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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

SCHEDULE 14A

Proxy Statement Pursuant to Section 14(a) of
the Securities Exchange Act of 1934 (Amendment No.          )

 

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MERGER PROPOSED—YOUR VOTE IS VERY IMPORTANT

        Resaca Exploitation, Inc., which we refer to as Resaca, its wholly-owned subsidiary, Resaca Acquisition Sub, Inc., which we refer to as Merger Sub, and Cano Petroleum, Inc., which we refer to as Cano, have entered into an Agreement and Plan of Merger, dated September 29, 2009, which we refer to as the merger agreement. Under the merger agreement, Resaca will acquire Cano through a merger of Merger Sub with and into Cano, which we refer to as the merger. Following the merger, Cano will be the surviving corporation and will continue as a wholly-owned subsidiary of Resaca. The merger agreement is attached as Annex A to this proxy statement/prospectus, which we refer to as the proxy statement.

        At the effective time of the merger and assuming the Resaca shareholder approval of an amendment to Resaca's certificate of formation to effect a reverse split of the outstanding shares of Resaca common stock, par value $0.01 per share, which we refer to as Resaca common stock, by a ratio of one-for-five immediately prior to the merger, which we refer to as the Reverse Stock Split, each outstanding share of Cano common stock, par value $0.0001 per share, which we refer to as Cano common stock, will be converted into the right to receive 0.42 shares of Resaca common stock and each outstanding share of Cano Series D Convertible Preferred Stock, no par value per share, which we refer to as Cano preferred stock, will be converted into the right to receive one share of a newly designated class of Resaca Series A Convertible Preferred Stock, par value $0.01 per share, which we refer to as Resaca preferred stock, each as described under "Description of Resaca Capital Stock" in this proxy statement. Immediately following the merger and prior to completion of the offering (as defined below), Cano common stockholders will hold approximately 50% of the common stock of the combined company, and Resaca shareholders will hold approximately 50% of the common stock of the combined company.

        Resaca common stock is listed on the AIM market of the London Stock Exchange, which we refer to as the AIM, under the symbols "RSOX" and "RSX." Resaca common stock has been approved for listing on the NYSE Amex under the symbol "RSOX." Upon the consummation of the merger and the concurrent equity offering, Resaca common stock will be traded on the NYSE Amex and the AIM under the symbol "RSOX." Cano common stock is currently listed on the NYSE Amex under the symbol "CFW."

        This proxy statement describes the merger agreement, the merger and the transactions related to the merger in detail and provides information concerning the special meeting of Cano stockholders. The completion of the merger is conditioned upon (i) Resaca's shareholders approving the issuance of shares of Resaca common stock and Resaca preferred stock to the Cano common stockholders and preferred stockholders, respectively, in the merger; (ii) Resaca's shareholders approving the issuance of up to $75 million in Resaca common stock (which amount may be increased or decreased in the sole discretion of the Resaca board of directors in accordance with the provisions of the Securities Act of 1933, as amended, and the rules and regulations promulgated thereunder) in an underwritten public offering, which we refer to as the offering; (iii) Resaca's shareholders approving the Reverse Stock Split; (iv) Resaca's shareholders approving an amendment to the Resaca Exploitation, Inc. 2008 Stock Incentive Plan, which we refer to as the Incentive Plan, to increase the number of shares of Resaca common stock reserved for issuance under the Incentive Plan by 4,000,000 shares and to prohibit the repricing of any award granted under the Incentive Plan; (v) Cano's common and preferred stockholders adopting the merger agreement; and (vi) Cano's common and preferred stockholders approving the amendment of Cano's certificate of incorporation by amending its Certificate of Designations, Rights and Preferences of the Series D Convertible Preferred Stock, dated August 31,

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2006, which we refer to as the Cano Series D Amendment. The Cano Series D Amendment is attached as Annex D to this proxy statement.

        The board of directors of Cano unanimously recommends that its stockholders vote "FOR" the proposals before them.

        Your vote is very important.    Whether or not you plan to attend Cano's special meeting, please take the time to vote by completing and mailing the enclosed proxy card or voting instruction card, or, if the option is available to you, by granting your proxy electronically over the Internet or by telephone.

        This document is a prospectus relating to the shares of Resaca common stock to be issued in the merger and a proxy statement for Cano to solicit proxies for its special meeting of stockholders. It contains answers to frequently asked questions and a summary of the important terms of the merger, the merger agreement and related transactions, followed by a more detailed discussion.

        For a discussion of certain significant matters that you should consider before voting on the proposed transaction, see "Risk Factors" beginning on page I-54.

        Neither the Securities and Exchange Commission, which we refer to as the SEC, nor any state securities commission has approved or disapproved of the transactions described in this proxy statement or the securities to be issued pursuant to the merger or passed upon the adequacy or accuracy of the disclosure in this proxy statement. Any representation to the contrary is a criminal offense.

        This proxy statement is dated June 2, 2010 and is first being mailed to stockholders of Cano on or about June 2, 2010.

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CANO PETROLEUM, INC.
801 Cherry Street, Suite 3200
Fort Worth, Texas 76102
(817) 698-0900

NOTICE OF SPECIAL MEETING OF STOCKHOLDERS
TO BE HELD ON JUNE 23, 2010

To the Stockholders of Cano Petroleum, Inc.:

        NOTICE IS HEREBY GIVEN that a special meeting of stockholders of Cano Petroleum, Inc., a Delaware corporation, which we refer to as Cano, will be held at The Fort Worth Club, located at 306 W. 7^th Street, Suite 1100, Fort Worth, Texas 76102, on Wednesday, June 23, 2010 at 10:00 a.m., Fort Worth, Texas time, for the following purposes:

1.

To consider and vote upon a proposal to adopt the Agreement and Plan of Merger, dated September 29, 2009, which we refer to as the merger agreement, by and among Cano, Resaca Exploitation, Inc., a Texas corporation, which we refer to as Resaca, and Resaca Acquisition Sub, Inc., a Delaware corporation and a wholly-owned subsidiary of Resaca, which we refer to as Merger Sub, and the merger contemplated thereby, pursuant to which Merger Sub will merge with and into Cano;



2.

To consider and vote upon a proposal to amend the Certificate of Designations, Rights and Preferences of the Series D Convertible Preferred Stock of Cano, dated August 31, 2006, as amended, which we refer to as the Cano Series D Amendment;



3.

To consider and vote upon proposal to adjourn the special meeting, if necessary, to solicit additional proxies if there are not sufficient votes in favor of proposal 1 or 2; and



4.

To transact such other business incident to the conduct of the meeting as may properly come before the meeting or any adjournments or postponements thereof.

        Only stockholders of record of Cano common stock, par value $0.0001 per share, which we refer to as Cano common stock, and Cano Series D Convertible Preferred Stock, no par value per share, which we refer to as Cano preferred stock, at the close of business on May 21, 2010, which we refer to as the Cano record date, are entitled to notice of and to vote at the special meeting or at any adjournments or postponements thereof. Each share of Cano common stock is entitled to one vote per share. Each share of Cano preferred stock is entitled to (i) one vote per share for proposals 1 and 2; and (ii) approximately 173.913 votes per share (voting on an as-converted basis to Cano common stock) on proposal 3.

        As of April 5, 2010, the holders of a majority of the outstanding shares of Cano preferred stock had executed and delivered voting agreements, with irrevocable proxies, agreeing to vote in favor of the Cano Series D Amendment and the merger agreement and executed a written consent in lieu of special meeting, whereby those holders approved the Cano Series D Amendment and the adoption of the merger agreement.

        The first two proposals listed above relating to the merger and the Cano Series D Amendment are conditioned upon each other and the approval of each such proposal is required for completion of the merger.

        The affirmative vote of both (a) a majority of the outstanding shares of Cano common stock, voting as a separate class; and (b) a majority of the outstanding shares of Cano preferred stock, voting as a separate class, is required to approve the merger agreement and the Cano Series D Amendment. The approval of the adjournment of the meeting, if necessary, to solicit additional proxies if there are not sufficient votes in favor of proposals 1 or 2 requires the affirmative vote of a majority of the shares cast affirmatively or negatively of Cano common stock and Cano preferred stock, voting as a single class with the Cano preferred stock voting on an as-converted basis to Cano common stock.

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        A complete list of Cano stockholders entitled to vote at the special meeting will be available for examination at Cano's offices in Fort Worth, Texas during normal business hours by any Cano stockholder for any purpose relevant to the special meeting for a period of ten days prior to the special meeting. This list will also be available at the special meeting and any Cano stockholder may inspect it for any purpose relevant to the special meeting.

        The members of the Cano board of directors, who voted, unanimously approved and adopted the merger agreement and the transactions contemplated by it, declared its advisability, and recommend that the Cano stockholders vote "FOR" the adoption of the merger agreement, "FOR" the adoption of the Cano Series D Amendment and "FOR" the approval of proposal 3 above. As described on pages I-108 to I-109, some Cano directors and executive officers will receive substantial financial benefits as well as other valuable consideration as a result of the merger.

        Your vote is important.    Even if you plan to attend the special meeting in person, we request that you sign and return the enclosed proxy or voting instruction card and thus ensure that your shares will be represented at the special meeting if you are unable to attend. If you do attend the special meeting and wish to vote in person, you may withdraw your proxy and vote in person.

June 2, 2010

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REFERENCES IN THIS PROXY STATEMENT

        The merger, the offering and refinancing of the combined company's indebtedness are conditioned upon the closing of each other. Therefore, we have combined a portion of the operational and reserve data and financial information to allow Cano stockholders to evaluate the meeting proposals as if the merger and related transactions are completed as of the date of this proxy statement/prospectus, which we refer to as the proxy statement. As used in this proxy statement, unless otherwise stated or the context otherwise indicates, all references to:

•

the "AIM" refers to the AIM market of the London Stock Exchange;



•

"Cano" refers to Cano Petroleum, Inc. and its consolidated subsidiaries prior to the completion of the merger;



•

"Cano common stock" refers to Cano's common stock, par value $0.0001 per share;



•

"Cano preferred stock" refers to Cano's Series D Convertible Preferred Stock, par value $0.0001 per share;



•

"Cano stock options" refers to options to acquire 1,320,910 shares of Cano common stock;



•

the "combined company," "we," "our," and "us" refer to Resaca as a combined company with Cano following the completion of the merger;



•

"Incentive Plan" refers to the Resaca Exploitation, Inc. 2008 Stock Incentive Plan, as amended by the First Amendment to Resaca Exploitation, Inc. 2008 Stock Incentive Plan;



•

"Incentive Plan Amendment" refers to the Second Amendment to Resaca Exploitation, Inc. 2008 Stock Incentive Plan;



•

the "merger" refers to the merger between Cano and Resaca as described in this proxy statement and the merger agreement;



•

the "Merger and the Share Issuances" refers to (i) the issuance of Resaca common stock and Resaca preferred stock, pursuant to the merger agreement; (ii) the merger; and (iii) the issuance of more than 25% of the aggregate number of shares of Resaca common stock issued and outstanding at the commencement of Resaca's fiscal year 2010 under Article V(b) of Resaca's certificate of formation in order to effect the issuance of Resaca common stock and Resaca preferred stock in conjunction with the merger and issuance of up to $75 million in Resaca common stock in an underwritten public offering (which amount may be increased or decreased in the sole discretion of the Resaca board of directors in accordance with the provisions of the Securities Act of 1933, as amended, and the rules and regulations promulgated thereunder);



