTER tax – forecast prices (US$000)
as at March 31, 2009 0% 5% 10% 15%

Proved developed producing 31,388 26,639 22,962 20,057
Proved developed non–producing 5,381 3,843 2,824 2,126
Proved undeveloped 21,766 14,307 9,439 6,192
Total proved 58,535 44,789 35,225 28,375
Total probable 42,287 27,828 18,789 12,904
Total proved + probable 100,822 72,617 54,014 41,279
Total possible 36,612 21,679 14,501 10,617
Total proved + probable + possible 137,434 94,296 68,515 51,896
Independent Evaluator’s Commodity Pricing Assumptions
Amguri Natural Gas

Nigeria Proved plus Annual Cost
Bonny Light Proved plus Probable Inflation
Year Crude Oil Proved Probable plus Possible Rate
($/Bbl) ($/mcf) ($/mcf) ($/mcf)
2009 (9 mos) 48.10 2.13 2.13 2.13 3.7%

2010 53.89 2.20 2.20 2.20 4.0%
2011 58.80 2.31 2.50 3.25 3.0%
2012 73.78 2.43 3.14 4.21 2.0%
2013 79.56 2.55 3.59 4.29 2.0%
2014 81.15 2.68 4.04 4.37 2.0%
2015 82.77 2.73 4.46 4.46 2.0%
2016 84.43 2.79 4.55 4.55 2.0%
2017 86.12 2.84 4.64 4.64 2.0%
2018 87.84 2.90 4.74 4.74 2.0%
Thereafter per year 2.0% 2.0% 2.0% 2.0% 2.0%
NET ASSET VALUE

The net asset values of the Company as at March 31, 2009 at a discount rate of five, ten and fifteen percent before
taxes are summarized below:
Estimated net future revenues (1) (US$000) 5% 10% 15%
Proven 47,459 37,956 31,100

Proven + probable 98,778 73,024 55,594
Proven + probable + possible 137,800 98,647 73,906
Working capital at March 31, 2009 6,989 6,989 6,989
Total asset value (2) (US$000)

Proven 54,448 44,945 38,089
Proven + probable 105,767 80,013 62,583
Proven + probable + possible 144,789 105,636 80,895
Common shares outstanding 113,708,941 113,708,941 113,708,941
Basic net asset value per share (US$)

Proven $ 0.48 $ 0.40 $ 0.33
Proven + probable $ 0.93 $ 0.70 $ 0.55
Proven + probable + possible $ 1.27 $ 0.93 $ 0.71
(1) before income taxes and reclamation costs

(2) estimated net future revenue plus working capital at March 31, 2009
RANDEE EASTGAARD - CALGARY RANJEET BORUAH - JORHAT RIKHYA NATH DAS - JORHAT RITISH P
21
Management’s
Discussion & Analysis
PHUKAN - JORHAT ROBERT WYNNE - CALGARY ROBIN GOGOI - JORHAT ROGER SAKATCH - CALGARY
22
MANAGEMENT’S DISCUSISON & ANALYSIS
Management’s Discussion and Analysis

For the three and twelve months ended March 31, 2009
Basis of Presentation The following discussion and analysis as provided by the Management of Canoro Resources Ltd. (“Canoro”
or “Company”) as of July 27, 2009 is to be read in conjunction with the accompanying audited financial statements and related notes
for the years ended March 31, 2009 and 2008. The financial data presented has been prepared in accordance with Canadian generally
accepted accounting principles (“GAAP”). The reporting and the functional currency is the United States dollar (US$).
Effective April 1, 2008, the Company’s functional currency changed from Canadian dollars to US$ as a result of increased significance
of the US$ to the Company’s cash flows. Amongst other things, this increased significance of the US$ is a result of increased capital
expenditures in US$ and an increased proportion of revenues earned in US$. As both the functional and the reporting currencies of the
Company are in US$, there are no translation gains and losses that will impact accumulated other comprehensive income.
Monetary assets and liabilities of the Company that are denominated in currencies other than US$ are translated into its function
currency at the rates of exchange in effect at the period end date. Any gains and losses are recorded in earnings.
Forward-Looking Statements Certain statements included or incorporated by reference in this MD&A constitute
forward-looking statements or forward-looking information under applicable securities legislation. Such forward-looking statements
or information are for the purpose of providing information about management’s current expectations and plans relating to the future.
Readers are cautioned that reliance on such information may not be appropriate for other purposes, such as making investment decisions.
Forward-looking statements or information typically contain statements with words such as “anticipate”, “believe”, “expect”, “plan”,
“intend”, “estimate”, “propose”, “project” or similar words suggesting future outcomes or statements regarding an outlook. Forward-
looking statements or information in this MD&A include, but are not limited to, statements or information with respect to:
business strategy and objectives; development plans; exploration plans; acquisition and disposition plans and the timing thereof; reserve
quantities and the discounted present value of future net cash flows from such reserves; future production levels; capital expenditures;
net revenue; operating and other costs; royalty rates and taxes.
Forward-looking statements or information are based on a number of factors and assumptions that have been used to develop such
statements and information but may prove to be incorrect. Although the Company believes that the expectations reflected in such
forward-looking statements or information are reasonable, undue reliance should not be placed on forward-looking statements because
the Company can give no assurance that such expectations will prove to be correct. In addition to other factors and assumptions may
be identified in this MD&A, assumptions have been made regarding, among other things: the impact of increasing competition;
the general stability of the economic and political environment in which the Company operates; the timely receipt of any required
regulatory approvals; the ability of the Company to obtain qualified staff, equipment and services in a timely and cost-efficient manner;
the ability of the operator of the projects which the Company has an interest in to operate the field in a safe, efficient and effective manner;
the ability of the Company to obtain financing on acceptable terms; field production rates and decline rates; the ability to replace and
expand oil and natural gas reserves through acquisition, development or exploration; the timing and costs of pipeline, storage and facility
construction and expansion and the ability of the Company to secure adequate product transportation; future oil and natural gas prices;
currency, exchange and interest rates; the regulatory framework regarding royalties, taxes and environmental matters in the countries
in which the Company operates; and the ability of the Company to successfully market its oil and natural gas products. Readers are
cautioned that the foregoing list is not exhaustive of all factors and assumptions that may have been used.
Forward-looking statements or information are based on current expectations, estimates and projections that involve a number of
risks and uncertainties that could cause actual results to differ materially from those anticipated by the Company and described in the
forward-looking statements or information. These risks and uncertainties that may cause actual results to differ materially from the
forward-looking statements or information include, among other things: the ability of management to execute its business plan; general
economic and business conditions; the risk of war or instability affecting countries or states in which the Company operates; the risks
of the oil and natural gas industry, such as operational risks in exploring for, developing and producing crude oil and natural gas; market
demand; the possibility that government policies or laws may change or governmental approvals may be delayed or withheld; risks
and uncertainties involving geology of oil and natural gas deposits; the uncertainty of reserves estimates and reserves life; the ability
of the Company to add production and reserves through acquisition, development and exploration activities; the Company’s ability
to enter into or renew production sharing contracts; potential delays or changes in plans with respect to exploration or development
projects or capital expenditures; the uncertainty of estimates and projections relating to production (including decline rates), costs
and expenses; fluctuations in oil and natural gas prices, foreign currency, exchange, and interest rates; risks inherent in the Company’s
marketing operations, including credit risk; uncertainty in amounts and timing of royalty or cess payments; health, safety and environ-
mental risks; risks associated with existing and potential future law suits and regulatory actions against the Company; uncertainties as to
ROY HEATH - JORHAT RUPANKAR RAJKHOWA - JORHAT RYAN ELLSON - CALGARY SADANANDA GO
23
the availability and cost of financing; and financial risks affecting the value of the Company’s investments. See page 29 of the MD&A for
a further discussion of specific risks and uncertainties. Readers are cautioned that the foregoing list is not exhaustive of all possible risks
and uncertainties. Additional risk factors affecting the Company and its business are contained in the Company’s Annual Information
Form filed on SEDAR at www.sedar.com.
Non-GAAP terms The MD&A contains the terms “funds from operations”, and “netbacks” which are not recognized measures under
Canadian generally accepted accounting principles. The Company uses these measures to help evaluate its performance. Management
considers netbacks an important measure as it demonstrates its profitability relative to current commodity prices. Management uses
funds from operations to analyze performance and considers it a key measure as it demonstrates the Company’s ability to generate
the cash necessary to fund future capital investments and to repay debt. Funds from operations has been defined by the Company as
net earnings adjusted for non-cash items (depletion, depreciation and accretion, stockbased compensation, unrealized (gain)/loss on
foreign exchange, and unrealized investment (gain)/loss) and excludes the change in non-cash working capital related to operating
activities and expenditures on asset retirement obligations and reclamation. Canoro’s determination of funds from operations may not
be comparable to that reported by other companies nor should it be viewed as an alternative to cash flow from operating activities, net
earnings or other measures of financial performance calculated in accordance with Canadian GAAP.
Barrel of oil equivalent Where amounts are expressed on a barrel of oil equivalent (boe) basis, natural gas volumes have been
converted to barrels of oil equivalent at six thousand cubic feet to one barrel of oil equivalent (6 mcf = 1 boe). This conversion ratio is the
convention used in the oil and natural gas industry and is based on an energy equivalent conversion method primarily applicable at the
burner tip and does not represent a value equivalent at the wellhead. The use of boe’s may be misleading, particularly if used in isolation.
OPERATIONAL AND FINANCIAL HIGHLIGHTS

In accordance with Canadian industry practice, production volumes, reserve volumes and revenues are reported on a Company interest
basis, before deduction of royalties. Canoro’s results of operations were dependent on production volumes of natural gas, crude oil and
natural gas liquids and the prices received for this production.
Production and realized sales prices
Three months ended March 31 Twelve months ended March 31

Operational and
Financial Highlights
($ thousands, except per unit amounts) 2009 2008 % change 2009 2008 % change
Natural gas (mcf/d) 2,617 1,462 79 3,223 1,153 179
Crude oil (bbl/d) 209 146 43 244 106 130
Total (boe/d) 645 390 66 781 298 162
Realized gas price ($/mcf) 1.84 2.45 (25) 2.18 2.45 (11)
Realized oil price ($/bbl) 50.64 104.47 (52) 95.76 97.32 (2)
Nigerian Bonny Light ($/bbl) 47.59 99.20 (52) 87.81 84.59 4
Realized price ($/boe) 23.87 48.36 (51) 38.92 44.13 (12)

