means collectively the First Lien Notes and the Second Lien Notes;

"

" means Petrolifera Petroleum Limited;

"

" means the annual information form of Petrolifera for the year ended December 31, 2009 dated

March 17, 2010;

"

" means the independent engineering evaluation of the crude oil, natural gas liquids and

natural gas interests of Petrolifera prepared by GLJ, independent petroleum engineering consultants of Calgary,

Alberta, dated March 5, 2010 and effective December 31, 2009;

"

" means those quantities of petroleum estimated, as of a given date, to be potentially

recoverable from undiscovered accumulations by application of future development projects;

"

" means the Corporation's first 10,000 bbl/d SAGD bitumen facility and wells located at Great Divide;

"

" means the Corporation's 9,500 bbl/d heavy crude oil refinery located in Great Falls, Montana;

"

" means steam-assisted gravity drainage;

"

" means steam-oil ratio;

"

" means the independent evaluation of the undeveloped land acreage of the

Corporation prepared by Sayer Energy Advisors ("

"), independent oil and gas advisory firm of Calgary,

Alberta, dated January 22, 2010 and effective December 31, 2009; and

- 6 -

"

" means the Toronto Stock Exchange.

In this Annual Information Form, references to "dollars" and "$" are to the currency of Canada, unless

otherwise indicated.

- 7 -

") seismic programs have been conducted in support of plans to file an application to further

expand plant capacity at Great Divide, initially to 44,000 bbl/d. The Corporation also owns conventional producing

crude oil and natural gas properties at Battrum, Saskatchewan and at Marten Creek, Gilby/Three Hills and Latornell,

Alberta and an approximate 22 percent equity interest in Petrolifera, a public Canadian crude oil and natural gas

production, exploration and development company active in Argentina, Peru and Colombia. The following is a

general description of the development of the Corporation over the past three years.

In the winter of 2007, Connacher completed an extensive and successful 81 core hole drilling and 3D

seismic program on its main lease block at Great Divide, resulting in a marked expansion of its reserve and resource

base and supporting Management's decision to proceed with an application for a second oil sands plant at Algar also

with a design capacity of 10,000 bbl/d of bitumen. The proposed plant site is approximately eight km east of the Pod

One plant. This application was submitted to regulatory authorities in June 2007.

In May 2007, Connacher completed a "bought-deal" financing for $100,050,000 aggregate principal

amount of convertible senior unsecured debentures due June 30, 2012. Proceeds of the offering were used by the

Corporation to repay short term borrowings and to fund capital expenditure programs in respect of the development

of its oil sands projects and conventional projects and the remainder was used for operating expenses.

Construction at Pod One, including the drilling of 15 SAGD well pairs, was completed in August 2007,

within the 300 day construction schedule and at a total capital cost of approximately $272 million, excluding

approximately $25 million of sunk costs, capitalized interest and capitalized general and administrative expenses.

Following plant commissioning in September 2007, Connacher commenced steam injection into the SAGD well

pairs. In October 2007, Connacher delivered and sold to market its first truckload of dilbit from Pod One.

In November 2007, Connacher completed a "bought-deal" financing of 10,350,000 flow-through common

shares at a price of $5.00 per flow-through share. Connacher also issued an aggregate of 100,000 flow-through

shares at a price of $5.00 per flow-through share pursuant to a private placement. The total gross proceeds of

$52,250,000 from the financings were used to drill exploratory core holes and conduct 3D seismic to assist in the

delineation of additional oil sands reserves and resources at Great Divide and Halfway Creek.

In December 2007, Connacher completed the sale of US$600 million aggregate principal amount of 10.25

percent senior secured second lien notes (the "

") due December 15, 2015, at a price of 98.657

percent, resulting in gross proceeds of approximately US$592 million (approximately $592 million). A portion of

the proceeds was used to discharge Connacher's outstanding indebtedness, to fund a one-year debt service reserve

account and to pay certain expenses associated with the issuance of the Second Lien Notes. The balance of

approximately $327 million was added to the Corporation's working capital to fund the construction of the Algar

Project.

Coincidental with the sale of the Second Lien Notes, Connacher secured a new syndicated five year term

revolving first lien credit facility (the "

"). The Revolving Facility was comprised of a $150

million tranche and a US$50 million tranche, with the latter for use in the business of the Refinery. In March 2009,

the Corporation cancelled the Revolving Facility.