•

the "merger agreement" refers to the Agreement and Plan of Merger, dated as of September 29, 2009, by and among Resaca, Merger Sub and Cano, as amended by (i) Amendment No. 1 to the Agreement and Plan of Merger, dated as of February 24, 2010; (ii) Amendment No. 2 to the Agreement and Plan of Merger, dated April 1, 2010; (iii) Amendment No. 3 to the Agreement and Plan of Merger, dated April 28, 2010; and (iv) Amendment No. 4 to the Agreement and Plan of Merger, dated May 19, 2010;



•

"Merger Sub" refers to Resaca Acquisition Sub, Inc., a wholly-owned subsidiary of Resaca, prior to the completion of the merger;



•

the "New Facility" refers to a firm commitment from UBNA, as administrative agent and an issuing lender, and Natixis New York Branch, which we refer to as Natixis, as an issuing lender, to arrange a new revolving senior secured credit facility providing for first priority loan borrowings not to exceed a borrowing base initially determined at $90 million with financial institutions acceptable to Resaca and the issuing lenders;

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•

"offering" refers to the underwritten public offering of between $50 million and $75 million in Resaca common stock which amount includes the underwriters' 30 day option to purchase additional shares of Resaca common stock to cover overallotments, and which amount may be increased or decreased in the sole discretion of the Resaca board of directors in accordance with the provisions of the Securities Act of 1933, as amended, and the rules and regulations promulgated thereunder;



•

"PBWS" refers to Permian Basin Well Services, LLC;



•

"Resaca" refers to Resaca Exploitation, Inc. and its consolidated subsidiary collectively prior to the completion of the merger;



•

"Resaca common stock," "our common stock" or "common stock" refer to Resaca's or the combined company's common stock, par value $0.01 per share;



•

"Resaca preferred stock," "our preferred stock" or "preferred stock" refers to Resaca's Series A Convertible Preferred Stock, par value $0.01 per share, which will be issued to the holders of Cano preferred stock in the merger;



•

"Reverse Stock Split" refers to a reverse split of the outstanding shares of Resaca common stock by a ratio of one-for-five immediately prior to the merger;



•

"Rig Acquisition" refers to Resaca's acquisition of workover rig operations, a building and a yard from PBWS and Resaca's issuance of 3,320,250 shares of Resaca common stock as consideration for such acquisition;



•

"Torch" refers to Torch Energy Advisors Incorporated; and



•

"UBNA" refers to Union Bank of North America, N.A., formerly known as Union Bank of California, N.A.

        In addition, all discussions of Resaca outstanding shares, shares of restricted stock and options, pro forma for the merger with Cano, assume that (i) all Cano restricted stock is converted into Resaca common stock and (ii) all Cano stock options became Resaca stock options. Where indicated in this proxy statement, information in this proxy statement, including but not limited to share calculations and the exchange ratio in the merger, is presented as if the Resaca shareholders and/or the Cano stockholders have approved the following:

•

the merger;



•

the issuance of Resaca common stock and Resaca preferred stock in conjunction with the merger;



•

the Reverse Stock Split (requires Resaca shareholder approval only);



•

the Incentive Plan Amendment (requires Resaca shareholder approval only); and



•

the Rig Acquisition (requires Resaca shareholder approval only).

        Where indicated in this proxy statement, including as described with the terms "combined company" or "pro forma combined," pro forma combined financial information presented in this proxy statement gives effect to the completion of the merger and the Reverse Stock Split. For a complete description of the adjustments we have made to arrive at the pro forma combined financial measures that we present in this proxy statement, please read "Unaudited Pro Forma Combined Financial Data" beginning on page F-2 of this proxy statement. Where indicated in this proxy statement, including as described with the terms "Resaca," "Cano," and "historical," separate and/or historical information of Resaca and Cano presented in this proxy statement gives no effect to the completion of the merger or the Reverse Stock Split.

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CHAPTER I—THE MERGER

QUESTIONS AND ANSWERS ABOUT THE CANO SPECIAL MEETING OF STOCKHOLDERS

        Set forth below are commonly asked questions and answers about the merger and the Cano special meeting of stockholders. For a more complete description of the legal and other terms of the merger, please read carefully this entire proxy statement, including the annexes and the other documents referred to herein and the other available information referred to in "Where You Can Find More Information" on page II-8.

General

Q:

Why am I receiving these materials?

A:

We are sending you these materials to help you decide how to vote your shares of Cano stock with respect to our proposed merger.

The merger cannot be completed unless the Resaca shareholders approve the Merger and the Share Issuances, the Reverse Stock Split and the Incentive Plan Amendment and Cano common and preferred stockholders adopt the merger agreement and approve the Cano Series D Amendment. Resaca is holding its annual meeting of shareholders and Cano is holding a special meeting of stockholders to vote on the proposals necessary to complete the merger. Information about the Cano special meeting, the merger and the other business to be considered by the Cano stockholders is contained in this proxy statement.

As of April 5, 2010, the holders of a majority of the outstanding shares of Cano preferred stock had executed and delivered voting agreements, with irrevocable proxies, agreeing to vote in favor of the Cano Series D Amendment and the merger agreement and executed a written consent in lieu of special meeting, whereby those holders approved the Cano Series D Amendment and the adoption of the merger agreement. Holders of Cano preferred stock are entitled to appraisal rights under the General Corporation Law of the State of Delaware, which we refer to as the DGCL in respect of the merger.

We are delivering this document to you as both a proxy statement of Cano and as a prospectus of Resaca. It is a proxy statement because Cano's board of directors is soliciting proxies from its stockholders. It is a prospectus because Resaca will exchange shares of Resaca common stock and Resaca preferred stock for shares of Cano common stock and Cano preferred stock in the merger.

Q:

Why are Resaca and Cano proposing the merger?

A:

Resaca and Cano believe that the merger will:

•

combine complementary assets and create balanced growth opportunities for the combined company;

•

result in significant cost savings and efficiencies for the combined company;

•

allow for near-term low risk production enhancement through increased productivity of the combined company;

•

provide strategic consistency to the combined company; and

•

create more efficient access to capital for the combined company.

Please review the more detailed description of our reasons for the merger beginning on pages I-87 and I-90.

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Q:

What will happen if the merger is completed?

A:

Resaca will acquire Cano through the merger of Merger Sub, a wholly-owned subsidiary of Resaca, with and into Cano. Cano will be the entity surviving the merger and will continue as a wholly-owned subsidiary of Resaca after the merger. Resaca will continue as a public company, and following the merger the combined company will be a domestic independent oil and gas company.

Q:

What will Cano stockholders and Resaca shareholders receive in the merger?

A:

In the merger, holders of Cano common stock will receive 0.42 shares of Resaca common stock for each share of Cano common stock outstanding. This exchange ratio is fixed and will not be adjusted to reflect stock price changes prior to the consummation of the merger. Immediately following completion of the merger, prior to the completion of the offering, Cano common stockholders will own approximately 50% of the common stock of the combined company.

Holders of Cano preferred stock will receive one share of Resaca preferred stock for each share of Cano preferred stock. Immediately following the effective time of the merger, each share of Resaca preferred stock initially will be convertible into the right to receive approximately 201.491 shares of Resaca common stock.

Resaca shareholders will continue to own their existing shares, of which there are approximately 19,389,499 shares outstanding immediately following the Reverse Stock Split and at effective time of the merger.

For more information, please see "The Merger Agreement—Manner and Basis of Converting Securities" beginning on page I-121.

Q:

When do Resaca and Cano expect to complete the merger?

A:

Resaca and Cano expect to complete the merger after all conditions to the merger as set forth in the merger agreement are satisfied or waived, including the shareholder and stockholder approvals required at the meetings of Resaca and Cano, respectively. Resaca and Cano currently expect to complete the merger by the end of June 2010. However, it is possible that factors outside of either company's control could require Resaca or Cano to complete the merger at a later time or not to complete it at all.

Q:

How does the board of directors of Cano recommend that I vote?

A:

The Cano board of directors unanimously recommends that holders of Cano common stock and Cano preferred stock vote "FOR" the proposals, including the adoption of the merger agreement and the Cano Series D Amendment.

Q:

What do I need to do now?

A:

After carefully reading and considering the information contained in this proxy statement, please vote your shares as soon as possible so that your shares will be represented at the Cano special meeting. Please follow the instructions set forth on the proxy card or on the voting instruction form provided by the record holder if your shares are held in the name of your broker, bank or other nominee.

Q:

How do I vote?

A:

You may vote before Cano's special meeting in one of the following ways:

•

use the U.S. toll-free number shown on your proxy card;

•

visit the website shown on your proxy card to vote via the Internet; or

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•

complete, sign, date and return the enclosed proxy card in the enclosed return envelope. If you sign and send in your proxy card and do not indicate how you want to vote, your proxy will be counted as a vote in favor of the proposals to be voted on at the Cano special meeting.

You may also cast your vote in person at the Cano special meeting. To assure that Cano obtains your vote, please vote as instructed on your proxy card, even if you plan to attend the Cano special meeting in person.

If your shares are held in "street name", through a broker, bank or other nominee, that institution will send you separate instructions describing the procedure for voting your shares. "Street name" holders who wish to vote at the special meeting will need to obtain a proxy form from the institution that holds their shares.

Q:

When and where is the Cano special meeting of stockholders to be held?

A:

The Cano special meeting of stockholders will take place on Wednesday, June 23, 2010 at 10:00 a.m., Fort Worth, Texas time. The location of the special meeting is The Fort Worth Club located at 306 W. 7^th Street, Suite 1100, Fort Worth, Texas 76102.

Q:

What constitutes a quorum for Cano?

A:

Stockholders who hold a majority in voting power of the Cano common stock and Cano preferred stock issued and outstanding as of the close of business on the record date and who are entitled to vote must be present or represented by proxy in order to constitute a quorum to conduct business at the Cano special meeting.

Q:

What vote is required for Cano's approval relating to the merger?

A:

The affirmative vote of a majority of the outstanding shares of Cano common stock, voting as a separate class, and the affirmative vote of a majority of the outstanding shares of Cano preferred stock, voting as a separate class, is required to adopt the merger agreement and the Cano Series D Amendment. The affirmative vote of a majority of the shares cast affirmatively or negatively of Cano common stock and Cano preferred stock, voting as a single class with the Cano preferred stock voting on an as-converted basis to Cano common stock, is required to approve the Cano meeting adjournment proposal.

Your vote is very important to us. You are encouraged to submit a proxy as soon as possible.

Q:

If my shares of Cano common stock are held in "street name" by my broker, bank or other nominee, will my broker, bank or other nominee vote my shares of Cano common stock for me?

A:

Unless you instruct your broker, bank or other nominee how to vote your shares of Cano common stock, your shares will NOT be voted.

In connection with the Cano special meeting, broker non-votes will not be considered in determining the presence of a quorum, but abstentions will be considered. Broker non-votes will not be considered in determining the presence of a quorum at the Cano special meeting because only non-routine voting matters are on the ballot. Broker non-votes will have the same effect as voting "AGAINST" the proposals to (i) adopt the merger agreement and approve of the merger or (ii) approve the Cano Series D Amendment. Abstentions will also have the same effect as voting "AGAINST" each of the foregoing Cano proposals.

An abstention occurs when a Cano stockholder abstains from voting (either in person or by proxy) on one or more of the proposals. Broker non-votes occur when a bank, broker or other nominee returned a proxy but does not have authority to vote on a particular proposal. You should therefore provide your broker, bank or other nominee with instructions as to how to vote your shares of Cano common stock.