Royalties ($/boe) 2.86 5.21 (45) 4.00 3.34 20
Operating costs ($/boe) 9.68 6.70 44 5.37 6.93 (23)
Netback ($/boe) 11.33 36.45 (69) 29.55 33.86 (13)
GOI - JORHAT SANJANA BARUAH - JORHAT KAMTA PRASAD - NOIDA SANJEEV GUPTA - NOIDA
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Production
Production for the three and twelve months ended March 31, 2009 averaged 645 boe/d and 781 boe/d representing a 66 percent and
162 percent increase over the comparative periods. The increase in production is due to production additions from two successful wells,
A-10B and A-11, drilled in 2007 and brought onto production in March of 2008. Consequent to detail sampling and transient test
data analysis conducted during the last quarter of 2007/08 on these wells, it was determined the reservoir was a retrograde condensate
reservoir. Canoro initiated detailed engineering analysis including Front End Engineering Design (FEED). Engineering identified
the need of gas recycling to maintain the reservoir pressure at dew point to optimize liquid recovery and practice prudent reservoir
management. The engineering studies led to technical specifications of gas compressors and associated equipment for sourcing. After a
competitive bid process, the main equipment packages were awarded in the third quarter with commissioning expected in early 2010
based on manufacturers’ delivery dates. The gas recycling scheme is projected to have a material impact on Canoro’s funds flow from
operations as its production mix is projected to change from approximately 30% condensate to over 60% condensate. The recycling
scheme should also mitigate the impact of seasonal demand factors as the Company will still be able to extract condensate regardless of
natural gas demand in the region.
Preparations are being made to convert the A-11 well to a dual producer/injector. Canoro plans on injecting gas into the Main Barail
zone and produce from the Mid-Barail zone which tested at 2.1 mmcf/d and 280 bbl/d in 2007 through a 16/64 inch choke with tubing
head pressure of 2,500 psi. Subsequent to year-end, the Company completed the tie in of A-14 with restricted production rates of 1.0
mmcf/d. A-14 gas is planned to be used for sales and additional re-injection supply.
Realized sales price
Natural gas
For the three and twelve months ended March 31, 2009 the Company received $1.84 and $2.18 per mcf respectively, compared to $2.45
in the comparative periods. The decrease is attributed to the weakening of the Indian rupee (Rs) against the US dollar throughout the
year. The Indian rupee ranged from a high of approximately 40:1 (Rupee to US$) in April 2008 to a low of approximately 52:1 (Rupee
to US$) in March 2009.
The majority of natural gas production is sold at a fixed price of Rs 3,840 per 1000 m3 , however, contractually the Company must sell the
first 12,000 m3/d (approximately 340 mcf/d) at Rs 2,304 per 1000 m³, (approximately $1.64 per mcf). The Company is paid in rupees
and is subject to foreign exchange fluctuations on the average price received on changes between the rupee and US$. Although the
Company is not directly impacted by fluctuations in global natural gas prices due to the nature its contracts, increases in global natural
gas prices results in regional market pressure to increase the price received for natural gas in India.
Crude oil
Crude oil prices experienced unprecedented volatility during the year. This in turn, has affected the price of the Company’s benchmark
crude, Nigerian Bonny Light which has ranged from a high of $149.87 to a low of $38.26 during the year. Nigerian Bonny Light is a high
grade of Nigerian crude oil with high API gravity produced in the Niger Delta basin trading near Brent, and is considered more relevant
within India. The increase in the first half of the year was due to strong global demand growth primarily in China and India combined
with limited supply and low inventories for oil. During the year, crude oil prices benefited from geo-political events in top producing
regions including the Middle East and Africa. The precipitous fall in prices resulted from global demand destruction from the interna-
tional credit crisis and fears of a global recession. As the year progressed oil demand forecasts became increasingly bearish and were
continually revised downwards.
For the three and twelve months the Company received $50.64 and $95.76 per bbl compared to the average Nigerian Bonny Light price
of $47.59 and $87.81. The Company receives a premium to the Bonny Light due to the high quality of the condensate produced.
The Company’s realized sales price for the three and twelve months ended March 31, 2009 was $23.87 and $38.92 per boe respectively,
compared to $48.36 and $44.13 per boe for the same period in 2008. The change in realized price received is consistent with the change
in the Nigerian Bonny Light price.
Petroleum and natural gas sales

Petroleum and natural gas sales for the twelve months ended March 31, 2009 were $11.1 million, up 131 percent over the $4.8 million
in the prior year. The increase in revenue is attributable to a 162 percent increase in sales volumes offset by an 11 percent decrease in
the realized sales price. Petroleum and natural gas sales for the three months ended March 31, 2009 were $1.4 million, down 18 percent
from the comparative period in the prior year. The decrease in revenue is due to a 51 percent decrease in the realized sales price offset by
a 65 percent increase in sales volumes.
SANJIB BARUAH - NOIDA SARAT CHAND GOGOI - NOIDA SHIRLEY TAYLOR - CALGARY SIVA DUTTA -
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Royalties and Cess

%
($000) 2009 2008 % change 2009 2008 change
Total 166 183 (9) 1,142 363 215
Per boe 2.86 5.22 (45) 4.00 3.34 20
The Company pays royalties imposed by the Government of India Petroleum and Natural Gas Rules to the respective State granting
the lease in which crude oil is produced. The Company is responsible for paying royalties at a rate of Rs 528 per metric tonne of crude
oil produced (approximately $1.41 per bbl). In addition, the Company is responsible for paying cess at the rate of Rs 927 per metric
tonne of crude oil sold (approximately $2.47 per bbl). Cess is a levy imposed by the Oil Industry Development Act on crude oil sales
and is payable to the Central Government. State and Central royalties are paid in Indian Rupee’s and are subject to foreign exchange
fluctuations. Royalties on natural gas are assessed at 10% of well head value of gas and are paid by the purchaser of the natural gas;
therefore, the Company does not pay royalties on natural gas production.
On September 20, 2007, the Company entered into an agreement with a private fund based in Jersey, Channel Islands, whereby the
fund provided limited-recourse funding (“Entitlement Fund”) of $10,000,000 for appraisal and development drilling in the Company’s
Amguri Field in Assam, India. The fund does not have a participating interest in the field, nor is it responsible for future capital costs.
The fund only receives payments based on the Company’s 60% share of gross revenue from the Amguri Field ranging from 7% before
recovery of the original $10,000,000 and 3.5% thereafter. As at March 31, 2009, the fund has recovered approximately $1.0 million.
For the three months and twelve months ended March 31, 2009, total royalties and cess on production amounted to $0.2 and $1.1
million compared to $0.2 and $0.4 million in the comparative periods in the prior year. During the three and twelve months ended, the
Company continued payments to the Entitlement Fund as per the agreement. Payments to the Entitlement Fund of $0.1 million and
$0.8 million respectively, are included in the above royalty figures. The increase in royalties on an absolute basis is due to increased oil
production and revenue entitlement payments as per the Entitlement Fund agreement.
Operating expenses
($000) 2009 2008 % change 2009 2008 % change

Total 562 238 136 1,531 756 103
Per boe 9.68 6.70 44 5.37 6.93 (23)
Operating expenses for the three and twelve months ended March 31, 2009 were $0.5 million ($9.68 per boe) and $1.5 million ($5.37
per boe) compared to $0.2 million ($6.70 per boe) and $0.8 million ($6.93 per boe) in the comparative periods in the prior year.
The increase in operating costs on an absolute basis is due to an significant increase in production volumes. The decrease in operat-
ing expenses per boe for the twelve months ended is due to fixed costs being spread over higher production volumes and operational
improvements. The increase in operating costs for the three months ended is due to non-recurring repairs and maintenance charges
and an insurance adjustment related to operated wells. The Company continues to be committed to being a low cost producer in North
East India.
Depletion, depreciation and accretion expense

%
($000) 2009 2008 % change 2009 2008 change
Total 1,270 907 40 5,850 3,591 63
Per boe 21.87 25.56 (14) 20.51 32.90 (38)
For the three and twelve months ended March 31, 2009 depletion, depreciation and accretion (“DD&A”) was $1.3 million and $5.9
million compared to $0.9 million and $3.6 million in the comparative periods in the prior year. The decrease in the DD&A rate per boe
is due to the addition of proven reserves from the successful drilling at Amguri 14, increased proven reserves assigned to A-6, A-10B and
A-11 due to additional well performance information obtained during the year offset by a higher capital basis. The increase in DD&A on
an absolute basis is due to the increase in production.
- JORHAT SOUMYA SRIKANTH - NOIDA SUMAN KUMAR - NOIDA SURAJIT DUTTA - NOIDA
26
Capital expenditures
The Company’s total capital expenditures during the three months and twelve months ended March 31, 2009 amounted to $3.8 million
and $30.0 million compared to $5.4 million and $13.7 million for the comparative periods in the prior year. The significant increase
in capital is due to higher costs of services resulting from record oil prices, additional drilling activity and significant cost overruns at
Amguri 12. During the year the Company drilled six wells (3.7 net) with a 32 percent success rate based on net wells compared to three
wells (2.4 net) in the prior year. The Company’s exploration and development expenditures were financed through a combination of
cash on hand and funds generated from operations. The Company is in the process of re-evaluating its asset base with a concerted effort
to reduce exploration risk and have a balanced portfolio of development and exploration opportunities. Work is proceeding on the
Pre-Stack Depth Migration (“PSDM”) re-processing and re-interpretation of Amguri 3D seismic data with initial results expected in the
second half of the calendar year.
During the year, Canoro relinquished the Assam portion of the AA-ON/7 block. Canoro is currently pursuing a new PSC to be
established on the Nagaland portion of the AA-ON/7 block which had an exploration license granted in August 2006. There are no
guarantees the Company will be granted a new PSC.
CORPORATE
Interest income
During the three and twelve months ended March 31, 2009, the Company earned interest income of $0.05 and $0.2 million compared
to $0.4 million and $0.9 million in the comparative periods in the prior year. The decrease in interest income is due to lower average cash
balances, lower interest rates and the Company holding the cash on hand in an operating account in order to have unrestricted access
to the funds.
General and administrative expenses

General and administrative (“G&A”) costs for the three and twelve months ended March 31, 2009 were $1.5 million and $6.9 million
compared to $1.7 million and $4.9 million in the comparative periods in the prior year. Overall, G&A costs increased commensurate
with increased staffing and activity levels as evidenced by Canoro spending approximately $30.0 million on exploration and development
activities in the year. Specifically, G&A costs increased due to:
• increased office space in both Calgary and Delhi;

• strengthening of the Canadian dollar, as many of the employee’s are paid in Canadian dollars;
• increased technical and operating personnel, including four additional expatriate staff; and
• a significant investment in developing and implementing controls and procedures to build a strong foundation to grow the Company
as it moves to a development and production company.
With the decrease in activity projected for 2009/10, the Company during the fourth quarter began to reduce its personnel and made it
a mandate to all employees, contractors and suppliers to reduce costs. A significant portion of the costs incurred in 2008/09 were one
time set-up costs and development costs and will be non-recurring in 2009/2010. Canoro is forecasting G&A costs for 2009/10 be ap-
proximately $4.0 – $4.8 million, a reduction of approximately 41 percent to 29 percent from 2008/09 levels.
Canoro believes it has assembled the necessary personnel to take the Company from an exploration company to an exploration and
production company with the ability to significantly increase reserves and production.
Stock based compensation expense