Throughout 2007, a total of 1,518,267 stock options were exercised, resulting in the Corporation receiving

cash proceeds of $1,466,000. In addition, 108,975 Common Shares were issued in 2007 pursuant to the

Corporation's share award incentive plan for non-employee directors.

On February 25, 2008 the Corporation entered into a pooling arrangement totalling 38.5 gross sections of

oil sands leases in the Halfway Creek area with Alberta Oilsands Inc., an arm's length party. Under this arrangement,

15.5 sections of undeveloped and prospective lands were contributed by the Corporation and 23 sections were

contributed by Alberta Oilsands Inc. The pooling arrangement provides for the joint ownership, evaluation and

potential development of any resources which may be identified on the subject leases. The agreement provides for

joint operatorship during the initial two years of the evaluation program, with Connacher as the designated operator

of any subsequent evaluation program(s) and of any identifiable development program(s) which may occur. In

2008, a decision was made to defer exploration expenditures at Halfway Creek until the 2009-2010 drilling season,

when Connacher would be the operator.

- 9 -

Connacher determined that Pod One achieved commerciality effective March 1, 2008. As a result,

production, revenues and related expenses were booked in the Corporation's statements of operations and retained

earnings from March 1, 2008 onward. Prior thereto, all revenues and expenses related to Pod One were capitalized.

In the winter of 2008, Connacher completed an extensive and successful 125 core hole drilling and 3D

seismic program, focused on its main lease block at Great Divide. The results of the drilling program were reflected

in the Corporation's June 30, 2008 reserve report by GLJ, which showed a significant increase in reserve volumes

and pre-tax present values as compared to the year end 2007 reserve report.

In July 2008, the Corporation's production at Great Divide Pod One surpassed 1 MMbbl of bitumen.

During 2008, an aggregate of 2.14 MMbbl of bitumen was produced at Pod One and by year end 2008, total

production since start-up was 2.16 MMbbl of bitumen.

In November 2008, Connacher was granted an Order in Council and final approval from the ERCB to

proceed with construction of the Algar Project. Subsequent to the issuance of these formal approvals, Connacher

advanced its construction program at Algar, but construction was suspended in late December 2008 due to adverse

financial, credit and economic market conditions and a decision to preserve cash and credit during a time of

economic uncertainty. Notwithstanding the suspension of construction, certain activities, including building of

long-lead order equipment and civil work at the Algar plant site and SAGD well pad sites, continued into 2009, to

attempt to avoid the possibility of prolonged delays in the project's overall timeline. Construction at Algar and

drilling of the 17 SAGD well pairs was reinstated in July 2009.

In November 2008, the Corporation completed the monetization of its US$300 million cross currency and

interest swap asset on its US$600 million Second Lien Notes for cash proceeds of $89.1 million. The completion of

this transaction and the resultant increase in the Corporation's cash balances were accomplished without cost or

equity dilution.

In mid-December 2008, the Corporation announced that a decision had been made to temporarily curtail

Pod One production. This decision was taken in response to the then rapid deterioration in the bitumen markets, the

emergence of lower crude oil prices, the widening of heavy oil differentials as compared to WTI, a stronger

Canadian dollar compared to the relative decline in crude oil prices from peak levels in mid-year 2008, regional

marketing issues and some transportation and diluent cost issues. As a consequence, bitumen production at Pod One

was reduced to approximately 5,000 bbl/d at the end of December 2008.

Throughout 2008, a total of 1,101,583 stock options were exercised, resulting in the Corporation receiving

cash proceeds of $893,000. In addition, 108,975 Common Shares were issued in 2008 pursuant to the Corporation's

share award incentive plan for non-employee directors.

On January 21, 2009, Connacher announced the resumption of bitumen production at Pod One due to

improved market conditions arising from narrowed heavy oil differentials, improved marketing and transportation

arrangements, enhanced diluent blending ratios and improved pricing achieved by locking in higher WTI pricing

during a period of pricing contango for a portion of its production during 2009.

During the winter of 2009, a total of 23 gross (23 net) core holes were drilled on the Corporation's Great

Divide leases.

In March 2009, Connacher arranged a $20 million demand operating financing facility for the purposes of

issuing letters of credit (the "

"). The L/C Facility was secured by cash and a first lien claim on certain

assets of the Corporation.

