Connacher reports significant increases in reserves and 10% pre-tax present value during 2007



    CALGARY, Feb. 25 /CNW/ - Connacher Oil and Gas Limited (CLL - TSX)
announces that the company's reserve base and related 10% present value of
future net revenue ("present value or present worth") expanded significantly
during 2007. The increase in bitumen reserves and resources at Great Divide
and Halfway Creek reflects the completion of facilities at Great Divide Pod
One ("Pod One") and the impact of Connacher's Q1 2007 core hole drilling
program on its main lease block in the region. The increase in conventional
reserves reflects successful drilling at Marten Creek, Alberta, also during
Q1 2007. Total 2P reserves ("1P-proved; 2P-proved and probable; 3P-proved,
probable, and possible") at year end 2007 increased 101 percent to
187.3 million barrels from 92.9 million barrels at December 31, 2006. The 10%
present value for these 2P reserves increased 126 percent over December 31,
2006 estimates from $529 million to $1.2 billion.
    The estimates are as at December 31, 2007 and do not include any of the
results of Connacher's active and successful drilling program thus far during
2008. The full impact of this activity will be captured in a mid-year 2008
update report, which will be prepared and reported upon after drilling
results, core analysis and other information are fully assessed by the company
and its independent evaluators, GLJ Petroleum Consultants ("GLJ") of Calgary,
Alberta.
    Comparative reserve volumes and values are presented on a year-over-year
calendar basis, although the company did prepare a mid-year report. There was
no material change in total estimated reserve volumes compared to those
estimated at mid-year 2007; however, there is, for example, a 43 percent
increase in the 10% present value assigned to Connacher's 2P reserves at
December 31, 2007, compared to the mid-year estimates for this category. The
increase reflects a higher price forecast at year end 2007 and the expenditure
of capital to complete Pod One facilities and wells prior to year end 2007.
    The reserve estimates provided herein were prepared by GLJ in a report
("GLJ 2007 Report") with an effective date of December 31, 2007. The GLJ 2007
Report was prepared using assumptions and methodology guidelines outlined in
the Canadian Oil and Gas Evaluation Handbook ("COGE Handbook") and in
accordance with National Instrument 51-101 ("NI 51-101"). Comparisons provided
herein with respect to Connacher's conventional and bitumen reserves and
resources are to estimates contained in a report prepared by GLJ with an
effective date of December 31, 2006 ("GLJ 2006 Report"). Future net revenue is
calculated after deduction of forecast royalties, operating expenses, capital
expenditures and abandonment costs but before corporate overhead or other
indirect costs, including interest and income taxes. The GLJ 2007 Report was
prepared utilizing the GLJ January 1, 2008 price forecast, effective
December 31, 2007. The GLJ 2007 Report does not consider the impact of the
adoption of Alberta's new royalty regime in 2009 as the detailed regulations
have yet to be released. The company does not believe the proposed Alberta
royalty changes will have an unduly adverse effect on its reserve volumes or
related present values, but it is anticipated that if the current proposals
are adopted the impact will be negative.
    All references to barrel of oil equivalent ("boe") are calculated on the
basis of 6 mcf:1 bbl. Readers are cautioned that the conversion used in
calculating barrels of oil equivalent is based on an energy equivalency
conversion method primarily applicable at the burner tip and does not
represent a value equivalency at the wellhead. Furthermore, boes may be
misleading if used in isolation. Future net revenues disclosed herein do not
represent fair market value. Also, estimations of reserves and future net
revenue to be discussed in this press release constitute forward-looking
information. See "Forward Looking Information" below.

