Lycos Energy Inc. Announces 2024 Results

2025-04-08

TSXV - TSX Venture Exchange · Oil · Natural Gas · Canada

Calgary, Alberta--(Newsfile Corp. - April 8, 2025) - Lycos Energy Inc. (TSXV: LCX) ("Lycos" or the "Company") is pleased to announce its operating and financial results for the three months and year ended December 31, 2024. Selected financial and operating information is outlined below and should be read with Lycos' audited annual consolidated financial statements, related management's discussion and analysis ("MD&A") for the three months and year ended December 31, 2024, and annual information form ("AIF") for the year ended December 31, 2024, copies of which are available on the Company's SEDAR + profile at www.sedarplus.caand the Company's website at www.lycosenergy.com.

Financial and Operating Highlights

| | | Three months ended | | | | | | Year ended | | | | | | | | | | | | | | December 31, | | | % change | | | December 31, | | | % change | | | | | | | | | ($ in thousands, except per share) | | 2024 | | | 2023 | | | 2024 | | | 2023 | | | | | | | | | Total petroleum and natural gas sales, net of blending(1) | | 30,196 | | | 24,748 | | | 22% | | | 123,722 | | | 76,597 | | | 62% | | | Adjusted funds flow from operations(1) | | 14,421 | | | 11,382 | | | 27% | | | 59,044 | | | 31,834 | | | 85% | | | Per share - basic | $ | 0.27 | | $ | 0.22 | | | 23% | | $ | 1.11 | | $ | 0.75 | | | 48% | | | Per share - diluted | $ | 0.27 | | $ | 0.21 | | | 29% | | $ | 1.11 | | $ | 0.71 | | | 56% | | | Net income (loss)(3) | | (13,442 | ) | | 1,172 | | | (1247)% | | | (905 | ) | | 24,719 | | | (104)% | | | Per share - basic | $ | (0.25 | ) | $ | 0.02 | | | (1350)% | | $ | (0.02 | ) | $ | 0.58 | | | (103)% | | | Per share - diluted | $ | (0.25 | ) | $ | 0.02 | | | (1350)% | | $ | (0.02 | ) | $ | 0.55 | | | (104)% | | | Capital expenditures - exploration & development | | 9,824 | | | 18,520 | | | (47)% | | | 67,813 | | | 62,996 | | | 8% | | | Capital expenditures - net acquisitions & dispositions | | (1,235 | ) | | 12,954 | | | (110)% | | | 56,754 | | | 67,840 | | | (16)% | | | Adjusted working capital (net debt)(1) | | (17,896 | ) | | (17,057 | ) | | 5% | | | (17,896 | ) | | (17,057 | ) | | 5% | | | Weighted average shares outstanding (thousands) | | | | | | | | | | | | | | | | | | | | Basic | | 53,238 | | | 50,876 | | | 5% | | | 53,160 | | | 42,621 | | | 25% | | | Diluted | | 53,238 | | | 53,055 | | | 0% | | | 53,160 | | | 44,865 | | | 18% | | | Average daily production: | | | | | | | | | | | | | | | | | | | | Crude oil (bbls/d) | | 4,421 | | | 4,081 | | | 8% | | | 4,393 | | | 2,983 | | | 47% | | | Natural gas (mcf/d) | | 893 | | | 238 | | | 275% | | | 494 | | | 158 | | | 213% | | | Total (boe/d) | | 4,570 | | | 4,121 | | | 11% | | | 4,475 | | | 3,009 | | | 49% | | | Realized prices: | | | | | | | | | | | | | | | | | | | | Crude oil ($/bbl)(2) | | 73.91 | | | 65.56 | | | 13% | | | 76.76 | | | 69.44 | | | 11% | | | Natural gas ($/mcf) | | 0.92 | | | 2.38 | | | (61)% | | | 0.81 | | | 2.33 | | | (65)% | | | Total ($/boe) | | 71.68 | | | 65.06 | | | 10% | | | 75.44 | | | 68.95 | | | 9% | | | Operating netback ($/boe)(1) | | | | | | | | | | | | | | | | | | | | Petroleum and natural gas revenues(2) | | 71.68 | | | 65.06 | | | 10% | | | 75.44 | | | 68.95 | | | 9% | | | Realized gain (loss) on financial derivatives | | (0.20 | ) | | 0.97 | | | (121)% | | | (0.20 | ) | | (0.12 | ) | | 67% | | | Royalties | | (9.93 | ) | | (9.29 | ) | | 7% | | | (10.81 | ) | | (10.02 | ) | | 8% | | | Net operating expenses(1) | | (21.88 | ) | | (21.87 | ) | | 0% | | | (22.90 | ) | | (25.02 | ) | | (8)% | | | Transportation expenses | | (1.47 | ) | | (1.79 | ) | | (18)% | | | (1.49 | ) | | (1.19 | ) | | 25% | | | Operating netback, including financial derivatives ($/boe)(1) | | 38.20 | | | 33.08 | | | 15% | | | 40.04 | | | 32.60 | | | 23% | | | Adjusted funds flow from operations ($/boe)(1) | | 34.30 | | | 30.03 | | | 14% | | | 36.05 | | | 28.99 | | | 24% | | | (1)See Non-IFRS Measures, Non-IFRS Financial Ratios and Capital Management Measures. (2)Realized prices are based on revenue, net of blending expense. (3)The three months and year ended December 31, 2024, includes a non-cash loss on disposals of $22.2 million. | | | | | | | | | | | | | | | | | | |

