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Connacher Reports Year-End 2012 Reserves

CALGARY, Feb. 13, 2013 /CNW/ - Connacher Oil and Gas Limited (CLL - TSX) 
reported today that as of December 31, 2012 its estimated proved ("1P") 
bitumen reserves, as evaluated by GLJ Petroleum Consultants Ltd. ("GLJ"), 
independent qualified reserves evaluators, totaled approximately 214 million 
barrels. 1P bitumen reserve volumes have increased by 22 per cent, over 
year-end 2011 volumes, after production of 4.3 million barrels during the 
year, due largely to the approval of the Great Divide Expansion Project. The 
ten per cent present value ("10% PV") of 1P bitumen reserves is approximately 
$1.0 billion. 
Proved and probable ("2P") reserve volumes totaled approximately 451 million 
barrels of bitumen. 2P bitumen reserve volumes decreased by approximately 10 
per cent, due primarily to the implementation of an updated GLJ recovery model 
for estimating future recoverable volumes and pad performance. The ten per 
cent present value of 2P bitumen reserves decreased to approximately $1.8 
billion, due primarily to increased estimated future capital costs, adjusted 
near-term production forecasts and lower future commodity prices, as estimated 
by GLJ. 
Detailed information included in the GLJ December 31, 2012 report ("Year-End 
2012 Report") regarding Connacher's bitumen reserves and resources and 
associated present values are set forth in the tables below, including a 
comparison of year-end 2012 results to year-end 2011 results. The Company 
disposed of all of its conventional oil and natural gas reserves during 2012. 
The Year-End 2012 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 bitumen reserves, 
bitumen resources and for 10% PV for December 31, 2012 are to estimates 
contained in the report, prepared by GLJ, with an effective date of December 
31, 2011 ("Year-End 2011 Report"). 
Connacher owns a 100 percent working interest in approximately 87,000 net 
acres of oil sands leases, primarily located at its Great Divide project in 
Northeastern Alberta, situated 80 kilometers southwest of Fort McMurray. 
Numerous oil accumulations in the McMurray formation have been identified for 
continuing and future development on Connacher's properties. 
Connacher's first steam-assisted gravity drainage ("SAGD") project at Great 
Divide, Pod One, has been producing bitumen since late 2007, with commercial 
production commencing March 1, 2008. Algar commenced producing bitumen in 
August 2010 and commerciality was achieved October 1, 2010. Production from 
both projects since startup through December 31, 2012 has totaled 
approximately 17 million barrels of bitumen. Such amounts have been deducted 
from earlier estimates of proved reserves prior to the calculation of reserves 
as at December 31, 2012. 
Unless otherwise stated, reserves refer to reserves of bitumen. Resources 
refers to bitumen resources. Future net revenue is calculated after the 
deduction of forecast royalties, operating expenses, estimated future capital 
expenditures and well abandonment costs, but before corporate overhead or 
other indirect costs, including interest and income taxes, from forecast 
revenue. The 10 percent pre-tax present value of future net revenue is also 
referred to as "present value" or "PV". Certain amounts cited herein have been 
rounded for presentation purposes. Outstanding financial hedges were not 
included in the evaluation. The GLJ Year-End 2012 Report was prepared 
utilizing the GLJ January 1, 2013 price forecast, effective December 31, 2012. 
Readers are referred to the notes to the Summary Tables included in this press 
release for details regarding the price forecast used by GLJ. Earlier 
reports were prepared using the price forecasts then being applied by GLJ. 
Future net revenues disclosed herein do not represent fair market value. Also, 
estimations of reserves, resources and future net revenue discussed in this 
press release constitute forward looking information. See "Forward Looking 
Information and Reserves Advisory" below. 
Additional details regarding Connacher's projects and development 
opportunities at Great Divide can be accessed at www.connacheroil.com or 
www.sedar.com. Furthermore, additional information regarding Connacher's 
reserves and resources, including the Company's interest in the resources and 
the risks and the level of uncertainty associated with the recovery of the 
resources, can be found in the Company's annual information form ("AIF") dated 
March 16, 2012. This AIF can be accessed at www.sedar.com. The Company will 
be filing an updated AIF later this year and prior to March 31, 2013, once it 
has completed the audit of its financial and operating results for the 
year-ended December 31, 2012 and has released them to the public. This is 
anticipated to occur on March 27, 2013. 
About Connacher 
Connacher Oil and Gas Limited is a single purpose company active in the 
development, production and sale of bitumen. The Company's principal assets 
are holdings in the Great Divide oil sands project in northern Alberta, south 
of Fort McMurray. 
Summary Tables 
Amounts presented are working interest volumes which are the Company's working 
interest (operating or non-operating) share before deducting royalties and 
without including any royalty interests of the Company. 


