1-Year Target: $1.75

Connacher reported Q1/10 CFPS of $0.01, vs. our estimate of $0.04.

Cash flow came in below our estimate due to lower more negative than expected
downstream margins, as well as slower than expected improvements in Pod One
production and operating costs.

The company has completed its 10 Mbbl/d Algar project on time and under budget.
The successful completion of a second SAGD project is an impressive and
differentiating factor.

COO Peter Samtez has been appointed President of the company. Mr. Sametz
assumes the role from Richard Gusella, who will continue as Chairman and CEO
until his planned retirement in May 2014, at which point we expect Mr. Sametz
to assume the CEO role as well. Given Connacher’s strong operational track
record under Mr. Sametz, we view this as a positive development.

We continue to rate Connacher 2-Sector Perform.