Connacher provides update on recent developments and financing



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

    CALGARY, April 24 /CNW/ - Connacher Oil and Gas Limited (CLL - TSX)
wishes to provide market participants with an update on recent activities
involving the company's Great Divide project, conventional oil and gas
activities and the company's 9,500 bbl/d refinery in Great Falls, Montana.

    Great Divide Pod One

    Connacher is in the process of constructing a plant and facilities and
drilling Steam Assisted Gravity Drainage (SAGD) well pairs at the company's
10,000 bbl/d of bitumen SAGD project located in northeastern Alberta (the "Pod
One Project"). The budgeted amount in respect of the development of the Pod
One Project, including contingencies, capitalized interest, capitalized
overhead and capitalized operating costs (until the project becomes
commercial), was previously disclosed to be $256 million. This included
$24 million of sunk costs (lease acquisition, exploratory core hole drilling
and preliminary evaluation costs dating back to 2004) incurred prior to
submissions of regulatory applications and commencement of construction.
    Most recently, Connacher has completed a detailed review of the overall
cost forecast for the Pod One Project. The total cost forecast for completion
of the Pod One Project, prior to any cost mitigation efforts, is now estimated
to be $290 million, including sunk costs, capitalized items, revised budget
items and new items. The capitalized costs aggregate approximately $25 million
in this estimate and will be incurred over time as the plant is commissioned
and bitumen production increases as the reservoir heats up.
    A significant portion of the increase in estimated budgeted costs relate
primarily to the main SAGD facility. This occurred due to a number of minor
scope changes to the facility, efforts to keep shop and field construction on
the 300 day schedule during harsh winter conditions, a jump in the price of
steel and an increase in the estimated cost of buildings. It is anticipated
that some of these cost increases may be mitigated by a reduction in future
operating costs as a consequence of the utilization of more energy efficient
facilities. Although there have been minor scope changes to the main facility,
it is still on schedule for start-up in the summer of 2007. In addition, other
estimated cost increases for previously budgeted items related to well pad
facilities, camp installation, site preparation, infrastructure items and
personnel.
    Further costs have arisen for items which were either not previously
budgeted for or that have arisen as a consequence of increased activity by
Connacher in the region. These items, including road improvements, will be
completed within the Pod One Project but will provide benefit to Connacher in
respect of its other activities in the area over time. In addition to these
improvements, modifications to the Highway 63 access are also planned. Costs
associated with inventories of parts, personnel camps, electrical
infrastructure and civil engineering materials have now been included in the
Pod One costs and therefore have resulted in an increase to the overall Pod
One Project budget; however, these items will also be utilized for the
development of Connacher's nearby resources.
    Until very recently, the largest non-planned expenditure item had been
site preparation costs due to the proximity of water to the surface and the
need to move considerably more material to achieve a suitable site. While this
factor and others resulted in utilization of the majority of the contingency
amount which had been provided for in the original budget, Connacher
anticipated until this recent review that it could complete the Pod One
Project within the budgeted amounts.
    The Pod One Project remains on schedule for start up in the summer of
2007, which is within four years of Connacher initially acquiring the oil
sands leases. Connacher is satisfied with the execution strategy and process
in spite of inflationary pressures and the requirement for some scope changes
affecting its budgeted costs. Mitigation efforts will continuously be
undertaken to attempt to reduce overall costs associated with the development
of the Pod One Project.

    Other Oil Sands Developments

    During this past winter, the company drilled 81 coreholes and shot
68 km(2) of three dimensional seismic to successfully delineate additional oil
sands accumulations. Based on this work, and subject to approval by
Connacher's Board of Directors, the company is preparing an application for
submission to the AEUB, Alberta Environment and to other departments of the
Alberta Government for permission to develop Pod 2 (also known as the "Algar
Project"). The Algar Project is estimated to be similar in size, scope and
cost to the Pod One Project. The company has also commenced stakeholder
consultations including consultations with First Nations groups in the area.

    Conventional Production Summary

    As previously disclosed, the company's conventional crude oil and natural
gas production for 2006 averaged 2,725 boe/d. Connacher's production has
recently declined to approximately 2,100 boe/d, comprised of 8,300 mcf/d of
natural gas and 700 bbls/d of crude oil. This has occurred for a variety of
reasons, including normal production declines, temporary limitations or
malfunctions of some facilities, an inability to tie-in new wells as planned
due to issues related to plant access, winter conditions and regulatory
issues. In the opinion of the company, many of the issues affecting the
reduction in production are anticipated to be of short duration. In addition,
workovers are ongoing and two new wells that have been tied-in are expected to
soon be on production. In the second quarter of 2007, production is expected
to increase. The overall impact on Connacher's budgeted financial results for
the first quarter of 2007 and for the full year are not anticipated to be
material as a consequence of this short-term decline in production.
    Connacher's 2007 winter drilling program resulted in a number of new
natural gas wells in its Marten Creek area which have been tested and are
standing cased or are awaiting completion and tie-in next winter, due to
winter only access. The company believes, based on initial test results, that
it can significantly increase its production of natural gas from this area
once this work is completed. These new reserves were discovered subsequent to
the preparation of the year end reserves evaluation and will be included in
the company's next reserves update. Further drilling is planned in this area.