Message to Shareholders

Over the past two years, Lycos has been one of the most active drillers in the Mannville Stack, consistently validating its technical thesis with respect to multi-lateral development. Through innovative and strategic drilling, Lycos has successfully increased production per share(3)by 46% and adjusted funds flow per share(1)by 82% over the prior year. The year was highlighted by a 100% drilling success rate on the Company's multi-lateral drilling, Mannville drilling program, a Total Proved ("TP") and Total Proved plus Probable ("TPP") Net Asset Value ("NAV") of $3.50 per diluted share ("Diluted Share") and $5.79 per Diluted Share(3), respectively.

The Q4 2024 and year-end 2024 operating and financial results presented below, demonstrate the quality of the Company's assets in generating value, while maintaining balance sheet strength of 0.3X annualized net debt to adjusted funds flow ratio(1).

Average production volumes increased to 4,570 boe/d (97% crude oil) in Q4 2024 compared to 4,121 boe/d (99% crude oil) in Q4 2023, representing an 11% increase. Q4 2024 production was negatively impacted by approximately 310 boe/d of shut-in volumes due to gas egress issues.

Realized adjusted funds flow from operations(1) of $14.4 million in Q4 2024 compared to $11.4 million in Q4 2023, representing a 27% increase.

Operating netback(1) of $38.20 per boe in Q4 2024, representing a 15% increase from $33.08 per boe in Q4 2023.

Net operating expenses(1)remained flat at $21.88 per boe in Q4 2024 as compared to $21.87 per boe in Q4 2023, even with the Company experiencing shut-in volumes in 2024. Year over year, net operating expenses decreased significantly to $22.90 per boe for the year ended December 31, 2024, as compared to $25.02 per boe in the comparable year.

Executed a $9.8 million capital expenditures(1)program in the fourth quarter of 2024, bringing on stream 3 gross (3.0 net) multi-lateral wells by the end of December 2024. These wells included a new Middle Waseca pool discovery at Moose Lake, that achieved an IP30 of 284 bbl/d. Of the Q4 capital expenditures, $0.7 million relates to the spud of 1 gross (1.0 net) multi-lateral well that was brought on stream in Q1 2025 and pad construction for the Q1 2025 drilling program. The Company also invested $0.4 million on gas handling infrastructure and $0.8 million on land and seismic expenditures in the quarter.

On December 31, 2024, the Company completed a disposition of non-core assets in the Gull Lake and Lloydminster Saskatchewan areas for total consideration of $10.2 million, subject to final closing adjustments. In Q4 2024, the Company also completed a disposition of lands in the Greater Lloydminster Alberta area for a total consideration of $2.9 million.

Exit net debt(1)of $17.9 million, a decrease of 44% from Q3 2024.

Strong reserves growth (net of the 2024 dispositions)(2) of 26% on TP basis and 15% on TPP basis through pool extensions.

Production replacement(3)was 82% on TP basis and 82% on TPP basis.

Based on a 2024 adjusted funds flow netback(1)of $36.05/boe, achieved recycle ratios(3) of 1.4 on a Proved Developed Producing basis ("PDP") basis, 1.6 on a TP basis and 2.1 on a TPP basis.

(1)See Non-IFRS Measures, Non-IFRS Financial Ratios and Capital Management Measures (2)See Disclosure of Oil and Gas Information (3)See Oil and Gas Metrics

Operations Update

In Q1 2025, Lycos drilled 9 gross (8.91 net) multi-lateral wells, of which 8 gross (7.92 net) multi-lateral wells were rig released by the quarter-end date. To date, 7 gross (6.92 net) multi-lateral wells are on production, with the last two wells expected to be on production by the end of April, 2025. Based on the Company's drilling to date, Lycos has deemed the Q1 2025 exploratory program a success and is expecting to add more than 70 wells to its estimated inventory. Current production is estimated at 4,500 boe/day (97% oil).

