Connacher Announces First Quarter 2013 Results

CALGARY, May 14, 2013 /CNW/ - Connacher Oil and Gas Limited (CLL - TSX; 
"Connacher" or the "Company") announces the release of its financial and 
operating results for the first quarter 2013 ending March 31, 2013, a summary 
of which is set out below. These are the first results for Connacher as a 
focused in situ oil sands developer, producer and marketer of bitumen. The 
Company's near term objectives are to deliver successive and sustained 
improvement in operating and financial results and liquidity. 
Q1 2013 Highlights: 

    --  EBITDA of $10.7 million
    --  Bitumen production averaged 12,406 bbls/day with an average
        netback of $16.43/bbl
    --  Dilbit sales via rail transport increased to 55 per cent  of
        total sales versus 11 per cent in Q1 2012
    --  Capital expenditures of $20 million, $17 million for production
        and $3 million for maintenance
    --  Drilled one new well pair at Algar and drilling four new well
        pairs on Pad 104 at Pod One
    --  Submitted commercial SAGD+™ regulatory application
    --  Sanctioned Diluent Recovery Unit ("DRU") project

Q1 2013 Financial and Operational Summary

The following summarizes the operating and financial results for the 
three-month period ended March 31, 2013 (Q1 2013). To properly reflect the 
disposition of Montana Refining Company, Inc. (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)            Q1 2013    Q1 2012

Revenue, net of royalties (continuing                         
operations)                                         $101,320   $107,747

EBITDA (continuing operations) ((1))                  10,682     12,419

Net earnings (loss) (continuing operations)         (46,566)   (23,001)

Net earnings (loss) (discontinued                             
operations)                                                -      2,443

Net earnings (loss)                                 (46,566)   (20,558)
     Per share, basic and diluted                     (0.10)     (0.05)

Capital expenditures - continuing                             
operations                                            20,251     11,856

Cash on hand                                          81,714     48,852

Working capital                                       76,957    (5,059)

Long-term debt                                       861,828    848,256

Shareholders' equity                                 296,746    399,087

OPERATIONAL                                     Q1 2013   Q1 2012

Average benchmark prices                                         

  WTI (US$/bbl)                                   94.37    102.94

  Heavy oil differential ($/bbl)                  32.33     21.41

  Western Canadian Select                         62.87     81.65

Daily production volumes - Continuing

  Bitumen (bbl/d)                                12,406    12,429

Selected highlights ($/bbl)                                      

  Dilbit sales                                    71.12     74.17

  Diluent costs                                   12.44     13.88

  Realized bitumen sales                          58.68     60.29

  Transportation and handling costs               20.37      9.69
                                                  38.31     50.60

  Royalties                                        2.29      2.86

  Net bitumen revenue                             36.02     47.74

  Production and operating expenses               19.59     17.45

  Bitumen netback - per barrel ((1))              16.43     30.29

(1) A non-GAAP measure, which is defined in the Advisory section of the
    Company's Management's Discussion and Analysis for the periods
    ended March 31, 2013 and March 31, 2012 ("MD&A"). Bitumen netback
    is reconciled to net loss in the MD&A.

The average Q1 2013 gross dilbit sales price for intra Alberta volumes was 
$58.32/bbl and $81.72/bbl for sales by rail outside of Alberta. Bitumen 
netbacks were approximately $4.00/bbl higher for sales by rail than sales to 
the intra Alberta market.

At March 31, 2013, the Company's working capital surplus was $77 million, 
including $82 million of cash on hand. Long term debt, consisting solely of 
the Company's outstanding second lien notes due in 2018 and 2019, totaled $862 
million. Connacher has available bank credit lines of $95 million less 
outstanding letters of credit totaling $2.3 million which were issued by the 
Company as at March 31, 2013. Based on covenant restrictions of the Facility, 
the maximum available bank credit line at the end of Q1 2013 is $82.7 million 
(net of existing letters of credit).

Under the note indenture for the Company's existing Second Lien Senior Notes, 
the Company has a first lien debt basket that permits the Company to incur 
first lien debt of up to $170 million (inclusive of debt under the Facility). 
Subject to obtaining the required consents from the lenders under the Facility 
(or refinancing the Facility), this debt basket should provide the Company 
with the flexibility to incur a material amount of incremental debt if 
additional liquidity becomes necessary or desirable.