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Q:

What if I do not vote on the matters relating to the merger?

A:

If you are a Cano stockholder and you fail to vote or fail to instruct your broker, bank or other nominee how to vote on the approval of the merger agreement, your failure to vote will have the same effect as a vote "AGAINST" the adoption of the merger agreement. If you respond with an "abstain" vote, your proxy will have the same effect as a vote "AGAINST" this proposal. If you respond but do not indicate how you want to vote on the adoption of the merger agreement, your proxy will be counted as a vote "FOR" the adoption of the merger agreement.

If you are a Cano stockholder and you fail to vote or fail to instruct your broker, bank or other nominee how to vote on the Cano Series D Amendment, your failure to vote will have the same effect as a vote "AGAINST" the Cano Series D Amendment. If you respond with an "abstain" vote, your proxy will have the same effect as a vote "AGAINST" this proposal. If you respond but do not indicate how you want to vote on the Cano Series D Amendment, your proxy will be counted as a vote "FOR" the Cano Series D Amendment.

The adoption of the merger agreement and the Cano Series D Amendment are conditioned on each other, and approval of each is required for completion of the merger.

If you are a Cano stockholder and you fail to vote or fail to instruct your broker, bank or other nominee how to vote on the Cano meeting adjournment proposal, your failure to vote will not affect the Cano meeting adjournment proposal. An "abstention" vote will similarly not affect the Cano meeting adjournment proposal. If you respond but do not indicate how you want to vote on the Cano meeting adjournment proposal, your proxy will be counted as a vote "FOR" the Cano meeting adjournment proposal.

Q:

What if I hold shares of both Resaca and Cano?

A:

If you are a shareholder of Resaca and a stockholder of Cano, you will receive two separate packages of proxy materials. A vote as a Resaca shareholder for the Merger and the Share Issuances, the Reverse Stock Split or the Incentive Plan Amendment will not constitute a vote as a Cano stockholder for the adoption of the merger agreement or the Cano Series D Amendment, or vice versa. Therefore, please sign and return all proxy cards that you receive, whether from Resaca or Cano, or vote as a Cano stockholder by Internet or telephone.

Q:

May I change my vote after I have delivered my proxy or voting instruction card?

A:

Yes. You may change your vote at any time before your proxy is voted at the Cano special meeting. You can do this in one of four ways:

•

by sending a notice of revocation to the corporate secretary of Cano;

•

by sending a completed proxy card bearing a later date than your original proxy card;

•

by logging onto the Internet website specified on your proxy card in the same manner you would submit your proxy electronically or by calling the telephone number specified on your proxy card, in each case if you are eligible to do so and following the instructions on the proxy card; or

•

by attending the Cano special meeting and voting in person. Your attendance alone will not revoke your proxy.

If you choose any of the first three methods, you must take the described action no later than the beginning of the special meeting.

If your shares are held in an account at a broker, bank or other nominee, you should contact your broker, bank or other nominee to change your vote.

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Q:

What are the material U.S. federal income tax consequences of the merger?

A:

The merger is intended to qualify as a tax-free reorganization within the meaning of Section 368(a) of the Internal Revenue Code of 1986, as amended, which we refer to as the Internal Revenue Code, such that a U.S. Holder (as defined in "Material U.S. Federal Income Tax Consequences of the Merger" on page I-116) whose shares of Cano stock are exchanged in the merger solely for shares of Resaca stock will not recognize gain or loss, except with respect to cash received in lieu of fractional shares of Resaca stock. The merger is conditioned on the receipt of a legal opinion from tax counsel for Cano that the merger will be treated for U.S. federal income tax purposes as a tax-free reorganization within the meaning of Section 368(a) of the Internal Revenue Code and that each of Cano and Resaca will be a party to the reorganization within the meaning of Section 368 of the Internal Revenue Code.

For a more complete discussion of the U.S. federal income tax consequences of the merger, see "Material U.S. Federal Income Tax Consequences of the Merger" on page I-116. Tax matters are complicated and the consequences of the merger to you will depend on your particular facts and circumstances. Please consult with your tax advisor as to the specific tax consequences of the merger to you, including the applicability of U.S. federal, state, local, foreign and other tax laws.

Q:

Is the consummation of the merger contingent on the approval of any party other than the shareholders of Resaca and the stockholders of Cano?

A:

In addition to Resaca shareholder and Cano stockholder approval, the consummation of the merger is contingent upon the following:

•

the approval and implementation of the Reverse Stock Split and the Incentive Plan Amendment;

•

the Resaca common stock to be issued in the merger having been approved for listing on the NYSE Amex, which approval was received by Resaca on March 30, 2010;

•

because the merger will constitute a reverse takeover under the AIM rules, Resaca common stock must be readmitted to trading on the AIM immediately following the merger. Following the Resaca annual meeting and the pricing of the offering on June 23, 2010, it is anticipated that trading of Resaca common stock on the AIM will be suspended until the completion of the merger and the closing of the offering. It is anticipated that Resaca common stock will be readmitted to the AIM and the suspension of trading lifted on June 30, 2010.

•

all indebtedness under Resaca's and Cano's credit facilities having been repaid or refinanced, or Resaca and Cano having received the consent of the lenders under such credit facilities to enter into the merger; and

•

the completion of the offering.

Resaca and Cano currently expect each of these conditions to be satisfied prior to or promptly after Resaca's annual meeting of shareholders and Cano's special meeting of stockholders. However, it is possible that factors outside of either company's control could delay the satisfaction of these conditions or these conditions could not occur or be satisfied at all. See "Summary—Conditions to Completion of the Merger" beginning on page I-22.

Q:

Am I entitled to appraisal rights?

A:

Cano's preferred stockholders are entitled to appraisal rights. Cano's common stockholders are not entitled to appraisal rights. Resaca shareholders are also not entitled to appraisal rights.

Q:

Where will my shares be traded after the merger?

A:

Upon the consummation of the merger and the offering, Resaca common stock will be traded on the NYSE Amex and the AIM under the symbol "RSOX." Upon consummation of the merger,

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Cano common stock will no longer be publicly traded. Resaca preferred stock will not be publicly traded.

Q:

Who will be the directors of the combined company?

A:

If the merger occurs, the size of the combined company's board of directors will be increased from five to seven members. One of the current members of the Resaca board will resign, and three current members of the Cano board of directors will be nominated by Resaca's independent directors for election to the board of the combined company. As a result, following the merger, the combined company's board will consist of four individuals previously serving as Resaca directors and three individuals previously serving as Cano directors.

Q:

What if I hold Cano stock options, restricted stock or other stock-based awards?

A:

If the merger occurs, each Cano option will immediately vest prior thereto and become an option (a) to purchase that number of shares of Resaca common stock obtained by multiplying the number of shares of Cano common stock issuable upon the exercise of such option by the exchange ratio of 0.42, (b) at an exercise price per share equal to the per share exercise price of such option divided by the exchange ratio of 0.42, and (c) otherwise with the same terms and conditions as the outstanding Cano options. However, in any event the exercise price, the number of shares purchasable pursuant to the option and the terms and conditions of exercise of such option will be determined in accordance with the requirements of Section 424(a) of the Internal Revenue Code and in a manner that does not cause any option to be deferred compensation subject to Section 409A of the Internal Revenue Code.

Immediately prior to the completion of the merger, all restrictions on Cano restricted stock awards will expire and each outstanding share will be converted into the right to receive 0.42 shares of Resaca common stock at the effective time of the merger.

Q:

What happens to Resaca stock options, restricted stock or other stock-based awards?

A:

Resaca stock options and other equity-based awards, including restricted stock, will remain outstanding and will not be affected by the merger.

Q:

Should I send in my stock certificates now?

A:

No. Please do not send your stock certificates with your proxy card.

You will receive written instructions from the exchange agent after the merger is completed on how to exchange your stock certificates for Resaca common stock or Resaca preferred stock, as applicable.

Q:

Are there any risks in the merger that I should consider?

A:

Yes. There are risks associated with all business combinations, including the proposed merger. In particular, you should be aware that the exchange ratio determining the number of shares of Resaca common stock that Resaca will issue in exchange for shares of Cano common stock in the merger is fixed and will not change as the market prices of shares of Resaca common stock or Cano common stock fluctuate in the period before the merger. Accordingly, the value of the shares of Resaca common stock that Resaca will issue in the merger in exchange for shares of Cano common stock may be either less or more than the current trading price of shares of Cano common stock. There are also a number of other risks that are discussed in this proxy statement. We have described these risks and other risks in more detail under "Risk Factors" beginning on page I-54.

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Q:

Where can I find more information about the companies?

A:

Investors and security holders may obtain free copies of reports published by Resaca (when they are available) by contacting Resaca Investor Relations at (713) 753-1441. Investors and security holders also may obtain free copies of the documents on Resaca's website at www.resacaexploitation.com. The information contained on, connected to or that can be accessed via the website is not part of this proxy statement.

Cano files periodic reports and other information with the U.S. Securities and Exchange Commission, which we refer to as the SEC. Investors and security holders may obtain free copies of these documents (when they are available) and other documents filed with the SEC by contacting Cano Investor Relations at (817) 698-0900. You may also read and copy this information at the SEC's public reference facility. Please call the SEC at 1-800-SEC-0330 for information about this facility. This information is also available through the Internet site maintained by the SEC at www.sec.gov and at the offices of the NYSE Amex. Investors and security holders may also obtain free copies of the documents filed with the SEC on Cano's website at www.canopetro.com. The information contained on, connected to or that can be accessed via the website is not part of this proxy statement.

For a more detailed description of the information available, please see "Where You Can Find More Information" on page II-8.

Q:

Who should I contact if I have any questions?

A:

If you have questions about the merger or if you need assistance in submitting your proxy or voting your shares or need additional copies of the proxy statement or the enclosed proxy card, you should contact:

If you are a Cano shareholder:

Q:

How is the Series D Convertible Preferred Stock Certificate of Designations, Rights and Preferences amended or changed by the Cano Series D Amendment?

A:

The Cano Series D Amendment eliminates the rights of the holders of the Cano preferred stock arising out of or caused by the execution and delivery of the merger agreement or the consummation of the merger (including any rights to require Cano to redeem any of the shares of the Cano preferred stock or notice, voting or consent rights), except to receive the shares of Resaca preferred stock pursuant to the terms of the merger agreement and the rights set forth in the investors rights agreement attached as Annex F to this proxy statement (including registration rights and preemptive rights relating to the Resaca capital stock to be received by such holders pursuant to the merger), which we refer to as the investors rights agreement. If the Cano Series D Amendment is approved, and the merger is consummated, the holders of Cano preferred stock will have rights only to the consideration specified in the merger agreement and the rights under the investors rights agreement. For more information, please see "The Merger—Investors Rights Agreement with Holders of Resaca Preferred Stock" beginning on page I-113 and "The Merger Agreement—Manner and Basis of Converting Securities" beginning on page I-121.

Q:

What are the terms of the investors rights agreement?

A:

In connection with the issuance of the Resaca preferred stock to the current holders of the Cano preferred Stock, Resaca entered into the investors rights agreement with the holders of the Resaca

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preferred stock on April 5, 2010. The investors rights agreement grants such shareholders substantially similar registration and other rights currently associated with the Cano preferred stock. The investors rights agreement is attached as Annex F to this proxy statement. For more information, please see "The Merger—Investors Rights Agreement with Holders of Resaca Preferred Stock" beginning on page I-113.

