Connacher Announces Bitumen Royalty Transaction, Full Repayment of Interim Revolving Credit Facility and Extension of CCAA Stay

CALGARY, Jan. 30, 2018 /CNW/ - Connacher Oil and Gas Limited ("Connacher" or the "Company") is pleased to announce that it has received approval from the Court of Queen's Bench of Alberta (the "Court") in its proceedings under the Companies' Creditors Arrangement Act ("CCAA") to grant a bitumen royalty to Burgess Energy Holdings, L.L.C. ("Burgess") on all of the lands (the "Royalty Lands") containing bitumen together with the oil sands rights and interests owned by Connacher (the "Royalty") for cash consideration. The Royalty will be calculated on a sliding scale. The net realized bitumen price is to be determined based on gross dilbit sales less diluent, transportation and storage costs. The Royalty transaction closed on January 30, 2018.

Concurrent with the closing of the Royalty transaction, the Company has used a portion of the consideration received to repay in full its US$16,521,164 interim revolving credit facility established pursuant to a credit agreement dated as of May 25, 2016, as amended. The Royalty transaction and interim credit facility repayment enhance the Company's balance sheet and financial sustainability.

The Company further announced that it has obtained an extension of the CCAA stay of proceedings to June 29, 2018 to pursue and implement appropriate CCAA exit strategies.

About Connacher

Connacher is a Calgary-based in situ oil sands developer, producer, and marketer of bitumen. The Company holds a 100 per cent working interest, which is subject to the Royalty, in approximately 447 million barrels of proved and probable bitumen reserves and operates two steam-assisted gravity drainage facilities located on the Company's Great Divide oil sands leases near Fort McMurray, Alberta.

Forward Looking Information

This news release contains certain statements that constitute forward looking statements under applicable securities legislation. All statements other than statements of historical fact are forward looking statements.  In some cases, forward looking statements can be identified by terminology such as "may", "will", "should", "expect", "plan", "anticipate", "believe", "estimate", "predict", "potential", "continue", or the negative of these terms or other comparable terminology.  These statements are only as of the date of this document and the Company does not undertake to publicly update these forward looking statements except in accordance with applicable securities laws. Forward looking statements, including but without limitation, statements concerning the impact that the Royalty and the repayment of the interim financing credit facility will have on the Company's financial position and balance sheet, the Company's forecasted oil price and annual operating netback of Great Divide and the non-producing Royalty Lands before the Royalty is triggered, the Company's ability to manage its liquidity position and deploy the capital required to maintain existing reserve and production bases, fund maintenance capital, fund working capital requirements and meet contractual and other commitments; expectations regarding future commodity prices, foreign exchange rates, diluent blend ratio, transportation costs, rail costs, rail usage, and production and operating costs in future periods; expectations regarding sales and production, bitumen netback, general and administrative expenses, and capital expenditures in future periods; the Company's reserves; and general operational and financial performance in future periods are based on current expectations, estimates, projections and assumptions, which the Company believes are reasonable but which may prove to be incorrect and therefore such forward looking statements should not be unduly relied upon.

These forward looking statements involve known and unknown risks, uncertainties which may cause actual results or performance to be materially different from any future results or performance expressed or implied herein. These risks, uncertainties and other factors relating to the Company include, but are not limited to, the risk that the CCAA stay period will not be extended past June 29, 2018 and that as a result creditors will be entitled to exercise their various rights and remedies against the Company, the level of indebtedness of the Company, the implementation and impact of obtaining any reorganization or restructuring of the assets, business and financial affairs of the Company, future cooperation of the creditors of the Company, the Company's ability to generate sufficient cash flow from operations or to obtain adequate financing to fund capital expenditures and working capital needs and to meet the Company's ongoing obligations during the CCAA process and thereafter, the ability to maintain relationships with suppliers, customers, employees, shareholders and other third parties in light of the Company's current liquidity situation and the CCAA proceedings, as well as 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 and interest 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 continue operations and increase production to levels previously achieved, the ability to obtain qualified staff, equipment and services in a timely and cost efficient manner; the ability to operate its business in a safe, efficient and effective manner; the effect of current plans; the timing and costs of capital expenditures; the regulatory framework regarding environmental matters in the jurisdictions in which the Company operates; and the ability of the Company to successfully market its products.

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. Any forward looking information included in this press release is expressly qualified in its entirety by this cautionary statement. Any 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

Merle Johnson, Chief Executive Officer, or Jeff Beeston, Chief Financial Officer, Connacher Oil and Gas Limited, Phone: [phone], Fax: [phone], Suite 1040, 640 - 5th Avenue SW, Calgary, Alberta T2P 3G4, [email protected], www.connacheroil.com

Related Links

http://www.connacheroil.com