EXHIBIT 99.1

                                  [CANAAN LOGO]



                                                For further information contact:
                                                Sue Barnard, Corporate Secretary
                                                                  (405) 604-9205
                                                    sue.barnard@canaanenergy.com


            CANAAN ENERGY CORPORATION ANNOUNCES REPURCHASE OF 11% OF
                            OUTSTANDING COMMON SHARES

NEWS RELEASE

Oklahoma City, Oklahoma (November 27, 2001) - Canaan Energy Corporation
("Canaan") (NASDAQ NMS: KNAN) today announced the planned buyback of 560,169
shares of its common stock at $12.00 per share. The purchase, totaling $6.7
million, represents approximately 11% of the shares outstanding and will close
at the end of November. The Company plans to finance the transaction with a
combination of cash on hand and bank borrowings under its existing credit
facility. According to Chairman and CEO Leo E. Woodard, "The price paid per Mcf
equivalent is well below that of recent oil and gas property transactions, and
gives no value to the non-proven projects Canaan has assembled since it became a
publicly traded company in October 2000. Given Canaan's current lack of market
liquidity for its common stock, this purchase represents a unique opportunity to
acquire a significant portion of the Company's shares at a price that is
expected to result in an increase in value per share to the remaining
shareholders."

The shares are being purchased by the Company pursuant to a right of first
refusal granted by a shareholders' agreement executed at the time of the
acquisition of Indian Oil Company by Canaan in October 2000. The shares, owned
by three former shareholders of Indian Oil Company, had been offered for sale at
$12.00 per share to Oklahoma City based Chesapeake Energy Corporation. After the
purchase, the selling shareholders will continue to own approximately 233,000
shares of Canaan common stock, which remain subject to the shareholders'
agreement.

In May 2001, Chesapeake had privately expressed interest in a possible business
combination with Canaan. At that time, Canaan engaged the investment-banking
firm of Hibernia Southcoast Capital ("HSC") to serve as financial advisor with
respect to Chesapeake's expression of interest. After reviewing the Company's
circumstances at that time with HSC, including, among other things, the
Company's estimated net asset value and the Company's growth plan, the Canaan
board concluded it was in the best interest of shareholders to continue with the
Company's plan of growth, implemented only seven months prior, rather than
pursue a business combination with Chesapeake. This decision was communicated to
Chesapeake at the time. The current offer of $12.00 per share is substantially
less than Chesapeake's prior level of interest. Although gas prices have
declined since May 2001, the Company believes that oil and gas transaction
values have not suffered a similar deterioration. The Company's exercise of its
right of first refusal to purchase shares of the former Indian shareholders'
shares, in addition to enhancing the value per share for remaining shareholders,
also prevents Chesapeake from acquiring a significant equity position at a price
which Canaan believes is below its fair value.

At the time of the Company's exercise of its right to repurchase the shares, its
common stock was trading at a range of $7.30 to $7.60 per share. The shares have
traded consistently below the Company's estimated underlying net asset value
based on its estimated proved reserves since trading commenced on the NASDAQ NMS
in October 2000. At that time, Canaan issued shares






of its common stock as consideration for the acquisition of eight affiliated
limited partnerships and Indian Oil Company. No additional shares were sold to
the public, and the resulting lack of liquidity has severely inhibited Canaan's
daily trading volume and share price as well as analyst coverage.

John K. Penton, Canaan's President, commented, "Chesapeake's desire to purchase
a minority position in our Company at $12.00 per share confirms our opinion that
the current stock price does not reflect the Company's value. The Company has
previously stated its desire to raise additional capital through the equity
markets at a time when the markets would be receptive to such an offering, and
at a time when its shareholders would not suffer undue dilution. Such an
offering, in addition to providing incremental capital, would create increased
market liquidity for Canaan's common stock. In the meantime, we have assembled a
staff of professionals with skills we believe to be unmatched in a company of
our size. We have a plan of growth that we believe is in the best interests of
Canaan's shareholders, and maximization of shareholder value remains our highest
priority."

Canaan Energy Corporation is an independent oil and gas exploration and
production company headquartered in Oklahoma City, Oklahoma. Canaan trades on
the NASDAQ NMS under the symbol KNAN.


FORWARD LOOKING STATEMENT

This press release includes certain statements that may be deemed to be "forward
looking statements" within the meaning of Section 27A of the Securities Act of
1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as
amended. All statements, other than statements of historical facts, included in
this press release that address activities, events or developments that the
company expects, believes or anticipates will or may occur in the future are
forward looking statements. They include statements regarding the company's
capital and growth plans, drilling plans and objectives, related exploration and
development costs, number and location of planned wells, reserve estimates and
values, statements regarding the quality of the company's properties and
potential reserve and production levels. These statements are based on certain
assumptions and analysis made by the company in the light of its experience and
perception of historical trends, current conditions, expected future
developments and other factors it believes appropriate in the circumstances,
including the assumption that there will be no material change in the operating
environment for the company's properties and that there will be no material
acquisitions or divestitures. Such statements are subject to a number of risks,
including but not limited to commodity price risks, drilling and production
risks, risks related to weather and unforeseen events, governmental regulatory
risks and other risks, many of which are beyond the control of the company.
Reference is made to the company's reports filed with the Securities and
Exchange Commission for a more detailed disclosure of the risks. For all of
these reasons, actual results or developments may differ materially from those
projected in the forward looking statements. The company assumes no obligation
to update the forward looking statements to reflect events or circumstances
occurring after the date of the statement.