Lesson 1

Head Office:
CONNACHER OIL & GAS LTD
Suite 2600, 530-8th Avenue S.W.
Calgary AB Canada T2P 3S8
Phone:403 538-6201
Fax:403 538-6225
Email:inquiries@connacheroil.com
Website: www.connacheroil.com

Connacher Oil and Gas Limited is a Calgary-based Canadian oil and natural gas exploration and production company. Its principal asset is a 100 percent interest in 107 sections (68,480 acres) of oil sands leases at its Great Divide oil sands project near Fort McMurray, Alberta. It also maintains conventional production at Battrum, Tompkins and Steelman, Saskatchewan. In pursuing its objective of maximizing shareholder value, when possible Connacher secures large, operated interests. Over time, a balanced portfolio of oil and natural gas interests is being pursued. An opportunistic approach, supported by timely decisions, reflects management's experience and aggressive strategy towards realizing growth objectives. Connacher also owns 35 percent (book) of and manages Petrolifera Petroleum Limited, which has interests in Argentina and Peru.

Other Locations: Battrum and Tompkins oil properties in southwest Saskatchewan; Great Divide oil sands mining project southwest of Fort McMurray AB under evaluation for development; Block 106 oil exploration licence in the Maranon Basin of Peru; Block 107 natural gas exploration licence in the Ucayali Basin of Peru; 40% interest in 95,000 acre Puesto Morales/Rinconada oil and gas exploration concession in the Neuqen Basin of Argentina.
Fiscal Year End: Dec 31
Auditor: Deloitte & Touche LLP
Employee Count (2004/2003): 11 / N/A
NAICS Codes: 211111, Crude Petroleum and Natural Gas ExtractionOfficers:
Richard A. Gusella, President & CEO; Peter D. Sametz, Executive Vice President & COO; Richard R. Kines, Vice President, Finance & CFO; Timothy J. O'Rourke, Vice President, Oil Sands Operations;
Board Members:
Charles W. Berard, Colin M. Evans, Gary W. Freeman, Richard A. Gusella, Stewart D. McGregor

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.

For further information

contact: Richard A. Gusella, President and Chief Executive Officer, Connacher Oil and Gas Limited, Phone: (403) 538-6201, Fax: (403) 538-6225, inquiries@connacheroil.com, www.conacheroil.com