CONNACHER PROVIDES OPERATIONS UPDATE; GREAT DIVIDE PRODUCTION GROWTH
CONTINUES

CALGARY, Dec. 14 /CNW/ - Connacher Oil and Gas Limited announced today that bitumen production from its two steam-assisted gravity drainage ("SAGD") plants at its Great Divide operation in north-eastern Alberta averaged 14,610 bbl/d during the week ended December 10, 2010. These volumes were calculated on a rolling seven day average basis and were measured at Connacher's Pod One and Algar plants.

Production from Pod One was 7,760 bbl/d for the week, an increase of eight percent over levels last reported on October 26, 2010. Recent volumes are in line with December 2010 exit rate guidance of 7,500 bbl/d-8,000 bbl/d, as provided in the company's Third Quarter 2010 Management's Discussion and Analysis. Pod One production has been increasingly stable and reliable and has demonstrated steady growth for the past several months. While daily SAGD production volumes can be variable, Connacher's management remains optimistic that production from Pod One can achieve exit guidance levels. The calculated steam: oil ratio ("SOR") at Pod One was 3.52 for the current period.

Production at Algar was 6,854 bbl/d for the week, an increase of 14 percent over levels last reported on October 26, 2010. One additional well (202-1) was converted to full SAGD production during the period and continues to show improvement. The rampup at Algar has been outstanding for Connacher and the project has already achieved a calculated SOR of 3.55 during the reporting period, despite only having been in rampup mode since August 2010. While daily SAGD volumes can be erratic during the rampup phase, Connacher's management remains optimistic that Algar can achieve exit guidance levels of 7,000 bbl/d - 8,000 bbl/d for the month of December 2010 and that the total 2010 exit rate production from Pod One and Algar will range between 14,500 bbl/d - 16,000 bbl/d. Readers are cautioned that rolling seven day average production levels may not be indicative of anticipated long-term production levels. See Forward Looking Information.

Despite continuing industry challenges associated with service disruptions on the Enbridge pipeline system, Connacher has been able to successfully sell its growing diluted bitumen ("dilbit") volumes to a variety of buyers and markets, benefiting from the flexibility afforded to it by its ability to truck its production.

Connacher also announced today that it has completed a full and thorough auction of certain of its conventional producing properties at Battrum, Saskatchewan and at Marten Creek/Randall, Alberta. This process resulted in the receipt of numerous attractive bids and efforts are now underway to complete binding, Board-approved agreements, with a view to finalizing these dispositions, for cash, at the earliest possible date, possibly before year-end. Once binding agreements typical of transactions of this nature are completed, additional details related to the anticipated sales will be provided by the company. Upon closing, proceeds net of related expenses will be added to the company's treasury, thereby reducing the company's net debt. There can be no assurance that these transactions will be completed and on terms acceptable to Connacher.

Connacher Oil and Gas Limited is a Calgary-based crude oil, natural gas and bitumen producer. Its principal asset is its ownership and operatorship of its Great Divide/Algar SAGD operations in north-eastern Alberta. Connacher also owns conventional crude oil and natural gas properties in Alberta, a profitable heavy oil refinery in Great Falls, Montana and maintains a significant equity stake in Petrolifera Petroleum Limited.

Forward-Looking Information

This news release contains certain "forward-looking information" within the meaning of applicable securities laws including anticipated bitumen production levels and the timing associated therewith at the company's Great Divide Pod One and Algar facilities, plans to finalize definitive agreements relating to the proposed sale of Company's conventional producing properties at Battrum, Saskatchewan and at Marten Creek/Randall in Alberta and the use of proceeds from such dispositions should they occur. Reported average or daily production levels and SORs may not be reflective of sustainable production rates and SORs over extended periods of time and future production rates and SORs may differ materially from the production rates and SORs reflected herein due to, among other factors, difficulties or interruptions encountered during the production of bitumen. Forward-looking information is based on the opinions and estimates of management at the date the information is provided and is subject to a variety of risks and uncertainties and other factors that could cause actual events or results to differ materially from those projected in the forward-looking information. These risks include, but are not limited to 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 estimates; the uncertainty of estimates and projections in relation to production, costs and expenses and health, safety and environmental risks), the risk of commodity price and foreign exchange rate fluctuations, risks associated with obtaining, maintaining and the timing of receipt of regulatory approvals, permits and licenses and uncertainties relating to access to capital and credit markets. In addition, the completion of the proposed dispositions of conventional producing properties at Battrum, Saskatchewan and at Marten Creek/Randall, Alberta are subject to completion of definitive documentation and Board approval. There can be no assurance that the proposed dispositions will be completed as presently contemplated or prior to year-end. Additional risks and uncertainties are described in the Corporation's Annual Information Form for the year ended December 31, 2009 which is filed on SEDAR at www.sedar.com. The forward-looking information contained in this news release is made as of the date hereof and the company assumes no obligation to update or revise this information to reflect new events or circumstances, except as required by law. Because of the risks, uncertainties and assumptions inherent in forward-looking information, prospective investors in the company's securities should not place undue reliance on the forward- looking information contained herein.

For further information: R. A. Gusella, Chairman and Chief Executive Officer Or Peter D. Sametz, President and Chief Operating Officer Or Grant D. Ukrainetz, Vice President, Corporate Development, P - [phone], F - [phone], www.connacheroil.com, [email protected]