CALGARY, Aug. 2, 2011 /CNW/ - Connacher Oil and Gas Limited (CLL - TSX) announced today it has engaged Rothschild as its exclusive financial advisor solely for the purpose of assisting the company in establishing a joint venture with a third party to develop its non-producing Great Divide oil sands assets.

The initial focus of the joint venture will be to advance the proposed development of an additional 24,000 bbl/d of bitumen productive capacity at Connacher's Algar steam-assisted gravity drainage ("SAGD") project on the company's Great Divide oil sands acreage in northeastern Alberta. Connacher submitted an application to regulators for approval of an Environmental Impact Assessment and the Great Divide Expansion Project at Algar in May, 2010 and anticipates approval in late 2011. This would increase the authorized production at Great Divide from 20,000 bbl/d at present to 44,000 bbl/d.

The establishment of a joint venture will enable this project to be brought forward in a timely manner, permitting more immediate access to the long life production (over 25 years) of the already identified and evaluated approximately 320 million barrels of probable bitumen reserves owned by Connacher, which volumes supported the aforementioned expansion application. These probable reserves are in addition to Connacher's approximate 180 million barrels of proved ("1P") reserves already associated with its existing Pod One and Algar projects. These reserve estimates were prepared by GLJ Petroleum Limited, independent petroleum consultants, in their February 2011 report, effective December 31, 2010.

Timely and successful negotiation of a joint venture could facilitate ordering of long lead items such as boilers and evaporators by year end 2011. This, in turn, could enable the start-up of construction during the latter part of 2012, with first bitumen production by the end of 2013, assuming the initial expansion is comprised of two sequential 12,000 bbl/d projects as opposed to one 24,000 bbl/d project. It will be recalled that to plan for continued expansion at Algar, Connacher prepared the project site for brownfield expansion, which is anticipated to result in a lower prospective cost structure as a consequence. Connacher anticipates detailed costing of its expansion alternatives will be completed at approximately the same time as it receives regulatory approval and near the latter stages of completing negotiations for the proposed joint venture.

The joint venture will represent a unique opportunity for interested parties to align themselves with an established operator in the near-term development and production of meaningful volumes of bitumen from the oil sands, as to date most joint ventures in the SAGD space have focused on higher risk, longer-term resources opportunities. Connacher will continue to be the operator of the Great Divide leases and prospectively anticipates retaining a majority interest in the lands and reserves. It is also anticipated that, as estimated by GLJ, timely and sequential development of additional productive potential already identified on the Great Divide lease block will allow for total production potential from the block to exceed 54,000 bbl/d from proved, probable and possible ("3P") reserves (aggregating 604 million bbl, of which 104 million bbl are possible reserves), with additional upside separately recognized for best estimate contingent resources.

Rothschild is a worldwide financial advisory firm with a 200 year history. With 1,000 bankers based in 40 countries, the firm's scale, global reach and local knowledge enable it to develop relationships and deliver effective solutions to support clients worldwide. Rothschild recently opened its Calgary office in recognition of, among other things, the increasingly important role the oil sands will play in future energy developments, not only in Canada but on a worldwide basis.

Connacher is a Calgary-based producer and developer of heavy gravity and light gravity crude oil reserve and resource deposits in Alberta's oil sands and in central Alberta, respectively, using modern technology, including horizontal drilling and SAGD in situ recovery techniques in the oil sands and horizontal drilling and multi-frac technology in its pursuit of light gravity crude oil resource opportunities in central Alberta. Connacher also owns and operates a profitable 9,500 bbl/d heavy oil refinery in Great Falls, Montana. Connacher common shares and convertible debentures are listed for trading on the Toronto Stock Exchange.

http://www.theglobeandmail.com/globe-investor/news-sources/?date=+20110802&archive=cnw&slug=C8914

Cheers; Scott