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Press release from CNW Group

CONNACHER OIL AND GAS LIMITED ANNOUNCES PRICING OF US$550 MILLION AND CDN$350 MILLION SECOND LIEN SENIOR SECURED NOTES

Friday, May 20, 2011

CONNACHER OIL AND GAS LIMITED ANNOUNCES PRICING OF US$550 MILLION AND CDN$350 MILLION SECOND LIEN SENIOR SECURED NOTES18:43 EDT Friday, May 20, 2011/NOT FOR DISTRIBUTION TO UNITED STATES NEWSWIRE SERVICES OR FOR DISSEMINATION IN THE UNITED STATES/CALGARY, May 20, 2011 /CNW/ - Connacher Oil and Gas Limited (CLL - TSX) announced today it has entered into a definitive agreement to issue and sell US$550 million face value of 8.5% Second Lien Senior Secured Notes due August 1, 2019 ("US Dollar Notes") at par and CDN$350 million face value of 8.75% Second Lien Senior Secured Notes due August 1, 2018 ("CDN Dollar Notes" and, together with the US Dollar Notes, are referred to as the "Notes") at par, resulting in a yield to maturity of 8.5% for the US Dollar Notes and 8.75% for the CDN Dollar Notes. The Notes have been resold through a syndicate of investment banks to certain institutional investors pursuant to applicable securities law exemptions. The completion of this offering is anticipated to occur on May 31, 2011 and is subject to  customary closing conditions.Using the May 19, 2011 Bank of Canada noon exchange rate of C$1.00 = US$1.03, the net proceeds to Connacher from the sale of the Notes (after deducting the estimated costs of the transaction) will be approximately C$864.1 million.  The net proceeds of the offering are expected to be used to purchase the company's presently outstanding First Lien and Second Lien Senior Secured Notes ("Old Notes") tendered pursuant to cash tender offers ("Tenders") initiated on May 10, 2011 and for general corporate purposes. To date, in excess of 50 percent of each series of Old Notes have been tendered to the Tenders.As previously announced, Connacher intends to amend its existing revolving credit facility, increasing its size to CDN$100 million, from US$50 million and extending its maturity to May 31, 2014.  The amended facility is anticipated to be syndicated to a number of financial institutions and completed concurrently with the closing of the Note offering.These transactions are intended to strengthen Connacher's balance sheet, improve its overall financial strength and further enhance the company's liquidity.Connacher Oil and Gas Limited is a Calgary-based company whose primary assets are two steam assisted gravity drainage ("SAGD") bitumen production projects, Pod One and Algar, which are part of the company's  Great Divide project in Alberta's oil sands area.  Recent bitumen production has been approximately 14,000 bbl/d from these projects. Further expansion of Connacher's bitumen production is contemplated from continued ramp up at Algar, as well as optimization programs and innovative recovery methods at both projects.  Connacher also holds extensive undeveloped bitumen reserves and resources and owns conventional crude oil and natural gas production, reserves and undeveloped acreage in Alberta.  A wholly-owned subsidiary operates a 9,500 bbl/d heavy crude oil refinery in Great Falls, Montana, U. S. A.This press release is not an offer of the Notes in the United States.  The Notes have not and will not be registered under the U. S. Securities Act of 1933, as amended (the "US Securities Act").  The Notes may not be offered or sold, except to qualified institutional buyers in reliance on the exemption from registration provided by Rule 144A under the US Securities Act, or to persons outside the United States in compliance with Regulation S and applicable Canadian exemptions.  Any public offering of securities made in the United States would be made by means of a prospectus that would be obtainable from Connacher and that would contain detailed information about Connacher, its management and financial statements.Forward-Looking InformationThis press release contains certain "forward-looking information" within the meaning of applicable securities law including statements regarding Connacher's proposed offering of Notes and use of proceeds in connection therewith, the amendment of Connacher's revolving credit facility (the "Amendment"), the proposed closing date of the Offering and the Amendment and the anticipated impact of Connacher's refinancing activities on its financial position and liquidity.  Forward-looking information is frequently characterized by words such as "plan", "expect", "project", "intend", "believe", "anticipate", "estimate", "may", "will", "would", "potential", "proposed" and other similar words, or statements that certain events or conditions "may" or "will" occur. These statements are only predictions. Forward-looking information is based on the opinions and estimates of management at the date the information is provided, and is subject to a variety of risks and uncertainties and other factors that could cause actual events or results to differ materially from those projected in the forward-looking information. These factors include the inherent risks involved in the exploration and development of oil sands properties, difficulties or delays in start-up operations, the uncertainties involved in interpreting drilling results and other geological data, fluctuating oil prices, the possibility of unanticipated costs and expenses, uncertainties relating to the availability and costs of financing needed in the future and other factors including unforeseen delays.  The ability of the company to complete the proposed offering of Notes is subject to the completion of definitive documentation and the satisfaction of certain conditions to closing. For a description of the risks and uncertainties facing Connacher and its business and affairs, readers should refer to Connacher's Annual Information Form for the year ended December 31, 2010. Connacher undertakes no obligation to update forward-looking statements if circumstances or management's estimates or opinions should change, unless required by law. The reader is cautioned not to place undue reliance on forward looking statements.For further information: R. 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 Fax : (403) 538-6225 Inquiries@connacheroil.com