Production
Connacher have determined that Pod One achieved commerciality with an effective date of March 1, 2008. Accordingly, production, sales and related costs will be booked in their income statement from that date forward. Total corporate production has now surpassed 9,300 boe/d up from 7,500 boe/d as reported on February 28, 2008, with the ramp up of bitumen production at Pod One and the recent startup of significant new natural gas sales from 2007 and 2008 discoveries at Randall in the Marten Creek area of northern Alberta. Conventional production has now surpassed 3,600 boe/d with the successful startup of the Randall plant. Connacher are quickly approaching the rank of an intermediate producer. Further short term production gains are anticipated as full design capacity at Pod One is realized and other recent new conventional discoveries in Alberta are brought onstream.
Reserves
Connacher’s reserve and resource bases expanded considerably during 2007, primarily due to increases in estimates of their recoverable bitumen at Great Divide, with their 2P bitumen reserves and best estimate contingent and prospective bitumen resources increasing 60 percent to 417 million barrels and 3P bitumen reserves and high estimate contingent and prospective resources increasing 67 percent to 799 million barrels, after production of 850 thousand barrels in 2007, compared to year end 2006. Conventional 2P boe reserves also increased eight percent during 2007. The related 10 percent pre-tax present value of Connacher’s reserves and resources increased dramatically, reflecting higher forecast pricing by the company’s independent consultant and the completion of significant capital programs at Great Divide, as future net revenue is calculated after deduction of royalties, operating costs, well abandonment costs and future capital requirements to realize the forecast production and revenue base, but before income taxes and indirect costs such as general and administrative (G&A) expenses.