Connacher Oil and Gas Limited Announces Algar Production Ramp Up Progressing
on Schedule; Daily Production at Algar has Surpassed 5,000 barrels per day;
Combined Bitumen Production at Great Divide Has Exceeded 12,000 barrels per
day.

CALGARY, Oct. 4 /CNW/ - Connacher Oil and Gas Limited ("Connacher") announced today that combined bitumen production levels from its Pod One and Algar steam assisted gravity drainage ("SAGD") operations exceeded 12,000 bbl/d during September 2010 and recently averaged 11,691 bbl/d for the seven days ended October 2, 2010. Algar and Pod One are located on the company's Great Divide oil sands lease block, approximately 80 km southeast of Fort McMurray, Alberta. Production levels during ramp up can fluctuate on a daily basis, as produced emulsions in the early stages of a ramp up are variable, as new equipment at the surface is activated and as volumes escalate towards design capacity.

At Algar, bitumen production averaged approximately 5,015 bbl/d for the seven days ended October 2, 2010. To date 14 of the project's 17 SAGD well pairs have been converted to full SAGD production, with two wells remaining on circulation. The seventeenth well pair has not yet been steamed. The Algar production ramp up is ahead of both the initial Pod One ramp up and thus far is also running ahead of other record ramp up rates which have recently been reported for new SAGD operations by another operator. Based on learnings from Pod One, this in part reflects the impact of Connacher's ability to maximize steam injection into the Algar wellbores during the circulation phase, prior to the startup of SAGD production. Readers should note that Algar production, related costs and revenues will be capitalized and will not be recorded in the company's operating and financial results until such time as a declaration of commerciality occurs. It is anticipated commerciality with an effective date of October 1, 2010 may occur once the company is satisfied as to the reliability of Algar production and diluted bitumen ("dilbit") sales. This decision will likely occur later in the month of October 2010. The Company continues to anticipate a 2010 exit bitumen production rate of between 7,000 bbl/d and 7,500 bbl/d at Algar.

At Pod One, bitumen production averaged approximately 6,676 bbl/d for the seven days ended October 2, 2010 although production exceeded 7,000 bbl/d for many days during the month of September 2010. Weekly variations may reflect minor operational issues, including pump replacements or other manageable operations matters which require temporary individual well shutdowns. Operational reliability at Pod One has improved subsequent to the activation of the cogeneration facility at Algar in early September 2010, which reduced the load on the regional power grid. With reliable power supplies, steady state steam injection, efficient plant operations, improved pumping operations and with the anticipated ramp up of production from two new SAGD well pairs, which were converted to full SAGD production in July and August of this year, bitumen production volumes from Pod One are anticipated to continue increasing towards targeted 2010 exit rates of between 8,500 bbl/d and 9,000 bbl/d.

Average full year 2010 combined Pod One and Algar bitumen volumes have been forecast at 9,000 bbl/d. Connacher continues to anticipate achieving a total exit bitumen production rate for 2010 of between 15,500 bbl/d and 16,500 bbl/d, which in turn augers favorably for much higher bitumen production levels in 2011, on a successive quarterly basis and overall.

The Pod One trucking terminal expansion was recently completed, on-time and on-budget and has been commissioned into service. With the recent activation of the company's dilbit sales transfer line connecting Algar and Pod One, the dilbit transportation requirements of both Pod One and Algar are now consolidated at and being coordinated from Pod One. Connacher is now able to handle 26,000 bbl/d of diluted bitumen ("dilbit") volumes at this facility and continues to truck produced volumes to numerous purchasers without interruption.

Connacher Oil and Gas Limited is a Calgary-based crude oil, bitumen, natural gas and natural gas liquids production company. Principal oil sands assets are held in the Great Divide region of Alberta. Conventional production is held in Alberta and Saskatchewan and Connacher also owns and operates a heavy oil refinery in Great Falls, Montana and maintains an approximate 19 percent equity stake in Petrolifera Petroleum Limited, a public oil company active in Argentina, Peru and Colombia in South America. Our common shares (CLL - TSX) and our outstanding convertible debentures (CLL.DB.A - TSX) are listed for trading on the Toronto Stock Exchange.

Forward-Looking Information:

This press release contains forward looking information including but not limited to production ramp up rates and anticipated 2010 production exit rates from Pod One, Algar and on a combined basis, the anticipated timing for determination of commerciality at Algar, anticipated operating reliability resulting from the activation of the company's cogeneration plant and excess trucking facility capacity to meet future dilbit transportation requirements. Forward looking information is based on management's expectations regarding 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), 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; timing difficulties or delays and additional costs relating to the production ramp up of Pod One and Algar; 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 and risks associated with the impact of general economic conditions. 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, 2009, which is available at www.sedar.com.

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 are expressly qualified in their entirety by this cautionary statement, The forward-looking information included in this press release is made as of the date hereof and Connacher assumes no obligation to update or revise any forward-looking information to reflect new events or circumstances, except as required by law.

For further information: Richard A. Gusella, Chairman and Chief Executive Officer OR Grant D. Ukrainetz, Vice President, Corporate Development, Phone: [phone], Fax: [phone], [email protected], Website: connacheroil.com