Stock-based compensation expense is the amortization over the vesting period of the fair value of stock options granted to employees,
directors and key consultants of the Company. The fair value of all options granted is estimated using the Black-Scholes option pricing
model. The non-cash compensation expense for the three months and twelve months ended March 31, 2009, was $0.2 million and $1.2
million compared to $1.5 million and $2.7 million in the comparative periods in the prior year. The decrease in stock based compensation
expense is primarily due to a lower average option price resulting from lower average market prices at the time of grant and a decrease in
the amount of options granted during the year.
Canoro believes that providing employees with stock options effectively aligns the employees’ goals with the shareholders and helps retain key
employees. During the year the Company re-priced 1.6 million stock options held by employees representing approximately 15 percent of the
total options outstanding. The Company did not re-price any stock options held by Officers or Directors of the Company.
SURENDRA SINGH - NOIDA SWEETY TAMULY - JORHAT TOM LOCH - CALGARY UTPAL BORA - JORH
27
Net loss
For the three and twelve months ended March 31, 2009, Canoro recorded a net loss of $2.7 million and $6.3 million compared to a net
loss of $1.0 million and $7.1 million in the comparative periods in the prior year. Earnings for the three and twelve months ended were
adversely affected by non-cash items such as depletion, depreciation, accretion, unrealized foreign exchange, unrealized investment loss
and stock-based compensation.
Liquidity and Capital Resources

Share Capital
At March 31, 2009, the Company had 113,708,941 common shares outstanding (March 31, 2008 – 112,992,273). The common shares
of Canoro trade on the TSX Venture Exchange under the symbol CNS. The following table summarizes outstanding share data for the
three and twelve months ended March 31, 2009.
Three months ended Twelve months ended

March 31, 2009 March 31, 2009
Weighted average shares outstanding
Basic 113,708,941 113,565,580
Options (1) – –
Diluted 113,708,941 113,565,580
Trading Statistics
High 0.36 1.64
Low 0.07 0.07
Average daily volume 511,729 315,113
(1) Anti-dilutive incremental options are excluded from the weighted average diluted shares outstanding.
At July 27, 2009, the Company had 113,708,941 shares outstanding and 10,262,000 options outstanding.
Capital Resources
At March 31, 2009, the Company had $7.0 million of net working capital, including cash and cash equivalents of $5.5 million and no debt.
As a result of the current global financial crisis, the availability of both equity and debt has tightened significantly. Management anticipates
the Company will have adequate liquidity and capital resources to fund its capital expenditures through a combination of cash flow from
operations and cash on hand. In the event that debt and equity markets continue to be difficult or a there is a prolonged down turn in
commodity prices, the Company would consider strategic alternatives including but not limited to a strategic merger, disposition of
assets, or reduction in capital program. Failure to obtain such financing on a timely basis could cause the Company to forfeit its interest
in certain properties and reduce or terminate operations.
Contractual obligations, commitments and contingencies

Pursuant to current production sharing contracts (“PSC’s”) the Company is required to perform minimum exploration activities that
include acquisitions and processing of seismic data and drilling of exploration wells. The Company plans to fund these costs with existing
cash balances and cash flow from operations. These obligations have not been provided for in the financial statements.
The Company has office lease commitments in Noida and Jorhat in India and Calgary, Canada.
The following are the anticipated payments under the contracts:
PSCs Office leases Total

2009 $ 2,746 $ 656 $ 3,402
2010 6,300 556 6,856
2011 3,394 247 3,641
2012 2,100 164 2,264
Total $ 14,540 $ 1,623 $ 16,163
On September 20, 2007 the Company entered into an agreement with a private fund based in Jersey, Channel Islands, whereby the fund
provided limited-recourse funding of $10.0 million for appraisal and development drilling in the Company’s Amguri Field in Assam,
India. The funds have been expended.
HAT UZZAL GOGOI - JORHAT VIJAY PAL KANOJIA - NOIDA

28
The fund does not have a participating interest in the field, nor is it responsible for future capital costs. The fund only receives payments
based on the Company’s 60 percent share of gross revenue from the Amguri Field ranging from seven percent before recovery of the
original $10.0 million and 3.5 percent thereafter. The agreement provides that the Company shall have a termination option between
September 20, 2010, the third anniversary of the agreement, and December 31, 2012 to buy back the fund’s entitlement for $15.0
million before recovery, or for $12.8 million after recovery of the fund’s initial $10.0 million. If this termination option is exercised by the
Company, the fund will be granted, subject to TSX approval, 5.0 million warrants to acquire 5.0 million common shares of the Company,
exercisable within nine months from the date of issue at an exercise price of Cdn$2.00 per common share. If the Company declines to
exercise the termination option within the stated time period, the fund will retain its revenue entitlement to the Amguri field.
Subsequent Events
On June 1, 2009, High Artic Energy Services L.P. (HAES) filed a statement of claim in the Court of Queen’s Bench of Alberta
against the Company for the amount of $1.3 million relating to invoices submitted to the Company. On June 30, 2009 the Company
filed a defence to the HAES claim as well as a counterclaim for damages of $5 million, an Order for an accounting of the costs and
expenses invoiced to the Company by HAES, pre-judgment interest and costs. On July 22, 2009 HAES filed a defence to the Company’s
counterclaim. As legal proceedings have only recently been commenced, and as no examinations for discovery have yet taken place, the
likelihood of success of the claim or counterclaim is not yet determinable.
On July 24, 2009, Canoro announced it entered into an agreement with, a private fund (“Fund”) based in Jersey, Channel Islands,
whereby the Fund will provide limited-recourse funding of US$4 million for the purchase and installation of the gas compression units
as part of development operations in the Amguri Field in Assam, India. The Fund will not earn a participating interest in the field, nor
will it be responsible for future capital costs. The Fund will only be entitled to receive repayments based on Canoro’s 60% share of gross
revenue from the Amguri Field ranging from 8% before recovery of the original US$4 million, declining to 4% thereafter.
The agreement also provides that Canoro shall have the option between July 2012 and December 31, 2012 after the Fund’s recovery of its
initial investment, to buy back the Fund’s entitlement for US$5.1 million. If such option is exercised by Canoro, the Fund will be granted,
subject to TSX Venture approval, warrants to subscribe for two million common shares of the Company, exercisable within six months
from the date of issue at a subscription price of CDN $0.20 per share.
SUMMARY OF QUARTERLY RESULTS

2009 2008
($ thousands, except
per share amounts) Q4 Q3 Q2 Q1 Q4 Q3 Q2 Q1
Petroleum and
natural gas sales 1,386 1,500 4,012 4,201 1,715 1,091 1,253 748
Cash flow from/
(used) in operating
activities 1,405 (2,422) 4,406 (1,700) (3,220) (3,327) 276 77
Net Loss (2,663) (2,678) (582) (381) (755) (1,974) (1,438) (2,921)
Per share –
basic and diluted (0.02) (0.02) (0.01) – (0.01) (0.02) (0.02) (0.03)
Capital
expenditures 3,829 11,685 7,898 6,588 5,445 3,253 138 4,871
Total boe/day 645 651 923 904 390 287 295 267
Total Assets 88,786 92,842 90,604 91,704 90,364 90,098 67,732 59,974

The fluctuations in petroleum and natural gas sales over the past eight quarters is due to the volatility in oil prices and increased production
volumes in fiscal 2009 over fiscal 2008. The Company has reported a loss over the past eight quarters primarily due to non-cash charges
such as depletion and stock-based compensation. During the fourth quarter of 2009, the Company’s capital expenditures decreased
significantly as a result of both drilling rigs being released at the end of December 2008. The decrease in production volumes over the
past two quarters is due to decreased seasonal demand in the region and prudent reservoir management. Total assets have remained
relatively flat since the third quarter of 2008. The large increase in total assets in the third quarter of 2008 is due to the financing that
closed in December 2007.
29
Risk and uncertainties
Financial Resources
The Company’s cash flow from operations may not be sufficient to fund its ongoing activities and implement its business plans. From
time to time the Company may enter into transactions to acquire assets or the shares of other companies. Depending on the future
exploration and development plans, the Company may require additional financing, which may not be available or, if available, may not
be available on favorable terms. Failure to obtain such financing on a timely basis could cause the Company to forfeit its interest in certain
properties, miss certain acquisition opportunities and reduce or terminate operations. If the revenues from the Company’s reserves
decrease as a result of lower oil and natural gas prices or otherwise, it will effect its ability to expend the necessary capital to replace
its reserves or to maintain its production. If cash flow from operations are not sufficient to satisfy capital expenditure requirements,
there can be no assurance that additional debt, equity, or asset dispositions will be available to meet these requirements or available on
acceptable terms. In addition, cash flow is influenced by factors which the Company cannot control, such as commodity prices, exchange
rates, interest rates and changes to existing government regulations and tax policies.
Exploration and Development

The exploration and development of oil and gas deposits involve a number of uncertainties that even thorough evaluation, experience
and knowledge of the industry cannot eliminate. It is impossible to guarantee that the exploration programs of the Company’s properties
will generate economically recoverable reserves. The commercial viability of a new hydrocarbon pool is dependent upon a number of
factors that are inherent to reserves, such as the content and the proximity of infrastructure, as well as oil and gas prices, which are subject
to considerable volatility, regulatory issues such as price regulation, taxes, royalties, import and export of oil and gas and environmental
protection issues. The individual impact generated by these factors cannot be predicted with any certainty, but once combined, may
result in non-economic reserves. The Company remains subject to normal risks inherent to the oil and gas industry such as unusual and
unexpected geological changes in the parameters and variables of the petroleum system and operations.
Operating Hazards and Risks

