(CLL C$3.32)

Analyst: Mark Polak, Associate: Steve Toth

Mar 14, 2008

Stock Rating: Outperform Risk Qualifier: Speculative

One-Year Target (C$): 4.75 Implied Total return (%): 43.1

Shares O/S F.D. (MM): 227.4 Mkt. Cap (C$MM): 754.9

Float F.D. (MM): 206.1 Mkt. Float (C$MM): 684.3

Year End: December 31 Expected Reporting Date: n.a.

Price Momentum Quadrant: 1 QuaDS Score: 3

Relative Strength: 5 52-Week High/ Low (C$): 4.43/2.59

S&P/TSX Sector: Energy RBCCM Sector Ranking: 2

Company Profile

Connacher's principal assets are its 100% interest in approximately 95,000

acres of oil sands leases in the Great Divide region near Fort McMurray,

Alberta, where production from Pod One recently began. It also operates a

9,500 bbl/d refinery in Great Falls, Montana, has conventional production

of 2,350 boe/d (two-thirds gas) and owns a 26% equity stake in Petrolifera

Petroleum Limited (TSX: PDP).

Investment Rationale

• Connacher is currently on well 92 of its 120-well oil sands delineation

and core hole well program. The seismic program is also nearing

completion, and we believe the results of these activities are likely to

provide a positive catalyst for the share price with the release of a midyear

reserve and resource report in Q3/08.

• Connacher recently announced that it has entered into a pooling of 38.5

sections (24,640 acres) of contiguous oil sands rights with Alberta

Oilsands Inc. The value of this transaction to CLL will be determined by

the relative resource contributions (currently unknown); however, we

believe this is a slight positive as it exposes the company to additional

contiguous acreage, while also allowing for more efficient evaluation

and potential development of the resources.

Valuation

Our target price of $4.75 is in line with our risked NAV estimate of $5.17

using NYMEX futures prices and including the risked value of future

expansions.

Price Target Impediments

The company has a significant amount of financial leverage, which

magnifies the risks of lower commodity prices, a stronger Canadian dollar

and higher costs. Capital cost execution and exploration results pose risks

as well.