CALGARY, Feb. 13, 2013 /CNW/ - Connacher Oil and Gas Limited (CLL - TSX) reported today that as of December 31, 2012 its estimated proved ("1P") bitumen reserves, as evaluated by GLJ Petroleum Consultants Ltd. ("GLJ"), independent qualified reserves evaluators, totaled approximately 214 million barrels. 1P bitumen reserve volumes have increased by 22 per cent, over year-end 2011 volumes, after production of 4.3 million barrels during the year, due largely to the approval of the Great Divide Expansion Project. The ten per cent present value ("10% PV") of 1P bitumen reserves is approximately $1.0 billion.

Proved and probable ("2P") reserve volumes totaled approximately 451 million barrels of bitumen. 2P bitumen reserve volumes decreased by approximately 10 per cent, due primarily to the implementation of an updated GLJ recovery model for estimating future recoverable volumes and pad performance. The ten per cent present value of 2P bitumen reserves decreased to approximately $1.8 billion, due primarily to increased estimated future capital costs, adjusted near-term production forecasts and lower future commodity prices, as estimated by GLJ.

Detailed information included in the GLJ December 31, 2012 report ("Year-End 2012 Report") regarding Connacher's bitumen reserves and resources and associated present values are set forth in the tables below, including a comparison of year-end 2012 results to year-end 2011 results. The Company disposed of all of its conventional oil and natural gas reserves during 2012.

The Year-End 2012 Report was prepared using assumptions and methodology guidelines outlined in the Canadian Oil and Gas Evaluation Handbook ("COGE Handbook") and in accordance with National Instrument 51-101 ("NI 51-101"). Comparisons provided herein with respect to Connacher's bitumen reserves, bitumen resources and for 10% PV for December 31, 2012 are to estimates contained in the report, prepared by GLJ, with an effective date of December 31, 2011 ("Year-End 2011 Report").

Connacher owns a 100 percent working interest in approximately 87,000 net acres of oil sands leases, primarily located at its Great Divide project in Northeastern Alberta, situated 80 kilometers southwest of Fort McMurray. Numerous oil accumulations in the McMurray formation have been identified for continuing and future development on Connacher's properties.

Connacher's first steam-assisted gravity drainage ("SAGD") project at Great Divide, Pod One, has been producing bitumen since late 2007, with commercial production commencing March 1, 2008. Algar commenced producing bitumen in August 2010 and commerciality was achieved October 1, 2010. Production from both projects since startup through December 31, 2012 has totaled approximately 17 million barrels of bitumen. Such amounts have been deducted from earlier estimates of proved reserves prior to the calculation of reserves as at December 31, 2012.

Unless otherwise stated, reserves refer to reserves of bitumen. Resources refers to bitumen resources. Future net revenue is calculated after the deduction of forecast royalties, operating expenses, estimated future capital expenditures and well abandonment costs, but before corporate overhead or other indirect costs, including interest and income taxes, from forecast revenue. The 10 percent pre-tax present value of future net revenue is also referred to as "present value" or "PV". Certain amounts cited herein have been rounded for presentation purposes. Outstanding financial hedges were not included in the evaluation. The GLJ Year-End 2012 Report was prepared utilizing the GLJ January 1, 2013 price forecast, effective December 31, 2012. Readers are referred to the notes to the Summary Tables included in this press release for details regarding the price forecast used by GLJ. Earlier reports were prepared using the price forecasts then being applied by GLJ. Future net revenues disclosed herein do not represent fair market value. Also, estimations of reserves, resources and future net revenue discussed in this press release constitute forward looking information. See "Forward Looking Information and Reserves Advisory" below.

Additional details regarding Connacher's projects and development opportunities at Great Divide can be accessed at www.connacheroil.com or www.sedar.com. Furthermore, additional information regarding Connacher's reserves and resources, including the Company's interest in the resources and the risks and the level of uncertainty associated with the recovery of the resources, can be found in the Company's annual information form ("AIF") dated March 16, 2012. This AIF can be accessed at www.sedar.com. The Company will be filing an updated AIF later this year and prior to March 31, 2013, once it has completed the audit of its financial and operating results for the year-ended December 31, 2012 and has released them to the public. This is anticipated to occur on March 27, 2013.

About Connacher

Connacher Oil and Gas Limited is a single purpose company active in the development, production and sale of bitumen. The Company's principal assets are holdings in the Great Divide oil sands project in northern Alberta, south of Fort McMurray.

