Connacher Oil and Gas Limited secures C$800 million of new financing


    -   Sale of Senior Secured Notes
    -   Establishment of Five-Year Revolving Credit Facility
    -   Proceeds to Be Used to Discharge Existing Secured Indebtedness and to
        Fully Finance Construction of Algar Project at Company's Great Divide
        Oil Sands Holdings in Alberta

    CALGARY, Nov. 19 /CNW/ - Connacher Oil and Gas Limited (CLL - TSX)
announced today it has entered into a definitive agreement to issue and sell
US$600 million face value of 10.25% Senior Secured Notes due December 15, 2015
("Notes") at a price of 98.657%, resulting in a yield to maturity of 10.50%.
The Notes have been resold through a syndicate of investment banks to certain
institutional investors pursuant to applicable securities law exemptions. The
completion of the Note financing is anticipated to occur on December 3, 2007
and is subject to the finalization of definitive documentation and other
customary closing conditions.
    Using the November 16, 2007 closing exchange rate of US$1.027=
C$1.00, the net proceeds to Connacher from the sale of the Notes (after
deducting the estimated costs of the transaction) will be approximately
C$563 million. A portion of the net proceeds will be used to discharge
Connacher's outstanding Term Loan B indebtedness (C$175 million) and to fund a
one-year debt service reserve account (C$60 million), with the balance of
approximately C$328 million available to fully fund the construction of the
company's second 10,000 barrel per day Algar Project, or Pod Two, at
Connacher's Great Divide holdings, situated approximately 50 miles southwest
of Fort McMurray, Alberta. Proceeding at Algar is subject to regulatory
approval, including from the Alberta Energy Utility Board, or EUB.
    Coincident with the sale of the Notes, Connacher has also negotiated a
new secured revolving credit facility (the "Facility") with a syndicate of
banks and financial institutions. The Facility is comprised of a C$150 million
tranche and a US$50 million tranche, with the latter for use in the company's
day to day refining and marketing operations in Great Falls, Montana. The
Facility will have a five-year term, in comparison to Connacher's current
facilities of approximately C$65 million, which are substantially 364 day
facilities. The Facility is also scheduled to close on December 3, 2007,
coincident with the closing of the Note financing and is also subject to the
finalization of definitive documentation and other customary closing
    Both the Facility and the Notes are secured by substantially all of the
assets of the company and its subsidiaries, excluding Connacher's equity
investment in Petrolifera Petroleum Limited, with the Facility holding a first
priority lien and the Notes holding a second priority lien.
    Moody's and Standard & Poor's have recently rated the Notes as B1 and BB,
respectively. Moody's also affirmed its rating of the company as B1, while S&P
increased its rating of the company from B+ to BB-.
    Upon receipt of EUB and other regulatory approvals for Algar, Connacher
will be prepared to proceed immediately with its construction program and
anticipates constructing the Algar Project within the 300 day time frame
required to construct Pod One and drilling the associated 15 horizontal well
pairs. Including contingencies, Connacher estimates the Algar Project will
cost approximately $326 million, with much of the increase in comparison to
Pod One related to additional infrastructure charges due to the project's more
remote location, approximately seven miles from the main highway in the area.
There are also some planned scope changes. These expenditures will be incurred
in 2008 and 2009.
    Separately, Connacher recently completed the sale of approximately
C$52 million of flow through common shares at a price of C$5.00 per share,
with proceeds primarily dedicated to fully fund this winter's 3D seismic
programs and the anticipated drilling of 120 exploratory core holes on its
main oil sands lease block, substantially on defined anomalies from last
winter's drilling season. This program will effectively double Connacher's
core hole inventory at Great Divide. The results will be incorporated into the
company's mid-year 2008 reserve and resource report, anticipated to be
prepared by the company's independent qualified reserves evaluator, GLJ
Petroleum Consultants Ltd., effective June 30, 2008. A year-end 2007 GLJ
reserve report will also be prepared in accordance with National Instrument
51-101 incorporating any developments and information since mid-year 2007.
    It is anticipated the company's 2008 capital program on conventional oil
and gas properties in Canada and its capital program at its Great Falls,
Montana refinery will be financed from internally generated sources. These are
anticipated to aggregate approximately $73 million during 2008 and are part of
Connacher's previously announced capital plan for next year.
    As a result of the foregoing capital raising transactions, Connacher
anticipates that it will be able to fully finance all of its new projects and
planned 2008 growth programs, in addition to the anticipated completion of
Algar in 2009, without the need to raise additional permanent capital in the
form of new equity for established projects.

    This press release is not an offer to sell securities or the solicitation
of an offer to buy securities in any jurisdiction. Securities may not be
offered or sold in the United States absent registration or an applicable
exemption from registration. Any public offering of securities to be 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.

    Connacher Oil and Gas Limited is a Calgary-based crude oil and natural
gas exploration and production company. Its principal asset is its 100 percent
ownership of 95,000 acres of oil sands leases in the Great Divide area of
Alberta's oil sands. Pod One, the company's first 10,000 bbl/d project, is
presently in the steam circulation pre-heat phase and is anticipated to ramp
up to target production levels by the third quarter of 2008. An application to
build Algar or Pod Two for a second 10,000 bbl/d project has been submitted to
the EUB and other regulators. Connacher also produces approximately
2,400 boe/d of conventional crude oil and natural gas, has another 1,000 boe/d
of natural gas behind pipe to be tied into market in the winter of 2007-2008,
owns and operates a 9,500 bbl/d refinery in Great Falls, Montana and owns 26
percent of Petrolifera Petroleum Limited, a publicly traded oil company active
in South America.

    Forward-Looking Statements: This news release contains certain
"forward-looking information" within the meaning of applicable securities laws
including statements regarding the Corporation's planned issuance of senior
secured notes and the placement of a new five year secured revolving credit
facility, the proposed repayment of the Corporation's current debt facilities,
the Corporation's exploration and development plans (including the development
of Algar) and planned capital expenditure plans for 2008 and 2009.
Forward-looking information is 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 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 factors include the inherent risks
involved in the exploration and development of oil sands properties,
difficulties or delays in start-up operations, 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, start-up, receipt and maintenance of required
approvals and the ability to access sufficient capital from external sources.
The closing of the planned issuance of senior secured notes and the five year
secured revolving credit facility are subject to the finalization of
definitive documentation and the satisfaction of certain conditions to
closing. 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, 2006. 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.

    Readers are cautioned that the conversion used in calculating barrels of
oil equivalent (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. Furthermore, boes may be misleading if used in

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,,

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