Connacher, Petrolifera Finalize Deal for Block 106 in Peru

Connacher Oil and Gas, as guarantor and Petrolifera Petroleum Limited, through its wholly-owned subsidiary, Petrolifera Petroleum Del Peru S.A.C., confirmed the signing of a License Contract with Perupetro for the exploration and exploitation of hydrocarbons on Block 106 in the Maranon Basin onshore northern Peru. The signing occurred at a ceremony in Lima, Peru on July 12, 2005, with Minister of Energy and Mines Sanchez and senior executives of Perupetro.

As previously advised, the License covers approximately two million acres and has a primary term of seven years with an agreed minimum work program of US $25.6 million, including the drilling of one well in each of year four and year seven. The License is held 100 percent by Petrolifera, the operator. Connacher retains a 10 percent carried working interest through the drilling of the first well in exchange for its guarantee. The carried working interest is exchangeable into a two percent gross overriding royalty in certain circumstances, and Petrolifera has a right of first purchase of Connacher's interest in the License.

Connacher is a public Canadian company listed on the Toronto Stock Exchange under the symbol CLL. Its principal asset is a 100 percent interest in 64,640 acres at its Great Divide project in the Alberta oil sands. Connacher also owns 40 percent of and provides management services to Petrolifera. Petrolifera is a private company with interests in the Neuquen Basin, Argentina and in Peru.