                                        
      Bitumen Reserves and Resources (thousand bbls)
                                   31-Dec-11 31-Dec-12
             Proved Producing         25,080    19,931
      Total Proved Reserves (1P)     175,185   214,009
                   Probable          325,640   237,393

Proved and Probable Reserves (2P)    500,825   451,402

 Proved, Probable & Possible (3P)    605,687   569,303

Best Estimate Contingent Resources   174,692    61,989
                                     
       10% Present Value of Future Net Revenue
    Bitumen Reserves and Resources - Before Tax
                                    Dec-11 Dec-12
                                      $MM    $MM
              Proved Producing        528    320
      Total Proved Reserves (1P)    1,110  1,009
                    Probable        1,302    749

 Proved and Probable Reserves (2P)  2,412  1,758

Proved, Probable and Possible  (3P) 3,127  2,444

Best Estimate Contingent Resources    127     61
                                Before Tax Present Value ($MM)
                                  0%      5%      8%     10%     12%
          Proved Producing       433     368     337     320     304
             Total Proved      4,041    1,917   1,291   1,009    798

Proved plus Probable Producing   699     579     523     491     463
    Total Proved plus Probable  9,853    3,799   2,349   1,758   1,344
               Total PPP       14,455   5,313   3,259   2,444   1,880

Notes:

1)      Proved Reserves are those reserves that can be estimated with a
        high degree of certainty to be recoverable.  It is 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.  It is unlikely
        that the actual remaining quantities recovered will exceed the
        sum of the estimated proved plus probable plus possible
        reserves.  There is 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.  These resource estimates are not currently
        classified as reserves, pending further reservoir delineation,
        project application, facility and reservoir design work,
        preparation of firm development plans and Company approvals. 
        Contingent resources entail additional commercial risk than
        reserves and adjustments for commercial risks have not been
        incorporated in the summaries set forth herein.  There is no
        certainty that it will be commercially viable to produce any
        portion of the contingent resources.

5)      Best Estimate: this is considered to be the best estimate of
        the quantity that will actually be recovered.  It is equally
        likely that the actual remaining quantities recovered will be
        greater or less than the best estimate.  If probabilistic
        methods are used, there should be at least a 50 percent
        probability that the quantities actually recovered will equal
        or exceed the best estimate.

6)      Does not include bitumen resources or undeveloped land value.

7)      Pricing assumptions in the Year-End 2012 Report were as
        follows:
                                                                    
                          NYMEX     Light             Edmonton  AECO
                           WTI      Sweet     WCS @   Pentane   Spot


