Connacher's proposed change in direction is a direct result of this perfect economic storm. It appears that the lesson that Connacher's management has taken from the economic storm is that Connacher needs to be less dependent specifically on bitumen and not to put too many eggs in one basket so to speak. Peter Sametz always referred to Connacher Oil and Gas as a three legged stool: bitumen, conventional oil and gas and refining. From the 2008 Report it appears that Connacher is intent on expanding its conventional oil and gas production as this is the fastest and easiest way for Connacher to substantially increase cash flow to develop the bitumen side of the business while oil prices remain relatively low. The refinery is also to be expanded in the future when the economy improves to protect Connacher's downside when the price of oil drops in the future. This appears to be the lesson other companies are learning from the perfect economic storm. In this sense Connacher's 2008 Report predates the lesson that Suncor has learned. Suncor has realized that as a stand alone bitumen business predominantly, although it has a refinery and retail gas stations, that it is exposed to low oil prices in the bitumen business as Suncor's bitumen is not profitable at todays price for bitumen. By joining with PetroCanada, Sunor will gain the diversification through PetroCanada's exploration side world wide.

We all know that the oil and gas industry is a cyclical business. Connacher's cost to produce bitumen is under $20.00 dollars a barrel which is probably the lowest in the oil sands. The question is, is this change in direction the right way to go? This perfect economic storm that we are working our way through is the worst economic storm in 70 years. Will it ever occur in this severity again? If not, is it the right thing to do at this point in time to ramp up conventional production and later refining and look to take in partners for developing the bitumen side of the business thereby lessening Connacher's 100% control of it's bitumen projects?

I guess taking in joint partner's could be a good thing and Connacher could retain 100% control of it's bitumen projects going forward if it was to partner with pension funds which would love the anuity like characteristics that bitumen production presents and Connacher could word the deal in such a way that Connacher has total operational control over the operation while the pension fund was a silent partner. It depends on the way the deal is put together. On the other hand is this new emphasis on conventional production being dictated by the banks and financial lenders to secure new credit lines and loans? I don't know. This wasn't stated in the Report. Also, how does Resolute Funds figure in any of this?

In the end it appears that Connacher's 2008 Report is not a new direction at all but just a re-emphasis of the three legged stool approach that has always been Connacher's approach. Many on this board who counselled in the past that Connacher should sell the refinery and conventional oil and gas operations, will now have to decide if they want to stay invested in Connacher as their belief that the integrated approach does not work well will continue now at an excellerated rate and Connacher will not become a stand alone bitumen business.

Best Wishes; Scott