Information regarding Resaca's annual meeting of shareholders

Q:

When will Resaca shareholders consider and vote upon the Merger and the Share Issuances, the Reverse Stock Split and the Incentive Plan Amendment?

A:

Resaca shareholders will consider and vote upon the Merger and the Share Issuances, the Reverse Stock Split and the Incentive Plan Amendment, as well as the Rig Acquisition and the election of directors, at its annual meeting of shareholders. The Resaca annual meeting of shareholders will take place on Wednesday, June 23, 2010 at 9:30 a.m., Houston, Texas time.

Q:

What constitutes a quorum at the Resaca annual meeting of shareholders?

A:

Shareholders who hold a majority in voting power of the Resaca common stock issued and outstanding as of the close of business on the record date and who are entitled to vote must be present or represented by proxy in order to constitute a quorum to conduct business at the Resaca annual meeting.

Q:

What vote is required for Resaca shareholder approval relating to the merger?

A:

The affirmative vote of a majority of the votes cast, affirmatively or negatively, at the Resaca annual meeting at which a quorum representing a majority of all outstanding voting stock is present, either in person or by proxy, is required to approve the Merger and the Share Issuances, the Incentive Plan Amendment and the Resaca meeting adjournment proposal. The affirmative vote of the holders of two-thirds of the outstanding shares of Resaca common stock entitled to vote on the approval of the Reverse Stock Split at the Resaca annual meeting at which a quorum representing a majority of all outstanding voting stock is present, either in person or by proxy, is required to approve the Reverse Stock Split. The affirmative vote of a majority of the votes cast, affirmatively or negatively, at the Resaca annual meeting at which a quorum representing a majority of all outstanding voting stock is present, either in person or by proxy, excluding any votes cast by any Resaca shareholder qualifying as a related-party in relation to the Rig Acquisition, is required to approve the Rig Acquisition.

Q:

Other than the Merger and the Share Issuances, will other matters be considered at the Resaca annual meeting?

A:

Yes. In addition to voting on the merger-related matters previously described (i.e., the Merger and the Share Issuances), at Resaca's annual meeting, Resaca shareholders will be asked to consider and vote on the following additional matters:

•

to consider and vote upon a proposal to approve the Reverse Stock Split;

•

to consider and vote upon a proposal to approve the Incentive Plan Amendment;

•

to consider and vote upon a proposal to ratify the Rig Acquisition;

•

in the event the Merger and the Share Issuances, the Reverse Stock Split and the Incentive Plan Amendment are approved, to consider and vote upon a proposal to:

(i)

elect, and seat upon consummation of the Merger and the Share Issuances, William O. Powell, III as a Class I director to hold office until the 2012 annual meeting or until his successor is duly elected and qualified;

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(ii)

elect, and seat upon consummation of the Merger and the Share Issuances, Garrett Smith as a Class II director to hold office until the 2013 annual meeting or until his successor is duly elected and qualified; and



(iii)

elect, and seat upon consummation of the Merger and the Share Issuances, Donald W. Niemiec as a Class III director to hold office until the 2011 annual meeting or until his successor is duly elected and qualified;



•

to consider and vote upon a proposal to adjourn the annual meeting in order to solicit additional proxies if there are not sufficient votes in favor of any proposal; and



•

to consider and vote upon a proposal to:



(i)

re-elect Judy Ley Allen as a Class II director to hold office until the 2013 annual meeting or until her successor is duly elected and qualified; and



(ii)

re-elect Richard Kelly Plato as a Class II director to hold office until the 2013 annual meeting or until his successor is duly elected and qualified; and



•

to transact such other business incident to the conduct of the meeting as may properly come before the meeting or any adjournments or postponements thereof.

Q:

What vote is required for Resaca shareholder approval of such other matters other than the Merger and the Share Issuances, the Reverse Stock Split and the Incentive Plan Amendment?

A:

The ratification of the Rig Acquisition requires the affirmative vote of a majority of the votes cast, affirmatively or negatively, at the Resaca annual meeting at which a quorum representing a majority of all outstanding voting stock is present, either in person or by proxy excluding any votes cast from any Resaca shareholder qualifying as a related-party in relation to the Rig Acquisition. Abstentions and broker non-votes will have no effect on the outcome of the vote of such proposal.

A plurality of the votes cast at the Resaca annual meeting is required for the election of directors. This means that, if the Merger and the Share Issuances, the Reverse Stock Split and the Incentive Plan Amendment are approved, the three new director nominees (i.e., Messrs. Powell, Smith and Niemiec) receiving the highest number of affirmative votes cast at the annual meeting will be elected to the Resaca board of directors. Additionally, the two director nominees (i.e., Ms. Allen and Mr. Plato) receiving the highest number of affirmative votes cast at the annual meeting will be elected to the Resaca board of directors.

Q:

Why is Resaca proposing the Reverse Stock Split to its shareholders at its annual meeting?

A:

Resaca is proposing the Reverse Stock Split to increase the stock price for shares of Resaca common stock immediately prior to the merger so that the minimum listing requirements of the NYSE Amex can be satisfied. The NYSE Amex requires all new securities listing on its market to have a minimum market price of $2.00 per share. The effect of the Reverse Stock Split is to increase the stock price in the same proportion as the number of shares is adjusted downward, resulting in a five times increase in the stock price of Resaca common stock immediately prior to the merger. It is a condition precedent of the merger that Resaca common stock be listed on the NYSE Amex.

Q:

What is the principal effect of the Reverse Stock Split?

A:

If approved, the Reverse Stock Split would occur immediately prior to the merger for all Resaca common stock, and the ratio of post-split shares for pre-split shares would be the same for all of such shares of Resaca common stock. The Reverse Stock Split would affect all Resaca shareholders uniformly and would not affect any shareholder's percentage ownership interest in Resaca immediately prior to the merger. In addition, the Reverse Stock Split would not affect any Resaca

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shareholder's proportionate voting rights. Each share of Resaca common stock outstanding after the Reverse Stock Split would be entitled to one vote and would remain fully paid and non-assessable.

The principal effects of the Reverse Stock Split would be that:

•

based on shares outstanding as of May 28, 2010 and assuming a one-for-five reverse stock split, the number of shares of Resaca common stock issued and outstanding would be reduced from 96,947,494 shares to approximately 19,389,499, a decrease of approximately 77,557,995 shares, or approximately 80%;



•

the exercise price and/or the number of shares of Resaca common stock issuable under Resaca's outstanding stock options would be proportionately adjusted based on the above ratio; and



•

the number of shares of Resaca common stock reserved for issuance under the Incentive Plan would be reduced proportionally prior to the implementation of the Incentive Plan Amendment.

No scrip or fractional certificates will be issued in connection with the Reverse Stock Split. Instead, any fractional share that results from the Reverse Stock Split will be exchanged for cash in an amount equal to the closing price on the effective date of the merger.

A reduction in the number of outstanding shares of Resaca common stock could result in decreased liquidity in the combined company's common stock. In addition, the Reverse Stock Split could result in some Resaca shareholders owning "odd lots" of less than one hundred (100) shares of the Resaca common stock on a post-split basis. Odd lots may be more difficult to sell, or may require greater transaction costs per share to sell than do "board lots" of even multiples of one hundred (100) shares.

The number of authorized shares of Resaca common stock will not be affected by the Reverse Stock Split, and the Reverse Stock Split will not affect the par value of the Resaca common stock.

Q:

Why is Resaca proposing the Incentive Plan Amendment to its shareholders at its annual meeting?

A:

Resaca is proposing the Incentive Plan Amendment, to be implemented simultaneously with the merger and after giving effect to the Reverse Stock Split, in order to (i) reserve for issuance under the Incentive Plan an adequate number of shares of Resaca common stock to (a) implement the conversion of all outstanding Cano stock options into options to purchase Resaca common stock issued under the Incentive Plan; and (b) fund potential future awards under the Incentive Plan following the completion of the merger and (ii) to prohibit repricing of any awards granted under the Incentive Plan. The board of directors of Resaca believes that 4,000,000 additional shares of Resaca common stock, which number of shares has been adjusted for the Reverse Stock Split, represents a reasonable amount of potential equity dilution and allows the combined company to continue awarding stock options, restricted stock and other equity incentive awards, which are an important component of the combined company's overall compensation program. As of May 28, 2010 and assuming that the approval of the Reverse Stock Split occurred on May 28, 2010, only 563,715 shares of Resaca common stock would have been available for the issuance of awards under the Incentive Plan. Based on the closing price of Cano common stock of $1.11 and the closing price of Resaca common stock of $0.62 on May 28, 2010 and taking into consideration the need to convert Cano options into Resaca options in accordance with Section 424(a) of the Internal Revenue Code, approximately 473,678 shares of Resaca common stock must be available under the Incentive Plan for the conversion of the Cano stock options. Following the conversion of the Cano stock options and stock grants, and without the Incentive Plan Amendment, the Incentive Plan would only have 90,037 shares available for issuance. After the Incentive Plan Amendment is effective, 4,090,037 shares of Resaca common stock will be available for awards

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under the Incentive Plan. The board of directors believes that prohibiting the repricing of any awards granted under the Incentive Plan aligns the Incentive Plan with Resaca's past practices.

Q:

What assets did Resaca purchase in the Rig Acquisition?

A:

Resaca purchased (i) personal property consisting of workover rigs, reverse units/tank, power swivels, vehicles (trucks, trailers, construction equipment), shop equipment, and related equipment; (ii) books and files relating to such personal property and (iii) real property consisting of land, a building and a yard located at 2103 Maurice Road, Odessa, Texas, which we collectively refer to as the Rig Assets.

Q:

What consideration did Resaca pay for the Rig Assets?

A:

The purchase price for the Rig Assets was $1,593,720 ($1,604,995 value of the Rig Assets minus $11,275 for related taxes). Resaca issued 3,320,250 shares of Resaca common stock in exchange for the Rig Assets, which number of shares was determined by dividing the purchase price by $0.48 or £0.295 (which was the closing stock price on the AIM for Resaca common stock on July 6, 2009), after applying an exchange rate of $1.627 per British pound. At the request of the seller, PBWS, an affiliate of Resaca, the shares were issued to Torch E&P Company, a current shareholder of Resaca indirectly owned by its Chairman of the Board and Chief Executive Officer.

Q:

Who are related-party shareholders in the Rig Acquisition?

A:

Torch E&P Company, J.P. Bryan, Resaca's Chairman of the Board, and John J. Lendrum, III, Resaca's Chief Executive Officer are related-party shareholders in the Rig Acquisition. These related-party shareholders have agreed to abstain from voting on the Rig Acquisition proposal at Resaca's annual meeting.

Q:

What are the terms of the offering?

A:

Resaca expects to offer between $50 million and $75 million in shares of Resaca common stock in an underwritten public offering (which amount includes the underwriters' 30 day option to purchase additional shares of Resaca common stock to cover overallotments, and which amount may be increased or decreased in the sole discretion of the Resaca board of directors in accordance with the provisions of the Securities Act of 1933, as amended, and the rules and regulations promulgated thereunder). The actual amount of the offering may vary, based upon market conditions at the time.

Q:

What will the proceeds of the offering be used for?

A:

We intend to use the net proceeds of the offering to repay between $43 million and $67 million of existing indebtedness for the combined company, depending on the actual size of the offering. The remaining proceeds of the offering and the proceeds from any exercise of the underwriters' option to purchase additional shares will be retained as cash for future general corporate purposes, including severance and merger related expenses.