    Bitumen Reserves

    Connacher owns a 100% working interest in approximately 95,000 net acres
of oil sands leases at its Great Divide project in north-eastern Alberta,
approximately 80 kilometres southwest of Fort McMurray and at Halfway Creek,
Alberta. Numerous oil accumulations in the McMurray formation have been
identified for development on the Great Divide leases, including Pod One,
which contains over 20 metres of net steam assisted gravity drainage ("SAGD")
pay and is now producing bitumen. Additional details regarding Connacher's
development at Great Divide can be accessed at www.connacheroil.com or
www.sedar.com. The company has already applied to develop a similar
10,000 bbl/d facility at Pod Two or Algar.
    During 2007, Connacher's 1P bitumen reserves increased 21 percent to
53 million barrels, after deduction of minor volumes of bitumen produced
during December 2007 at Pod One. Connacher's 2P bitumen reserves also
increased 111 percent to reach 178 million barrels, compared to 84 million
barrels at year end 2006. Proved, probable and possible ("3P") bitumen
reserves were estimated at 242 million barrels at year end 2007 compared to
110 million barrels at December 31, 2006, an increase of 120 percent. These
estimates do not include any of the results from 2008 drilling of core holes
at Great Divide or at Halfway Creek, both in Alberta.
    During 2007, GLJ was also able to continue its recognition of
considerable additional contingent and prospective resources (as defined in
the notes following the table below) on the oil sands leases owned by
Connacher. It should be noted that reserves, contingent resources and
prospective resources involve different risks associated with achieving
commerciality.
    Contingent resources were assigned in regions with lower core-hole
drilling density than the reserve regions and are outside current areas of
application for development. These resource estimates are not classified as
reserves at this time, pending further reservoir delineation, project
application, facility and reservoir design work. Contingent resources entail
additional commercial risk than reserves which have not been included in the
net present valuation. There is no certainty that it will be commercially
viable to produce any portion of the contingent resources.
    Prospective resources were assigned in unexplored regions of Connacher's
acreage. Prospective resources entail additional commercial risk than reserves
and contingent resources which have not been included in the net present
valuation. There is no certainty that any portion of the prospective resources
will be discovered. If discovered, there is no certainty that it will be
commercially viable to produce any portion of the prospective resources.
    Proved bitumen reserves (1P) and low estimate contingent resources were
estimated at 114 million barrels; 2P bitumen reserves and best estimate
contingent resources were estimated at 303 million barrels; 3P bitumen
reserves and high estimate contingent resources were estimated at 452 million
barrels.
    1P bitumen reserves and low estimate contingent and prospective resources
were estimated at 114 million barrels, the same as above, as no prospective
resources are associated with 1P reserves. 2P bitumen reserves and best
estimate contingent and prospective resources were estimated at 417 million
barrels and 3P bitumen reserves and high estimate contingent and prospective
resources were estimated at 799 million barrels.
    The GLJ 2007 Report estimated Connacher's 1P bitumen reserves would
generate $1 billion of future net revenue with a 10 percent present value of
$492 million, after deduction of future capital requirements of $295 million
and abandonment costs of $8 million.
    2P bitumen reserves were forecast to generate $3.7 billion of future net
revenue, with a 10 percent present value of $1.1 billion, after provisions for
future capital of $1.1 billion and abandonment costs of $20 million.
    3P bitumen reserves were forecast to generate $5.7 billion of future net
revenue with a 10 percent present value of $1.2 billion, after provisions for
future capital of $1.6 billion and abandonment costs of $31 million.
    1P bitumen reserves plus low estimate contingent resources were forecast
to generate $1.9 billion, of future net revenue with a 10 percent present
value of $634 million, after provisions for future capital of $981 million and
abandonment costs of $18 million.
    2P bitumen reserves and best estimate contingent resources were forecast
to generate $6.5 billion of future net revenue, with a 10 percent present
value of $1.4 billion, after future provisions for future capital of
$2.3 billion and $43 million of abandonment.
    3P bitumen reserves plus high estimate contingent resources were forecast
to generate $10 billion of future net revenue, with a 10 percent present value
of $1.9 billion, after provisions for future capital of $3.5 billion and
abandonment costs of $65 million.
    Economic runs for 1P bitumen reserves and low estimate contingent and
prospective resources are identical to 1P bitumen reserves plus low estimate
contingent resources, as no prospective resources were assigned in conjunction
with 1P reserves.
    2P bitumen reserves and best estimate contingent and prospective
resources were forecast to generate $9 billion of future net revenue, with a
10 percent present value of $1.8 billion, after provisions for future capital
of $3.2 billion and abandonment costs of $58 million. Under this scenario,
future annual production is forecast by GLJ to peak at 41,332 barrels per day
in 2017.
    3P bitumen reserves and high estimate contingent and prospective
resources were forecast to generate $18.8 billion of future net revenue, with
a 10 percent present value of $2.6 billion after provisions for future capital
of $6.7 billion and abandonment costs of $124 million. Under this scenario,
future annual production is forecast by GLJ to surpass 57,000 barrels per day
in 2013.
    The resource volumes have not been classified as reserves at this time,
pending further delineation drilling, development planning, project design and
regulatory application. The resource values should be considered indicative in
nature, only, pending further design work to confirm timing and capital
estimates. Readers are cautioned that there is also a difference between
contingent and prospective resources with differing risks and that there is no
certainty that it will be commercially viable to produce any portion of the
resources.

