Connacher announces equity offering



    
    /NOT FOR DISTRIBUTION TO UNITED STATES NEWSWIRE SERVICES OR FOR
    DISSEMINATION IN THE UNITED STATES/
    

    CALGARY, May 19 /CNW/ - Connacher Oil and Gas Limited (the "Corporation"
or "Connacher" - CLL - TSX) is pleased to announce that it has filed a
preliminary short form prospectus in Canada in connection with a public
offering (the "Offering") of common shares of Connacher (the "Common Shares").
The Offering will be conducted through a syndicate of underwriters with RBC
Capital Markets as sole bookrunner and co-lead manager, together with Credit
Suisse Securities (Canada), Inc. and TD Securities Inc. as the other co-lead
managers (the "Underwriters"). Pursuant to the terms of the Offering, the
Corporation has agreed to grant the Underwriters an over-allotment option to
purchase additional Common Shares equal to up to 15% of the Common Shares sold
pursuant to the Offering, exercisable at any time, in whole or in part, up to
30 days from the closing of the Offering.
    The Offering will be priced in the context of the market with the final
terms of the Offering to be determined at the time of pricing. The net
proceeds of the Offering will be added to working capital to fund the
Corporation's capital expenditures and for general corporate purposes, which
may include a portion of the capital costs associated with the construction of
the Corporation's second 10,000 bbl/d steam assisted gravity drainage ("SAGD")
oil sands project ("Algar"), once a decision to reinstate construction at
Algar and drill 15 SAGD well pairs is made. While such a decision has not yet
been made, the Corporation, in accordance with its strategy to pre-fund
capital projects, will add to its liquidity through the net proceeds of the
Offering to position itself to reinstate construction at Algar in a timely
manner.
    The Common Shares will be sold publicly in all provinces of Canada (other
than Québec) and on a private placement basis in the United States pursuant to
exemptions from the registration requirements of the U.S. Securities Act of
1933, as amended (the "1933 Act") and such other jurisdictions as may be
agreed to by the Corporation and the Underwriters. The Offering is scheduled
to close on or about June 3, 2009 and is subject to certain customary
conditions and regulatory approvals, including the approval of the Toronto
Stock Exchange.
    In conjunction with the Offering, the Corporation is advancing
negotiations with a Canadian chartered bank on behalf of a syndicate of
proposed lenders, whereby the Corporation would approach the syndicated bank
loan market to secure a revolving working capital facility and a construction
loan for Algar (the "Facilities"). The Facilities, if made available and
subject to the meeting of any funding conditions, would provide increased
liquidity and financial flexibility to assist the Corporation in pursuing the
construction of Algar, should a decision be made to reinstate its construction
while also providing additional liquidity and financial flexibility for the
Corporation's normal course business activities. The capital anticipated to be
available pursuant to the Facilities, together with the anticipated proceeds
of the Offering, available cash and anticipated cash flow from operations
before changes in working capital, should be sufficient to fund the remaining
estimated $200 million of construction costs for Algar, assuming improved
commodity prices and stable economic conditions.
    This news release shall not constitute an offer to sell or the
solicitation of an offer to buy securities in the United States or any other
jurisdiction outside of Canada, nor shall there be any sale of the securities
in any jurisdiction in which such offer, solicitation or sale would be
unlawful. The Common Shares offered have not been, and will not be, registered
under the 1933 Act, or any state securities laws and may not be offered or
sold in the United States absent registration or an applicable exemption from
the registration requirements of the 1933 Act and applicable state securities
laws.

    Connacher is a Calgary-based bitumen, crude oil and natural gas company.
It is primarily an oil sands company, with operations at its 10,000 bbl/d
Great Divide Pod One SAGD plant in northeastern Alberta and with plans to
construct a second similar sized SAGD project in Great Divide at Algar. It
owns conventional Canadian production and reserves, a 9,500 bbl/d heavy oil
refinery in Great Falls, Montana and a 24 percent equity stake in Petrolifera
Petroleum Limited (PDP-TSX), a successful production and exploration company
active in Argentina, Colombia and Peru in South America. Connacher's Common
Shares and convertible debentures are listed for trading on the Toronto Stock
Exchange.

    Forward-Looking Statements: This news release contains certain
"forward-looking information" within the meaning of applicable securities law
including statements regarding the proposed use of proceeds of the Offering,
the proposed credit facilities and Connacher's ability to fund the remaining
costs of construction of Algar once a decision to reinstate construction has
been made. Forward-looking information is frequently characterized by words
such as "plan", "expect", "project", "intend", "believe", "anticipate",
"estimate", "may", "will", "would", "potential", "proposed" and other similar
words, or statements that certain events or conditions "may" or "will" occur.
These statements are only predictions. Forward-looking information is based on
the opinions and estimates of management at the date the information is
provided, and is subject to a variety of risks and uncertainties and other
factors that could cause actual events or results to differ materially from
those projected in the forward-looking information. These factors include the
inherent risks involved in the exploration and development of oil sands
properties, difficulties or delays in start-up operations, the possibility of
unanticipated costs and expenses, uncertainties relating to whether Connacher
will be able to secure the proposed credit facilities and other factors
including unforeseen delays. For a description of the risks and uncertainties
facing Connacher and its business and affairs, readers should refer to
Connacher's Annual Information Form for the year ended December 31, 2008.
Connacher undertakes no obligation to update forward-looking statements if
circumstances or management's estimates or opinions should change, unless
required by law. The reader is cautioned not to place undue reliance on
forward-looking statements.





For further information:

For further information: Richard A. Gusella, President and Chief
Executive Officer or Grant D. Ukrainetz, Vice President, Corporate
Development, Phone: (403) 538-6201, Fax: (403) 538-6225,
inquiries@connacheroil.com, Website: www.connacheroil.com


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