CONNACHER OIL AND GAS LIMITED REACHES AGREEMENT TO SELL BATTRUM PROPERTIES

CALGARY, Dec. 29 /CNW/ - Connacher Oil and Gas Limited ("Connacher" - CLL - TSX) announced today that it has executed a definitive Purchase and Sale Agreement with Hyak Energy ULC ('Hyak" or the "Purchaser") , an affiliate of Accelerated Oil Technologies LLC, a private company, whereby Connacher will sell its Battrum properties in southwest Saskatchewan to the Purchaser for an aggregate purchase price of $57.5 million, subject to normal closing adjustments and conditions. The transaction has an effective date of January 1, 2011 and it is anticipated it will close on or about February 15, 2011.

At an approximate current production level from Battrum of 700 bbl/d of medium gravity crude oil, the transaction metrics were approximately $82,000 per flowing barrel of production and based on a mid-year 2010 evaluation completed by GLJ Petroleum Consultants Ltd. for Connacher, before adjustments for production since July 1, 2010, the consideration paid per proved and probable ("2P") barrel of reserves was approximately $25.00 per barrel.

Proceeds will be added to Connacher's cash balances to reduce net debt.

Sayer Energy Advisors of Calgary, Alberta was Connacher's sole advisor in the sales process. RBC Capital Markets acted as financial advisor to Accelerated Oil Technologies LLC.

Connacher Oil and Gas Limited is a Calgary-based crude oil, natural gas and bitumen production, exploration and development company. Its primary asset is its Great Divide Project in Alberta's oil sands. Conventional properties are still held in Alberta at Marten Creek, Latornell, Three Hills and Gilby. Connacher also owns a 9,500 bbl/d heavy oil refinery in Great Falls, Montana and retains an approximate 19 percent interest in Petrolifera Petroleum Limited.

Accelerated Oil Technologies LLC is a private company focused on enhancing the production of mature oil fields in North America.

Forward-Looking Information

This press release contains forward-looking information including but not limited to the planned completion of the sale of the Battrum properties and the proposed use of proceeds in connection therewith. Forward-looking information is based on management's expectations regarding results of operations, production, future commodity prices and foreign exchange rates, future capital and other expenditures (including the amount, nature and sources of funding thereof), environmental matters, business prospects and opportunities and future economic conditions. Forward-looking information involves significant known and unknown risks and uncertainties, which could cause actual results to differ materially from those anticipated. These risks include, but are not limited to: the risks associated with the oil and gas industry (e.g., operational risks in development, exploration and production; timing difficulties or delays and additional costs relating to the production ramp up of Pod One and Algar; the uncertainty of estimates and projections relating to production, costs and expenses, and health, safety and environmental risks), the risk of commodity price and foreign exchange rate fluctuations and risks associated with the impact of general economic conditions. In addition, the completion of the sale of the Battrum properties is subject to the satisfaction of certain conditions, customary for transactions of this nature. There is, however, a risk that the purchase and sale may not be completed as contemplated. Additional risks and uncertainties affecting Connacher and its business and affairs are described in further detail in Connacher's Annual Information Form for the year ended December 31, 2009, which is available at www.sedar.com.

Although Connacher believes that the expectations in such forward-looking information are reasonable, there can be no assurance that such expectations shall prove to be correct. The forward-looking information included in this press release are expressly qualified in their entirety by this cautionary statement, The forward-looking information included in this press release is made as of the date hereof and Connacher assumes no obligation to update or revise any forward-looking information to reflect new events or circumstances, except as required by law.