Also in March 2009, Connacher filed a Proposed Terms of Reference with Alberta Environment with

respect to the proposed expansion of its Pod One and Algar SAGD facilities from a combined capacity of 20,000

bbl/d of bitumen to approximately 44,000 bbl/d of bitumen.

In June 2009, Connacher completed a marketed "bought-deal" financing of 191,762,500 Common Shares at

a price of $0.90 per Common Share for gross proceeds of $172,586,250. The net proceeds of the offering were used

to fund the Corporation's capital expenditures and for general corporate purposes, which included a portion of the

capital costs associated with the construction of Algar, after such construction was reinstated in July 2009.

- 10 -

In June 2009, Connacher completed the sale of US$200 million aggregate principal amount of 11.75

percent first lien senior secured notes (the "

") due July 15, 2014, at a price of 93.678 percent,

resulting in gross proceeds of approximately US$187 million (approximately $212 million). In conjunction with the

completion of the debt financing, the Board of Directors of Connacher authorized Management to proceed with the

reactivation of construction of Algar. Field construction at Algar was resumed on July 7, 2009. The net proceeds of

the debt financing were used for working capital and general corporate purposes, including, together with the net

proceeds of the June 2009 equity offering, to fund a portion of the remaining construction, drilling and completion

costs associated with the construction of Algar.

In August 2009, Connacher purchased 13,556,000 units of Petrolifera pursuant to a marketed public

offering completed by Petrolifera. Each unit was comprised of one common share in the capital of Petrolifera (a

"

") and one half of one Petrolifera warrant (each whole Petrolifera warrant being referred to herein

as a "

"), with each Petrolifera Warrant entitling Connacher to purchase one Petrolifera Share at

an exercise price of $1.20 per share at any time on or before August 28, 2011. In the event that the 20-day volume

weighted average price of the Petrolifera Shares on the TSX exceeds $2.50, Petrolifera may, within five business

days after such an event, provide notice to the holders of Petrolifera Warrants of early expiry and thereafter the

Petrolifera Warrants will expire on the date which is 30 days after the date of the notice to the holders of Petrolifera

Warrants.

Also in August 2009, the Corporation exercised 200,000 options to acquire Petrolifera Shares. As a result

of the acquisition of units and the exercise of options, Connacher owns approximately 22 percent of the Petrolifera

Shares.

In October 2009, the Corporation announced officer promotions and new assignments. Mr. Cameron Todd

was promoted to the position of Senior Vice President, Operations and was made responsible for all of Connacher's

oil sands production operations, the Corporation's refining and marketing activity and its health, safety and

environment portfolio. Mr. Russ Longley was appointed Vice President, Refining and Conventional Operations and

assumed direct head office responsibility for Connacher's refining operations in Great Falls, Montana and continued

to oversee Connacher's conventional crude oil and natural gas production. Mr. Merle Johnson was appointed to the

position of Vice President, Engineering and assumed responsibility for the Corporation's production, drilling and

reservoir engineering functions, with a primary emphasis on the management and development of Connacher's

unconventional bitumen properties at Great Divide.

Also in October 2009, Connacher completed a "bought-deal" financing of 23,172,500 flow-through

Common Shares at a price of $1.30 per share for gross proceeds of $30,124,250. The gross proceeds from the

offering will be used to further delineate and define the Corporation's oil sands properties through the drilling of

additional core holes and for conducting a 3D seismic program over Connacher's oil sands properties.

In November 2009, Connacher secured a new two-year US$50 million revolving credit facility (the

"

") and cancelled the L/C Facility.

Throughout 2009, a total of 579,724 stock options were exercised, resulting in the Corporation receiving

cash proceeds of $388,000. In addition, 327,623 Common Shares were issued in 2009 pursuant to the Corporation's

share award incentive plan for non-employee directors and 7,200 Common Shares were issued upon the conversion

of $36,000 of Debentures.

In January 2010, Connacher commenced its winter drilling program which resulted in the drilling of 68

core holes at Great Divide and 13 core holes at Halfway Creek (6.5 net core holes); the completion of two 3D

seismic programs at Great Divide and Thornbury to identify potential oil sands accumulations that could be the

target of future core hole programs; and the drilling of eight wells primarily for natural gas in northern Alberta as

part of Connacher's conventional drilling program. The drilling of two additional horizontal SAGD well pairs at

Pod One which commenced in December 2009 was completed in January 2010. The total budget for the winter

drilling program was set at $45 million. The total capital expenditure budget for 2010 is expected to be

approximately $256 million.

