UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM 8-K

CURRENT REPORT

Pursuant to Section 13 or 15(d) of The Securities Exchange Act of 1934

Date of Report (Date of earliest event reported)

September 9, 2011

Cano Petroleum, Inc.

(Exact name of registrant as specified in its charter)

Registrant’s telephone number, including area code:  (214) 687-0030

Not Applicable

(Former name or former address, if changed since last report.)

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instruction A.2. below):

o            Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

o            Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

o            Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

o            Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

Item 8.01                                             Other Events.

On September 9, 2011, Cano Petroleum, Inc., a Delaware corporation (“Cano”), executed a mutual termination letter with Natixis (the “Termination Letter”) providing for the termination of the three-year LIBOR interest rate basis swap contract for $20.0 million in notional exposure that the parties entered into on January 12, 2009 (the “Interest Rate Swap”).  The terms of the Interest Rate Swap provided for Cano to pay Natixis, in three-month intervals, a fixed rate of 1.73% and for Natixis to pay Cano the prevailing three-month LIBOR rate.

In recognition that Natixis was able to terminate the fixed price commodity swaps due to existing events of default, including, but not limited to, those defaults identified in the Consent and Forbearance Agreement dated August 5, 2010 among Cano, certain guarantors, certain lenders, including Natixis, and Union Bank, N.A. and previously disclosed on a current report on Form 8-K filed with the SEC on August 10, 2010, Cano and Natixis agreed to mutually and consensually terminate the Interest Rate Swap.  Pursuant to the Termination Letter, Cano also released Natixis and its affiliates from claims related to the Interest Rate Swap, the early termination thereof and Cano’s Amended and Restated Credit Agreement.  In connection with the termination of the Interest Rate Swap, Cano must pay $145,500 to Natixis.

In addition to being a party to the Interest Rate Swap, Natixis is also one of the senior lenders under Cano’s Amended and Restated Credit Agreement.

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SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

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