Connacher Announces Year End Results

CALGARY, March 27, 2013 /CNW/ - Connacher Oil and Gas Limited (CLL - TSX; 
"Connacher" or the "Company") today released its financial and operating 
results for 2012, a summary of which is set out below. Connacher faced a 
considerable number of challenges during 2012. A curtailed capital program 
imposed by budgetary constraints caused the Company to focus its efforts on a 
number of strategic initiatives, culminating in the sale of two of its 
business units, the Montana refinery (the "Refinery") and the remainder of the 
Company's conventional oil and gas properties. These transactions resulted 
in cash proceeds of approximately $225 million, thus allowing the Company to 
repay all amounts outstanding under its credit facility, with the balance of 
the proceeds being added to working capital to fund growth projects relating 
to its oil sands properties. As a result, Connacher is now a single purpose 
company active solely in the development, production and sale of bitumen. 
Year-end cash balances of $127 million position the Company to meet all of its 
2013 financial obligations and execute a meaningful capital program as 
described in earlier press releases. 
Other significant events include the following: 

    --  Completed an organizational realignment to reflect the needs of
        the business going forward including streamlining at the
        executive level and appointment of a new CEO
    --  The 24,000 bbl/d Great Divide Expansion Project received
        regulatory approval
    --  Connacher's revolving credit facility was continued at $95
    --  Marketing efforts continue to develop options to improve
        netbacks, particularly in moving bitumen to market by rail
    --  Initiated a series of low risk near term capital projects
        designed to increase bitumen production

2012 Financial and Operational Summary

To properly reflect the disposition of the Refinery and the Company's 
conventional assets in the financial statements, the results attributable to 
the Refinery and conventional assets have been segregated from ongoing 
operations and separately disclosed as "Discontinued Operations".

FINANCIAL ($000 except per
share amounts)              Q4 2012  Q4 2011  YTD 2012  YTD 2011    %

Revenue, net of royalties
(continuing operations)      94,959  119,377   384,946   430,029 (10)

EBITDA (continuing
operations) ((1))            11,181   30,269    40,669    81,045 (50)

Net earnings (loss)
(continuing operations)    (40,527) (49,076) (109,172) (142,810)   24

Net earnings (loss)
(discontinued operations)    33,360 (10,401)    24,703    28,705 (14)

Net earnings (loss)         (7,167) (59,477)  (84,469) (114,105)   26

  Per share, basic and
  diluted                    (0.02)   (0.13)    (0.19)    (0.26)   27

Capital expenditures         12,189   32,201    50,382   156,627 (68)

Cash on hand                126,844  117,045                         

Working capital             111,686   16,876                         

Long-term debt              849,938  856,068                         

Shareholders' equity        342,900  421,076                         

OPERATIONAL              Q4 2012 Q4 2011    % YTD 2012 YTD 2011    %

Daily production volumes
Bitumen (bbl/d)           11,945  13,173  (9)   11,881   13,379 (11)

Pricing  (net of diluent
and transportation)                                                 

Bitumen ($/bbl)            41.55   52.27 (21)    41.35    47.59 (13)

(1)      EBITDA is a non-GAAP measure, which is defined in the Advisory
         section of the
         Company's Management's Discussion and Analysis for the years
         ended December
         31, 2012 and December 31, 2011 ("MD&A"). EBITDA is reconciled
         to net loss in the

At December 31, 2012, cash balances were $127 million, working capital was 
$112 million and long term debt, consisting solely of the Company's 
outstanding second lien notes due in 2018 and 2019, totaled $850 million. 
Convertible debentures with face value of $100 million were repaid in June of 
2012. Connacher has available bank credit lines of $95 million less 
outstanding letters of credit totaling $2.4 million which were issued by the 
Company at year end 2012.

Total capital expenditures during the year were approximately $50 million, 
which amount was financed from operating cash flow and cash balances. 
Capital expenditures relating to continuing operations were approximately $36 
million. Please refer to the MD&A for a more detailed discussion of 2012 
Financial and Operating results.

Review of 2012


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, approximately 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 of bitumen from both 
projects since startup through December 31, 2012 totals approximately 17 
million barrels.

As at December 31, 2012, Connacher's 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 increased by 22 per cent over year-end 2011 volumes, 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 

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 10% PV 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.

Fourth Quarter 2012

Production of bitumen in the fourth quarter of 2012 ("Q4 2012") averaged 
11,945 bbl/d, which was 9 per cent lower than the comparable period in 2011, 
largely due to previously scheduled maintenance at Algar and limited capital 
expenditures. Cash flow from continuing operations was also lower in Q4 2012, 
with net outflows of $7.8 million, compared to cash flow from continuing 
operations of $11.5 million in Q4 2011, primarily due to lower benchmark 
pricing and higher transportation costs. Connacher incurred a loss of $7.2 
million or $0.02 per share for Q4 2012, compared with a loss of $59.5 million 
or $0.13 per share for Q4 2011.