    Conventional Reserves

    Connacher's conventional reserve base also expanded during 2007.
    On an oil equivalent basis, 1P reserves increased 5 percent to
6.8 million boes after producing 850,000 barrels in 2007. The company's 2P
equivalent reserves increased 8 percent to 9.5 million boes.
    The increases primarily reflect the successful drilling at Marten Creek,
Alberta.
    The GLJ 2007 Report estimated that Connacher's conventional 1P reserves
would generate $168 million of future net revenue with a 10 percent present
value of $112 million, after provision for future capital requirements for
Connacher's 1P reserves estimated at $14.3 million and abandonment costs net
of salvage value at $4.4 million.
    The company's 2P conventional reserves were forecast to generate
$245 million of future net revenue, with a 10 percent present value of
$143 million, after provisions for future capital requirements of
$15.8 million and forecast abandonment costs of $4.8 million.
    Connacher's conventional production provides current cash flow, loan
value and a hedge against natural gas requirements at Great Divide.

    Total Company Combined Reserves (Conventional and Bitumen)

    On a combined basis, Connacher's reserves accordingly grew at very
significant rates. Total 1P equivalent reserves at December 31, 2007 were
estimated by GLJ to be 59.9 million boes, an increase of 19 percent over year
end 2006.
    Connacher's 2P equivalent reserves increased 101 percent to 187.3 million
boes at December 31, 2007 compared to 92.9 million boes at year end 2006.
    The company's 2P conventional and bitumen reserves at year end 2007 are
forecast to generate $4 billion of future net revenue, with a 10 percent
present value of $1.2 billion, after provisions for future capital of
$1.1 billion and abandonment costs of $25 million. This represents a
127 percent increase in the 10 percent present value compared to 2006.
    On a per share basis, this calculated present value for 2P reserves alone
equates to approximately $5.70 per Connacher common share outstanding, before
provision for the value of contingent and prospective resources as estimated
in the GLJ 2007 Report, the value of the company's refinery and its investment
in Petrolifera Petroleum Limited and balance sheet adjustments. There are
presently approximately 210 million Connacher common shares outstanding.
    No reserve volumes or future net revenue or present value thereof was
assigned herein to Connacher's 26 percent equity interest in Petrolifera
Petroleum Limited's crude oil and natural gas reserves in Argentina.
    A detailed breakdown of reserves by category and other disclosure items
related to the reserve reports referenced herein will be included in the
company's Annual Report and its Annual Information Form ("AIF") which will be
filed on SEDAR at www.sedar.com in March 2008.

    Unproved Property Valuation

    Connacher retained Sayer Energy Advisors ("Sayer"), independent energy
advisors of Calgary, Alberta, to conduct an evaluation of its unproved
properties in Western Canada. Sayer completed a report (the "Sayer Report")
with an effective date of December 31, 2007. It was prepared according to
Standard of Disclosure for Oil and Gas activities described in NI 51-101.
    Sayer assigned a low value of $12.9 million, a median value of
$14.7 million and a high value of $16.5 million to Connacher's
77,182 net hectares of petroleum and natural gas rights held in the Provinces
of Alberta, British Columbia and Saskatchewan as at December 31, 2007. The
valuation does not include any of Connacher's bitumen rights, which are
evaluated within the GLJ 2007 Report.

    
    Summary Tables

    (Tables may not add due to rounding.)
    A. Volumes

    -------------------------------------------------------------------------
                        Connacher Oil and Gas Limited
                Bitumen Reserves and Resources - Before Tax(9)
    -------------------------------------------------------------------------
                                                31/12/06  31/12/07       %
                                                      (mbbl)          Change

    Proved Reserves (1P)(1)                       43,841    53,016        21
    Proved and Probable Reserves (2P)(1)(2)       84,147   177,792       111
    Proved, Probable and Possible
     Reserves (3P)(1)(2)(3)                      109,861   242,009       120
    Low Estimate Contingent Resources(4)(6)       21,303    61,325       188
    Best Estimate Contingent Resources(4)(7)     103,671   125,531        21
    High Estimate Contingent Resources(4)(8)     155,862   209,855        35
    1P + Low Estimate Contingent
     Resources(1)(4)(6)                           70,533   114,340        62
    2P + Best Estimate Contingent
     Resources(1)(2)(4)(7)                       187,818   303,323        61
    3P + High Estimate Contingent
     Resources(1)(2)(3)(4)(8)                    265,723   451,895        70
    Low Estimate Prospective Resources(5)(6)           0         0         0
    Best Estimate Prospective Resources(5)(7)     72,807   113,398        56
    High Estimate Prospective Resources(5)(8)    213,230   347,133        63
    1P + Low Estimate Contingent and
     Prospective Resources(1)(4)(5)(6)(9)        110,477   114,340         3
    2P + Best Estimate Contingent and
     Prospective Resources(1)(2)(4)(5)(7)(9)     260,625   416,720        60
    3P + High Estimate Contingent and
     Prospective Resources(1)(2)(3)(4)(5)(8)(9)  478,953   799,028        67
    -------------------------------------------------------------------------



