rebels 1:

My bias is that I own Connacher shares and about two months ago I purchased shares in Petrolifera. I wasn't very happy to learn that Connacher was purchasing $20 million of the recent Petrolifera share offering last week in Petrolifera's press release. My main interest is in Connacher's well being and there was no previous mention by Dick Gusella to indicate that Connacher money would be spent to maintain it's 24% equity holding in PDP in the Q-2 Report or in the Summer/Fall Press Release in terms of Connacher's capital budget. I don't want Connacher management to lose it's focus or to be distracted from it's capital budget and it's publicized game plan. I can live with the decision as Connacher has bought PDP shares in the past when PDP has had a new share offering so this is nothing new. But Connacher management needs to focus on the perception that this action sends out to the market right now. The market is concerned that managments main focus right now must be on #1 the Great Divide reaching its advertised operating capacity (9,500 bbl/d of bitumen) and #2 the completion of Algar. Nothing else. When managment bought back bonds with a face value of $13 million for $4 million, while this was a brilliant business decision to me, and then last week it bought $20 million worth of PDP shares, I think that this sends the wrong message to the market. Lack of focus.

PDP is an independent company I agree. I do not agree that Connacher's and Petrolifera's management is the same. In terms of the Senior Management Team: Dick Gusella is the President and CEO of Connacher and he is the Executive Chairman of Petrolifera. While Jennifer Kennedy is Petrolifera's Corporate Secretary (legal expert) however she is not on Connacher's Senior Management team but sits as a Director on Connacher's Board along with Stewart McGregor and Colin Evans who are also on Petrolifera's Board of Director's. There is a difference and there is no duplication on Connacher's Senior Management team with the exception of Dick Gusella. If Connacher were to not maintain its 24 % ownership of Petrolifera then it would most likely lose one or two directors on Petrolifera's board. Gary Wine the President and Chief Operating Officer of Petrolifera runs the day to day operation, not Dick Gusella.

In terms of Petrolifera having an effect on Connacher's share price I seem to recall that this board came to a conclusion a year or two ago after many discussions and postings that Petrolifera has absolutely no effect on Connacher's share price. I agree with you that the value of PDP shares to Connacher is as collateral for loans, and as just another asset as it pays Connacher $200,000 dollars a year in management fees and a 10% GOR on its first well in Peru.

Your explanation that if CLL was to divest it's shares in PDP to its shareholder's and other companies started doing with would cause chaos in the marketplace is probably true. At any rate since Dick Gusella has stated that he won't be handing over PDP shares anytime soon because of the tax cost to Connacher, this sort of ends my idea to get PDP shares free. At the time I was trying to think outside the box that if Connacher's share holders got free PDP shares they would buy more and thus Petrolifera would get the financing that it needed and Connacher shareholders would also be happy. But it's not going to happen so that's the end of it. This has been an interesting discussion rebels1. Thank you.

Best Wishes; Scott