Exploration & Production | Oil Sands | Capital Markets | Capital Expenditure

Connacher Spending Remaining Year's Capital on Algar Project

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Connacher Oil and Gas Limited has provides an operational update for the second quarter 2014, a finalized 2014-2015 capital plan, AGM voting results and Q2 2014 conference call details.

Operational Update

Based on field estimates, Connacher's Great Divide production for Q2 2014 averaged 13,700 bbl/d. Production was two per cent higher than the prior quarter (Q1 2014 - 13,433 bbl/d).

Pads 101 and 102 at Pod One were taken offline on July 3rd for approximately one day to complete tie-ins for the 9 new infill wells. Steaming began on infills 101-F9 and 101-F10 on July 7th. These wells are expected to be on production by August. The remaining wells will be brought on sequentially in pairs and all of the new infill wells are expected to be on production in the fourth quarter.

During the second quarter we achieved the lowest diluent blend ratio ("DBR") in the history of Great Divide at 14.4%. The DBR averaged 20% for 2013 and 19% for the first quarter of 2014.

Capital Plan

Following closing of the first lien financing in May 2014 the Company has finalized its Capital Plan, excluding maintenance capital, at $113 million. This includes the previously announced initial 2014 capital expenditures of $50 million (nine new infill wells at Pod One). The remaining $63 million will be spent primarily on the commercialization of the SAGD+® process at Algar to be on stream in 2015 and the mini‐steam expansion project at Pod One, which is expected to be implemented in 2015. Funding for the Capital Plan will come from cashflow and proceeds from the first lien term loan facility.