Exploration for natural resources involves many risks, which even a combination of experience, knowledge and careful evaluation may
not be able to overcome. Operations in which the Company has a direct or indirect interest will be subject to all the hazards and risks
normally incidental to exploration, development and production of resources, any of which could result in work stoppages, damages to
persons or property and possible environmental damage.
Although the Company has obtained liability insurance in an amount it considers adequate, the nature of these risks is such that liabilities
might exceed policy limits, the liabilities and hazards might not be insurable, or the Company might not elect to insure itself against
such liabilities due to high premium costs or other reasons, in which event the Company could incur significant costs that could have a
material adverse effect upon its financial condition.
Reserve Estimates
Despite the fact that the Company has reviewed the estimated figures related to potential reserve evaluation and probabilities attached
thereto and is of the opinion that the methods used to appraise these estimates are adequate, these figures remain estimates, even though
they have been calculated or validated by independent appraisers. The reserves disclosed by the Company should not be interpreted as
assurances of property life or the profitability of current or future operations given that there are numerous uncertainties inherent in the
estimation of economically recoverable oil and gas reserves.
Fluctuating Prices
Revenues from oil and gas sales vary accordingly to the existence of cost recovery pool balances. The Company’s revenues, if any, are expected
to be in large part derived from the extraction and sale of oil and gas. The price of oil has fluctuated widely, particularly in recent years, and is
affected by numerous factors beyond the Company’s control, including international economic and political trends, expectations of inflation,
war, currency exchange fluctuations, interest rates, global or regional consumptive patterns, speculative activities and increased production due
to new extraction developments and improved extraction and production methods. The effect of these factors on the price of oil, and therefore
the economic viability of any of the Company’s exploration projects, cannot be accurately predicted.
30
Environmental Factors
All phases of the Company’s operations are subject to environmental regulation in India. Environmental legislation is evolving in a manner
which requires stricter standards and enforcement, increased fines, and penalties for non-compliance, more stringent environmental
assessments of proposed projects and a heightened degree of responsibility for companies and their officers, directors and employees. The
current exploration, development and production activities of the Company require certain permits and licenses from the Directorate
General Hydrocarbons and other governmental agencies and such operations are, and will be, governed by laws and regulations governing
exploration, development and production, labor laws, waste disposal, land use, safety, and other matters. There can be no assurance that all
licenses and permits that the Company may require to carry out exploration and development of its projects will be obtainable on reasonable
terms or on a timely basis, or that such laws and regulation would not have an adverse effect on any project that the Company may undertake.
Political Risk
The Company’s projects are located in Northeast India and consequently the Company is subject to certain risks, including currency
fluctuations and possible political, economic civil and/or labour unrest which may result in the disruption of exploration and development
activities. The states of Assam, Nagaland and Arunachal Pradesh are home to strong independence movements. Over the past several years,
varying degrees of social upheaval and criminal activity has occurred in the regions related to these independence movements. While the
situation is presently stable in the areas in which the Company operates and the Company believes that it has good relationships in these
areas, there can be no guarantee that the Company will not be affected in the future. Additionally, the continued perception that the situation
has not stabilized or improved may hinder the Company’s ability to access capital in a timely or cost effective manner.
Retention of Key Employees

The Company is dependent on retaining the services of a small number of key personnel of the appropriate caliber as its business
develops. The success of the Company is, and will continue to be to a significant extent, dependent on the expertise and experience of
the directors and senior management and the loss of one or more could have a materially adverse effect on the Company.
Exchange Rate Volatility

To the extent revenues and expenditures denominated in, or strongly linked to, the US dollar and the Indian Rupee (Rs) are not
equivalent; the Company is exposed to exchange rate risk. In India, the Company is exposed to the extent that US dollar revenues
for crude oil sales do not equal US dollar expenditures and that Rs revenues from natural gas sales do not equal Rs expenditures.
The Company is not currently using exchange rate derivatives to manage exchange rate risk.
Repatriation of earnings
Currently there are no restrictions on the repatriation from India of earnings to foreign entities. However, there can be no assurance
those restrictions on repatriation of earnings from India will not be imposed in the future.
Disruptions in Production
Other factors affecting the production and sale of oil and gas that could result in decreases in profitability include: (i) expiration or
termination of permits or licenses, or sales price redeterminations or suspension of deliveries; (ii) future litigation; (iii) the timing
and amount of insurance recoveries; (iv) work stoppages or other labor difficulties; (v) changes in the market and general economic
conditions, monsoon conditions, equipment replacement or repair, fires, civil unrest or other unexpected geological conditions that can
have a significant impact on operating results.
Financial Risk Management

The Company is exposed to financial risks due to the nature of its business and the financial assets and liabilities it holds. The following
discussion reviews material financial risks, quantifies the associated exposures, and explains how these risks, and the Company’s capital,
are managed. Additional information in respect of the Company’s risks may be found in the Annual Information Form.
a) Market Risk
Changes in commodity prices and foreign currency exchange rates can have an impact on the Company’s earnings and value of
financial assets and liabilities.
Commodity price risk – Commodity price risk is the risk that the fair value or future cash flows will fluctuate as a result of changes
in commodity prices. The Company is exposed to commodity price risk due to the nature of its business. Oil and natural gas prices
are impacted by global supply and demand, as well as political and other forces. For the majority of natural gas production, the
Company receives a fixed price of 3,840 rupees (Rs) per 1000 m3, approximately $2.73 mcf. The Company also has a contract for
the life of production sharing contract to sell 12,000 m3/d (approximately 340 mcf per day) at 2,304 Rs per 1000 m³, (approxi-
mately $1.64 per mcf). The Company is paid in rupees and is subject to foreign exchange fluctuations on the average price received
on changes between the rupee and US$. Although the Company is not directly impacted by fluctuations in natural gas prices due
31
to the nature of their contracts, as prices around the world increase for natural gas there is continued market pressures to increase
the price received for natural gas in India which would benefit the Company. The Company receives world oil prices for its oil
production and is subject to price fluctuations. The price received for crude oil is very volatile and can undergo significant changes
in relatively short time periods. The highest monthly average price during the year was $137.96 in the month of July compared to
lowest monthly average of price received of $44.37 in the month of December. As at March 31, 2009 the Company did not have any
derivative commodity price contracts in place however, in the future, the Company may enter into such contracts in order to manage
its commodity price risk. Based on actual sales volumes recorded for the year ended March 31, 2009, a US$1.00 per barrel increase
(decrease) in oil prices would have increased (decreased) net earnings by $0.1 million. As the Company continues to increase
production, earnings will become more impacted by commodity prices, primarily oil.
Foreign currency exchange rate risk – Foreign exchange rate risk is the risk that the fair value of future cash flows will fluctuate
as a result of changes in foreign exchange rates. The reporting currency of the Company is United States dollars. Substantially all of
the Company’s operations are in foreign jurisdictions and as a result, the Company is exposed to foreign currency exchange rate risk
on some of its activities primarily on exchange fluctuations between the rupee and the US$. Oil revenues are denominated in US$,
while natural gas revenues are denominated in Indian rupees. Operating and capital expenditures are incurred in various currencies,
including, US dollars, Indian rupees and Canadian dollars. The majority of capital expenditures are incurred in US$ and oil revenues
are received in US$ therefore the Company’s exposure to foreign exchange is minimal. The Company may enter into derivative
foreign currency contracts in order to manage foreign currency exchange rate risk, but has not done so to date.
The table below shows the Company’s exposure to foreign currencies for its financial instruments:
Total US$ Rs CAD

As at March 31, 2009 per FS (1) US$ Equivalent
Cash and cash equivalents 5,456 5,314 142 –
Accounts receivable 10,400 9,903 485 12
Accounts payable (9,789) (9,430) (174) (185)
Balance sheet exposure 6,067 5,787 453 (173)
(1)
denotes Financial statements

The Company believes a three percent change in the US$ against these foreign currencies would be reasonably possible within the
next three month reporting period. A three percent strengthening of the US$ would result in a change in earnings as follows (an
equal but opposite impact to earnings would result if the US$ weakened by three percent):
Rs CAD
As at March 31, 2009 US$ Equivalent
Decrease in earnings 14 (5)
b) Credit Risk
Credit risk is the risk of a financial loss to the Company if a customer or counterparty to a financial instrument fails to meet its
contractual obligation and arises principally from joint venture partners and natural gas and oil marketers. The Company is exposed
to credit risk in respect to its cash and cash equivalents and accounts receivables. Cash and cash equivalents are held in operating
accounts with highly rated Canadian banks and therefore the Company considers these assets to have negligible credit risk. Virtually
all of the Company’s accounts receivable are from counterparties in the oil and gas industry and are subject to normal industry
credit risks. The Company’s production base is entirely in the Assam state in North East India. For both the Amguri and AAON/7
production sharing contracts, the Company has the same joint partner for both contracts thereby significantly concentrating the
exposure to credit risk for the Company. The Company believes credit risk from its joint venture partner is mitigated by the default
provisions within the production sharing contracts. The default provisions are very punitive to the party in default and can include
additional working interest reverting to the operator if certain conditions are not met by the defaulting party. Revenue receivables
are from both government agencies in India and large international oil and gas companies. The carrying amount of cash and cash
equivalents and accounts receivable represents the Company’s maximum credit exposure.
As at March 31, 2009, the Company’s accounts receivable is aged as follows:

Current (less than 90 days) $ 8,793
Past due (more than 90 days) 1,607
Total $ 10,400
32
c) Liquidity Risk
The Company manages its risk of not meeting its financial obligations through management of its capital structure, annual budgeting
of its revenues, expenditures and cash flows. On a monthly basis, internal reporting of actual results is compared to the budget in
order to modify budget assumptions, if necessary, to ensure liquidity is maintained. The Company believes it has adequate cash
flows and cash on hand to discharge its financial obligations. In the event that the Company’s receivables are not collected from its
joint venture partner, the Company may be required to seek other alternatives of financing which may be unavailable on reasonable
terms or curtail capital expenditures to satisfy outstanding obligations.
d) Capital Management
The Company defines its capital as shareholder’s equity. The Company’s objective is to maintain a strong capital position in order
to execute its business plan and maximize value to shareholders. Availability of capital is critical for future success and as such,
the Company strives to maintain strong relationships with the capital investment community. Methods employed to adjust the
Company’s capital structure could include any, all, or a combination of the following activities:
• Repurchase shares pursuant to a normal course issuer bid;
• Issue new shares through a public offering or private placement;
• Issue equity linked or convertible debt;
• Raise fixed or floating rate debt.
The Company is not subject to any externally imposed capital requirements.
Critical accounting policies / critical accounting estimates

Canoro’s financial statements have been prepared in accordance with Canadian general accepted accounting principles. Certain
accounting policies require management to make decisions with respect to the formulation of estimates and assumptions that affect
the reported amounts of assets, liabilities, revenues and expenses. Canoro’s management reviews their estimates frequently; however,
the emergence of new information and changed circumstances may result in actual results or changes to estimated amounts that differ
materially from current estimates. Canoro attempts to mitigate this risk by employing individuals with the appropriate skill set and
knowledge to make reasonable estimates; developing internal reporting systems; and comparing past estimates to actual results.
Petroleum and Natural Gas Reserves