Connacher is focused on delivering successive and sustained improvement in 
operating and financial results and liquidity. Based on currently available 
information and prevailing commodity prices, the Company anticipates 2013 
results that reflect strong operational performance. Production in the months 
of January and February 2013 was 12,045 bopd and 12,971 bopd, respectively. 
February production volumes were the highest since December 2011 and were 
achieved prior to the effects of the capital projects designed to add new 
production beginning later in 2013. A SAGD+™ commercial application was 
submitted in the first quarter of 2013 for Algar and the remaining steam 
generator retrofit work will be completed in the second quarter of 2013.

As a means of managing the risk of commodity price volatility, management 
monitors crude oil markets and enters into risk management commodity sales 
contracts from time to time, to ensure Connacher has adequate downside 
commodity price protection, having regard to its established hedging policy, 
financial leverage and capital commitments. The Company currently has risk 
management contracts in place covering approximately 6,000 barrels per day 
through the end of the year, with minimum prices of approximately $85 to $91 
per barrel.

Connacher remains bullish regarding the long term price of bitumen, however a 
constrained capacity to move land-locked Alberta crude oil to markets 
continues to pressure differentials and wellhead pricing. The Company intends 
to continue and expand its dilbit by rail strategy.

2013 Capital Expenditure Budget

Connacher's 2013 capital budget has been set at $95 million, including $68 
million for growth expenditures and $27 million for normal maintenance. The 
Company has drilled one new well pair at Algar, completed drilling four new 
producer wells on Pad 104 at Pod One, and expects to finish drilling the four 
related injector wells in April and subsequently drill up to four infill wells 
at Pod One.

Shareholders Meeting

The Annual and Special Meeting of Shareholders of the Company is scheduled to 
be held in Calgary at 4:00 P.M. on May 14, 2013 on the second level (Plus 15) 
conference room at 332 6(th) Avenue SW, Calgary, Alberta. At the Meeting, 
shareholders will be voting on the election of directors, appointment of 
auditors, confirmation of a by-law providing advance notice requirements for 
the nomination of directors, the approval of unallocated stock options under 
the Stock Option Plan, the replenishment of the common shares under the Share 
Award Incentive Plan and the extension of the Company's Shareholder Rights 
Plan Agreement.

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.

Forward Looking Information

This press release contains forward looking information including but not 
limited to expectations regarding future commodity prices, future capital 
expenditures, Connacher's ability to meet all of its financial obligations in 
2013, future well drilling activities and timing of completing the remaining 
steam generator retrofit work, commodity price protection afforded by the use 
of risk management contracts, Connacher's intention to continue to expand its 
dilbit by rail strategy and future operating results.

Forward looking information is based on management's expectations regarding 
future growth, results of operations, production, future commodity prices and 
foreign exchange rates, future capital and other expenditures (including the 
amount, nature and sources of funding thereof), plans for and results of 
drilling activity, environmental matters, business prospects and opportunities 
and future economic conditions. Forward looking information involves 
significant known and unknown risks and uncertainties, which could cause 
actual results to differ materially from those anticipated. These risks 
include, but are not limited to: the 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 of geological interpretations, the uncertainty of estimates 
and projections relating 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 impact of general economic 
conditions, risks and uncertainties associated with securing and maintaining 
the necessary regulatory approvals and financing to proceed with the operation 
and continued expansion of the Great Divide oil sands project.

Information relating to "reserves" and "future net revenues" associated 
therewith are deemed to be forward-looking information, as they involve the 
implied assessment, based on certain estimates and assumptions, that the 
reserves described exist in the quantities predicted or estimated, and can be 
profitably produced in the future to achieve the future net revenue calculated 
in accordance with certain assumptions. The assumptions relating to the 
reserves and associated future net revenues reported herein are contained in 
the reports of GLJ Petroleum Consultants Ltd. December 31, 2012 and December 
31, 2011 and are summarized in Connacher's Annual Information Form for the 
year ended December 31, 2012 and December 31, 2011, both of which are 
available on the System for Electronic Document Analysis and Retrieval (SEDAR) 
at Future net revenues associated with reserves do not 
necessarily represent fair market value.

In addition, reported average production levels may not be reflective of 
sustainable production rates and future production rates may differ materially 
from the production rates reflected in this press release due to, among other 
factors, difficulties or interruptions encountered during the production of 

Additional risks and uncertainties affecting Connacher and its business and 
affairs are described in further detail in Connacher's Annual Information Form 
for the year ended December 31, 2012. Although Connacher believes that the 
expectations in such forward looking information are reasonable, there can be 
no assurance that such expectations shall prove to be correct. The forward 
looking information included in this press release is expressly qualified in 
its entirety by this cautionary statement. The forward looking information 
included herein is made as of the date of this press release and Connacher 
assumes no obligation to update or revise any forward looking information to 
reflect new events or circumstances, except as required by law.

Kelly J. Ogle or Greg Pollard

Phone: (403) 538-6201 Fax: (403) 538-6225

SOURCE: Connacher Oil and Gas Limited

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CO: Connacher Oil and Gas Limited
ST: Alberta

-0- Mar/27/2013 22:58 GMT

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