Connacher successfully completes Great Divide Pod One mandated turnaround



    CALGARY, Sept. 16 /CNW/ - Connacher Oil and Gas Limited (CLL - TSX)
announces today that it successfully completed its mandated turnaround at its
10,000 bbl/d Great Divide Pod One steam assisted gravity drainage ("SAGD") oil
sands plant in northeastern Alberta on Thursday, September 11, 2008, in
accordance with its timetable. The turnaround was required under prevailing
Alberta regulations. Boilers and all pressure safety valves were inspected
with excellent results and the company is in the process of restoring normal
operations and ramping up its bitumen production. It is anticipated production
levels will shortly be restored to pre-turnaround levels prior to the
anticipated ramp up of Pod One production to design levels.
    Recently, there has been numerous press articles citing oil price levels
required to either initiate new capital programs at the oil sands or to
sustain operations. Most of these articles have focused on mining operations
in the oil sands, normally operated in conjunction with upgraders. Connacher
wishes to reaffirm that a much lower breakeven crude oil price hurdle is
generally associated with SAGD operations, after provision for normalized unit
operating costs, transportation charges, interest on long term debt, corporate
overhead, royalties payable to the Alberta Government and for a respectable
long-term return on invested capital, as compared to mining or integrated
mining operations. This is particularly true in the present operating and
pricing environment, with heavy oil differentials at very low levels due to
the delays in the commencement of significant new industry volumes of
bitumen-based production. It also reflects the lower unit capital requirements
normally associated with SAGD operations, due to what is characterized as the
efficiency of smaller scale operations.
    Also, Connacher is in the fortunate position of having pre-funded its
capital requirements for its second oil sands plant at Algar, which is
awaiting final regulatory approval, anticipated to be received in the next few
weeks. Connacher has the cash, cash flow and available credit to maintain
normal operations and to fund its oil sands development program at Algar.
Connacher has already pre-ordered all long-lead items and has completed
70 percent of its major equipment construction for Algar as at August 31,
2008. Preliminary unaudited financial and operating results for July and
August 2008 reinforce the Company's expectations for significant progress
during the third quarter of 2008 as compared to the prior quarter this year
and to the comparable quarter in 2007.

    Forward-Looking Information:

    This press release contains "forward-looking information" including:
anticipated bitumen production and the timeline for the restoration of
anticipated production levels at Great Divide Pod One following the mandated
turnaround; development of additional oil sands projects (including receipt of
regulatory approvals in respect of Algar, anticipated capital expenditures for
construction of Algar and sources of funding for construction of Algar) and
anticipated financial and operating results for the third quarter of 2008.
Forward-looking information is frequently characterized by words such as
"plan", expect", "project", "intend", "believe", "anticipate", estimate",
"may", "will", "could", "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 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,
difficulties or delays during construction and in start-up operations
following the turnaround, the uncertainties involved in interpreting drilling
results and other geological data, fluctuating oil prices, the possibility of
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, construction, start-up, approvals and the continuing ability to
access sufficient capital from external sources if required. Actual production
levels at Great Divide Pod One and the timelines associated therewith, actual
capital expenditures in respect of Algar and the timeline for receipt of
regulatory approval may vary from those anticipated in this press release and
such variations may be material. Additionally, financial and operating results
for the third quarter of 2008 are dependent on, among other things, actual
commodity prices realized by the company, restoration of production levels to
pre-turnaround levels on the timeline indicated and maintenance of current
operating costs in an inflationary environment. 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, 2007, which is 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. Due
to the risks and uncertainties inherent in forward-looking information, the
reader is cautioned not to place undue reliance on this forward-looking
information.





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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