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Connacher is a growing exploration, development and production company with a focus on producing bitumen and expanding its in-situ oil sands projects located near Fort McMurray, Alberta

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Message: E=Mail to Mr. Gusella

E=Mail to Mr. Gusella

posted on Nov 12, 2009 04:09PM

Since I was not able to get through on the Conference Call this morning I wrote an E=mail to Mr. Gusella and he quickly reponded to my questions.

Q - I asked him whether the reservoir at POD 1 suffered any damage during the curtailment of production in December 2008/January 2009? Mr. Gusella said that they do not believe there was damage. He said that while they would acknowledge that bitumen production seems to prefer a steady state as opposed to a lot of tinkering that they do not believe that there is any permanent and minimal residual damage to the reservoir.

Q - I asked him whether any permanent damage had been done to the reservoir? His answer was not in their opinion.

Q - In reading through Connacher's Q-3 Report on page 21 (of 39) the company's capital budget for 2010 has allocated $30 million dollars for POD 1 "including 2 new SAGD wells, 11 high temperature ESP's and facility optimization." I am unclear whether or not the total number of SAGD well pairs at POD 1 will be 19 well pairs after these 2 new well pairs are drilled in 2010 or 17 well pairs in total? I looked back at the Press Release of September 28, 2009 which said that 15 well pairs were currently producing and 2 well pairs were not? Mr. Gusella stated that there will be 19 total well pairs producing at POD one in 2010 with the drilling of the 2 new well pairs. He explained that in September POD 1 had 15 well pairs that were producing and that the 2 newest additional wells that had just come off their early "steaming phase" were still ramping up production and were not yet "mature" wells ( total = 17 wells today). He also said that over its lifetime POD 1 will have had a total of 65 well pairs drilled, so adding new wells at POD 1 is an ongoing process. He said that lower producing well pairs would not be terminated as long as they were adding cash flow to POD 1.

Q - With 11 new high temperature ESP's being installed at POD 1 in 2010, can the 6 currenlty installed "old type" ESP's still be used or will they have to be replaced with new high temperature ESP's immediatley? He said that they can still be used but if the high temperature ESP's perform as well as they expect that they will, that eventually all of the ESP's will be high temperature ones. He said that at the depths that Connacher's wells are at that they prefer to operate at higher temperatures to insure greater recovery efficiency over the long run.

So these are the answers to my questions from Dick Gusella himself. I did not pursue the specific production numbers as it was evident from the Conference call that they are not available at this time anyway.

Best Wishes; Scott

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