Connacher Oil and Gas Limited announces closing of previously announced debt financing and resumption of construction of Algar


    CALGARY, June 16 /CNW/ - Connacher Oil and Gas Limited (CLL - TSX)
announced today it has closed the sale of US$200 million face value of 11.75%
First Lien Senior Secured Notes due July 15, 2014 ("Notes") at a price of
93.678%, resulting in a yield to maturity of 13.5% and gross proceeds of
approximately US$187 million. The Notes were resold through a syndicate of
investment banks with Credit Suisse as Sole Book-Running Manager and RBC
Capital Markets and TD Securities, as Joint Lead Managers, to certain
institutional investors pursuant to applicable securities law exemptions.
    Using the June 15, 2009 Bank of Canada closing exchange rate of US$0.8831
= C$1.00, the net proceeds to Connacher from the sale of the Notes (after
deducting an estimate of the costs of the transaction) will be approximately
C$205.6 million. The net proceeds will be used for working capital and general
corporate purposes, including to fund a portion of the remaining construction,
drilling and completion costs associated with the construction of Algar, the
Corporation's second 10,000 barrel per day steam-assisted gravity drainage
("SAGD") oil sands project, and drilling of the associated 15 SAGD well pairs
(the "Algar Project").
    Connacher also wishes to advise that, having closed this debt financing,
its Board of Directors has now authorized management to proceed with the
reactivation of the Algar Project. Following completion of a brief
pre-start-up organizational period, work is anticipated to commence and the
Corporation anticipates that construction at Algar and the drilling of the 15
SAGD well pairs will take approximately 275 days from commencement of field
activities. This will be followed by requisite plant commissioning and
steaming of the SAGD well pairs, which will require additional time of
approximately 120 days, prior to commencing Algar production and its ramp-up
towards full plant capacity of 10,000 bbl/d of bitumen.

    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 reactivated its plan 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 the
planned construction of Algar and the drilling of 15 SAGD well pairs and the
timeline associated therewith. 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 Corporation 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
Corporation's Annual Information Form which is filed on SEDAR at Due to the risks, uncertainties and assumptions inherent in
forward looking information, prospective investors in the Corporation'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 Corporation 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,, Website:

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