Shareholders generally are opposed to the company that they are invested in issuing new shares due to the dilution that this creates. This is a given. My first reaction to the news today that Connacher is issuing new shares to raise money was that I was not happy with this decision. However, I have had time to read other peoples responses today on the board and I have done some thinking about this and I have to look at this as a positive move on managements part.

I know that the current price of a stock usually is priced six months ahead by the market, which means Connacher's present share value of $1.35 Cdn per share is what each share is worth based on its value in November 2009 as the market values it. I hurts me to say this (as a long time shareholder of Connacher since 2003) but at todays share price Connacher is dead money for the next half a year at least unless something substantial is done. Think about this. This November value of $1.35 Cdn per share already includes the Great Divide producing at its design capacity of 10,000 bbl/d of bitumen in addition to the extra bitumen from well pairs P11 and P12 (page 16 latest presentation) which might add another 1,000-2,000 bbl/d of bitumen. This is alread factored into the share price.

The share price also already includes the money which will come from the sale of asphalt from the MRC for the rest of the year until November. It also includes the sale of 3,000 bbl/d of conventional oil and natural gas sales. Todays share price of $1.35 Cdn is what all of these assets are worth in November.

In the meantime Connacher's contractors have already built a number of the large items that are needed for the plant at Algar and the contractors are storing these items which have already been built for delivery at their factories, or we were told, they are being delivered and stored at the plant site. They cannot be stored indefinately for a year or two years I would expect by the factories that have constructed them. Storing metal items at the Algar site also presents its own problem in terms of the weather and corrosion etc. Also, the design team Drifter Projects, that will build the Great Divide Project, and which has been hired to construct Algar, I would expect is continually being paid to stand by until the decision is made to complete Algar. It would be foolish to tell them no Algar is being put off indefinately, and then they start another project for someone else, and Connacher calls a year later and expects them to drop their current project to come immediately and restart work at Algar. No, I am convinced that part of the $18 million that Connacher stated, in its press release of December 15, 2008 http://www.connacheroil.com/document... , that it would cost to shut down Algar construction for 6 months, a large part of this money is going to the Drifter Projects team for salaries etc. as they stand by to resume the project.

Another factor is that the 15 well pairs must be started at Algar in December 2009 or Connacher must put the drilling off for another year. Without the well pairs being drilled the plant would sit idle for a year...no way. Think about it. That would be another year of doing nothing except paying the millions of dollars interest on the loan twice a year.

So we are back to the value of Connacher's shares being worth $1.35 Cdn in November 2009 dollars today. The only thing that will increase the share value would be the resumption of construction of the Algar project. It is essential because in case you haven't noticed all of Connacher's price forecasts and modelling etc. in its presentation are based on Connacher selling 20,000 bbl/d of bitumen. The production costs for Connacher's bitumen without Algar's bitumen production online puts all of Connacher's costs and numbers in their presentation out of whack.

We all know, and their have been lengthy discussions on this board about Connacher's integrated approach to developing the tar sands. The main reason for this integrated model was so that Connacher shareholders could retain control of the Great Divide and Algar projects. There are only a few ways that Connacher can raise money. By selling more shares, by obtaining a loan or credit line and paying interest (around 15% the banks or financial houses want today) or by farming out a percentage of the projects to a partner or partners as OPTI has done (Long Lake) and UTS had done (Fort Hills). In my opinion, selling more shares in addition to otaining another line of credit, while this is distasteful we the shareholders however will retain control of the projects. The alternative is to give up 100% control of both projects or Connacher Oil & Gas, and take in a partner and I am not prepared to do this. The rewards in the end are too great, and we have come too far to do this. It's for these reasons that I can support Richard Gusella's management teams decision today. This is my opinion.

Best Wishes; Scott