All of Canoro’s petroleum and natural gas reserves are evaluated and reported on by independent petroleum engineering consultants
in accordance with Canadian Securities Administrators’ National Instrument 51-101. The evaluation of reserves is a subjective process.
Forecasts are based on engineering data, projected future rates of production, commodity prices and the timing of future expenditures,
all of which are subject to numerous uncertainties and various interpretations. The Company expects that its estimates of reserves will
change to reflect updated information. Reserve estimates can be revised upward or downward based on the results of future drilling,
testing, production levels and changes in costs and commodity prices.
Depletion Expense
The Company uses the full cost method of accounting for exploration and development activities whereby all costs associated with these
activities are capitalized, whether successful or not. The aggregate of capitalized costs, net of certain costs related to unproved properties,
and estimated future development capital is amortized using the unit-of-production method based on estimated proved reserves. Changes
in estimated proved reserves or future development capital have a direct impact on depletion expense.
Certain costs related to unproved properties and major development projects may be excluded from costs subject to depletion until proved
reserves have been determined or their value is impaired. These properties are reviewed quarterly to determine if proved reserves should be
assigned, at which point they would be included in the depletion calculation, or for impairment, for which any write-down would be charged
to depletion and depreciation expense.
Full Cost Accounting Ceiling Test

The carrying value of property, plant and equipment is reviewed at least annually for impairment. Impairment occurs when the carrying
value of the assets is not recoverable by the future undiscounted cash flows. The cost recovery ceiling test is based on estimates of proved
reserves, production rates, petroleum and natural gas prices, future costs and other relevant assumptions. By their nature, these estimates
are subject to measurement uncertainty and the impact on the financial statements could be material. Any impairment would be charged
as additional depletion expense.
Asset Retirement Obligations

The asset retirement obligation is estimated based on existing laws, contracts or other policies. The fair value of the obligation is based
on estimated future costs for abandonments and reclamations discounted at a credit adjusted risk free rate. The liability is adjusted each
reporting period to reflect the passage of time, with the accretion charged to earnings and for revisions to the estimated future cash flows.
By their nature, these estimates are subject to measurement uncertainty and the impact on the financial statements could be material.
33
Income Taxes
The determination of the Company’s income and other tax assets or liabilities requires interpretation of complex laws and regulations
often involving multiple jurisdictions including Canada and India. All tax filings are subject to audit and potential reassessment after the
lapse of considerable time. Accordingly, the actual income tax asset or liability may differ significantly from that estimated and recorded.
Guarantees and off-balance sheet arrangements

Canoro has not entered into any off-balance sheet arrangements except for certain lease agreements entered into in the normal course
of operations. All leases are operating leases with lease payments charged to operating expenses or general and administrative expenses
according to the nature of the lease.
Recent Accounting Pronouncements

The following accounting pronouncements have been issued by the Canadian Accounting Standards Board, but were not in effect at
the date of the current financial statements. These pronouncements may have an impact on the Company’s future financial reporting.
Goodwill and Intangible Assets

Effective April 1, 2009, the Company will be required to adopt this standard, which replaces GAAP sections 3062 and 3450 and provides
guidance relating to the recognition, measurement, presentation and disclosure of goodwill and intangible assets. The Company is
currently assessing the impact of this standard.
Convergence of Canadian GAAP with International Financial Reporting Standards (“IFRS”)

In February of 2008, the Canadian Accounting Standards Board confirmed January 1, 2011 as the effective date for the requirement to report
under International Financial Reporting Standards (“IFRS”) with comparative 2010 periods converted as well. The Company has developed
a high level changeover plan to assess in detail all aspects of the changeover to IFRS, including appropriate changes to accounting policies
and financial disclosures, effects on information systems and processes, changes to internal controls over financial reporting and business
activities, in order to complete the transition to IFRS by April 1, 2011. The project will be managed by an in-house team of accounting profes-
sionals who have attended and will continue to attend training session’s specific to IFRS adoption. The Corporations auditors will be involved
throughout the process to access whether the Corporations policies are in accordance with these new standards. Canoro will update its IFRS
changeover plan to reflect new and amended accounting standards issued by the International Accounting Standards Board. As IFRS is
expected to change prior to 2011, the effect on the Company’s consolidated financial statements is not reasonably determinable at this time.
2009/10 Outlook
Strategy
Canoro is engaged in the acquisition, development and exploration for, and production and marketing of petroleum and natural gas
in India. Presently, the Company holds two properties or Production Sharing Contracts (PSC) in the States of Assam and Arunachal
Pradesh, India.
The Company strives to create shareholder value through the acquisition, exploration and development of prospective oil and gas areas
in India and elsewhere. The Company has achieved competitive advantages in India by focusing on relationships, experience, technology
and good international oilfield practices. While the competition for attractive development properties is intense, the Company
believes that this strategy is viable and offers an attractive risk-reward ratio for shareholders. The Company focuses on areas where the
management has long-standing experience and above-average relationships.
2009/10 Capital Spending

The Company is forecasting capital expenditures of approximately of approximately $9.0 to $11.0 million over the next 12-18 months
primarily on the gas compression project.
2009/10 Production Guidance

For fiscal 2010, the Company is forecasting average production of 700 boe/d to 900 boe/d and an exit rate of in excess of 1,000 boe/d. The
exit production is not significantly higher than the average production for fiscal 2010, however, the commissioning of the compression
project is projected to change the production mix of the Company from approximately 70 percent natural gas and 30 percent condensate
to greater than 60 percent condensate by year end. The impact on cash flow from operations will be significant as the Company received
approximately $13.07 per boe for natural gas production and $95.76 per bbl for oil during the year.
SEDAR filings
Additional information about Canoro is available on the Canadian Securities Administrators’ System for Electronic Document Analysis
and Retrieval (SEDAR) at www.sedar.com and at the Company’s website at www.canoro.com.
34
NOTES TO the Consolidated Financial Statements
Management’s Report
The accompanying consolidated financial statements of Canoro Resources Ltd., and all other financial and operating
information contained in this report are the responsibility of management. The consolidated financial statements have
been prepared in accordance with the accounting policies detailed in the notes to the consolidated financial statements
and in accordance with generally accepted accounting principles in Canada.
The Company’s systems of internal control have been designed and maintained to provide reasonable assurance that
assets are properly safeguarded and that the financial records are sufficiently well maintained to provide relevant,
timely and reliable information to management.
External auditors, appointed by the shareholders, have independently examined the consolidated financial statements
in accordance with generally accepted auditing standards in Canada. They have performed such tests as they have
deemed necessary to enable them to express an opinion on these consolidated financial statements.
An Audit Committee of the Board of Directors has reviewed these consolidated financial statements with management
and the external auditors. The Board of Directors has approved the consolidated financial statements on the recom-
mendation of the Audit Committee.
Les Kondratoff S. Brian Gieni

President and Chief Executive Officer Senior Vice President, Chief Financial Officer
and Country Manager
July 27, 2009

35
Auditors’ Report
We have audited the consolidated balance sheets of Canoro Resources Ltd., as at March 31, 2009 and 2008 and the consolidated
statements of operations and deficit, comprehensive income, and cash flows for the years then ended. These consolidated financial
statements are the responsibility of the Company’s management. Our responsibility is to express and opinion on these consolidated
financial statement based on our audit.
We conducted our audits in accordance with Canadian generally accepted auditing standards. Those standards require that we plan and
perform an audit to obtain reasonable assurance whether the financial statements are free of material misstatement. An audit includes
examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing
the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement
presentation.
In our opinion, these consolidated financial statements present fairly, in all material respects, the financial position of the Company as
at March 31, 2009 and 2008 and the results of its operations and its cash flows for the years then ended in accordance with Canadian
generally accepted accounting principles.
KPMG LLP Chartered Accountants
July 27, 2009

36
Consolidated Financial Statements of Canoro Resources Ltd.
For the years ended March 31, 2009 and 2008
Consolidated Balance Sheets

As at March 31 2009 2008
(Thousands of United States dollars)
Assets
Current assets
Cash and cash equivalents 5,456 23,993
Restricted cash (Note 8) – 9,741
Investment 28 80
Accounts receivable 10,400 8,323
Inventory 113 401
Prepaid expenses and deposits 781 767
16,778 43,305
Property, plant and equipment (Note 4) 72,008 47,059

Total Assets 88,786 90,364
Liabilities and Shareholders’ Equity

Current liabilities
Accounts payable and accrued liabilities 9,789 7,760
Asset retirement obligations (Note 5) 859 513
Shareholders’ equity
Common shares (Note 7) 86,883 85,597
Contributed surplus (Note 7) 14,051 12,986
Accumulated other comprehensive income 8,332 8,332
Deficit (31,128) (24,824)
78,138 82,091
Total Liabilities and Shareholders’ Equity 88,786 90,364

Future operations (Note 1)
Entitlement fund (Note 6)
Contingent liabilities (Note 11)
Contractual obligations and commitments (Note 12)
Subsequent events (Note 14)
See accompanying notes to the consolidated financial statements.
Approved by the Board:

Douglas R. Martin Robert S. Wynne
Director Director
37
Consolidated Statements of Operations and Deficit

Years ended March 31 2009 2008
Revenues
Petroleum and natural gas sales 11,099 4,817
Royalties (1,142) (363)
Investment gain – 26
Interest income and other 247 870
10,204 5,350
Expenses
Operating 1,531 756
General and administrative 6,929 4,917
Stock-based compensation 1,247 2,668
Foreign exchange loss 899 123
Unrealized investment loss 52 383
Depletion, depreciation and accretion 5,850 3,591
16,508 12,438
Net loss (6,304) (7,088)
Deficit, beginning of period (24,824) (17,736)
Deficit, end of period (31,128) (24,824)
Basic and diluted loss per share (Note 7) (0.06) (0.06)
Consolidated Statements of Comprehensive Income

Net loss (6,304) (7,088)

Other comprehensive income:
Foreign exchange adjustment on change in reporting currency – 12,283
Comprehensive income/(loss) (6,304) 5,195

38
Consolidated Financial Statements of Canoro Resources Ltd.
Consolidated Statements of Cash Flows

Operating Activities
Net loss (6,304) (7,088)
Non cash items
Depletion, depreciation and accretion 5,850 3,591
Unrealized foreign exchange (gain)/loss 1,124 (847)
Unrealized investment loss 52 383
Gain on sale of investment – (26)
Stock-based compensation 1,247 2,668
Net change in non-cash working capital (280) (4,876)
1,689 (6,195)
Financing Activities
Issuance of common shares, net of costs 689 31,684
689 31,684
Investing Activities
Additions to property, plant and equipment (net) (30,000) (13,708)
Proceeds on sale of investments – 708
Restricted cash 9,741 (3,365)
Change in non-cash working capital (1,556) 280
(21,815) (16,085)
Net effect of foreign exchange on cash denominated in foreign currencies 900 1,577
Net change in cash and cash equivalents (18,537) 10,981
Cash and cash equivalents, beginning of period 23,993 13,012
Cash and cash equivalents, end of period 5,456 23,993
Cash flow supplemental information:

Interest received 222 881

39
Notes to Consolidated Financial Statements

For the years ended March 31, 2009 and 2008
(All tabular amounts are expressed in thousands of United States dollars, except per share amounts or otherwise noted)
1. Future OperationS
These financial statements have been prepared by management on the basis of accounting principles applicable to a going
concern, which assumes that the Company will continue in operation for the foreseeable future and will be able to realize
its assets and discharge its obligations in the normal course of operations. As at March 31, 2009, the Company had working
capital of $7.0 million and had incurred a net loss of $6.3 million and generated $1.7 million of cash from operating activities
for the year ended March 31, 2009. See Note 12 for details on contractual obligations and commitments of the Company. The
application of the going concern concept is dependent upon the Company’s ability to generate future profitable operations.
Management regularly monitors funding requirements along with the Company’s asset portfolio, operational activities, and
market conditions to ensure they are appropriately balanced by either revising the Company’s financing plans, making changes
to operational activities, realizing assets or raising capital as required. Such changes may possibly include the realization of
assets or settling of liabilities other than in the normal course of business at amounts that may be different to those stated in the
financial statements. Management believes the going concern assumption to be appropriate for these financial statements. If
the going concern assumption is not appropriate, adjustments might be necessary to the carrying values of assets and liabilities,
reported revenues and expenses, and the balance sheet classifications used in the consolidated financial statements.
2. Significant accounting policies

(a) Basis of presentation:
These consolidated financial statements include the accounts of the Company and its subsidiaries, all of which are wholly–
owned. The audited consolidated financial statements have been prepared in accordance with Canadian generally accepted
accounting principles. The preparation of financial statements in accordance with Canadian generally accepted accounting
principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities
and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenue
and expenses during the reporting period. Actual results may differ from these estimates. Certain of the comparative amounts
have been reclassified to conform to current period presentation.
(b) Petroleum and natural gas properties:
(i) Capitalized costs
The Company follows the full cost method of accounting for its petroleum and natural gas properties. Under
this method, all costs related to the exploration for, and development of, petroleum and natural gas reserves are
capitalized in cost centers on a country–by–country basis. Costs include lease acquisition costs, geological and
geophysical expenses, overhead directly related to exploration and development activities, and costs of drilling
both productive and non–productive wells. Proceeds from the sale of properties are applied against capitalized
costs, without any gain or loss being realized, unless such sale would significantly alter the rate of depletion and
depreciation by 20 percent or more.
(ii) Depletion and depreciation
Depletion of petroleum and natural gas properties and depreciation of production equipment is provided
using the unit–of–production method based upon estimated proven petroleum and natural gas reserves, before
royalties, on a cost centre basis. The costs of significant unevaluated properties and major development projects
are excluded from costs subject to depletion. For depletion and depreciation purposes, relative volumes, before
royalties, of petroleum and natural gas production and reserves are converted at the energy equivalent conversion
rate of six thousand cubic feet of natural gas to one barrel of crude oil.
(iii) Impairment tests
In following the full cost method, an impairment loss is recognized when the carrying amount of the petroleum
and natural gas properties of a cost centre is not recoverable and exceeds its fair value. The carrying amounts are
assessed to be unrecoverable when the sum of the undiscounted cash flows expected from the production of
proved reserves, the lower of cost and market value of unproved properties and the cost of major development
40
projects are less then the carrying amount of the cost centre. In determining the amount of impairment, the
carrying amount of oil and gas properties capitalized in a cost centre is compared to the fair value of the associated
proved and probable reserves and the lower of cost and market value of any unproved properties which are subject
to a separate test for impairment. In determining the fair value of the proved and probable reserves, the Company
uses cash flows based upon oil and gas prices as quoted in the futures market where obtainable, adjusted for quality
differences, transportation, foreign exchange and other relevant factors. These cash flows are then discounted
using a risk–free interest rate. If the carrying value of the oil and gas properties is in excess of its fair value (the
“ceiling test”), the excess is charged against earnings as additional depletion and depreciation.
(iv) Joint activities
The Company conducts substantially all of its oil and gas exploration and production activities on a joint basis.
These financial statements reflect only the Company’s proportionate interest in such activities.
(c) Asset retirement obligations
The Company recognizes the liability associated with future abandonment and site restoration costs in the financial
statements at the time the liability is incurred, normally when the related asset is purchased or developed. When
incurred, the liability will be measured at its fair value with a corresponding increase to property, plant and equipment
and, over time, will be accreted up to the actual expected cash outlay to perform the abandonment and reclamation. This
accretion to the liability will be expensed through the Company’s consolidated statement of operations. The increase to
property, plant and equipment, known as the “asset retirement cost”, results in an increase to depletion expense over the
life of the Company’s proven reserves.
(d) Office furniture and equipment
Depreciation of office furniture and equipment is based on estimates of useful lives and is calculated using the declining
balance method at rates ranging from 20 percent to 100 percent per annum.
(e) Foreign currency translation
The Company translates foreign currency denominated monetary assets and liabilities at the exchange rate in effect
at the balance sheet date and non–monetary assets and liabilities are translated at historical exchange rates. Revenues
and expenses are translated at transaction date exchange rates except depletion and depreciation expenses, which is
translated at the same historical exchange rates as the related assets. Exchange gains or losses are included in the determi-
nation of net income as foreign exchange loss.
(f) Revenue recognition
Revenues associated with the sale of crude oil and natural gas is recorded when title passes to the customer. Revenues
from crude oil and natural gas production from properties from which the Company has an interest with other producers
is recognized on the basis of the Company’s net working interest.
(g) Inventory
Inventories of petroleum products, comprising of crude oil and condensate, are valued at the lower of cost and net
realizable values. Cost is determined based upon actual operating, transportation and depletion costs.
(h) Income taxes
The Company follows the asset and liability method of accounting for income taxes. Under this method, temporary
differences arising from the difference between the tax basis of an asset or liability and its carrying amount on the balance
sheet are used to calculate future income tax liabilities or assets. Future income tax liabilities or assets are calculated using
substantively enacted tax rates anticipated to apply in the periods that the temporary differences are expected to reverse.
A valuation allowance is recorded against any future income tax assets if it is more likely than not that the assets will not
be realized.
(i) Per share data
Basic per share amounts are computed by dividing net loss from operations by the weighted average number of common
shares outstanding for the period. Diluted per share amounts reflect the potential dilution that could occur if securities
or other contracts to issue common shares were exercised or converted to common shares. The treasury stock method is
used to determine the dilutive effect of stock options and other dilutive instruments. Under the treasury stock method,
only options for which the exercise price is less than the market value impact the dilution calculations.
41
(j) Cash and cash equivalents

Cash and cash equivalents are comprised of cash, term deposits and other highly liquid investments with an original
maturity of three months or less at the time of purchase.
(k) Stock–based compensation
The Company uses the fair value method for valuing stock options granted as stock–based compensation. Under the fair
value method, a compensation cost is measured at fair value for stock options granted at the grant date and expensed over
the vesting period with a corresponding increase to contributed surplus. Upon the exercise of the stock options, consider-
ation paid together with the amount previously recognized as contributed surplus, is recorded as an increase to share capital.
(l) Management estimates
The preparation of the financial statements in conformity with Canadian generally accepted accounting principles
requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities
and the disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts
of revenues and expenses during the reporting periods. Actual results could differ from those estimates. The most
significant estimates relate to determining the cost recoverability of the Company’s property, plant and equipment and
the provisions for depletion, depreciation and accretion, which are based upon such estimates as proven reserves and
future development and abandonment costs.
(m) Financial instruments
All financial instruments are recorded initially at estimated fair value on the balance sheet and classified into one of
five categories: held for trading, held to maturity, available for sale, loans and receivables and other liabilities. Cash and
cash equivalents, restricted cash and investments are classified as held for trading and measured at estimated fair value.
Accounts receivable are classified as loans and receivables and measured at amortized cost. Accounts payable is classified
as other liabilities and measured at amortized cost.
The Company may enter into derivative contracts (commodity price, interest rate or foreign currency) in order to manage
risk. Derivative contracts are marked–to–market at each reporting period with the change in estimated fair value recorded
as gain or loss in earnings. The Company does not utilize derivative contracts for speculative purposes, has not designated
any derivative contracts as hedges, and has not recorded any assets or liabilities as a result of embedded derivatives.
The estimated fair value of cash and cash equivalents, restricted cash, accounts receivable and accounts payable
approximate their carrying amounts due to their short terms to maturity.
3. Changes in accounting policies

(a) Change in functional currency
Effective April 1, 2008, the Company’s functional currency changed from Canadian dollars to US$ as a result of increased
significance of the US$ to the Company’s cash flows. Amongst other things, the increased significance of the US$ is a
result of increased capital expenditures being in US$ and an increased proportion of revenues being earned in US$. As
both the functional and reporting currencies of the Company are in US$, there are no translation gains and losses that
will impact accumulated other comprehensive income.
Monetary assets and liabilities of the Company that are denominated in currencies other than US$ are translated into its
function currency at the rates of exchange in effect at the period end date. Any gains and losses are recorded in earnings.
(b) Upcoming accounting pronouncements
The following accounting pronouncements have been issued by the AcSB, but were not in effect at the date of the current
financial statements. These pronouncements may have an impact on the Company’s future financial reporting.
Goodwill and Intangible Assets
Effective April 1, 2009, the Company will be required to adopt this standard, which replaces CICA Standards and
provides guidance relating to the recognition, measurement, presentation and disclosure of goodwill and intangible
assets. The Company does not expect the standard to have an impact on the financial statements.
Convergence of Canadian GAAP with International Financial Reporting Standards (“IFRS”)
Effective April 1, 2011, the Company will be required to prepare its consolidated financial statements In accordance with In-
ternational Financial Reporting Standards (IFRS), with appropriate comparative figures for the prior year. The Company is
currently assessing the differences between Canadian GAAP and IFRS and the affect on the consolidated financial statements.
42
4. Property, plant and equipment:
March 31, 2009

Accumulated
Depletion and
Cost Depreciation Net Book Value
Petroleum and natural gas properties

India $ 81,955 $ 12,576 $ 69,379
Office furniture and equipment

Canada 1,652 374 1,278
India 1,784 433 1,351
3,436 807 2,629
$ 85,391 $ 13,383 $ 72,008
March 31, 2008

Accumulated
Depletion and
Cost Depreciation Net Book Value
Petroleum and natural gas properties

India $ 52,846 $ 7,124 $ 45,722
Office furniture and equipment
Canada 787 175 612
India 896 171 725
1,683 346 1,337
$ 54,529 $ 7,470 $ 47,059
At March 31, 2009, expenditures associated with the Company’s unproven properties totaling $5.0 million (2008 – $11.2
million) have been excluded from depletion. Estimated future development costs of $13.3 million (2008 – $15.7 million) have
been included in costs subject to depletion. During the year ended March 31, 2009, direct overhead costs totaling $1.1 million
(2008 – $1.2 million) were capitalized relating to the Company’s exploration and development programs in India.
The Company performed a ceiling test calculation at March 31, 2009 to assess the recoverable value of the property, plant and
equipment. The price of crude oil is based upon Nigerian Bonny Light as forecasted by independent reservoir consultants
adjusted for quality differential. Based on these assumptions, the value of the undiscounted future net revenues from the
Company’s proved reserves exceeded the carrying value of property, plant and equipment at March 31, 2009.
The following table summarizes the benchmark prices used in the ceiling test calculation.
Year ended March 31 Oil (US$/Barrel) Gas (US$/mcf)

