Conventional Production

Connacher continues its development activity at its Battrum crude oil property in southwest Saskatchewan. Production from this region provides the company with a stable and growing source of cash flow to fund its activities.

Minor properties were sold in late 2006.

In 2006, Connacher acquired Luke Energy Ltd., which was largely a natural gas producer with good growth potential and properties physically proximate to Great Divide in northeast Alberta. Luke also operated most of its properties with largely 100 percent working interests. The properties acquired from Luke were primarily in the Marten Creek area of central northern Alberta and in the Three Hills area of Alberta.

The Luke transaction as a whole provided Connacher with a physical hedge against natural gas price escalation and volatility, not only for Great Divide SAGD production which will require natural gas as an input, but also for future developments in the oil sands, in addition to current cash flow and credit capacity.

Marten Creek, Alberta

• Natural gas production from this region
• Winter drilling region
• Extensive undeveloped acreage

Three Hills, Alberta

• Attractive oil properties
• Deeper gas potential

Three Hills Battery Renovation Completed

BOE disclaimer

Barrels of oil equivalent (boe) may be misleading, particularly if used in isolation. A boe conversion ratio of 6 mcf to 1 bbl is based on an energy equivalency conversion method primarily applicable at the burner tip and does not represent a value equivalency at the well head.