Connacher Updates Operations, Completes Auction of Assets

Connacher Oil and Gas Limited announced today that bitumen production from its two steam-assisted gravity drainage ("SAGD") plants at its Great Divide operation in north-eastern Alberta averaged 14,610 bbl/d during the week ended December 10, 2010. These volumes were calculated on a rolling seven day average basis and were measured at Connacher's Pod One and Algar plants.

Production from Pod One was 7,760 bbl/d for the week, an increase of eight percent over levels last reported on October 26, 2010. Recent volumes are in line with December 2010 exit rate guidance of 7,500 bbl/d-8,000 bbl/d, as provided in the company's Third Quarter 2010 Management's Discussion and Analysis. Pod One production has been increasingly stable and reliable and has demonstrated steady growth for the past several months. While daily SAGD production volumes can be variable, Connacher's management remains optimistic that production from Pod One can achieve exit guidance levels. The calculated steam: oil ratio ("SOR") at Pod One was 3.52 for the current period.

Production at Algar was 6,854 bbl/d for the week, an increase of 14 percent over levels last reported on October 26, 2010. One additional well (202-1) was converted to full SAGD production during the period and continues to show improvement. The rampup at Algar has been outstanding for Connacher and the project has already achieved a calculated SOR of 3.55 during the reporting period, despite only having been in rampup mode since August 2010. While daily SAGD volumes can be erratic during the rampup phase, Connacher's management remains optimistic that Algar can achieve exit guidance levels of 7,000 bbl/d - 8,000 bbl/d for the month of December 2010 and that the total 2010 exit rate production from Pod One and Algar will range between 14,500 bbl/d - 16,000 bbl/d. Readers are cautioned that rolling seven day average production levels may not be indicative of anticipated long-term production levels. See Forward Looking Information.

Despite continuing industry challenges associated with service disruptions on the Enbridge pipeline system, Connacher has been able to successfully sell its growing diluted bitumen ("dilbit") volumes to a variety of buyers and markets, benefiting from the flexibility afforded to it by its ability to truck its production.

Connacher also announced today that it has completed a full and thorough auction of certain of its conventional producing properties at Battrum, Saskatchewan and at Marten Creek/Randall, Alberta. This process resulted in the receipt of numerous attractive bids and efforts are now underway to complete binding, Board-approved agreements, with a view to finalizing these dispositions, for cash, at the earliest possible date, possibly before year-end. Once binding agreements typical of transactions of this nature are completed, additional details related to the anticipated sales will be provided by the company. Upon closing, proceeds net of related expenses will be added to the company's treasury, thereby reducing the company's net debt. There can be no assurance that these transactions will be completed and on terms acceptable to Connacher.

Connacher Oil and Gas Limited is a Calgary-based crude oil, natural gas and bitumen producer. Its principal asset is its ownership and operatorship of its Great Divide/Algar SAGD operations in north-eastern Alberta. Connacher also owns conventional crude oil and natural gas properties in Alberta, a profitable heavy oil refinery in Great Falls, Montana and maintains a significant equity stake in Petrolifera Petroleum Limited.