2010 48.10 2.13
2011 53.89 2.20
2012 58.80 2.31
2013 73.78 2.43
2014 79.56 2.55
Escalate thereafter 2.0% per annum 2.0% per annum
43
5. Asset retirement obligations

The following table represents the reconciliation of the beginning and ending aggregate carrying amount of the obligation
associated with the retirement of oil and gas assets as at March 31, 2009:
Asset retirement obligations, beginning of year $ 513

Obligations incurred 275
Accretion expense 71
Asset retirement obligations, end of year $ 859
The Company’s asset retirement obligation results from its obligations for abandonment of well sites. The Company estimates
the total undiscounted amount of cash flows required to settle its asset retirement obligations is approximately $1.2 million to
be incurred in the years 2025 and 2028. A credit adjusted risk free rate of 10 percent and an inflation rate of seven percent have
been used to determine the fair value of the asset retirement obligation.
6. Entitlement fund
On September 20, 2007 the Company entered into an agreement with a private fund based in Jersey, Channel Islands, whereby
the fund provided limited–recourse funding of $10.0 million for appraisal and development drilling in the Company’s Amguri
Field in Assam, India. The funds have been expended.
The fund does not have a participating interest in the field, nor is it responsible for future capital costs. The fund only receives
payments based on the Company’s 60 percent share of gross revenue from the Amguri Field ranging from seven percent
before recovery of the original $10.0 million and 3.5 percent thereafter. The agreement provides that the Company shall have a
termination option between September 20, 2010, the third anniversary of the agreement, and December 31, 2012 to buy back
the fund’s entitlement for $15.0 million before recovery, or for $12.8 million after recovery of the fund’s initial $10.0 million. If
this termination option is exercised by the Company, the fund will be granted, subject to TSX approval, 5.0 million warrants to
acquire 5.0 million common shares of the Company, exercisable within nine months from the date of issue at an exercise price
of CDN$2.00 per common share. If the Company declines to exercise the termination option within the stated time period, the
fund will retain its revenue entitlement to the Amguri field.
7. Share capital
(a) Authorized
Unlimited voting common shares, without nominal or par value;
Unlimited share purchase warrants; and
Unlimited non–voting preferred shares without nominal or par value.
(b) Common shares issued
(000’s) Number Amount

Balance, beginning of year 112,992 $ 85,597
Exercise of stock options 717 689
Transfer from contributed surplus – 597
Balance, end of year 113,709 $ 86,883
44
(c) Stock options

The following table sets forth a reconciliation of the stock option plan activity for the year ended March 31, 2009:
Weighted average
(000’s) Number exercise price (CAD)
Outstanding options, beginning of year 9,942 1.47
Granted 2,775 0.36
Exercised (717) 0.96
Forfeited (1,548) 1.34
Expired (125) 0.75
Outstanding options, end of year 10,327 1.07
Options exercisable, end of year 7,793 1.24
During the year the Company repriced 1.6 million stock options held by employees. The Company did not reprice any stock
options held by Officers or Directors of the Company.
Weighted Weighted
Average Average
Remaining Remaining
Exercise Price Outstanding at Contractual Life Exercisable at Contractual Life
(CAD) March 31, 2009 (years) March 31, 2009 Exercise Price
$ 0.16 to $ 0.50 3,881 4.0 2,104 3.5

$ 0.51 to $ 1.00 1,050 1.7 1,033 1.6
$ 1.01 to $ 1.50 3,186 2.6 2,846 2.5
$ 1.51 to $ 2.00 1,525 2.4 1,125 1.8
$4.34 685 0.9 685 0.9
10,327 2.9 7,793 2.4
(d) Contributed surplus

The following table sets forth a reconciliation of the contributed surplus balance:
Balance, beginning of year $ 12,986
Grant of options expensed, net of forfeiture 1,247
Capitalized stock based compensation 415
Transfer to share capital (597)
1,065
Balance, end of year $ 14,051
(e) Stock based compensation

The Company has established a stock option plan under which it has granted options to acquire common shares to officers,
directors, employees and key consultants. The plan provides for the granting of options equal to ten percent of the issued and
outstanding common shares of the Company. Options issued under the plan have a term of five years and vest over a two year
period starting on the date of the grant.
The weighted–average fair value of stock options issued during the year ended March 31, 2009 was $0.32 per option. (March
31, 2008 – $1.11) using the Black–Scholes option–pricing model with the following assumptions:

Weighted average fair value of awards $0.32 $1.11

Expected volatility (range) 103% to 108% 88% to 106%
Risk free rate of return 1.71% to 2.88% 2.85% to 4.55%
Expected option life (range) 5 years 5 years
Forfeiture rate 7% 14%

45
f) Loss per share

Net loss per share is computed using the following weighted average common shares:

Basic 113,566 98,801

Diluted (1)
113,566 98,801

(1)
Anti–dilutive incremental options are excluded from the weighted average diluted shares outstanding.
8. Restricted cash
From time to time, the Company is required to post guarantees with the Government of India and letters of credit to its suppliers
of goods and services. As at March 31, 2009, none of the Company’s cash was restricted.
9. Future income taxes

The provision for income taxes differs from the result, which would have been obtained by applying the combined federal and
provincial income tax rates to the Company’s loss before income taxes. This difference results from the following items:
2009 2008
Combined federal and provincial income tax rate 29.25% 31.47%
Expected tax recovery: (1,844) (2,231)

Increase (decrease) resulting from:
Stock–based compensation 366 840
Non taxable loss on sale – 44
Other 474 (177)
Expiration of non–capital losses – 177
Foreign exchange 1,283 –
Reduction in future income tax rate 314 1,160
Net increase in valuation allowance (593) 187
– –
The components comprising the future income taxes are as follows:

2009 2008
Tax assets:
Non–capital loss carry forwards 2,866 2,356
Investments 37 56
Unrealized foreign exchange (367) –
Share issue costs 636 996
Inventory (11) (30)
Property, plant and equipment 1,960 2,387
Asset retirement obligations 181 130
5,302 5,895
Less: valuation allowance (5,302) (5,895)
Future income tax asset $ – $ –
At March 31, 2009, the Company had approximately $14.2 million (2008 – $9.5 million) of losses available to reduce future
taxable income in Canada, expiring in the years 2009 to 2026.
46
10. Geographic segmentation

The Company has a corporate office in Canada and operations in India. Set out below is segmented information on a geographic basis.
For the year ended March 31, 2009 Canada India Consolidated
Petroleum and natural gas sales $ – $ 11,099 $ 11,099
Interest income and other 222 25 247
Net loss 4,651 1,653 6,304
Capital expenditures 865 29,135 30,000
As at March 31, 2009
Total assets $ 5,385 $ 83,401 $ 88,786
For the year ended March 31, 2008 Canada India Consolidated
Petroleum and natural gas sales $ – $ 4,817 $ 4,817
Interest income and other 843 27 870
Net loss 4,755 2,333 7,088
Capital expenditures 591 13,117 13,708
As at March 31, 2008
Total assets $ 35,402 $ 54,696 $ 90,098
11. Contingent liabilities

The Company is subject to legal proceedings and actions arising in the normal course of business. Management believes that
any liabilities, which might arise pertaining to such matters, would not be expected to have a material effect on the Company’s
consolidated financial position.
12. Contractual obligations and commitments

Pursuant to current production sharing contracts (“PSC’s”) the Company is required to perform minimum exploration
activities that include acquisitions and processing of seismic data and drilling of exploration wells. The Company plans to fund
these costs with existing cash balances and cash flow from operations. These obligations have not been provided for in the
financial statements.
The Company has office lease commitments in Noida and Jorhat in India and Calgary, Canada.
The following are the anticipated payments under the contracts:
PSC’s Office leases Total
2009 $ 2,746 $ 656 $ 3,402

2010 6,300 556 6,856
2011 3,394 247 3,641
2012 2,100 164 2,264
Total $ 14,540 $ 1,623 $ 16,163
The Company has an obligation to pay a revenue entitlement as described in Note 6.

47
13. Financial Risk Management

The Company is exposed to financial risks due to the nature of its business and the financial assets and liabilities it holds. The
following discussion reviews material financial risks, quantifies the associated exposures, and explains how these risks, and the
Company’s capital, are managed.
Additional information in respect of the Company’s risks may be found in the Annual Information Form.
a) Market Risk
Changes in commodity prices and foreign currency exchange rates can have an impact on the Company’s earnings and value of
financial assets and liabilities.
Commodity price risk – Commodity price risk is the risk that the fair value or future cash flows will fluctuate as a result of
changes in commodity prices. The Company is exposed to commodity price risk due to the nature of its business. Oil and
natural gas prices are impacted by global supply and demand, as well as political and other forces. For the majority of natural
gas production, the Company receives a fixed price of 3,840 rupees (Rs) per 1000 m3, approximately $2.73 per thousand cubic
feet (mcf). The Company also has a contract for the life of production sharing contract to sell 12,000 m3/d (approximately 340
mcf per day) at 2,304 Rs per 1000 m³ (approximately $1.64 per mcf). The Company is paid in rupees and is subject to foreign
exchange fluctuations on the average price received on changes between the rupee and US$. Although the Company is not
directly impacted by fluctuations in natural gas prices due to the nature of their contracts, as prices around the world increase
for natural gas there is continued market pressures to increase the price received for natural gas in India which would benefit the
Company. The Company receives world oil prices for its oil production and is subject to price fluctuations. The price received
for crude oil is very volatile and can undergo significant changes in relatively short time periods. The highest monthly average
price during the year was $137.96 in the month of July compared to lowest monthly average of price received of $44.37 in
the month of December. As at March 31, 2009 the Company did not have any derivative commodity price contracts in place
however, in the future, the Company may enter into such contracts in order to manage its commodity price risk.
Based on actual sales volumes recorded for the year ended March 31, 2009, a US$1.00 per barrel increase (decrease) in oil
prices would have increased (decreased) net earnings by $0.1 million. As the Company continues to increase production,
earnings will become more impacted by commodity prices, primarily oil.
Foreign currency exchange rate risk – Foreign exchange rate risk is the risk that the fair value of future cash flows will fluctuate
as a result of changes in foreign exchange rates. The reporting currency of the Company is United States dollars. Substan-
tially all of the Company’s operations are in foreign jurisdictions and as a result, the Company is exposed to foreign currency
exchange rate risk on some of its activities primarily on exchange fluctuations between the rupee and the US$. Oil revenues
are denominated in US$, while natural gas revenues are denominated in Indian rupees. Operating and capital expenditures are
incurred in various currencies, including, US dollars, Indian rupees and Canadian dollars. The majority of capital expenditures
are incurred in US$ and oil revenues are received in US$ therefore the Company’s exposure to foreign exchange is reduced.
The Company may enter into derivative foreign currency contracts in order to manage foreign currency exchange rate risk, but
has not done so to date.
The table below shows the Company’s exposure to foreign currencies for its financial instruments:
Total US$ Rs CAD