Summary Tables

Amounts presented are working interest volumes which are the Company's working interest (operating or non-operating) share before deducting royalties and without including any royalty interests of the Company.

Notes:

US$/CDN$ exchange rates were .98 in the Year End 2011 Report and 1.0 in the Year End 2012 Report.

Forward Looking Information and Reserves Advisory

This press release contains forward looking information, including but not limited to estimated reserves and resources and future net revenues associated therewith and the proposed timing of the release of the Company's Annual Information Form for the year ended December 31, 2012. The forward looking information is based on current expectations that involve a number of risks and uncertainties, which could cause actual results to differ materially from those anticipated. These risks include, but are not limited to risks associated with the oil and gas industry (e.g. operational risks in development, exploration and production delays or changes in plans with respect to exploration or development projects or capital expenditures; the uncertainty of reserve and resource estimates; the uncertainty associated with geological interpretations; the uncertainty of estimates and projections in relation to production, costs and expenses and health, safety and environmental risks), the risk of commodity price and foreign exchange rate fluctuations, risks associated with the implementation of new technology, risks associated with obtaining, maintaining and the timing of receipt of regulatory approvals, permits, and licenses, uncertainties relating to access to capital markets and the risk of volatile global economic conditions. Additional risks and uncertainties are described in the Company's Annual Information Form which is filed on SEDAR at www.sedar.com.

This press release includes information pertaining to the reserves, resources and the value of future net revenue of the Corporation as at December 31, 2012 and December 31, 2011 as evaluated by GLJ in its reports dated February 6, 2013 and February 16, 2012, respectively (together the "GLJ Reports"). Statements relating to reserves and resources are deemed to be forward looking information, as they involve the implied assessment, based on certain estimates and assumptions, that the reserves and resources described exist in the quantities predicted or estimated, and can be profitably produced in the future. The GLJ Reports are based on a number of assumptions relating to factors such as initial production rates, production decline rates, ultimate recovery of reserves, timing and amount of capital expenditures, marketability of production, future prices of bitumen, crude oil, natural gas liquids and natural gas, operating costs, anticipated reductions in SORs and operating costs as a result of installation of pumps in certain wells to improve productivity, well abandonment and salvage values, royalties and other government levies that may be imposed during the producing life of the reserves. Moreover, there is no assurance that the forecast price and cost assumptions contained in the GLJ Reports will be attained and variances could be material. The reserves and resources estimates of Connacher's properties described herein are estimates only. The actual reserves and resources on Connacher's properties may be greater or less than those calculated. The present value of estimated future net revenues referred to herein should not be construed as the fair market value of estimated bitumen, crude oil, natural gas and natural gas liquids reserves attributable to Connacher's properties.

Contingent resources disclosed herein were assigned in regions with lower core-hole drilling density than the reserve regions and a portion of the contingent resources are located outside Connacher's current areas of approval for development. These resource estimates are not classified as reserves at this time, pending further reservoir delineation, project application, facility and reservoir design work, preparation of firm development plans and company approvals. Contingent resources are considered sub-commercial and the chance of commerciality is equal to the chance of development. Conversely, the chance of commerciality for reserves is effectively 100 per cent. Adjustments for commercial risks were not incorporated in the estimates of contingent resources set forth herein. A range of Contingent Resource estimates (Low, Best and High) were prepared to reflect a range of technical uncertainty. Low Estimate Contingent Resources were assigned to mapped regions of oil - in- place of identified pods with lower core-hole drilling density than the reserve regions and with at least 12 m of continuous bitumen pay along with a conservative estimate of recovery factor. Best Estimate Contingent Resources were assigned to mapped regions of oil-in-place of identified pods with lower core-hole drilling density than the reserve regions and with at least 10 m of continuous bitumen pay along with a best estimate of recovery factor. High Estimate Contingent Resources were assigned to mapped regions of oil-in-place of identified pods with lower core-hole drilling density than the reserve regions and with at least 9 m of continuous bitumen pay along with a more optimistic estimate of recovery factor. There is no certainty that it will be commercially viable to produce any portion of the Contingent Resources.

Due to the risks, uncertainties and assumptions inherent in forward looking information, prospective investors in the Company's securities should not place undue reliance on forward looking information. Forward looking information contained in this press release is made as of the date hereof and are subject to change. The Company assumes no obligation to revise or update forward looking information to reflect new circumstances, except as required by law.

SOURCE: Connacher Oil and Gas Limited