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SUMMARY

        This summary primarily highlights selected information contained in this proxy statement and does not contain all of the information that may be important to you. We encourage you to read this proxy statement in its entirety, as well as the annexes. We have included page references to direct you to the more complete descriptions of the topics presented in this summary that are contained in this proxy statement. We have defined certain oil and gas industry terms used in this document in the "Glossary of Oil and Gas Terms" attached as Annex G to this proxy statement.

The Parties

Resaca

        Resaca is an independent oil and gas exploitation company headquartered in Houston, Texas. The company was formed in the State of Texas in 2006 to exploit a number of oil and gas properties in the Permian Basin of the United States. Resaca was admitted to trading on the AIM on July 17, 2008. Resaca's activities in the energy industry are distinct from those of a traditional exploration and production company whose focus is on new, unproven reserves. Resaca exploits known, mature, proven and probable low-risk oil and gas reserves. Resaca utilizes the latest technology available to achieve secondary and tertiary hydrocarbon recovery. Resaca's activities are focused in the Permian Basin of West Texas and southeast New Mexico. Over the long term, however, Resaca will pursue attractive exploitation opportunities in other U.S. basins and in areas outside the United States.

        For the fiscal year ended June 30, 2009, Resaca had revenues of approximately $14.6 million (excluding gains and losses on price risk management activities) and net income of approximately $2.7 million. For the nine months ended March 31, 2010, Resaca had revenues of approximately $11.3 million (excluding gains and losses on price risk management activities) and a net loss of approximately $6.7 million.

Cano

        Cano is an independent oil and natural gas company. Cano's strategy is to exploit its current undeveloped reserves and acquire, where economically prudent, assets suitable for enhanced oil recovery at a low cost. Cano intends to convert its proved undeveloped and/or non-proved reserves at its existing properties and properties Cano may acquire in the future into proved producing reserves by applying water, gas and/or chemical flooding and other techniques. Cano's assets are located onshore U.S. in Texas, New Mexico and Oklahoma.

        Cano was organized as a corporation under the laws of the State of Delaware in May 2003 as Huron Ventures, Inc. On May 28, 2004, Cano merged with Davenport Field Unit, Inc., an Oklahoma corporation, and certain other entities, which we refer to as the Davenport Merger. In connection with the Davenport Merger, Cano changed its name to Cano Petroleum, Inc. Prior to the Davenport Merger, Cano was inactive with no significant operations.

        For the fiscal year ended June 30, 2009, Cano had revenues of approximately $25.4 million and net income applicable to Cano common stock of approximately $7.9 million. For the nine months ended March 31, 2010, Cano had revenues of approximately $16.4 million and net loss applicable to Cano common stock of approximately $13.1 million.

Merger Sub

        Merger Sub, a wholly-owned subsidiary of Resaca, is a Delaware corporation formed on September 25, 2009, for the purpose of effecting the merger. Upon completion of the merger, Merger Sub will merge with and into Cano, and Cano will become a wholly-owned subsidiary of Resaca.

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        Merger Sub has not conducted any activities other than those incidental to its formation and the matters contemplated by the merger agreement.

The Merger of Resaca and Cano

        On September 29, 2009, Resaca and Cano entered into the merger agreement, pursuant to which Cano will merge with Merger Sub, a newly formed, wholly owned subsidiary of Resaca, with Cano thereupon becoming a wholly owned subsidiary of Resaca. In the merger, Cano common stockholders will receive 0.42 shares of Resaca common stock for each share of Cano common stock, and Cano preferred stockholders will receive one share of Resaca preferred stock for each share of Cano preferred stock. This exchange ratio is fixed and will not be adjusted to reflect stock price changes prior to the completion of the merger. Resaca shareholders will continue to own their existing shares, which will not be affected by the merger, except for dilution resulting from the issuance of Resaca common stock and Resaca preferred stock in conjunction with the merger.

        Due to Resaca's and Cano's complementary asset bases and similar strategic focus, we believe that the combined company will benefit from (i) balancing Resaca's near-term growth opportunities with Cano's longer-term development opportunities, (ii) capitalizing on significant cost savings and efficiencies through operational and administrative synergies in the range of $4.5 million to $5.0 million per year, (iii) increasing near-term production by the sharing of engineering expertise among Resaca and Cano management and staff, (iv) optimizing our larger and more diverse portfolio of combined assets, and (v) expanding our access to capital because of the combined company's increased size. For a more detailed description of the merger, please read "Management's Discussion and Analysis of Financial Condition and Results of Operations of Resaca—The Merger" beginning on page III-27 of this proxy statement.

The Combined Company

        At June 30, 2009, our estimated proved reserves had the following characteristics on a pro forma combined basis:

•

63.3 MMBOE;



•

PV-10 value of $664.5 million;



•

80% crude oil (as measured by MMBOE);



•

29% proved developed (as measured by MMBOE); and



•

A proved developed reserve life index of approximately 27 years (based upon production for the year ended June 30, 2009).

        Our estimated combined June 30, 2009 proved reserves of 63.3 MMBOE include 10.1 MMBOE of PDP, 8.0 MMBOE of PDNP, and 45.2 MMBOE of PUD. Reserves were estimated using New York Mercantile Exchange, which we refer to as NYMEX, crude oil and natural gas prices and production and development costs in effect on June 30, 2009. NYMEX crude oil price used in the estimation of Resaca's and Cano's reserves was $69.89 per barrel. NYMEX natural gas prices used in the estimation of Resaca's and Cano's reserves were $3.84 per MMBtu and $3.71 per MMBtu, respectively. The values reported may not necessarily reflect the fair market value of the reserves. For a more detailed description of the combined company's reserves, please read "Business and Properties—Combined Company Production, Estimated Proved Reserves and Acreage" beginning on page III-12 of this proxy statement.

        Our properties are contained in eight primary field complexes and a group of minor fields in mature oil and gas producing basins in Texas, New Mexico and Oklahoma and consist of approximately 75,000 gross and 73,000 net acres. At May 28, 2010, on a pro forma combined basis, we operated

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approximately 1,904 active wells, including 1,501 producing wells, 391 waterflood injection wells, and 12 salt water disposal wells. For the month ended April 30, 2010, on a pro forma combined basis, we produced an average of 1,923 net BOE per day from over 25 separate formations, which was composed of approximately 76% oil and approximately 24% natural gas. Nearly all of our production is from relatively shallow formations.

        Our exploitation plan involves the reactivation of shut-in wells, recompletion of currently producing wells, including refracturing, implementation of new waterfloods, reactivation and optimization of the existing waterfloods and an infill drilling program. We believe our properties contain many opportunities for the development of low risk oil and gas reserves and many of our properties are candidates for tertiary recovery by CO₂ flooding based on reports and studies performed on these properties.

        For the year ended June 30, 2009, we generated pro forma combined operating revenues of $43.1 million and pro forma combined net income of $25.8 million. For the nine months ended March 31, 2010, we generated pro forma combined operating revenues of $28.7 million and pro forma combined net loss of $17.9 million.

Combined Production and Reserve Data

        The following table shows selected data concerning our combined production, estimated proved reserves and acreage for the periods indicated on a pro forma combined basis:

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Areas of Operations

Pro Forma Combined Assets as of June 30, 2009:
Proved Reserves of 63.3 MMBOE
PV-10 value of $664.5 million
80% crude oil (as measured by MMBOE)
Proved developed reserve life index of approximately 27 years
1,904 active operated wells (May 28, 2010)
75,000 gross acres, 73,000 net acres (May 28, 2010)

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Our Properties

        The following is a brief summary of the combined company's properties:

        Panhandle Properties.    The Panhandle Properties are located on 20,387 gross and net acres in Carson, Gray, Hutchinson and Roberts Counties, Texas and produce from the Brown, White and Arkosic Dolomite formations and the Granite Wash sandstone formation. Estimated proved reserves as of June 30, 2009 attributable to the Panhandle Properties were 28.9 MMBOE.

        Cato Properties.    The Cato Properties are located on 21,122 gross (20,662 net) acres in Chavez and Roosevelt Counties, New Mexico and produce from the San Andres formation. Estimated proved reserves as of June 30, 2009 attributable to the Cato Properties were 16.0 MMBOE.

        Cooper Jal Unit Properties.    The Cooper Jal Unit Properties are located on 2,560 gross (1,855 net) acres in Lea County, New Mexico and produce from the Yates, Seven Rivers and Queens formations. Estimated proved reserves as of June 30, 2009 attributable to Cooper Jal Unit Properties were 9.8 MMBOE.

        Penwell Properties.    The Penwell Properties are comprised of two units, the Jordan San Andres Unit (1,280 gross and net acres) and the Edwards Grayburg Unit (1,840 gross and net acres), located in Ector and Crane Counties, Texas and produce from the San Andres, Grayburg and Queen formations. Estimated proved reserves as of June 30, 2009 attributable to the Penwell Properties were 1.7 MMBOE.

        Nowata Properties.    The Nowata Properties are located on 4,594 gross and net acres in Nowata County, Oklahoma and produce from the Bartlesville Sandstone formation. Estimated proved reserves as of June 30, 2009 attributable to the Nowata Properties were 1.5 MMBOE.

        Desdemona Properties.    The Desdemona Properties are located on 11,264 gross and net acres in Erath, Comanche and Eastland Counties, Texas and produce from the Barnett Shale, Duke Sands, Strawn Sand and Marble Falls Lime formations. Estimated proved reserves as of June 30, 2009 attributable to the Desdemona Properties were 1.4 MMBOE.

        Davenport Properties.    The Davenport Properties are located on 2,178 gross and net acres in Lincoln County, Oklahoma and produce from the Prue Sand formation. Estimated proved reserves as of June 30, 2009 attributable to the Davenport Properties were 1.3 MMBOE.

        Grand Clearfork Unit Properties.    The Grand Clearfork Unit Properties are located on 1,120 gross and net acres in Pecos County, Texas and produce from both the Upper and Lower Clearfork formations at an average depth of approximately 2,500 feet. Estimated proved reserves as of June 30, 2009 attributable to Grand Clearfork Unit Properties were 0.5 MMBOE.

        Other Minor Properties.    These fields are located on 8,210 gross (8,063 net) acres in Winkler, Howard, Ector and Crane Counties in Texas and Eddy County, New Mexico and include the Kermit Complex, Iatan North, Kayser (Cowden South), McElroy and Cotton Draw/BTBN. Estimated proved reserves as of June 30, 2009 attributable to these properties were 2.1 MMBOE.

        For a more detailed description of the combined company's properties, please read "Chapter III—Business & Financial Information of Resaca and Cano—Business and Properties—Our Business and Properties" beginning on page III-1 of this proxy statement.

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The Merger Agreement

        A copy of the merger agreement is attached as Annex A to this proxy statement. We encourage you to read the entire merger agreement carefully because it is the principal document governing the merger. For more information on the merger agreement, see "The Merger Agreement" beginning on page I-120.

Structure of the Merger

        Pursuant to the merger agreement, Merger Sub will merge with and into Cano, with Cano being the entity surviving the merger and becoming a wholly-owned subsidiary of Resaca.

Consideration to be Received in the Merger by Cano Stockholders

        In the merger, each share of Cano common stock will be converted into the right to receive 0.42 shares of Resaca common stock, which we refer to as the exchange ratio. Immediately after the merger is completed, but immediately prior to the completion of the offering, Cano common stockholders will own approximately 50% of the common stock of the combined company, and the Resaca shareholders will own the remaining approximately 50%.