Outlook

Given the recent volatility in markets and commodity prices, the Company has determined it is prudent to suspend its capital expenditures program over spring break-up and until there is more certainty around commodity price outlook. This is a temporary deferral of capital and the Company's 2025 budget as press released on January 6, 2025 remains unchanged at this time. The Company will closely monitor this situation as developments arise.

About Lycos

Lycos is an oil-focused, exploration, development and production company based in Calgary, Alberta, operating high-quality, heavy-oil, development assets in the Lloydminster and Greater Lloydminster area.

Additional Information

For further information, please contact:

| Dave Burton President and Chief Executive Officer T: (403) 616-3327 E: dburton@lycosenergy.com | Lindsay Goos Vice President, Finance and Chief Financial Officer T: (403) 542-3183 E: lgoos@lycosenergy.com |

Reader Advisories

Forward-Looking and Cautionary Statements

Certain statements contained within this press release constitute forward-looking statements within the meaning of applicable Canadian securities legislation. All statements other than statements of historical fact may be forward-looking statements. Forward-looking statements are often, but not always, identified by the use of words such as "anticipate", "budget", "plan", "endeavor", "continue", "estimate", "evaluate", "expect", "forecast", "monitor", "may", "will", "can", "able", "potential", "target", "intend", "consider", "focus", "identify", "use", "utilize", "manage", "maintain", "remain", "result", "cultivate", "could", "should", "believe" and similar expressions (including negatives and variations thereof). Lycos believes that the expectations reflected in such forward-looking statements are reasonable as of the date hereof, but no assurance can be given that such expectations will prove to be correct and such forward-looking statements should not be unduly relied upon. Without limitation, this press release contains forward-looking statements pertaining to: Lycos' business strategy, objectives, strength and focus; the Company's anticipated capital program, drilling plans, outlook and operational results for 2025 (including timing of pad construction for the Company's Q1 2025 drilling program and the Company's expectations as to when it will bring its recently spud multi-lateral well on stream); the anticipated addition of 70 wells to the Company's inventory pursuant to its 2025 drilling program; the Company's expectations regarding recently drilled wells, drilling plans, forecasted annual average production, net operating expenses, estimated well and facility abandonment and reclamation costs, estimated future capital expenditures and growth forecasts; expectations regarding commodity prices and heavy oil differentials; capital expenditures and timing thereof; the performance characteristics of the Company's oil and natural gas properties; the ability of the Company to achieve drilling success consistent with management's expectations; expectations in respect of the Company's wells, including anticipated benefits and results; and the source of funding for the Company's activities. Statements relating to production, reserves, recovery, replacement, costs and valuation are also deemed to be forward-looking statements, as they involve the implied assessment, based on certain estimates and assumptions, that the reserves described exist in the quantities predicted or estimated and that the reserves can be profitably produced in the future.

The forward-looking statements and information are based on certain key expectations and assumptions made by Lycos, including, but not limited to: expectations and assumptions concerning the business plan of Lycos; the timing of and success of future drilling, development and completion activities; the geological characteristics of Lycos' properties; prevailing and future commodity prices, price volatility, price differentials and the actual prices received for the Company's products; the availability and performance of drilling rigs, facilities, pipelines and other oilfield services; the timing of past operations and activities in the planned areas of focus; the drilling, completion and tie-in of wells being completed as planned; the performance of new and existing wells; the application of existing drilling and fracturing techniques; prevailing weather and break-up conditions; general economic conditions; royalty regimes and exchange rates; the application of regulatory and licensing requirements; the continued availability of capital and skilled personnel; the ability to maintain or grow its credit facility; the accuracy of Lycos' geological interpretation of its drilling and land opportunities, including the ability of seismic activity to enhance such interpretation; and Lycos' ability to execute its plans and strategies.