    Profitability Increases at Montana Refinery

    Connacher also advises that based on information presently available, its
refining subsidiary, Montana Refining Company Inc. ("MRCI"), anticipates
reporting strong operating and financial results for the first quarter of
2007, substantially in excess of budgeted expectations and consequentially
more than offsetting the shortfall relative to budget anticipated to arise
from the lower production levels derived from Connacher's conventional oil and
natural gas properties. A number of factors contributed to this performance,
including higher product prices, better than expected product yields, higher
than expected throughput, a lower crude cost and some positive developments
associated with the asphalt market. This strong financial performance will
assist Connacher's overall financial results in the first quarter of 2007 and
also is a mitigant to financial requirements for the increased costs
anticipated at Great Divide Pod One.

    Compliance Inspection

    On April 17, 2007 MRCI received notification from the United States
Environmental Protection Agency that its National Enforcement Investigations
Centre will be conducting a Clean Water Act compliance inspection in respect
of the refinery commencing on April 24, 2007. The purpose of this inspection
is to determine compliance with applicable environmental legislation,
approvals and permits. MRCI is cooperating in connection with this compliance
inspection.

    Financing

    On April 17, 2007 Connacher announced the offering, on a bought-deal
basis, of 4,819,300 common shares and 5,714,300 common shares issued on a
flow-through basis, for aggregate net proceeds of $50,000,170 underwritten by
a syndicate led by GMP Securities L.P. and including Orion Securities Inc.,
HSBC Securities (Canada) Inc., Raymond James Ltd., D & D Securities Company,
Desjardins Securities Inc. and Jennings Capital Inc. (collectively, the
"Underwriters"). Following consultation between Connacher and the
Underwriters, Connacher and GMP Securities L.P., on behalf of the
Underwriters, agreed to terminate the offering effective April 23, 2007. The
Underwriters have advised that they continue to remain committed in their
support for the financing initiatives of Connacher and intend to work towards
negotiating with Connacher an equity financing on terms and conditions to be
mutually agreed upon.

    Connacher is a Calgary-based oil and natural gas exploration and
production company. Its principal asset is its 100 percent interest in
reserves, resources and lands in the Great Divide regions of Alberta's oil
sands. Connacher also has conventional crude oil and natural gas properties in
Alberta and Saskatchewan, owns a 9,500 bbl/d refinery in Great Falls, Montana
and owns a 25 percent basic and fully-diluted interest in, and assists in the
management of, Petrolifera Petroleum Limited. This investment has a current
market value in excess of $200 million.

    Forward-Looking Statements: This press release contains certain
"forward-looking statements" within the meaning of such statements under
applicable securities law including management's assessment of the anticipated
capital costs and the timing of production start-up of the Pod One Project,
the planned development of the Algar Project, anticipated production from
non-oil sands properties, anticipated financial performance of the refinery
located in Montana and the results of the compliance inspection pursuant to
the Clean Air Act. Forward-looking statements are frequently characterized by
words such as "plan", "expect", "project", "intend", "believe", "anticipate",
"estimate", "may", "will", "potential", "proposed" and other similar words, or
statements that certain events or conditions "may" or "will" occur. These
statements are only predictions. Forward-looking statements are based on the
opinions and estimates of management at the date the statements are made, and
are 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 statements. These factors include the inherent risks
involved in the exploration and development of oil sands properties, the
uncertainties involved in interpreting drilling results and other geological
data, fluctuating oil prices, the possibility of project cost overruns or
unanticipated costs and expenses, uncertainties relating to the availability
and costs of financing needed in the future and other factors including
unforeseen delays. As an oil sands enterprise in the development stage,
Connacher faces risks, including those associated with exploration,
development, approvals and the ability to access sufficient capital from
external sources. Anticipated exploration and development plans relating to
Connacher's properties in 2007 are subject to change. For a detailed
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, 2006 and the short form preliminary prospectus of
Connacher dated April 23, 2007, both of which are available at www.sedar.com.
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. Barrels of oil equivalent ("boe") may be
misleading, particularly if used in isolation. A boe conversion ratio of
6 mcf:1 bbl is based on an energy equivalency conversion method primarily
applicable at the burner tip and does not represent a value equivalency at the
wellhead.





For further information:

For further information: Richard A Gusella, President and Chief
Executive Officer, Connacher Oil and Gas Limited, Phone: (403) 538-6201, Fax:
(403) 538-6225, inquiries@connacheroil.com, Website: www.connacheroil.com


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