        Each outstanding share of Cano preferred stock will be similarly converted into the right to receive one share of Resaca preferred stock. For more information, please see "The Merger Agreement—Manner and Basis of Converting Securities" beginning on page I-121.

        Holders of Cano common stock will not receive any fractional Resaca shares in the merger. Instead, the total number of shares that each holder of Cano common stock will receive in the merger will be rounded down to the nearest whole number, and Resaca will pay cash for any resulting fractional share that a Cano stockholder otherwise would be entitled to receive. The amount of cash payable for a fractional share of Cano common stock will be determined by multiplying the fraction by the average closing price for Resaca common stock for the fifteen trading days immediately prior to the merger.

        The merger agreement provides for adjustments to the exchange ratio to reflect fully the effect of any stock dividend, subdivision, reclassification, recapitalization, split, combination or exchange of shares with respect to Cano preferred stock, Resaca common stock or Cano common stock with a record date prior to the merger. In this proxy statement, Resaca requests its shareholders to approve the Reverse Stock Split, to be affected immediately prior to the merger. The exchange ratio in the merger agreement prior to the effect of the Reverse Stock Split is 2.1 and following the effect of the Reverse Stock Split, assuming its approval by the Resaca shareholders at the annual meeting, the exchange ratio is 0.42. For a more complete description of the merger consideration, see "The Merger Agreement—Manner and Basis of Converting Securities" beginning on page I-121.

Treatment of Stock Options, Restricted Stock and Other Stock-based Awards

        Resaca stock options, restricted stock and other equity-based awards will remain outstanding and will not be affected by the merger.

        If the merger occurs, all outstanding Cano stock options will immediately vest prior thereto and be converted into options of Resaca issued under the Incentive Plan, and those options will entitle the holder to receive Resaca common stock. The number of shares issuable under those options, and the exercise prices for those options, will be adjusted based on the exchange ratio. However, in any event the exercise price, the number of shares purchasable pursuant to the option and the terms and conditions of exercise of such option will be determined in accordance with the requirements of Section 424(a) of the Internal Revenue Code and in a manner that does not cause any option to be deferred compensation subject to Section 409A of the Internal Revenue Code. For a more complete

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discussion of the treatment of Cano options, please see "The Merger Agreement—Manner and Basis of Converting Securities" beginning on page I-121.

        Immediately prior to the completion of the merger, all restrictions on Cano restricted stock awards will expire and each outstanding share will be converted into the right to receive 0.42 shares of Resaca common stock at the effective time of the merger. For more information, please see "The Merger Agreement—Manner and Basis of Converting Securities" beginning on page I-121.

Directors and Executive Management Following the Merger

        The Resaca board of directors after the merger will be increased from five to seven directors. J.P. Bryan, Resaca's Chairman, will remain Chairman of the Board of the combined company and assume the role of Chief Executive Officer of the combined company. Richard Kelly Plato, a current Resaca director, is also standing for re-election, but will resign from Resaca's board of directors upon completion of the merger. Resaca's independent directors have nominated Donald W. Niemiec, William O. Powell, III and Garrett Smith, each of whom is currently a director of Cano, to serve on the Resaca board immediately after the merger. Judy Ley Allen, a current Resaca director, is also standing for re-election at the Resaca annual meeting of shareholders. As a result, following the merger, the combined company's board will consist of four individuals previously serving as Resaca directors and three individuals previously serving as Cano directors.

        Additionally, upon consummation of the merger, the following Resaca officers will resign: (i) Jay Lendrum, Chief Executive Officer, however, Mr. Lendrum will continue to serve as a director of the combined company and Vice Chairman of the Board; (ii) Mary Lou Fry, Vice President, General Counsel and Secretary; and (iii) Randy Ziebarth, Vice President—Operations. The following Cano officers will be appointed as officers of the combined company: (i) Phillip B. Feiner, Vice President, General Counsel and Corporate Secretary; and (ii) Michael Ricketts, Vice President and Chief Accounting Officer. In addition, Dennis Hammond will continue as the combined company's President and Chief Operating Officer. Chris Work will continue as Chief Financial Officer of the combined company and will also have the title of Senior Vice President.

        For a more complete discussion of the directors and management of the combined company, see "Management" beginning on page I-130.

Recommendations of the Cano Board of Directors

        After careful consideration, the Cano board of directors recommends that holders of Cano common stock and Cano preferred stock vote "FOR" the adoption of the merger agreement and the approval of the Cano Series D Amendment.

        For a more complete description of Cano's reasons for the merger and the recommendations of the Cano board of directors, see "The Merger—Cano's Reasons for the Merger" and "—Recommendation of the Cano Board of Directors" beginning on pages I-90 and I-93, respectively.

Financial Advisors

Resaca Financial Advisor

        Resaca's board of directors received the advice and considered the analyses of Madison Williams and Company (formerly known as SMH Capital Inc.), which we refer to as Madison Williams, in deciding to recommend the merger to its shareholders for approval.

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Cano Financial Advisor

        On September 29, 2009, RBC, Cano's financial advisor, rendered its oral opinion to the Cano board of directors, which opinion was subsequently confirmed in writing, that, based on RBC's experience as investment bankers, as of that date and subject to the various assumptions and limitations set forth in its opinion, the exchange ratio in the merger of 2.1 shares of Resaca common stock for each share of Cano common stock (which does not give effect to the Reverse Stock Split) is fair, from a financial point of view, to the holders of Cano common stock. The full text of RBC's written opinion, which sets forth material information relating to such opinion, including the assumptions made, matters considered and qualifications and limitations on the scope of review undertaken by RBC, is attached as Annex B to this proxy statement. We urge you to read RBC's opinion carefully in its entirety. RBC's opinion was provided for the information and assistance of the Cano board of directors in connection with its consideration of the merger and was not on behalf of any other entity or person. RBC's opinion addressed solely the fairness of the exchange ratio, from a financial point of view, to the holders of shares of Cano common stock and did not in any way address other terms or conditions of the merger or the merger agreement. RBC expressed no opinion and made no recommendation to any stockholder of Cano or Resaca or any other person as to how such stockholder or other person should vote or act with respect to any matter related to the merger. For a more detailed discussion of RBC's opinion, please see "The Merger—Opinion of Cano's Financial Advisor" beginning on page I-94.

Interests of Cano Directors and Executive Officers in the Merger

        You should be aware that some of the directors and officers of Cano have interests in the merger that are different from, or are in addition to, the interests of Cano stockholders generally. These interests relate to the treatment of equity-based compensation awards held by directors and executive officers of Cano in the merger, the appointment of three existing Cano directors as directors of the combined company after the merger, separation arrangements covering certain of Cano's executive officers, and the indemnification of Cano's current directors and officers by Resaca for six years after the merger.

        As of the date of this proxy statement, except for existing Cano employment agreements with certain of its executive officers, there are no agreements with Resaca for the employment of any of Cano's directors or the continuing employment of any of Cano's executive officers. Other than as set forth above, the interests of Cano's directors and executive officers in the merger are limited to their interests as stockholders or option holders of Cano.

        Cano's directors and executive officers beneficially owned approximately 6.1% of the shares of Cano common stock and 3.6% of shares of Cano preferred stock as of the record date for the Cano annual meeting.

        For a further discussion of interests of Cano directors and executive officers in the merger, see "The Merger—Interests of Certain Persons in the Merger" beginning on page I-107.

Material U.S. Federal Income Tax Consequences of the Merger

        Resaca and Cano intend for the merger to qualify as a tax-free reorganization within the meaning of Section 368(a) of the Internal Revenue Code. Accordingly, the merger is expected to be a tax-free transaction to the Cano stockholders to the extent the Cano common stockholders receive Resaca common stock and the Cano preferred stockholders receive Resaca preferred stock in the merger, except for cash received in lieu of fractional shares of Resaca common stock. It is a condition to each of Resaca's and Cano's respective obligations to complete the merger that Cano receive a legal opinion from tax counsel that the merger will be treated for U.S. federal income tax purposes as a tax-free reorganization within the meaning of Section 368(a) of the Internal Revenue Code.

        For a more complete description of the material U.S. federal income tax consequences of the merger, see "Material U.S. Federal Income Tax Consequences of the Merger" beginning on page I-116.

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        The tax consequences of the merger to you may depend on your own situation. In addition, you may be subject to state, local or foreign tax laws that are not addressed in this proxy statement. You are urged to consult with your own tax advisor for a full understanding of the tax consequences of the merger to you.

Accounting Treatment of the Merger

        The merger will be accounted for as an acquisition by Resaca of Cano under the purchase method of accounting according to U.S. generally accepted accounting principles. For a more detailed discussion of the accounting treatment of the merger, please see "The Merger—Accounting Treatment" on page I-107.

Appraisal Rights

        Under Section 262 of the DGCL, the holders of Cano preferred stock will have the right to seek appraisal of the fair value of their shares. However, the holders of Resaca common stock and the holders of Cano common stock do not have appraisal rights in connection with the merger. For a more detailed discussion of appraisal rights, please see "The Merger—Appraisal Rights" beginning on page I-109.

Risks Associated with the Merger

        In addition to the other information contained in this proxy statement, you should be aware of and carefully consider the risks relating to the merger described under "Risk Factors" beginning on page I-54 of this proxy statement in deciding whether to vote in favor of the adoption of the merger agreement and the Cano Series D Amendment.

Material Differences in the Rights of Cano Stockholders and Resaca Shareholders

        The rights of Cano stockholders are governed by the DGCL and Cano's amended certificate of incorporation, which we refer to as the Cano certificate of incorporation, and Cano's second amended and restated bylaws, which we refer to as the Cano bylaws and the Cano certificate of incorporation and the Cano bylaws are collectively referred to as the Cano charter documents. Upon completion of the merger, Cano stockholders who receive Resaca common stock or Resaca preferred stock will be shareholders of Resaca, and their rights will be governed by the Texas Business Organizations Code, which we refer to as the TBOC, and Resaca's certificate of formation, as amended, which we refer to as the Resaca certificate of formation, and Resaca's bylaws, which we refer to as the Resaca bylaws, and the Resaca certificate of formation and the Resaca bylaws we refer to collectively as the Resaca charter documents.

        The DGCL and the Cano charter documents differ from the TBOC and the Resaca charter documents in some material respects. One material difference is the required vote to approve a fundamental action, such as a charter amendment or merger. To approve a fundamental action, the TBOC requires an affirmative vote of at least two-thirds of the outstanding shares of Resaca common stock entitled to vote on the fundamental action. The DGCL requires a lesser vote of a majority of the outstanding shares of Cano common stock entitled to vote. The right to act by written consent also differs between Resaca shareholders and Cano stockholders. Cano stockholders are permitted to act by written consent in accordance with their bylaws, but Resaca shareholders are expressly prohibited from doing so under Resaca's certificate of formation.

        Similarly, there are some material differences in the rights of the holders of Resaca preferred stock and the Cano preferred stock. The conversion price of the Cano preferred stock is $5.75 per share. Following the merger, the conversion price of the Resaca preferred stock will be $4.963 per share, assuming the approval of the Reverse Stock Split. The anti-dilution adjustment feature of the conversion price of the Resaca preferred stock and the Cano preferred stock also differs. For the

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nine-month period following the initial issuance date, the conversion price of Resaca preferred stock will not be reduced for equity issued at a price greater than the market price of $3.971 per share as adjusted for the Reverse Stock Split. The conversion price of Cano preferred stock adjusts if equity issued is at a price less than the conversion price then in effect. For the nine-months following the completion of the merger, Resaca will not issue Resaca common stock for proceeds of more than $30 million at a gross per share price below $3.971 without prior consent of the holders of Resaca preferred stock and Cano preferred stock does not contain this restriction. The maturity date for the Resaca preferred stock will be October 6, 2012, a thirteen month extension from the maturity date set for the Cano preferred stock, which was September 6, 2011.