Although Lycos believes that the expectations and assumptions on which such forward-looking statements and information are based are reasonable, undue reliance should not be placed on the forward-looking statements and information because Lycos can give no assurance that they will prove to be correct. By its nature, such forward-looking information is subject to various risks and uncertainties, which could cause the actual results and expectations to differ materially from the anticipated results or expectations expressed. These risks and uncertainties include, but are not limited to: incorrect assessments of the value of benefits to be obtained from acquisitions and exploration and development programs; fluctuations in commodity prices (including pursuant to determinations by the Organization of Petroleum Exporting Countries and other countries (collectively referred to as OPEC+) regarding production levels); changes in industry regulations and political landscape both domestically and abroad; the impact of tariffs and other restrictive trade measures imposed by the U.S. administration, the Canadian administration and foreign governments on global economic markets, market volatility and the demand and/or market price for the Company's products; wars (including Russia's military actions in Ukraine and the Israel-Hamas conflict in Gaza); hostilities; civil insurrections; foreign exchange or interest rates; increased operating and capital costs due to inflationary pressures (actual and anticipated); volatility in the stock market and financial system; impacts of pandemics; the retention of key management and employees; and risks with respect to unplanned third-party pipeline outages, including in respect of safety, asset integrity and shutting in production. Ongoing military actions between Russia and Ukraine have the potential to threaten the supply of oil and gas from the region. The long-term impacts of the actions between these nations remains uncertain. Please refer to the AIF and the MD&A for additional risk factors relating to Lycos, which can be accessed either on the Company's website at www.lycosenergy.comor under the Company's SEDAR+ profile at www.sedarplus.ca. Readers are cautioned not to place undue reliance on this forward-looking information, which is given as of the date hereof, and to not use such forward-looking information for anything other than its intended purpose. Lycos undertakes no obligation to update publicly or revise any forward-looking information, whether as a result of new information, future events or otherwise, except as required by law.

Disclosure of Oil and Gas Information

2024 Dispositions. This press release discloses the changes in the Company's reserves, net the impact of certain dispositions completed by the Company in the 2024 financial year. The depositions, which have not been accounted for in the Company highlights presented under the heading "_Message to Shareholders_" above, amount to 1,107 Mboe PDP, 1,512 Mboe TP and 2,707 Mboe TPP.

Unit Cost Calculation. The term barrels of oil equivalent ("boe") may be misleading, particularly if used in isolation. A boe conversion ratio of six thousand cubic feet per barrel (6 Mcf/bbl) of natural gas to barrels of oil equivalence is based on an energy equivalency conversion method primarily applicable at the burner tip and does not represent a value equivalency at the wellhead. All boe conversions in the report are derived from converting gas to oil in the ratio mix of six thousand cubic feet of gas to one barrel of oil.

Product Types. Throughout this press release, "crude oil" or "oil" refers to heavy crude oil product types as defined by NI 51-101.

Drilling Locations.This press release discloses drilling locations in two categories: (i) booked locations and (ii) unbooked locations. Booked locations are derived from the reserves report (the "Reserves Report") prepared in compliance with NI 51-101 (as defined herein) and the COGEH (as defined herein) by the Company's independent reserves evaluator, Sproule International Limited ("Sproule"), evaluating the Company's year-end reserves as at December 31, 2024, and account for drilling locations that have associated proved and probable reserves estimated by the Company's independent qualified reserve evaluator Sproule, in accordance with NI 51-101 and the COGEH, and account for drilling locations that have associated proved and/or probable reserves, as applicable. Unbooked locations are internal estimates based on the Company's assumptions as to the number of wells that can be drilled per section based on industry practice and internal review. Unbooked locations do not have attributed reserves or resources. Of the approximately 359 (355.4 net) drilling locations identified herein, 67 (65.5 net) are proved locations, 25 (24.2 net) are probable locations and 267 (265.7 net) are unbooked locations (inclusive of the 70 estimated future unbooked locations anticipated to be added to the Company's inventory assuming the successful completion of the Company's Q1 2025 drilling program). Unbooked locations have been identified by management as an estimation of Company's multi-year drilling activities based on evaluation of applicable geologic, seismic, engineering, production and reserves information. There is no certainty that the Company will drill all unbooked drilling locations and if drilled there is no certainty that such locations will result in additional oil and gas reserves, resources or production. The drilling locations considered for future development will ultimately depend upon the availability of capital, regulatory approvals, seasonal restrictions, oil and natural gas prices, costs, actual drilling results, additional reservoir information that is obtained and other factors. While certain of the unbooked drilling locations have been derisked by the drilling of existing wells in relative close proximity to such unbooked drilling locations, other unbooked drilling locations are farther away from existing wells where management has less information about the characteristics of the reservoir and therefore there is more uncertainty whether wells will be drilled in such locations and if drilled there is more uncertainty that such wells will result in additional oil and gas reserves, resources or production.

Short Term Results.References in this press release to production test rates, initial test production rates, initial production rates (including IP30) and other short-term production rates are useful in confirming the presence of hydrocarbons, however such rates are not determinative of the rates at which such wells will continue to production, nor is it indicative of future production capability, decline and ultimate reserves. While encouraging, readers are cautioned not to place reliance on such rates in calculating the aggregate production for Lycos. A pressure transient analysis or well-test interpretation has not been carried out in respect of all wells. Accordingly, the Company cautions that the test results should be considered to be preliminary.