http://www.connacheroil.com/en/investor/cll-2011-01-05.pdf

PRESS RELEASE January 5, 2011

Connacher Provides Operational Update; Bitumen Production at Great Divide Averaged 14,750 bbl/d for the Last Week of December, 2010

Calgary, Alberta January 5 – Buoyed by continuing improvements in Great Divide Pod One production during the month of December 2010, Connacher Oil and Gas Limited (“Connacher” – CLL – TSX) achieved a seven day field-recorded rolling average production level of 14,750 bbl/d for the period ended December 31, 2010. This sets the stage at an excellent level at which to commence 2011. In addition, the company has commenced its Great Divide corehole drilling and 3D seismic program as well as a light oil horizontal multi-frac drilling program in central Alberta.

During the month of December 2010, bitumen production averaged approximately 14,300 bbl/d, including 7,800 bbl/d from Pod One, the highest monthly average at Pod One since December 2009, and 6,500 bbl/d from Algar. Algar continues to rampup favorably, having only been on-stream since August 2010. During the month of December 2010, the seven day rolling average bitumen production at Pod One ranged from 7,380 bbl/d to 8,070 bbl/d, the variance in production due primarily to minor plant upsets resulting from extremely cold winter conditions. During the month of December 2010, the seven day rolling average bitumen production at Algar ranged from 5,400 bbl/d to 7,400 bbl/d, the variance in production due primarily to plant downtime associated with maintenance to the glycol cooling system. On a combined basis, peak rolling seven day average bitumen production in the month of December was 15,130 bbl/d. Full year 2010 bitumen production was estimated to have averaged approximately 8,250 bbl/d, within two percent of the company’s full year guidance.

Readers are cautioned that these production volumes are field estimates and remain to be confirmed following normal head office review. Also, seven day rolling average periods are not necessarily indicative of longer term production capability and bitumen production levels during the rampup phase can be erratic.

Connacher is pleased with the improvement in the level and consistency of Pod One production, reflecting the benefit of stable power supplies, consistent steam generation and steam injection during the period since September 2010 when the Algar cogeneration plant was commissioned and placed into operation. Also, Connacher continues to be pleased with overall Great Divide production levels, which sets the stage for consistent sequential and year over year improvement in both operating and financial results, especially if crude oil prices persist at current levels, even with the strengthening in the Canadian dollar. Our systematic hedging program is also anticipated to provide significant protection against the downside risk of sharp declines in crude oil prices throughout 2011.

As previously announced, Connacher anticipates a more modest capital program of $104 million during 2011, which we anticipate will be funded from cash and internally generated cash flow. Growth expenditures include a first quarter 2011 60-70 well core hole drilling and 3D seismic program at Great Divide and Thornbury, which has commenced and is designed to add new resources, upgrade resources to reserves and assist in the selection, in 2012 and later, of the location of the next round of well pads for new production at Pod One and Algar. Also, the company has spudded the second well of a three well light oil horizontal multi-frac drilling program in central Alberta. The first well in this program has already been drilled and will be completed shortly. Results of this high netback opportunity will be announced once all three wells have been completed later in the first quarter of 2011. The balance of our 2011 capital outlays will be for maintenance capital primarily at Great Divide and to comply with regulatory or other requirements at our Montana refinery.