        For more information on these differences, see "Comparison of Rights of Resaca Shareholders and Cano Stockholders" beginning on page I-145.

Conditions to Completion of the Merger

        We expect to complete the merger after all the conditions to the merger in the merger agreement are satisfied or waived, including after we receive shareholder approval at the Resaca annual meeting and stockholder approval at the Cano special meeting and receive all required regulatory and third-party approvals. We currently expect to complete the merger by the end of June 2010. However, it is possible that factors outside of our control could require us to complete the merger at a later time or not to complete it at all.

        Each party's obligation to complete the merger is subject to the satisfaction or waiver of various conditions, including the following:

•

receipt of the required shareholder and stockholder approvals;



•

receipt of NYSE Amex authorization for listing of Resaca common stock to be issued in the merger or reserved for issuance upon exercise of converted Cano options, which was recieved by Resaca on March 30, 2010;



•

receipt of AIM authorization for readmission of Resaca common stock, which is anticipated to occur simultaneous with the closing of the merger;



•

receipt of any required regulatory approvals;



•

the SEC declaring effective the registration statement, of which this proxy statement is a part, and the registration statement not being subject to any stop order or threatened stop order;



•

no injunctions, restraints, legal restraints or prohibitions preventing the consummation of the merger;



•

no action taken by any governmental entity, or other circumstance, which imposes any restriction upon Resaca or the combined company which would have a material adverse effect on Resaca after the effective time of the merger;



•

accuracy of the other party's representations and warranties in the merger agreement, including their representation that no material adverse change has occurred;



•

the number of Cano dissenting shares does not exceed 1% of the total number of Cano common shares outstanding on the record date for the Cano special meeting;



•

all indebtedness under Resaca's and Cano's credit facilities having been repaid or refinanced, or Resaca and Cano having received consent of the lenders under such credit facilities to enter into the merger, which consents Resaca and Cano expect to receive prior to the marketing of the offering;



•

the other party's compliance with its obligations under the merger agreement; and



•

receipt by Cano of a legal opinion of its tax counsel with respect to certain U.S. federal income tax consequences of the merger.

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        The merger agreement provides that any or all of these conditions may be waived, in whole or in part, by Resaca or Cano, to the extent legally allowed. Neither Resaca nor Cano currently expects to waive any material condition to the completion of the merger. If either Resaca or Cano determines to waive any condition to the merger that would result in a material and adverse change in the terms of the merger to Resaca shareholders or Cano stockholders (including any change in the tax consequences of the transaction to Cano stockholders), if the offering cannot be completed or if the indebtedness under Resaca's and Cano's credit facilities cannot be repaid or refinanced, proxies would be resolicited from the Resaca shareholders or Cano stockholders, as applicable.

        In addition, the merger, the offering and refinancing of the combined company's indebtedness are each conditioned upon the closing of the other. For a more complete discussion of the conditions to the merger, see "The Merger Agreement—Conditions to the Merger" beginning on page I-124.

Timing of the Merger

        The merger is expected to be completed by the end of June 2010, subject to the satisfaction or waiver of closing conditions. However, it is possible that factors outside of either company's control could require Resaca or Cano to complete the merger at a later time or not to complete it at all.

No Solicitation of Other Offers

        In the merger agreement, each of Resaca and Cano has agreed that it will not directly or indirectly:

•

solicit, initiate, encourage any acquisition proposal or any inquiries or the making of any proposal that constitutes or could reasonably be expected to lead to an acquisition proposal;



•

approve or recommend entry into any agreement with respect to an acquisition proposal; or



•

encourage or participate in discussions or negotiations with, or disclose any nonpublic information with respect to, or otherwise cooperate in any way with, an acquisition proposal.

The merger agreement does not, however, prohibit either party from considering a bona fide acquisition proposal from a third party if certain specified conditions are met. For a discussion of the prohibition on solicitation of acquisition proposals from third parties, see "The Merger Agreement—Certain Additional Provisions—Acquisition Proposals (No-Shop Provisions)" beginning on page I-124.

Termination of the Merger Agreement

        Generally, the merger agreement may be terminated and the merger may be abandoned at any time prior to the completion of the merger (including after Resaca shareholder or Cano stockholder approval). In addition, either party can unilaterally terminate the merger agreement in various circumstances, including the following:

•

if the merger has not been completed by June 30, 2010, and if the terminating party has not materially breached its obligations under the merger agreement in a manner that proximately contributed to the failure to consummate the merger on or prior to such date;



•

if Cano stockholders fail to adopt the merger agreement or Resaca shareholders fail to approve the issuance of Resaca common stock and Resaca preferred stock as a result of the merger;



•

if the other party fails to cure a material breach of the merger agreement;



•

if a party enters into an alternative transaction, or its board of directors changes its recommendation of the merger; or



•

if it becomes reasonably apparent that all indebtedness under either party's credit facilities will not be repaid or refinanced prior to or at the completion of the merger or if either company will not receive consent under such credit facilities to enter into the merger; provided the

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terminating company has not materially breached its obligations under the merger agreement in a manner that proximately contributed to the failure to repay or refinance or obtain the consent of the lenders.

Termination Fees

        Upon the occurrence of certain termination events in connection with an offer or proposal regarding a business combination, Resaca or Cano may be required to pay the other a termination fee of $3.5 million.

        This termination fee could discourage other companies from seeking to acquire or merge with either Cano or Resaca. See "The Merger Agreement—Termination" and "—Termination Fees and Expenses" beginning on pages I-126 and I-127 respectively.

The Meetings—Matters to be Considered

Resaca Annual Meeting of Shareholders

        The Resaca annual meeting will take place on Wednesday, June 23, 2010 at 9:30 a.m., Houston, Texas time. The location of the annual meeting is Resaca's executive offices located at 1331 Lamar, Suite 1450, Houston, Texas 77010. Resaca's shareholders will be asked to vote on the following proposals:

1.

to approve the Merger and the Share Issuances;



2.

to approve the Reverse Stock Split;



3.

to approve the Incentive Plan Amendment;



4.

to approve the ratification of the Rig Acquisition;



5.

in the event that the Merger and the Share Issuances, the Reverse Stock Split and the Incentive Plan Amendment are approved, to consider and vote upon a proposal to:



(i)

elect, and seat upon consummation of the Merger and the Shares Issuances, William O. Powell, III as a Class I director to hold office until the 2012 annual meeting or until his successor is duly elected and qualified;



(ii)

elect, and seat upon consummation of the Merger and the Shares Issuances, Garrett Smith as a Class II director to hold office until the 2013 annual meeting or until his successor is duly elected and qualified; and



(iii)

elect, and seat upon consummation of the Merger and the Shares Issuances, Donald W. Niemiec as a Class III director to hold office until the 2011 annual meeting or until his successor is duly elected and qualified;



6.

to approve a proposal to adjourn the annual meeting to a later date or dates, if necessary, to solicit additional proxies if there are not sufficient votes in favor of any proposal;



7.

to consider and vote upon a proposal to:



(i)

re-elect Judy Ley Allen as a Class II director to hold office until the 2013 annual meeting or until her successor is duly elected and qualified; and



(ii)

re-elect Richard Kelly Plato as a Class II director to hold office until the 2013 annual meeting or until his successor is duly elected and qualified; and



8.

to transact any other business incident to the conduct of the meeting as may properly come before the Resaca annual meeting or any adjournment or postponement thereof.

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        The first three proposals listed above relating to the Merger and the Share Issuances, the Reverse Stock Split and the Incentive Plan Amendment are conditioned upon each other and the approval of each such proposal is required for completion of the merger.

        A separate proxy statement will be mailed to the Resaca shareholders on or about June 1, 2010.

Cano Special Meeting of Stockholders

        The Cano special meeting will take place on Wednesday, June 23, 2010 at 10:00 a.m., Fort Worth, Texas time. The location of the special meeting is The Fort Worth Club located at 306 W. 7^th Street, Suite 1100, Fort Worth, Texas 76102. Cano's stockholders will be asked to vote on the following proposals:

1.

to adopt the merger agreement;



2.

to approve the Cano Series D Amendment;



3.

to approve any motion to adjourn or postpone the Cano annual meeting, if necessary, to solicit additional proxies if there are not sufficient votes in favor of preceding two proposals; and



4.

to transact any other business incident to the conduct of the meeting as may properly come before the Cano special meeting or any adjournment or postponement thereof.

        The Cano board of directors recommends that Cano stockholders vote "FOR" all of the proposals set forth above, as more fully described under "The Cano Special Meeting of Stockholders" beginning on page II-1.

Record Dates; Share Ownership of Directors and Executive Officers

Resaca

        Resaca shareholders may vote at the Resaca annual meeting if they owned Resaca common stock at the close of business on May 21, 2010, the Resaca record date. As of the Resaca record date and prior to the effect of the Reverse Stock Split, directors and executive officers of Resaca and their affiliates owned and were entitled to vote 19,197,804 shares of Resaca common stock or approximately 19.8% of the total voting power of the shares of Resaca common stock outstanding on that date.

Cano

        You may vote at the special meeting of Cano stockholders if you owned Cano common stock or Cano preferred stock at the close of business on May 21, 2010, the Cano record date. As of the Cano record date, directors and executive officers of Cano and their affiliates owned and were entitled to vote 2,773,931 shares of Cano common stock, or approximately 6.1% of the shares of Cano common stock outstanding on that date, and 1,000 shares of Cano preferred stock, or approximately 3.6% of the shares of Cano preferred stock outstanding on that date.

Votes Required

Resaca

        Each share of Resaca common stock will be entitled to one vote at the Resaca annual meeting. At the Resaca annual meeting, assuming a quorum is present:

•

the affirmative vote of a majority of the votes cast, affirmatively or negatively, at the Resaca annual meeting at which a quorum representing a majority of all outstanding voting stock is present, either in person or by proxy, is required to approve the Merger and the Share Issuances, the Incentive Plan Amendment and the Resaca meeting adjournment proposal, and any other matters that may come before the Resaca shareholders at the meeting;

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•

The affirmative vote of the holders of two-thirds of the outstanding shares of Resaca common stock entitled to vote on the approval of the Reverse Stock Split at the annual meeting at which a quorum representing a majority of all outstanding voting stock is present, either in person or by proxy, is required to approve the Reverse Stock Split;



•

the affirmative vote of a majority of the votes cast, affirmatively or negatively, at the Resaca annual meeting at which a quorum representing a majority of all outstanding voting stock is present, either in person or by proxy, excluding any votes cast from any Resaca shareholder qualifying as a related-party in relation to the Rig Acquisition, is required to approve the Rig Acquisition; and



•

directors will be elected by a plurality of the votes cast.