 Inflation  Exchange Current  Edmonton  Hardisty    Plus   Current
Year     %        Rate   US$/bbl   C$/bbl    C$/bbl    C$/bbl  C$/Mscf 
2013      2.0      1.0     90.00     85.00     70.13    96.63    3.38 
2014      2.0      1.0     92.50     91.50     76.15    97.91    3.83 
2015      2.0      1.0     95.00     94.00     78.22    97.76    4.28 
2016      2.0      1.0     97.50     96.50     80.29   100.36    4.72 
2017      2.0      1.0     97.50     96.50     80.29   100.36    4.95 
2018      2.0      1.0     97.50     96.50     80.29   100.36    5.22 
2019      2.0      1.0     98.54     97.54     81.16   101.44    5.32 
2020      2.0      1.0    100.51     99.51     82.79   103.49    5.43 
US$/CDN$ exchange rates were .98 in the Year End 2011 Report and 1.0 in the 
Year End 2012 Report. 
8)      Tables may not add due to rounding. 
Forward Looking Information and Reserves Advisory 
This press release contains forward looking information, including but not 
limited to estimated reserves and resources and future net revenues associated 
therewith and the proposed timing of the release of the Company's Annual 
Information Form for the year ended December 31, 2012. The forward looking 
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 and resource estimates; the uncertainty associated with 
geological interpretations; 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 the implementation of new technology, 
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 volatile global economic conditions. 
Additional risks and uncertainties are described in the Company's Annual 
Information Form which is filed on SEDAR at www.sedar.com. 
This press release includes information pertaining to the reserves, resources 
and the value of future net revenue of the Corporation as at December 31, 2012 
and December 31, 2011 as evaluated by GLJ in its reports dated February 6, 
2013 and February 16, 2012, respectively (together the "GLJ Reports"). 
Statements relating to reserves and resources are deemed to be forward looking 
information, as they involve the implied assessment, based on certain 
estimates and assumptions, that the reserves and resources described exist in 
the quantities predicted or estimated, and can be profitably produced in the 
future. The GLJ Reports are based on 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 bitumen, crude oil, natural gas liquids and 
natural gas, operating costs, anticipated reductions in SORs and operating 
costs as a result of installation of pumps in certain wells to improve 
productivity, well abandonment and salvage values, royalties and other 
government levies that may be imposed during the producing life of the 
reserves. Moreover, there is no assurance that the forecast price and cost 
assumptions contained in the GLJ Reports will be attained and variances could 
be material. The reserves and resources estimates of Connacher's properties 
described herein are estimates only. The actual reserves and resources on 
Connacher's properties may be greater or less than those calculated. The 
present value of estimated future net revenues referred to herein should not 
be construed as the fair market value of estimated bitumen, crude oil, natural 
gas and natural gas liquids reserves attributable to Connacher's properties. 
Contingent resources disclosed herein were assigned in regions with lower 
core-hole drilling density than the reserve regions and a portion of the 
contingent resources are located outside Connacher's current areas of approval 
for development. These resource estimates are not classified as reserves at 
this time, pending further reservoir delineation, project application, 
facility and reservoir design work, preparation of firm development plans and 
company approvals. Contingent resources are considered sub-commercial and the 
chance of commerciality is equal to the chance of development. Conversely, the 
chance of commerciality for reserves is effectively 100 per cent. Adjustments 
for commercial risks were not incorporated in the estimates of contingent 
resources set forth herein. A range of Contingent Resource estimates (Low, 
Best and High) were prepared to reflect a range of technical uncertainty. Low 
Estimate Contingent Resources were assigned to mapped regions of oil - in- 
place of identified pods with lower core-hole drilling density than the 
reserve regions and with at least 12 m of continuous bitumen pay along with a 
conservative estimate of recovery factor. Best Estimate Contingent Resources 
were assigned to mapped regions of oil-in-place of identified pods with lower 
core-hole drilling density than the reserve regions and with at least 10 m of 
continuous bitumen pay along with a best estimate of recovery factor. High 
Estimate Contingent Resources were assigned to mapped regions of oil-in-place 
of identified pods with lower core-hole drilling density than the reserve 
regions and with at least 9 m of continuous bitumen pay along with a more 
optimistic estimate of recovery factor. There is no certainty that it will be 
commercially viable to produce any portion of the Contingent Resources. 
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. 
Kelly J. Ogle or Greg Pollard Phone: (403) 538-6201 Fax: (403) 
538-6225 inquiries@connacheroil.com Website:www.connacheroil.com 
SOURCE: Connacher Oil and Gas Limited 
To view this news release in HTML formatting, please use the following URL: 
http://www.newswire.ca/en/releases/archive/February2013/13/c4801.html 
CO: Connacher Oil and Gas Limited
ST: Alberta
NI: OIL  
-0- Feb/13/2013 23:00 GMT
 
 
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