Connacher Oil and Gas Limited Announces Initiation of Process to Sell Halfway Creek

CALGARY, June 22, 2011 /CNW/ - Connacher Oil and Gas Limited (TSX: CLL) announced today that the company, in conjunction with Alberta Oil Sands Inc. ("AOS"), has engaged RBC Rundle to assist in the sale of a 100 percent working interest (held 50 percent by Connacher and 50 percent by AOS) in 38.5 contiguous sections (24,640 acres) of oil sands leases located at Halfway Creek, in the heart of the Athabasca oil sands region in northeast Alberta.

As at December 31, 2010, in aggregate, the Halfway Creek leases have been assigned 154.5 million barrels of best estimate contingent resources and 47.7 million barrels of best estimate prospective resources based on an independent reserve and resource report prepared by GLJ Petroleum Consultants Ltd. ("GLJ").  To date, a total of 32 core holes have been drilled on the Halfway Creek lands and the lease block has been covered by 2-D seismic. Connacher is disposing of its interest in the Halfway Creek leases to allow the company to continue to focus on its Great Divide assets as its core oil sands region.  As evaluated by GLJ in a report as at December 31, 2010, Great Divide has the potential for greater than 55,000 bbl/d of bitumen production, based on estimates of proved plus probable plus possible reserves.

Assuming successful completion of the disposition process, the transaction would further fortify Connacher's liquidity position.  The disposition is consistent with the company's previously announced five-point strategy for 2011, which includes asset rationalization, production optimization, streamlining its balance sheet, accelerating its evaluation of its conventional resource plays and accelerating the development of its Great Divide oil sands assets through a process to conclude a joint venture.  Most of these initiatives are proceeding or have been completed.

Questions related to Halfway Creek or the sale process can be directed to Mark McMurray, Managing Director, RBC Rundle, 403-299-8447 or to Jeff Meunier, Vice President, RBC Rundle, 403-299-8461.

Connacher Oil and Gas Limited is a Calgary-based company whose primary assets are two steam assisted gravity drainage ("SAGD") bitumen production projects, called Pod One and Algar, which are a core part of the company's Great Divide assets in the Athabasca oil sands region of Alberta.  Further expansion of the company's bitumen production is contemplated from the continuing rampup of production at Algar, from the application of optimization programs and the introduction of innovative new recovery methods at both projects, including SAGD plus solvent at Algar in 2011.  The company is also participating in two new light gravity crude oil resource plays in central Alberta and owns and operates a 9,500 bbl/d heavy oil refinery in Great Falls, Montana, U.S.A.

Forward Looking Information:

This press release contains forward looking information including but not limited to the planned disposition of the company's working interest at Halfway Creek and the anticipated benefits associated therewith, expectations relating to anticipated future bitumen production levels at Great Divide, the company's five point strategy and anticipated increases in production at Pod One and Algar through optimization programs and the planned implementation of the SAGD plus solvent project.

Forward looking information is based on management's expectations regarding future growth, results of operations, production, future commodity prices and foreign exchange rates, future capital and other expenditures (including the amount, nature and sources of funding thereof), plans for and results of drilling activity, environmental matters, business prospects and opportunities and future economic conditions. Forward looking information involves significant known and unknown risks and uncertainties, which could cause actual results to differ materially from those anticipated. These risks include, but are not limited to: the risks associated with the oil and gas industry (e.g., operational risks in development, exploration and production; delays or changes in plans with respect to exploration or development projects or capital expenditures; the uncertainty of reserve and resource estimates, the uncertainty of geological interpretations, the uncertainty of estimates and projections relating to production, costs and expenses, and health, safety and environmental risks), the risk of commodity price and foreign exchange rate fluctuations, risks associated with the impact of general economic conditions, risks and uncertainties associated with securing and maintaining the necessary regulatory approvals and financing to proceed with the operation and continued expansion of the Great Divide oil sands project and risks associated with the sale of other non-cash generating assets.  There can be no assurance that the process to sell  Halfway Creek will result in an offer that will be acceptable to the company and there are risks associated with the completion of a sale transaction.

Additional risks and uncertainties affecting Connacher and its business and affairs are described in further detail in Connacher's Annual Information Form for the year ended December 31, 2010, which is available at www.sedar.com. Although Connacher believes that the expectations in such forward looking information are reasonable, there can be no assurance that such expectations shall prove to be correct. The forward looking information included in this press release is expressly qualified in its entirety by this cautionary statement. The forward looking information included herein is made as of the date of this press release and Connacher assumes no obligation to update or revise any forward looking information to reflect new events or circumstances, except as required by law.

SOURCE Connacher Oil and Gas Limited

For further information:

Richard A. Gusella
Chairman and Chief Executive Officer

OR

Peter D. Sametz
President and Chief Operating Officer

OR

Grant D. Ukrainetz
Vice President, Corporate Development

Phone:  (403) 538-6201     Fax:  (403) 538-6225
inquiries@connacheroil.com       Website:  connacheroil.com


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