Total capital expenditures during the quarter were approximately $20 million, 
which amount was financed from operating cash flow and cash balances. Please 
refer to the MD&A for a more detailed discussion of Q1 2013 Financial and 
Operating results.

Production at Connacher's Great Divide project for Q1 2013 averaged 12,406 
bbl/day compared to 12,429 bbl/day for Q1 2012. Pod One production averaged 
6,243 bbls/day and Algar averaged 6,163 bbl/day.

Cash flow from operating activities (continuing operations) was $9 million in 
Q1 2013 compared to $22 million in Q1 2012. The decline was primarily driven 
by lower benchmark pricing, wider differentials, and higher transportation and 
handling costs. When compared to Q1 2012, WCS was $18.78/bbl lower for Q1 
2013. The higher transportation costs are due mainly to rail costs incurred to 
move more dilbit to higher value markets.

Connacher incurred a net loss of $46.6 million or $0.10 per share for Q1 2013, 
compared with a loss of $20.6 million or $0.05 per share for Q1 2012. The 
increased net loss is primarily due to unrealized foreign exchange impacts on 
the translation of the company's U.S. dollar denominated debt, cash and cash 
equivalents, as the Canadian dollar decreased in value relative to the U.S. 
dollar. The recorded net loss in the first quarter was also impacted by the 
same factors affecting cash flow from operations.

Operations Update and Outlook

Based upon field estimates Great Divide production in the month of April 2013 
was approximately 11,500 bbl/day. Production was impacted in April by pump 
installations at Pad 101N at Pod One. The changes are completed and the wells 
were back on line in early May.

The planned retrofit work on one of the steam generators at Algar began in 
late April and is expected to be completed and on line by the end of May. The 
impact on production is expected to be approximately 1,000 bbl/day for the 
second quarter.

In Q1 2013 railed volumes were at 55 per cent of total production and are on 
track to exceed our target of 60 per cent in Q2. Streamlining of the rail 
strategy will continue with a focus on reducing transportation costs.

The new well pair at Algar was tied in and began steaming in early April. 
Drilling of the four new well pairs at Pod One was completed by the end of 
April. The lateral sections of these wells encountered high quality reservoir. 
These wells are expected to be tied in and placed on steam injection in the 
third quarter. Drilling operations began at the end of April for the four 
infill wells at Pod One, which are anticipated to be completed and placed on 
steam injection during the third quarter as well. The DRU project, which is 
designed to reduce the amount and cost of diluent in our dilbit sales, should 
be operational by year-end.

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. A revised corporate presentation will be posted on the website 
after the meeting.

About Connacher

Connacher Oil and Gas Limited is a focused in situ oil sands developer, 
producer and marketer of bitumen. The Company's principal assets are holdings 
in the Great Divide oil sands project in northern Alberta, south of Fort 

Forward Looking Information

This press release contains forward looking information including expectations 
for future well drilling activities, the timing for completing retrofit work 
on one of the steam generators at Algar and the expected impact thereof on Q2 
production, the timing of placing new wells on steam injection, the timing of 
bringing the DRU project on line and the anticipated impact thereof, 
expectations regarding the Company's ability to rely on the debt basket 
provided for under the Note Indenture related to the Company's existing second 
lien senior notes, expectations regarding the amount of the Company's bitumen 
to be marketed by rail in future periods and general operational and financial 
performance in future periods.

Forward looking information is based on management's expectations regarding 
the Company's future financial position, the Company's future growth, results 
of operations and 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), risk of commodity price and foreign exchange rate 
fluctuations, risks associated with the impact of general economic conditions, 
risks and uncertainties associated with maintaining the necessary regulatory 
approvals and securing the financing to proceed with the operation and 
continued expansion of the Great Divide oil sands project.

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.

Chris Bloomer Chief Executive Officer

Greg Pollard Chief Financial Officer

Connacher Oil and Gas Limited

Phone: (403) 538-6201 Fax: (403) 538-6225 Suite 900 - 332 6th Avenue SW 
Calgary, Alberta T2P 0B2

SOURCE: Connacher Oil and Gas Limited

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CO: Connacher Oil and Gas Limited
ST: Alberta

-0- May/14/2013 21:31 GMT

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