Cano

        Each share of Cano common stock is entitled to one vote at the special meeting. Each share of Cano preferred stock is entitled to (i) one vote per share on the adoption of the merger agreement and the approval of the Cano Series D Amendment; and (ii) approximately 173.913 votes per share (voting on an as-converted basis to Cano common stock) on approval of the Cano meeting adjournment proposal and any other matters that may come before the Cano stockholders at the special meeting. At the Cano special meeting, assuming a quorum is present:

•

the affirmative vote of a majority of the outstanding shares of Cano common stock, voting as a separate class, and the affirmative vote of a majority of the outstanding shares of preferred stock of Cano, voting as a separate class, is required to adopt the merger agreement and to approve the Cano Series D Amendment; and



•

the affirmative vote of a majority of the shares cast affirmatively or negatively of Cano common stock and Cano preferred stock, voting as a single class with the Cano preferred stock voting on an as-converted basis to Cano common stock, is required to approve the Cano meeting adjournment proposal and any other matters that may come before the stockholders at the meeting.

        As of April 5, 2010, the holders of a majority of the outstanding shares of Cano preferred stock had executed and delivered voting agreements, with irrevocable proxies, agreeing to vote in favor of the Cano Series D Amendment and the merger agreement and executed a written consent in lieu of special meeting, whereby those holders approved the Cano Series D Amendment and the adoption of the merger agreement.

Quorum and Abstentions

        A quorum must be present to conduct business at each of the meetings. This means that at the Resaca annual meeting, shareholders who hold a majority in voting power of the Resaca common stock issued and outstanding as of the close of business on the record date and who are entitled to vote must be present or represented by proxy in order to constitute a quorum to conduct business at the annual meeting. At the Cano special meeting, greater than 50% of the outstanding shares of Cano common stock and Cano preferred stock as of the Cano record date must be represented in person or by proxy.

        Abstentions and withhold votes will have no effect on the outcome of the vote with respect to the Resaca proposals to (i) approve of the Merger and the Share Issuances and the Incentive Plan Amendment, (ii) ratify the Rig Acquisition or (iii) approve the election of directors to the board of Resaca. However, with respect to the proposal to approve the Reverse Stock Split, abstentions will have the same effect as voting "AGAINST" such proposal. Abstentions will have the same effect as voting "AGAINST" each of the Cano proposals.

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        An abstention occurs when a stockholder abstains from voting (either in person or by proxy) on one or more of the proposals. A withhold vote occurs when a stockholder withholds its vote (either in person or by proxy) with respect to the election of a director or directors.

Recent Developments

Resignation of Patrick M. McKinney

        Patrick M. McKinney resigned from his position as Senior Vice President of Engineering and Operations of Cano effective as of May 11, 2010.

Amendment to the Merger Agreement

        On May 19, 2010, Resaca, Cano and Merger Sub entered into that certain Amendment No. 4 to the Agreement and Plan of Merger, which we refer to as the Fourth Amendment. The Fourth Amendment revises certain representations and warranties and covenants of Resaca and Cano to account for the fact that a separate proxy statement (rather than a joint proxy statement) will be prepared for each of Resaca's annual meeting of shareholders and Cano's special meeting of its stockholders.

CIT Facility Waiver

        On May 14, 2010, Resaca received a waiver from its lenders under its senior credit facility, referred to herein as the CIT Facility, for failing to meet its minimum current ratio test as of March 31, 2010 and for the formation of the Merger Sub. The waiver with respect to the formation of Merger Sub will remain in effect until July 31, 2010. In addition, under the terms of the waiver, if Resaca does not repay or refinance the CIT Facility by June 30, 2010, it will cause all amounts owed to Torch, an affiliate of Resaca and its Chairman of the Board, at such time under the Services Agreement (as defined on page I-68 and as described on page IV-1) to be evidenced by a promissory note payable to Torch, which will be subordinated to the indebtedness Resaca owes under the CIT Facility on terms acceptable to its senior lenders.

Torch Subordination Letter Agreement

        Resaca entered into an agreement with Torch on May 14, 2010 which requires that on June 30, 2010, unless the CIT Facility has been repaid in full or refinanced, all amounts that Resaca owes to Torch at such time under the Services Agreement will be evidenced by a written promissory note payable to Torch. As of March 31, 2010, Resaca owes Torch $1,755,647 under the Services Agreement. Interest on such promissory note will accrue at the prime rate announced from time to time by Amegy Bank N.A. plus 2.0%, which is the same rate of interest that Torch may apply to all over due amounts under the terms of the Services Agreement. All principal and accrued interest on the promissory note will be due and payable at maturity on October 1, 2012 (or, if earlier, two business days after the CIT Facility is repaid from the proceeds of an issuance of Resaca equity or 91 days after the CIT Facility is refinanced or repaid with funds from any other sources). Such promissory note will also be subordinated to all amounts that Resaca owes under the CIT Facility.

Report on Combined Company Reserves as of December 31, 2009

        On March 24, 2010, Resaca received a reserve report on the combined proved reserves of Resaca and Cano as of December 31, 2009 from Haas Petroleum Engineering Services, Inc., which we refer to as Haas. As of December 31, 2009, the PV-10 value for the combined company is $773.5 million, which is an increase of $109.0 million or 16.4% higher than the PV-10 value computed at June 30, 2009 of $664.5 million. The $109.0 million increase is primarily attributable to higher commodity prices.

        These estimates do not include the effect of the SEC's revised oil and gas rules, "Modernization of Oil and Gas Reporting," issued in December 2008, which is effective for annual reports on Forms 10-K for fiscal years ending on or after December 31, 2009. The revised SEC rules include changes to the

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pricing used to estimate reserves, the ability to include nontraditional resources in reserves, the use of new technology for determining reserves and permitted disclosure of probable and possible reserves. The estimated proved reserves, future net revenues and PV-10 presented at December 31, 2009 were determined using SEC rules in effect for fiscal years prior to December 31, 2009, including the use of end of the period prices for oil and natural gas as of December 31, 2009, which were $79.39 per barrel of oil and $5.82 per MMBtu of natural gas instead of an unweighted average 12-month price, calculated as the unweighted arithmetic average of the first-day-of-the-month price for each month within the 12-month period ended December 31, 2009, of $61.18 per Bbl for oil and $3.87 per MMBtu for natural gas under the new SEC rules. Haas estimates that, had the combined company applied unweighted 12-month average pricing at December 31, 2009 under the SEC's revised rules, the combined company's proved reserves would have decreased by 1.7 MMBOE, which is a reduction of 3% as compared to proved reserves of 57.5 MMBOE using December 31, 2009 flat pricing. Haas estimates that utilizing the unweighted 12-month average pricing at December 31, 2009 would have reduced the PV-10 value of the combined company's proven reserves by $404.9 million or 52% as compared to PV-10 value of proved reserves of $773.5 million using December 31, 2009 flat pricing. Beginning June 30, 2010, the combined company will be required to prepare its reserve estimates using the definitions and pricing required by the SEC's revised rules.

Stock Exchange Listing

        On March 30, 2010, the combined company was approved for listing on the NYSE Amex upon notice of issuance.

New Bank Facility

        On April 26, 2010, we received a firm commitment for a new $200 million revolving senior secured credit facility with UBNA and Natixis. UBNA is the Administrative Agent and UBNA and Natixis are the Issuing Lenders of the New Facility. The New Facility will mature on July 1, 2012 and is expected to have an initial and current borrowing base of $90 million based upon our estimated proved reserves. The New Facility provides for an automatic extension to the third anniversary of the closing date of the New Facility if all shares of Resaca preferred stock convert to shares of Resaca common stock or the stated maturity date or redemption date for the Resaca preferred stock is extended to a date at least 91 days after the third anniversary of the closing date of the New Facility and no default then exists under the New Facility. Advances under the New Facility shall be in the form of either base rate loans or LIBOR loans. The interest rate on base rate loans shall be tied to the "UB Reference Rate" plus a margin of 1.5% to 2.25% based on the percentage of the borrowing base utilized at the time of the credit extension. The interest rate on LIBOR loans shall be LIBOR for a 30, 60, 90, or (if available) 180 day period plus a margin of 2.50% to 3.25% based on the percentage of the borrowing base utilized at the time of the credit extension. See "Chapter III—Business & Financial Information of Resaca and Cano—Management's Discussion and Analysis of Financial Condition and Results of Operations of Resaca—Our New Facility" on page III-54 for a detailed discussion of the New Facility and Exhibit 10.222 hereto for the draft form of credit agreement to be entered into in connection with the New Facility, which we refer to as the New Credit Agreement.

The Offering

        Resaca expects to offer between $50 million and $75 million in shares of Resaca common stock in an underwritten public offering (which amount includes the underwriters' 30 day option to purchase additional shares of Resaca common stock to cover overallotments, and which amount may be increased or decreased in the sole discretion of the Resaca board of directors in accordance with the provisions of the Securities Act of 1933, as amended, and the rules and regulations promulgated thereunder). The actual amount of such offering will depend upon market conditions at the time. Management currently intends to use the net proceeds of the offering to repay between $43 million and $67 million of existing indebtedness for the combined company, depending on the actual size of the

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offering. The remaining proceeds of the offering will be retained as cash for general corporate purposes, including severance and merger related expenses, although these amounts ultimately depend upon the actual size of the offering, which is impossible to determine at this time.

Cano Property Sale

        During January 2010, Cano sold its interests in certain oil and gas properties located in the Texas Panhandle for net proceeds of $6.3 million. The sale had an effective date of January 1, 2010. As of January 1, 2010, the net book value of these sold assets was $3.8 million, based on updated reserve information as of December 31, 2009, which resulted in a pre-tax gain of $2.5 million. Cano used a portion of the net proceeds of $6.3 million to pay down its outstanding debt. As of May 28, 2010, Cano had available borrowing capacity of $1.1 million under its senior credit facility and a cash balance of $0.1 million.

Change in Transfer Agent and Registrar

        Effective upon the merger, the Transfer Agent and Registrar for the Resaca common stock and Resaca preferred stock will change from Computershare Investor Services (Jersey) Limited, its Transfer Agent and Registrar prior to the merger, to Computershare Trust Company N.A.

Conversion of Trading Denomination of Resaca Common Stock to U.S. Dollars

        On April 1, 2010, in preparation for the merger and the combined company's planned listing on NYSE Amex, the trading denomination of the Resaca common stock changed from British pounds to U.S. dollars.

Contact Information of the Combined Company

        Our principal executive offices are located at 1331 Lamar, Suite 1450, Houston, Texas 77010. The telephone number of our principal executive offices is (713) 650-1246. Our web site is www.resacaexploitation.com. The information on our web site does not constitute part of this proxy statement.

Organizational Structure

        The chart below depicts the organization of the combined company after giving effect to the merger.

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SELECTED HISTORICAL CONSOLIDATED FINANCIAL DATA OF RESACA

        The following table sets forth certain of Resaca's consolidated financial data as of and for each of the periods indicated. The financial information as of and for the years ended June 30, 2007, 2008 and 2009 has been derived from Resaca's audited consolidated financial statements. The financial information as of and for the nine month periods ended March 31, 2009 and 2010 has been derived from Resaca's unaudited consolidated financial statements. The financial information as of June 30, 2006 and for the period from inception (March 1, 2006) to June 30, 2006 has been derived from Resaca's unaudited financial statements. This disclosure reflects Resaca's results only and does not include the effect of the merger, the issuance of Resaca common stock and Resaca preferred stock in conjunction with the merger, the Reverse Stock Split or the Rig Acquisition. The selected historical financial data below should be read in conjunction with "Management's Discussion and Analysis of Financial Condition and Results of Operations of Resaca" beginning on page III-27 and Resaca's consolidated financial statements and notes thereto beginning on page F-11.

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