CORPORATE PRESENTATION - Connacher Oil and Gas

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CORPORATE PRESENTATION - Connacher Oil and Gas

CORPORATE PRESENTATIONFebruary 2013


ConnacherFocus onOil SandsFill the PlantsEmphasis onLiquidityCashEBITDAValuableExecution leads tovalue recognition• Connacher is now a single-purposecompany, active in the development,production and sale of bitumen.CORPORATE PRESENTATION


The Great Divide Oil Sands Project• Two producing projects, Pod One and Algar, located80 km southwest of Fort McMurray• Fastest in industry from land acquisition to production– Innovative processes, such as water-handling,have become industry standard• Pod One and Algar provide significant growthpotential through field optimization– Well pad 104 (up to 10 well pairs)– Infill wells– SAGD+ TM• Great Divide Expansion Project - planned for 24,000bbl/d• Other Lands: Quigley and Thornbury– Additional exploration and delineation onCompany lands to identify new podsGreat Divide is one of only twelveproducing commercial in-situ projects inthe resource trendCORPORATE PRESENTATION


Oil Sands – Great Divide Geological Evolution2005 2012Maps show net SAGD pay >10mCORPORATE PRESENTATION


2012 Oil Sands Production14,00012,000Bitumen Production (bbls/day)Pod One and AlgarMaintenance10,0008,0006,0004,0002,0000Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov DecPod OneAlgarCORPORATE PRESENTATION


Pod One• Over 11 million bbls of bitumen produced and sold since December 2007 startup• 27,000 bbl/d steam generation capacityCORPORATE PRESENTATION


Algar• Over 5 million bbls of bitumen produced and sold since August 2010 startup• 30,000 bbl/d steam generation capacity• Designed to facilitate expansionCORPORATE PRESENTATION


Great Divide Expansion• Received ERCB approval for theexpansion September 2012• Reserves provide production capabilityof 24,000 bbl/d• Long life reserves• Reservoir characteristics similar to Algar• Incorporating knowledge and expertisefrom Pod One and AlgarCORPORATE PRESENTATION


Diluent Recovery Unit (Pod One)• A portion of thediluent will berecovered from thedilbit and recycled• May reduce diluentusage at Pod Oneby up to 50 percent• Heavier blend hasbroader marketappeal• DRU processeddilbit results inlower costs and ahigher netback• All majorequipment hasbeen purchasedCORPORATE PRESENTATION


Production Rate (bbls/day)Cum Production Volume (bbls)SAGD+ TM – Continued Success800700203-01 Production40000350006005004003002001000300002500020000150001000050000Bitumen Production Rate SAGD Decline Trend Incremental Production• Production improvement sustained over length of trial (various solvent blends and injection concentrationstested)• As of January 2013, about 24,000 bbls of incremental bitumen have been produced (based on flat productionprofile)• Connacher plans to submit a commercial SAGD+ TM regulatory application for Algar in Q1CORPORATE PRESENTATION


SAGD+ TM – Continued SuccessReduced SORPerformance Indicator• BGR (Bitumen Gain Ratio) is defined as the increase in bitumen production volume divided by thevolume of solvent stored in the reservoir over a period of time (daily, monthly, cumulative)• BGR is a more relevant measure of scheme performance than bitumen production and solventrecovery themselves (accounts for various rates of solvent injection)• Based on Connacher’s internal estimates, the Cumulative BGR is currently about 4.4• Historical solvent value is about twice the value of bitumen, which gives a BGR of 2.0 as a startingpoint for break even on an operating basisCORPORATE PRESENTATION


Rail TransportationConnacher pioneered dilbit by rail• Access to all major refiningmarkets• Connacher has contractedkey transloading capacity• Introduction of “Great DivideBlend” brand to refiningmarkets• Drives premium netback, aftertransportation• Reaches many markets withvariability in volume and termCORPORATE PRESENTATION