As at March 31, 2009 per FS (1) US$ Equivalent US$ Equivalent
Cash and cash equivalents 5,456 5,314 142 –

Accounts receivable 10,400 9,903 485 12
Accounts payable (9,789) (9,430) (174) (185)
Balance sheet exposure 6,067 5,787 453 (173)
(1)
denotes Financial statements
48
The Company believes a three percent change in the US$ against these foreign currencies would be reasonably possible within
the next three month reporting period. A three percent strengthening of the US$ would result in a change in earnings as follows
(an equal but opposite impact to earnings would result if the US$ weakened by three percent):
Rs CAD
As at March 31, 2009 US$ Equivalent
Decrease in earnings 14 (5)
b) Credit Risk
Credit risk is the risk of a financial loss to the Company if a customer or counterparty to a financial instrument fails to meet
its contractual obligation and arises principally from joint venture partners and natural gas and oil marketers. The Company is
exposed to credit risk in respect to its cash and cash equivalents and accounts receivable.
Cash and cash equivalents are held in operating accounts with highly rated Canadian banks and therefore the Company
considers these assets to have negligible credit risk.
Virtually all of the Company’s accounts receivable are from counterparties in the oil and gas industry and are subject to normal
industry credit risks. The Company’s production base is entirely in the Assam state in North East India. For both the Amguri
and AAON/7 production sharing contracts, the Company has the same joint partner for both contracts significantly concen-
trating the exposure to credit risk for the Company. The Company believes credit risk from its joint venture partner is mitigated
by the default provisions within the production sharing contracts. The default provisions are very punitive to the party in
default and can include additional working interest reverting to the operator if certain conditions are not met by the defaulting
party. Revenue receivables are from both government agencies in India and large international oil and gas companies.
The carrying amount of cash and cash equivalents and accounts receivable represents the Company’s maximum credit exposure.
As at March 31, 2009, the Company’s accounts receivable is aged as follows:
Current (less than 90 days) $8,793
Past due (more than 90 days) 1,607
Total $10,400
c) Liquidity Risk
The Company manages its risk of not meeting its financial obligations through management of its capital structure, annual
budgeting of its revenues, expenditures and cash flows. On a monthly basis, internal reporting of actual results is compared to
the budget in order to modify budget assumptions, if necessary, to ensure liquidity is maintained.
The Company believes it has adequate cash flows and cash on hand to discharge its financial obligations. In the event that the
Company’s receivables are not collected from its joint venture partner, the Company may be required to seek other alternatives
of financing which may be unavailable on reasonable terms or curtail capital expenditures to satisfy outstanding obligations.
d) Capital Management
The Company defines its capital as shareholder’s equity. The Company’s objective is to maintain a strong capital position in
order to execute its business plan and maximize value to shareholders. Availability of capital is critical for future success and
as such, the Company strives to maintain strong relationships with the capital investment community. Methods employed to
adjust the Company’s capital structure could include any, all, or a combination of the following activities:
• repurchase shares pursuant to a normal course issuer bid;
• issue new shares through a public offering or private placement;
• issue equity linked or convertible debt;
• raise fixed or floating rate debt.
The Company is not subject to any externally imposed capital requirements.
49
14. Subsequent Events

On June 1, 2009, High Artic Energy Services L.P. (HAES) filed a statement of claim in the Court of Queen’s Bench of Alberta
against the Company for the amount of $1.3 million relating to invoices submitted to the Company. On June 30, 2009 the
Company filed a defence to the HAES claim as well as a counterclaim for damages of $5 million, an Order for an accounting
of the costs and expenses invoiced to the Company by HAES, pre-judgment interest and costs. On July 22, 2009 HAES filed a
defence to the Company’s counterclaim. As legal proceedings have only recently been commenced, and as no examinations for
discovery have yet taken place, the likelihood of success of the claim or counterclaim is not yet determinable.
On July 24, 2009, Canoro announced it entered into an agreement with, a private fund (“Fund”) based in Jersey, Channel
Islands, whereby the Fund will provide limited-recourse funding of US$4 million for the purchase and installation of the gas
compression units as part of development operations in the Amguri Field in Assam, India. The Fund will not earn a participat-
ing interest in the field, nor will it be responsible for future capital costs. The Fund will only be entitled to receive repayments
based on Canoro’s 60% share of gross revenue from the Amguri Field ranging from 8% before recovery of the original US$4
million, declining to 4% thereafter.
The agreement also provides that Canoro shall have the option between July 2012 and December 31, 2012 after the Fund’s
recovery of its initial investment, to buy back the Fund’s entitlement for US$5.1 million. If such option is exercised by Canoro,
the Fund will be granted, subject to TSX Venture approval, warrants to subscribe for two million common shares of the
Company, exercisable within six months from the date of issue at a subscription price of CDN $0.20 per share.
50
CORPORATE INFORMATION
Corporate Information
Board of Directors
Douglas R. Martin
Board Chair; Chair, Audit Committee; Member, Compensation Committee Calgary, Alberta, Canada
D. Nolan Blades
Chair, Reserves Committee Calgary, Alberta, Canada
John Boyd
Member, Audit Committee; Member, Reserves Committee Calgary, Alberta, Canada
Jeff Clarke
Member, Corporate Governance Committee Allen, Texas, USA
Harley Winger
Chair, Corporate Governance Committee Calgary, Alberta, Canada
Les B. Kondratoff
Member, Compensation Committee Bragg Creek, Alberta, Canada
James N. Smith
Member, Reserves Committee; Member, Corporate Governance Committee Reading, England, United Kingdom
Robert S. Wynne
Member, Audit Committee; Chair, Compensation Committee Calgary, Alberta, Canada
51
EXECUTIVE OFFICERS
Les B. Kondratoff, BSc, MBA, President and Chief Executive Officer
S. Brian Gieni, BComm, CMA, Senior Vice President, Chief Financial Officer and Country Manager
Robert S. Wynne, BSc, MBA, Managing Director and Chief Operating Officer
Doug Uffen, BSc, P.Geoph, Vice President – Geoscience
Ryan Ellson, CA, Vice President Finance
CANORO’S OFFICE LOCATIONS auditors

Canada KPMG LLP
700, 717 7th Avenue SW Calgary, Alberta, Canada
Calgary, Alberta, Canada T2P 0Z3
Tel: +1 (403) 543-5747 INVESTOR RELATIONS CONTACT
Fax: +1 (403) 543-5740 Robert Wynne
www.canoro.com Tel: +1 (403) 592-6295

Fax: +1 (403) 543-5740
India rswynne@canoro.com
2nd Floor, GHCL Building

B-38, Sector-1
ABBREVIATIONS
bbl/d barrels of oil per day
Noida 201301, India
bcf billion cubic feet
Tel: +91-120-4270210 / 4270211
boe barrel of oil equivalent
Fax: +91-120-4270220
boe/d barrel of oil equivalent per day
STOCK EXCHANGE LISTING mbbl thousand barrels
TSX Venture Exchange mboe thousand barrels of oil equivalent
Symbol: CNS mcf thousand cubic feet

mcf/d thousand cubic feet per day
REGISTRAR AND TRANSFER AGENT mmbbl million barrels
Computershare Trust Company of Canada mmboe million barrels of oil equivalent
Calgary, Alberta, Canada mmcf million cubic feet
mmcf/d million cubic feet per day
INDEPENDENT ENGINEERS PSC Production sharing contract
Sproule Associates Limited
Calgary, Alberta, Canada
www.canoro.com

Canoro-Oil &amp; Gas

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2009 Annual Report | For the year ended March 31, 2009

Canoro is a publicly listed independent international oil and

Highlights of FY2009 Results

Subsequent to year-end and 2009/10 outlook

Highlights of FY2009 Results

Building a better understanding Creating value through gas marketing

In addition to Changpang, we have a number of Building a Platform for Growth

Chairman of the Board President and Chief

July 27, 2009

AMGURI – CANORO’S CORE ASSET

In July 2007, Canoro announced that the Amguri 10B well

Key features of the Amguri PSC

GOSWAMI - NOIDA MANOJ KUMAR GUPTA - NOIDA MRIGANKA BORGOHAIN - JORHAT

Canoro Low Pressure Gas Pipeline

Assam Gas Company Ltd.

A-8a A-2 Gas

Development of Amguri Field

Reserve Reconciliation (forecast prices)

AMGURI GROSS RESERVES (1)

AA-ON/7 GROSS RESERVES (1)

COMPANY GROSS RESERVES (2), (3)

AMGURI GROSS RESERVES (1), (3)

2009 2008 % change

AA-ON/7 GROSS RESERVES (1), (3)

COMPANY GROSS RESERVES (1), (2), (3)

RESERVE LIFE INDEX

Net present value – before tax – forecast prices (US$000)

Net present value – AFTER tax – forecast prices (US$000)

as at March 31, 2009 0% 5% 10% 15%

Independent Evaluator’s Commodity Pricing Assumptions

Amguri Natural Gas

2009 (9 mos) 48.10 2.13 2.13 2.13 3.7%

NET ASSET VALUE

Proven 47,459 37,956 31,100

Total asset value (2) (US$000)

Common shares outstanding 113,708,941 113,708,941 113,708,941

Basic net asset value per share (US$)

(1) before income taxes and reclamation costs

Management’s Discussion and Analysis

OPERATIONAL AND FINANCIAL HIGHLIGHTS

Production and realized sales prices

Three months ended March 31 Twelve months ended March 31

Realized price ($/boe) 23.87 48.36 (51) 38.92 44.13 (12)

Realized sales price

Petroleum and natural gas sales

Royalties and Cess

Three months ended March 31 Twelve months ended March 31

($000) 2009 2008 % change 2009 2008 % change

Depletion, depreciation and accretion expense

General and administrative expenses

• increased office space in both Calgary and Delhi;

Stock based compensation expense

Liquidity and Capital Resources

Three months ended Twelve months ended

Contractual obligations, commitments and contingencies

PSCs Office leases Total

HAT UZZAL GOGOI - JORHAT VIJAY PAL KANOJIA - NOIDA

SUMMARY OF QUARTERLY RESULTS

Risk and uncertainties

Exploration and Development

Operating Hazards and Risks

Retention of Key Employees

Exchange Rate Volatility

Canoro-Oil & Gas

Canoro-Oil & Gas