Connacher Oil and Gas Limited launches First Lien Secured Note offering and updates corporate presentation



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

    CALGARY, June 10 /CNW/ - Connacher Oil and Gas Limited (CLL - TSX)
announced today that it intends to offer, by way of a private placement,
approximately US$150 million principal amount of First Lien Secured Notes
("Notes"). Completion and pricing of the offering is subject to market and
other conditions. It is expected that the Notes would mature in 2014.
    Net proceeds, after deduction of the expenses of the offering, will be
used for working capital and general corporate purposes, including to fund a
portion of the capital costs associated with the construction of Algar, the
Corporation's second 10,000 barrel per day steam-assisted gravity drainage
("SAGD") oil sands project, once a decision is made by Connacher's Board of
Directors to authorize reinstatement of construction at Algar and drilling of
the associated 15 SAGD well pairs. This decision has not yet been finalized.
However, in accordance with Connacher's practice to pre-fund major capital
projects, upon closing of this offering of Notes, net proceeds, together with
current cash balances, including the $163.9 million of net proceeds recently
received from the offering of common shares completed on June 5, 2009, will
clearly position the Corporation to reinstate construction at Algar in a
timely manner, as the Corporation's available cash balances would exceed the
estimated remaining $200 million of construction, drilling and completion
costs for Algar, assuming stable economic conditions.
    It is anticipated that receipt of the net proceeds of the offering of
Notes would eliminate the need to pursue continued negotiations for a
construction loan for Algar. Connacher will continue to advance its
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 (the "Working
Capital Facility"). The Working Capital Facility, if made available and
subject to the meeting of any funding conditions, would provide additional
liquidity and financial flexibility for the Corporation's normal course
business activities. The availability, terms and conditions of the proposed
Working Capital Facility are yet to be finalized. There can be no assurance
that the Corporation will be able to complete the proposed Working Capital
Facility on terms and conditions acceptable to the Corporation, to the
syndicated loan market or at all.
    Connacher also announces that it has updated its corporate presentation,
a copy of which is available on its website at www.connacheroil.com. The
presentation contains certain operational information including estimated 2010
bitumen netbacks and a calculation of estimated 2010 corporate operating
margin. This presentation will be used in conjunction with the Corporation's
participation at the 2009 CAPP Oil & Gas Investment Symposium being held in
Calgary from June 15 to June 17, 2009. The Corporation's presentation will be
made by Mr. R.A. Gusella, President and Chief Executive Officer and by Mr.
Peter Sametz, Executive Vice President and Chief Operating Officer on June 16
and June 17, 2009.

    Connacher Oil and Gas Limited is a Calgary-based integrated oil company.
Its primary upstream production is from oil sands operations at its 10,000
barrel per day Great Divide Pod One SAGD plant in northeastern Alberta. The
Corporation has plans to construct a second similar sized SAGD project in
Great Divide at Algar. It owns conventional Canadian production and reserves,
a downstream operation with a 9,500 barrel per day heavy oil refinery in Great
Falls, Montana and maintains a 24 percent equity stake in Petrolifera
Petroleum Limited (PDP-TSX), a 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
under the symbol "CLL".

    This press release is not an offer of the Notes in the United States. The
Notes have not and will not be registered under the U.S. Securities Act of
1933, as amended (the "US Securities Act"). The Notes may not be offered or
sold, except to qualified institutional buyers in reliance on the exemption
from registration provided by Rule 144A under the US Securities Act, or to
persons outside the United States in compliance with Regulation S and
applicable Canadian exemptions. Any public offering of securities made in the
United States would be made by means of a prospectus that would be obtainable
from Connacher and that would contain detailed information about Connacher and
management, as well as financial statements.

    Forward-Looking Information

    This news release contains certain "forward-looking information" within
the meaning of applicable securities laws including information regarding
Connacher's proposed offering of Notes and use of proceeds in connection
therewith, the anticipated reinstatement of construction of Algar and the
drilling of 15 SAGD well pairs and the ability of the Corporation to raise
additional financing through the Working Capital Facility. 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 risks include, but are not limited to risk 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
estimates; the uncertainty of estimates and projections in relation to
production, costs and expenses and health, safety and environmental risks),
the risk of commodity price and foreign exchange rate fluctuations, risks
associated with obtaining, maintaining and the timing of receipt of regulatory
approvals, permits and licenses, uncertainties relating to access to capital
markets and the risk of continuing deterioration of global economic
conditions. In certain circumstances the company may curtail production, defer
expenditures and/or modify its plans with respect to capital expenditures,
which may impact year-end cash balances and net operating income. Additional
risks and uncertainties are described in the company's Annual Information Form
which is filed on SEDAR at www.sedar.com.
    The ability of the company to complete the proposed offering of Notes is
dependent on market conditions and the ability to negotiate terms and
conditions satisfactory to the company. The current financial crisis has
resulted in severe economic uncertainty and resulting illiquidity in capital
markets which increases the risk associated with the company's financing
plans. There can be no assurance that the company will be successful in
completing the proposed financing. Failure to complete the proposed offering
of Notes will require the company to examine other alternatives for securing
the financing needed to reinstate the construction of Algar. Due to the risks,
uncertainties and assumptions inherent in forward looking information,
prospective investors in the company's securities should not place undue
reliance on forward looking information. Forward looking information contained
in this press release is made as of the date hereof and are subject to change.
The company assumes no obligation to revise or update forward looking
information to reflect new circumstances, except as required by law.





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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