TMX group

CALGARY, Dec. 21 /CNW/ - Connacher Oil and Gas Limited (CLL - TSX)
announced today that is has received its OSE Order No. 050027 from Alberta
Environment which will allow it to commence and proceed with its 2005/2006
core hole drilling program on its 107-section Great Divide oil sands property
in northeastern Alberta. Core hole licensing procedures are underway and the
initial core holes will be drilled on and around Connacher's Pod One
accumulation, development of which to produce up to 10,000 bbl/d of bitumen is
awaiting EUB and Alberta Environment approval following submission of an
application last August 2005.
The initial locations are easily accessible from Highway 68, which
bisects Connacher's property. They are designed to determine if, as
anticipated, the areal extent of and reserve base of Pod One can be expanded.
They result from the interpretation of a 3D seismic program shot over Pod One
in the spring of this year and from continuing geological evaluation.
Upon completion of the Pod One core holes, the rig will be moved to the
extreme southeastern portion of the lease block to commence detailed
evaluation of and anticipated confirmation of the presence of additional pods
or accumulations which are indicated to possibly be present by the results of
previously-drilled conventional well bores which contained significant    
bitumen-bearing McMurray Sands.
Subject to weather conditions and the procurement of an additional rig
later in the drilling season, it is anticipated up to 75 core holes will be
drilled by Connacher during this winter's program. As 3D seismic programs
yielded excellent results last season, Connacher anticipates three separate
programs will be shot over three indicated accumulations during the first
quarter of 2006. If Connacher is successful in establishing adequate
additional reserves within any of these prospective accumulations, it
anticipates securing an updated reserve report by mid-summer 2006 and, if
warranted, submitting shortly thereafter an application (or applications) to
the regulatory authorities to develop an additional 10,000 bbl/d pod (or pods)
in 2007 and beyond.
Connacher anticipates its rig camp will be set up on December 30, 2005
and that the CoraLynn rig which has been contracted for the program will be
drilling by January 2, 2006. A total of 24 kilometers of main access road to
the eastern portion of the lease to be evaluated has already been frozen in to
facilitate movement of the rig to the desired locations.
Connacher is proceeding with numerous initiatives related to Pod One
development, while it awaits regulatory approval, in order to be prepared for
timely action when approval is received.
In other developments, Connacher is finalising documentation related to
its proposed purchase of refining assets located in Great Falls, Montana, USA
and also with respect to its proposed purchase of Luke Energy Ltd.         
(LKE - TSX), both of which transactions were previously announced.
Additionally, the associated financing is being finalized.
Finally, Connacher owns 35 percent of Petrolifera Petroleum Limited  
(PDP - TSX) which today announced its fifth successive indicated crude oil
discovery on its 100 percent-owned Puesto Morales/Rinconada concession in the
Neuquen Basin, Argentina. Connacher's holdings of Petrolifera now have a stock
market value of approximately $100 million based on current trading levels, or
approximately $0.72 per basic Connacher common share outstanding.
Connacher Oil and Gas Limited is a Calgary-based oil and natural gas
exploration and production company. Its principal asset is the 100 percent
ownership of 107 sections of oil sands leases and its Great Divide oil sands
project situated southwest of Fort McMurray. Connacher also holds conventional
producing assets in Saskatchewan, has announced plans to acquire refining
assets in Montana, USA and is in the process of acquiring Luke Energy Ltd  
(LKE - TSX)., a public Calgary-based natural gas exploration and production
company. Connacher owns 35 percent of Petrolifera Petroleum Limited        
(PDP - TSX).

This press release contains forward-looking statements, including but not
limited to the planned drilling program, flow rates and operating costs. There
statements are based on current expectations that involve a number of risks
and uncertainties, which could cause actual results to differ from those
anticipated. There risks include, but are not limited to, risks associated
with the oil and gas industry, (e.g. operational risks in development,
exploration and production; delays or changes in plans with respect to
exploration or developments projects or capital expenditures; the uncertainty
of reserve estimates; the uncertainty of estimates and projections in relation
to production, costs and expenses and health, safety and environmental risks),
the risk of commodity price and foreign exchange rate fluctuations, the
uncertainty associated with negotiating with foreign governments and risk
associated with international activity.
Due to the risks, uncertainties and assumptions inherent in forward-
looking statements, prospective investors in the company's securities should
not place undue reliance on these forward looking statements.