Connacher Announces Second Quarter 2013 Results

CALGARY, Aug. 14, 2013 /CNW/ - Connacher Oil and Gas Limited (CLL - TSX; 
"Connacher" or the "Company") is pleased to announce the release of its 
financial and operating results for the second quarter ending June 30, 2013 
("Q2 2013"), a summary of which is set out below. 
Q2 2013 Highlights: 

    --  EBITDA of $24 million, a 125% increase from Q1 2013
    --  Bitumen production averaged 11,572 bbl/d
    --  Bitumen netback of $31.79/bbl, a 93% increase from Q1 2013
    --  Funds flow from continuing operations of $6 million
    --  Reduced diluent blend ratio ("DBR") to 20% from 22% in Q1 2013
    --  Dilbit sales by rail increased to 80% of total sales versus 55%
        in Q1 2013
    --  Completed drilling four new infill wells and four new well
        pairs at Pod One
    --  All four infill wells are now on steam injection
    --  Replacement well pair at Pad 202 placed on production in July
    --  Received regulatory approval for SAGD+ commercial project at
    --  Received regulatory approval to divert steam from Pad 101 North
        to Pad 104 wells at Pod One
    --  Capital expenditures of $28 million

Q2 2013 Financial and Operational Summary

The following summarizes the operating and financial results for the three and 
six month periods ended June 30, 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".
                   Three months ended June 30 Six months ended June 30

FINANCIAL ($000       2013           2012        2013          2012
except per share

Revenue, net of     110,613            81,411  211,933         189,158

EBITDA (continuing   24,403             6,956   35,085          19,375
operations) ((1))

Funds flow            5,678          (14,166)  (3,833)        (22,647)
operations)( (1))

Net earnings       (32,117)          (20,264) (78,683)        (43,266)
(loss) (continuing

Net earnings              -          (24,798)        -        (22,354)

Net earnings       (32,117)          (45,062) (78,683)        (65,620)

Per share, basic     (0.07)            (0.10)   (0.18)          (0.15)
and diluted 

Capital              28,153             8,882   48,404          20,738
expenditures -

Cash on hand                                    76,724          41,499

Working Capital                                 55,702         110,555

Long-term debt                                 881,396         939,623

Shareholders'                                  265,064         357,742

               Three months ended June 30 Six months ended June 30
                  2013           2012        2013          2012 
Average benchmark                                                     
WTI (US$/bbl)       94.27             93.50    94.96           98.20 
Heavy oil         (17.13)           (23.00)  (22.12)         (22.21)
Western Canada      79.04             71.31    74.18           76.48
  Select ($/bbl) 
Daily production                                                      
volumes -
Bitumen (bbl/d)    11,572            11,674   11,986          12,052 
Highlights ($/bbl) 
Dilbit sales        85.06             62.01    77.78           68.39 
Diluent costs      (7.03)           (15.22)   (9.75)         (14.51) 
Realized bitumen    78.03             46.79    68.03           53.88
Transportation    (21.65)           (12.48)  (20.99)         (11.01)
  and handling

                      56.38             34.31    47.04           42.87

  Royalties          (3.06)            (2.43)   (2.67)          (2.66)

  Net bitumen         53.32             31.88    44.37           40.21

  Production and    (21.53)           (17.21)  (20.53)         (17.33)

Bitumen netback -    $31.79            $14.67   $23.84          $22.88
per barrel((1))

(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 June 30, 2013 and June 30, 2012 ("MD&A"). Bitumen netback is
    reconciled to net loss in the MD&A. EBITDA from continuing
    operations is reconciled to net loss in the MD&A and funds flow
    from continuing operations is reconciled to cash flow from
    operating activities in the MD&A

At June 30, 2013, the Company's working capital surplus was $56 million, 
including $77 million of cash on hand. Based on current covenant calculations 
the Company is able to fully utilize the $95 million under the facility. The 
maximum available bank credit line at the end of Q2 2013 is $82 million, net 
of existing letters of credit.

Long term debt, consisting solely of the Company's outstanding Second Lien 
Senior Notes due in 2018 and 2019 (the "Notes"), totaled $881 million. Under 
the note indenture for the Company's 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 commitments under the bank facility).

Total capital expenditures during the quarter were approximately $28 million 
($49 million YTD 2013). Capital expenditures of $21 million were incurred in 
Q2 2013 to increase production and decrease operating costs with the remaining 
$7 million for maintenance expenditures.

Bitumen production at Great Divide averaged 11,572 bbl/day in Q2 2013, down 7% 
from Q1 2013 due to planned maintenance. Pod One averaged 5,660 bbl/day and 
Algar averaged 5,912 bbl/day.

Cash flow from operating activities (continuing operations) was $21 million in 
Q2 2013 compared to $9 million in Q1 2013. The increase was primarily driven 
by higher realized pricing and decreased diluent use.

Connacher incurred a net loss of $32 million or $0.07 per share for Q2 2013, 
compared with a net loss in Q1 2013 of $47 million or $0.10 per share. The net 
loss in Q2 2013 includes $40 million of non-cash charges.

Operations Update and Outlook

Based upon field estimates, Great Divide production in the month of July 2013 
was 11,643 bbl/day. Production was impacted in July by tie-ins for Pad 102 
infills and rod pump conversions at Algar. We expect to begin realizing 
increasing production from our 2013 capital spending in Q4 2013.

Surface facility construction at Pad 104 is continuing and expected to be 
completed in September. The four new well pairs at Pad 104 are scheduled to 
begin steaming in late September for approximately 90 days before being 
converted to SAGD production in late Q4 2013 to early Q1 2014.

The re-drilled well pair at Algar has been converted to SAGD production after 
89 days of steaming and is currently producing 350 bbl/d, based on field 
estimates. Three of the four infill wells began steaming in late July and are 
expected to be on production by October 2013. The remaining infill well began 
steaming in August.

SAGD+ trials will continue at Algar until the end of the year. Well 203-1 has 
been on down-hole pump since May and has seen a positive SOR response with no 
operational issues. Well 203-4 solvent injection began in July.

Q2 2013 Conference Call Details

Connacher will host its quarterly conference call on August 15, 2013 at 8AM 
MDT. Interested participants can call in to (888) 231-8191 or locally at (403) 
451-9838. Please use the Conference ID# 98592661. Participants are encouraged 
to call in 5 minutes prior to commencement. For those wishing to access the 
call online, the webcast URL is:

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 the expected 
timing of realizing the production impacts of 2013 capital spending, future 
production and the timing thereof, future exploration and development 
activities, future SAGD+ trials, 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 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.

SOURCE  Connacher Oil and Gas Limited 
Contact 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  
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CO: Connacher Oil and Gas Limited
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