- 11 -

ws, growing demand for crude oil in Asia

and India and stunted world supply is expected to lead to a significant pick-up in activity in the Canadian oil sands

in 2010 and beyond. Recent announcements from ConocoPhillips/Total SA, Husky Energy Inc./BP PLC, Canadian

Natural Resources Limited and ExxonMobil Canada to initiate new or expand current oil sands projects are evidence

of increased confidence in the oil sands industry. Other mega-project oil sands announcements could follow. As new

monies begin to flow into the oil sands sector, price inflation for steel and services and labour shortages could once

again emerge similar to that experienced during 2006 and 2007. This could put expansion economics at risk.

There is an apparent risk aversion on the part of investors and a resulting positive investor bias towards

companies in the oil sands with current production, proven ability to construct and operate projects and strong

balance sheets. As a result, smaller land or technology based oil sands companies could find it difficult to attract or

raise capital to finance their pilot or commercial projects, or compete in a constrained labour environment. This

could lead to consolidation in this space.

The recovery in crude oil prices has also brought with it a renewed interest in the Canadian oil sands from

state, national and major international oil companies looking for access to oil reserves in countries with stable

political environments. With the majority of lands in the Canadian oil sands under lease and dominated by large

companies with little appetite for outside partners, these potential oil sands entrants may focus on junior or emerging

oil sands companies for partnership or acquisition opportunities. This could become a very important source of

capital to such companies.

The price discount of heavy crude oil compared to light crude oil has been at its lowest percentage levels in

recent history. This price discount has primarily been driven by the shortage of heavy crude oil in the United States,

declining imports from Mexico and Venezuela and lagging production from Canada, coupled with higher demand

for heavy crude oil from many US refineries which added conversion capacity in recent years and with the recent

opening of a pipeline connecting heavy crude oil production from Western Canada to refining complexes on the US

Gulf Coast. This narrow discount is anticipated to continue in the short to medium term.

Consequently, producers of heavy crude oil and oil sands are expected to experience stronger netbacks and

economics, which could lead to more heavy oil or oil sands projects. Conversely, narrow heavy crude oil discounts

are expected to negatively impact the profitability of refineries. Also, tighter refined product margins resulting from

a surplus of European and Asian gasoline production entering the US markets, a reduction in demand for gasoline as

consumers reduce travel and purchase more fuel efficient vehicles and as industry demand for diesel and jet fuel

remains soft as the economy slowly recovers, are expected to adversely impact the refining industry in North

America in 2010 and beyond.

number of large complex refineries in the US have been shut in and more refineries

could be shut in or be closed or mothballed in 2010. In order to weather this deterioration, refineries may be forced

to reduce or curtail production runs and focus efforts on specialty products and concentrate on customer servicing

and marketing efforts.

Technology advances and improvements in drilling practices have opened up unconventional oil and

natural gas opportunities, especially in the natural gas shale formations of North America. These shale plays offer

the prospect of natural gas wells with very high initial production levels, albeit with high initial capital costs and

decline rates, that offer strong economics at prices above the $6.00/Mcf range. Natural gas production from the shale

formations, plus the threat of liquefied natural gas imports from Europe and Asia, should limit the price of natural

gas in the short to medium term. Natural gas production from conventional activity is expected to decline as

- 12 -

producers switch their focus to shale plays, plus the impact of a mature conventional natural gas basin reflecting

high decline rates and high incremental costs of finding and development. Technological developments, including

multi-stage fracs, have also led to revisiting oil-bearing formations, including the Cardium in Alberta, the Viking

and Shaunavon in southwestern Saskatchewan and the Bakken in southeast Saskatchewan.

Consolidation and asset rationalization amongst senior producers in Canada may result in a large number of

good quality conventional oil and natural gas assets being available in the marketplace, accessible to those

companies with strong balance sheets or access to capital.

Finally, heightened environmental concern and activism continues, advocating that Canada's oil sands are a

significant contributor to global warming. The perceived failure of the 2009 Copenhagen Summit brings with it

uncertainty as to the direction of public policy regarding greenhouse gas emissions and environmental regulations.

While the Canadian and Alberta governments have their own framework for reducing emissions, it is anticipated

that Canadian regulations will mirror pronouncements, when issued, by the US.