Posted today on Connacher's website:

http://www.connacheroil.com/en/investor/cll-2011-11-07.pdf

Looks like these blocks are the next to get sold.

Very good news release. Heavy insider buying as of late, could this be why:

23% increase in one month from this technology. I think the market will see this as a huge positive, if the technology could bring these projects closer to design capacity.

Connacher Announces Breakthrough Results From its SAGD+(TM) Field Trial at Algar

CALGARY, Oct. 20, 2011 /CNW/ - Connacher Oil and Gas Limited (CLL - TSX) today announced breakthrough results from its SAGD+(TM) "steam with solvent" field trial on two of its wells located on Pad 203 at its Algar steam-assisted gravity drainage ("SAGD") project, the second stage of the company's Great Divide oil sands operations in northeastern Alberta.

Data recently submitted to the Energy Resources Conservation Board ("ERCB") registry, which will shortly be available in the public domain, demonstrated that, compared to an April 2011 baseline, daily average per well bitumen production volumes during the months of August 2011 and September 2011 increased 23 percent. This was also accompanied by an average SOR decrease of 15 percent. Testing has occurred over a twelve week period and results surpassed our original expectations.

Volumetric concentrations of solvent injection were generally in the ten percent range and, as part of the field trial, have been increased to 15 percent during the month of October 2011. The impact of this change is anticipated to result in further productivity improvements.

Of considerable additional importance is that reservoir retention of the injected solvent has decreased to less than 15 percent, or conversely solvent recovery has reached 85 percent or better, well above levels considered necessary for economic application, having regard to the relative value of bitumen and solvent. Connacher believes this is the first time this has been achieved at field level.

The baseline wells were chosen because they had achieved a very stable level of production since being placed onstream in 2010, when Algar commenced production. The SOR decrease was also limited by the necessity to manipulate steam injection rates to maintain normal operating pressure during the continuing high pressure steam injection phase at Algar, which will be modified at a later date as the company transitions its Algar operation to low pressure SAGD.

These results will continue to be accumulated and in the near future, as data is assimilated and assessed, the trial may be expanded to include additional wells on Pad 203. In addition to the obvious benefit of higher per well productivity, which can serve to enhance the present worth of long life reserves, Connacher also anticipates that over time the application of SAGD+(TM) can also contribute to improved recovery factors, the extent of which remains to be determined.

While solvent recoveries and related production impacts have considerably exceeded expectations, facility modifications would have to be implemented to fully capture and recycle the recovered solvent. Decisions to expand the pilot and to subsequently modify facilities will await a full cycle economic assessment of the project. Prudence in the context of current economic and capital market uncertainty also suggests constrained new investment activity in the short term, until there is evidence of increased clarity on prospective crude oil, solvent and bitumen pricing and the outcome of other business initiatives presently underway which, upon completion, would continue to advance Connacher's overall liquidity initiatives.

Connacher Oil and Gas Limited is a Calgary-based energy company. Its primary asset is its 100 percent ownership of bitumen reserves and production from two SAGD plants, Pod One and Algar, at its Great Divide oil sands lease block in northeastern Alberta. Connacher also owns conventional reserves and production in central Alberta and owns and operates a profitable 9,500 bbl/d heavy crude oil refinery in Great Falls, Montana.

Forward Looking Information

This press release contains forward looking information including, but not limited to, the anticipated impact of changes in volumetric concentrations of solvent injection on future productivity, possible expansion of the application of SAGD+(TM) on additional wells, the potential impact of SAGD+(TM) on recovery factors and the implementation of future facility modifications to fully capture and recycle recovered solvent. Forward looking information is based on management's expectations regarding future growth, results of operations, production, future commodity prices and foreign exchange rates, future capital and other expenditures (including the amount, nature and sources of funding thereof), plans for and results of drilling activity, environmental matters, business prospects and opportunities and future economic conditions. Forward looking information involves significant known and unknown risks and uncertainties, which could cause actual results to differ materially from those anticipated. These risks include, but are not limited, to operational risks in development, exploration, production and start‐up activities; delays or changes in plans with respect to exploration or development projects or capital expenditures; the uncertainty of reserve and resource estimates; the uncertainty of estimates and projections relating 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 impact of general economic conditions; sales volumes and risks and uncertainties associated with securing and maintaining the necessary regulatory approvals and financing to proceed with the continued expansion of the Great Divide oil sands project. Moreover, reported average production levels may not be reflective of sustainable production rates and future production rates may differ materially from the production rates reflected in this press release due to, among other factors, difficulties or interruptions encountered during the production of bitumen or other hydrocarbons. Additional risks and uncertainties are described in further detail in Connacher's Annual Information Form ("AIF") for the year ended December 31, 2010 which is available at www.sedar.com. Although Connacher believes that the expectations in such forward looking information are reasonable, there can be no assurance that such expectations shall prove to be correct. The forward looking information included in this press release is expressly qualified in its entirety by this cautionary statement. The forward looking information included in this press release is made as of October 20, 2011 and Connacher assumes no obligation to update or revise any forward looking information to reflect new events or circumstances, except as required by law.

