Connacher Oil & Gas Ltd CLLZF

Adam Zive, oil and gas analyst, Desjardins Securit

[churgstrauss]

On Oil:

in near term, probably at bottom here..my view is that is function of warmer than average weather combined with some worries about OPEC being able to put production costs in place and overemphasis on slowing US economy, which I do not think is as bad as people think..I do not think since the beginning of the year when WTI prices traded down that fundamentals have changed..second half of the year we might have much different scenario, especially if OPEC can put cuts in place..OPEC is probably going to wait until their cut in February put into place before making any further decisions..I think in near term oil has sold off too much based on fundamentals..I think we need warmer weather for longer term as risk to my call of a bottom..

On Natural Gas:

we think natural gas will be in $6.50-$7.00, could actually be lower in the year, we are slightly worried about natural gas right now..right now we are trending significantly above five-year average..going into refill season in fall 2006, worries about full storage before end of the refill season, I think could be setting again, which is pretty bearish for the commodity..

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