    -------------------------------------------------------------------------
                        Connacher Oil and Gas Limited
               Conventional Canadian Reserves - Before Tax(10)
    -------------------------------------------------------------------------
                         LIGHT/MEDIUM                NATURAL GAS
                          OIL (mbbl)                   (mmcf)
                                             %                           %
                      31/12/06  31/12/07  Change  31/12/06  31/12/07  Change

    Proved Reserves
     (1P)                2,422     2,356      (3)   24,706    26,916       9
    Probable Reserves      786       694     (11)    8,773    11,535      31
                       ------------------          ------------------
    Proved + Probable
     Reserves (2P)       3,208     3,050      (5)   33,479    38,451      15
    -------------------------------------------------------------------------


    --------------------------------------------
                          EQUIVALENT
                           (mboes)
                                             %
                      31/12/06  31/12/07  Change
    Proved Reserves
     (1P)                6,540     6,842       5
    Probable Reserves    2,248     2,617      17
                       ------------------
    Proved + Probable
     Reserves (2P)       8,788     9,459       8
    --------------------------------------------



    -------------------------------------------------------------------------
                        Connacher Oil and Gas Limited
         Combined Conventional and Bitumen Reserves - Before Tax(10)
    -------------------------------------------------------------------------
                                                                         %
                                                  31/12/06  31/12/07  Change
                                                        (mboes)

    Proved Conventional Reserves(1)                  6,540     6,842
    Proved Bitumen Reserves(1)                      43,841    53,016
                                                  -------------------
    Total Proved Reserves (1P)(1)                   50,381    59,857      19

    Probable Conventional Reserves(2)                2,248     2,617
    Probable Bitumen Reserves(2)                    40,306   124,776
                                                  -------------------
    Total Probable Reserves(2)                      42,554   127,393     199

    Proved + Probable Conventional Reserves
     (2P)(1)(2)                                      8,788     9,459
    Proved + Probable Bitumen Reserves(1)(2)        84,147   177,792
                                                  -------------------
    Total 2P Reserves(1)(2)                         92,935   187,250     101
    -------------------------------------------------------------------------



    B. Present Value

    -------------------------------------------------------------------------
                        Connacher Oil and Gas Limited
                 10% Present Value of Future Net Revenue(9)
                 Bitumen Reserves and Resources - Before Tax
    -------------------------------------------------------------------------
                                                  31/12/06  31/12/07     %
                                                         ($MM)        Change

    Proved Reserves (1P)(1)                            191       492     158
    Proved and Probable Reserves (2P)(1)(2)            376     1,051     180
    Proved, Probable and Possible
     Reserves (3P)(1)(2)(3)                            464     1,165     151
    Low Estimate Contingent Resources(4)(6)             52       142     173
    Best Estimate Contingent Resources(4)(7)           208       348      67
    High Estimate Contingent Resources(4)(8)           350       742     112
    1P + Low Estimate Contingent
     Resources(1)(4)(6)                                243       634     161
    2P + Best Estimate Contingent
     Resources(1)(2)(4)(7)                             584     1,399     140
    3P + High Estimate Contingent
     Resources(1)(2)(3)(4)(8)                          814     1,906     134
    Low Estimate Prospective Resources(5)(6)             0         0       0
    Best Estimate Prospective Resources(5)(7)          194       379      95
    High Estimate Prospective Resources(5)(8)          431       724      68
    1P + Low Estimate Contingent and
     Prospective Resources(1)(4)(5)(6)(9)              486       634      30
    2P + Best Estimate Contingent and
     Prospective Resources(1)(2)(4)(5)(7)(9)           778     1,778     128
    3P + High Estimate Contingent and
     Prospective Resources(1)(2)(3)(4)(5)(8)(9)      1,245     2,631     111
    -------------------------------------------------------------------------