For further information:

Richard A. Gusella
Chairman and Chief Executive Officer

OR

Peter D. Sametz
President and Chief Operating Officer

OR

Grant D. Ukrainetz
Vice President, Corporate Development

Phone: (403) 538-6201
inquiries@connacheroil.com
Fax: (403) 538-6225
Website: connacheroil.com

I think he would much rather support XL because the US is a long-term stable economic partner. If Enbridge really believes it can maintain a tariff that wont squeeze the industry and still make it profitable to ship to Asia then I would love to see them build it. In addition, it would be nice if the pipe was in the ground at the moment to take advantage of the diffs, but that environment has never lasted long historically. The Brent- WTI spread is just high currently because of middle east instability, and has been volatile like this since 2004. One could argue that because of rapid change coming to the middle east, we might even see a resurgence on the production side from countries. This is already happening in Iraq, and once things settle in Libya, the diff will narrow again (Libya supplies most of its oil to Europe).

Speaking about pacific oil economics, take Alaska North Slope (ANS) for example. It has only ever really been shipped to California and the lower 48 because the pricing environment has never really been stable enough to warrant it being shipped in large quantities to Asia. Now that ANS has sharply declined, it is not even seen as a factor in supply. It really raises the question of whether or not oil from Canada will reach Asia in the near future.

If XL goes through, it would probably be years before a West Coast line is even considered again. And I can assure you Harper wont be in office.

What do you guys think?

I just wanted to throw in my 2 cents about the issues of pipelines since I work for a major midstream company in the patch. Firstly, Keystone will get approved, its just a matter of time. The reason being as mentioned earlier, the US doesnt have a viable option at this point and has to make a decision that will secure its energy source (middleast reserves are highly inflated). In addition to this point, Enbridges "Northern Gateway" pipeline will probably not be built, as Keystone XL is already years ahead of it in its planning. Also, the US government would never stomach the fact that Canada would open up its market significantly to China. As for being worried about diluent supply, Enbridge has already put into service its "southern lights" line, which returns diluent supply back to Alberta from refineries in the US.

As with any area of increased production, transport capacity always follows suite. The greatest worry concerning Connacher in my opinion, is that its production profile doesn't shape up to what its promised to be. Even though they refinanced their bonds, they still run a significant risk of default if they cant deliver on their production. Another concern I have about the company is they place so much emphasis on their reserves as a value adding property. Investors however do not price these reserves into the shares because we have seen in the past that these SAGD projects are extremely capital intensive, and provide marginal returns unless the pricing environment remains good in the long run. In that sense, conventional reserves are far more valuable than those of connachers.

Although I rarely post, I often read most posts. I guess in that sense I am a "lurker". I have taken a step back from the markets lately as I am fully funding my post secondary degree, and cash is scarce when you are a student. I just wanted the members to know I fully appreciate reading every post, and hope to contribute more in the future when I begin my full time job and have more time and money.

Cheers,

-Brent

Thanks for the reply Cornergas. I dont think that a take-over is necessarily what ONGC is looking for, but perhaps an investment (Joint Venture). Given that Connacher owns a refinery and Luke, Im pretty sure that a take over is very unlikely. I highly doubt that an Indian company would get involved in the refining side of things given the current economic environment. Despite this however (and given that very few companies are similar to "10,000 bbls/day of heavy oil production"), I believe that the increase in SP was due to speculating Connacher is involved. It will be interesting to see what happens next week regarding the SP, and perhaps a formal press release regarding the matter.