Dilbit by Rail80%Total Production Moved by Rail – 2012 & 2013 (E)70%60%50%40%30%20%10%0%Q1 Q2 Q3 Q4 2013 (E)CORPORATE PRESENTATION


Summary• Cash proceeds from the refinery and conventional sales improvedfinancial position• Focused on low risk development opportunities to increaseproduction• Demonstrated innovation delivering bitumen to market• Disciplined and cost conscious approach to operationsCORPORATE PRESENTATION


Connacher Oil and Gas LimitedSuite 900, 332 - 6 Avenue SWCalgary, Alberta, Canada T2P 0B2Telephone: (403) 538-6201Facsimile: (403) 538-6225Stock ExchangeTSX: CLLEmail: inquiries@connacheroil.comWebsite: www.connacheroil.comCORPORATE PRESENTATION


APPENDIXCORPORATE PRESENTATION


Reserve Base December 31, 2012 (5)ReservesVolume(Mmbbl)10% PV($mm) (4)Proved Bitumen Reserves (1P) (1) 214 $1,009Proved and Probable Bitumen Reserves (2P) (2) 451 $1,758Total Proved, Probable and Possible Reserves (3P) (3) 569 $2,444• The Government gave final approval for the Great Divide Expansion Project in 2012 whichresulted in a 22% increase in proven reserves, from 175 to 214 million barrels• 2P reserves support >40,000 bbl/d production target1) Proved reserves are those reserves that can be estimated with a high degree of certainty to be recoverable. It is likely that the actual remaining quantities recovered will exceed the estimated provedreserves.2) Probable reserves are those additional reserves that are less certain to be recovered than proved reserves. It is equally likely that the actual remaining quantities recovered will be greater or less than thesum of the estimated proved plus probable reserves.3) Possible reserves are those additional reserves that are less certain to be recovered than probable reserves. It is unlikely that the actual remaining quantities recovered will exceed the sum of theestimated proved plus probable plus possible reserves. There is a 10% probability that the quantities actually recovered will equal or exceed the sum of the proved plus probable plus possible reserves.4) 10% Present Value of future net revenue, calculated after deduction of forecast royalties, operating expenses, capital expenditures and well abandonment costs but before corporate overhead or otherindirect costs, including interest and income taxes using GLJ Jan 1, 2013 price forecast. Future Net Revenue does not necessarily represent fair market value.5) Per GLJ Petroleum Consultants Ltd. as at Dec 31, 2012. Refers to gross reserves..CORPORATE PRESENTATION


Infill wells•The un-steamed areabetween pairs is heatedover time by conductionSteamChamber•A new producer well isdrilled in between existingpairs at the base of thereservoir•The heated area“Toblerone Bar” is drainedwith cyclic steam typeprocess•Peak production expectedto be about half of typicalSAGD pairCORPORATE PRESENTATION


Benefits of SAGD+ TMSAGD+ TMSAGD• Accelerated production• Improved recovery and SOR• Decreased initial (Greenfield) and sustaining capital• Lower non-fuel operating costs• Reduced emission intensityCORPORATE PRESENTATION


SAGD Production PhasesCap RockOil SandsCirculationHigh Pressure~90 daysSteam LiftPeak SAGD ProductionHigh Pressure~12 to 18 monthsGas LiftLow Pressure SAGD ProductionLow Pressure~4 to 6 yearsPumpsInfill WellsCORPORATE PRESENTATION


2013 Revenue Hedge Positions(1)PeriodNotional Volume Min WTI (US$) Max WTI (US$)(bbls/day)Q1 6,000 85.45 104.23Q2 6,000 87.06 103.83Q3 5,550 90.06 103.85Q4 4,550 91.18 103.76• Additional purchaser (bank) option on 500 bbls/day @ $97.40 for Q3 2013 - Q2 2014 and 2,975bbls/day for Cal 14 @ $97.421) As at January 30, 2013CORPORATE PRESENTATION

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