    -------------------------------------------------------------------------
                        Connacher Oil and Gas Limited
                   10% Present Value of Future Net Revenue
          Total Company (Conventional and Bitumen) - Before Tax(10)
    -------------------------------------------------------------------------
                                                         ($MM)           %
                                                  31/12/06  31/12/07  Change

    Proved Conventional Reserves(1)                    121       112
    Proved Bitumen Reserves(1)                         191       492
                                                  -------------------
    Total Proved Reserves (1P)(1)                      312       603      94

    Probable Conventional Reserves(2)                   31        32
    Probable Bitumen Reserves(2)                       185       559
                                                  -------------------
    Total Probable Reserves(2)                         216       591     174

    Proved + Probable Conventional
     Reserves (2P)(1)(2)                               152       143
    Proved + Probable Bitumen Reserves(1)(2)           376     1,051
                                                  -------------------
    Total 2P Reserves(1)(2)                            528     1,194     126
    -------------------------------------------------------------------------
    Notes:
    1)  Proved reserves are those reserves that can be estimated with a high
        degree of certainty to be recoverable. It is 90% likely that the
        actual remaining quantities recovered will exceed the estimated
        proved reserves.
    2)  Probable reserves are those additional reserves that are less certain
        to be recovered than proved reserves. It is equally likely that the
        actual remaining quantities recovered will be greater or less than
        the sum of the estimated proved plus probable reserves.
    3)  Possible reserves are those additional reserves that are less certain
        to be recovered than probable reserves. There is only a 10%
        probability that the quantities actually recovered will equal or
        exceed the sum of proved plus probable plus possible reserves.
    4)  Contingent Resources are those quantities of petroleum estimated, as
        of a given date, to be potentially recoverable from known
        accumulations using established technology or technology under
        development, but which are not currently considered to be
        commercially recoverable due to one or more contingencies.
    5)  Prospective Resources are those quantities of petroleum estimated, as
        of a given date, to be potentially recoverable from undiscovered
        accumulations by application of future development projects.
    6)  Low Estimate is considered to be a conservative estimate of the
        quantity that will actually be recovered from the accumulation. If
        probabilistic methods are used, this term reflects P90 confidence
        level.
    7)  Best Estimate is considered to be the best estimate of the quantity
        that will actually be recovered from the accumulation. If
        probabilistic methods are used, this term is a measure of central
        tendency of the uncertainty distribution (P50).
    8)  High Estimate is considered to be an optimistic estimate of the
        quantity that will actually be recovered from the accumulation. If
        probabilistic methods are used, the term reflects a P10 confidence
        level.
    9)  Contingent resources and prospective resources are additive only for
        purposes of economic calculations, but are distinct categories with
        different risks.
    10) Does not include bitumen resources or undeveloped land value.
    

    Forward-Looking Information

    This press release contains forward-looking information, including but
not limited to estimated reserves and future net revenues, and future capital
expenditures. The information is based on current expectations that involve a
number of risks and uncertainties, which could cause actual results to differ
materially from those anticipated. These risks include, but are not limited to
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 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 and risks associated with obtaining, maintaining and the timing
of receipt of regulatory approvals, permits, and licenses. Additional risks
and uncertainties are described in the company's Annual Information Form which
is filed on SEDAR at www.sedar.com.
    The reserves and future net revenue in this press release represent
estimates only. The reserves and future net revenue from the company's
properties have been independently evaluated by GLJ with effective dates of
December 31, 2007 and December 31, 2006, respectively. This evaluation
includes a number of assumptions relating to factors such as initial
production rates, production decline rates, ultimate recovery of reserves,
timing and amount of capital expenditures, marketability of production, future
prices of crude oil and natural gas, operating costs, abandonment and salvage
values, royalties and other government levies that may be imposed during the
producing life of the reserves. These assumptions were based on price
forecasts prepared by GLJ as at the dates of the reports and many of these
assumptions are subject to change and are beyond the control of the company.
Details of these assumptions will be contained in the company's Annual
Information Form for the year ended December 31, 2007. Actual production,
sales and cash flows derived therefrom will vary from the evaluation and such
variations could be material. The present value of estimated future net cash
flows referred to herein should not be construed as the current market value
of estimated crude oil and natural gas reserves attributable to the company's
properties.
    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, Connacher Oil and Gas Limited, Phone: (403) 538-6201, Fax:
(403) 538-6225, inquiries@connacheroil.com, www.connacheroil.com


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