This is from the Oil and Gas Inquirer April 13.

This is just the story in the paper and some facts are differ then actual numbers from newest CLL presentation. Never the less it is a good reading about oilsand companies.

http://www.dobmagazine.nickles.com/a...

"Dick Gusella, president of Connacher Oil & Gas Limited, has spent months fighting to maintain production at his company's Great Divide SAGD (steam assisted gravity drainage) project. "December was a real pig," he says. (When asked how long he's been an oilman, Gusella responds, "I'm coming up on 100 years, but these days it feels like it's been a lot longer.") Connacher's concerns mirror the difficulties facing all thermal bitumen recovery projects.

"Credit is not available these days in our industry, and investment capital comes with unattractive terms if it's available at all," Gusella says. "No one knows how long these conditions will last. I am truly grateful that our company has $180 million in cash or we wouldn't be able to weather this storm. Today, the first three financial operating principles are liquidity, liquidity, and liquidity. The fourth principle is to protect your assets."

In Connacher's case, asset protection includes hanging onto skilled employees and maintaining the underground steam chamber at Great Divide. (SAGD production depends on injecting steam to heat a portion of bitumen in the reservoir, which enables the tarry crude to flow into horizontal wellbores.) If an operator stops injecting heat into the formation, the steam that's already there will cool. "In that case, you will be producing water for a year from those horizontal wells when you start up again, and there could be formation damage as well," Gusella says.

On Dec. 15, Connacher announced that it would stop injecting steam at Great Divide Pod One to avoid bleeding cash. Light crude prices had hit drastic lows. Worse, big upgraders didn't want additional bitumen, so the price spread between light and heavy crudes widened to a crippling $22/bbl. Fortunately, Connacher renegotiated with its suppliers (notably its truckers), and the company found an upgrader willing to buy forward at an attractive fixed differential (in part thanks to higher forward prices for crude in general).

Great Divide's output reached nearly 10,000 barrels per day (bbl/d), then plunged to 5,000 bbl/d after steaming was curtailed, and has now climbed back to 7,500. The company expects to achieve full production of 10,000 bbl shortly unless market conditions again deteriorate. Over the past year, its operating costs have dropped dramatically, to the $16-$20/bbl range, and are expected to decrease further as production continues to increase.

"Raw bitumen is hit with diluent and chemicals before it gets processed, to help knock out the water. Through trial and error, our team has come up with the optimum chemical cocktail-every SAGD project requires a unique mix," Gusella says. To boost production, Connacher has drilled a couple of new wells offsetting its best producing pair (1,200 bbl/d, with a steam to oil ratio of two to one) at Pod One. However, the company will not proceed with constructing a second pod until light oil prices stabilize above US$55/bbl and the light-heavy differential is attractive."