Lotus Creek Exploration Inc. press release

Lotus Creek Exploration Inc. Announces Fourth Quarter 2025 Operating Results, Year-End Reserves Summary and Operational Update

2026-03-05

TSXV - TSX Venture Exchange · Oil · Natural Gas Liquids · Natural Gas · Canada · Resource Estimate

Lotus Creek Exploration Inc. Announces Fourth Quarter 2025 Operating Results, Year-End Reserves Summary and Operational Update

Calgary, Alberta--(Newsfile Corp. - March 4, 2026) - Lotus Creek Exploration Inc. (TSXV: LTC) ("Lotus Creek" or the "Company") is pleased to provide the following fourth quarter operating and financial results and a summary of the year-end independent evaluation of the Company's reserves. Lotus Creek's Audited Consolidated Financial Statements and related Management's Discussion and Analysis ("MD&A") for the year ended December 31, 2025 are available for review on Lotus Creek's website at www.lotuscreek.ca and on Lotus Creek's SEDAR+ profile at www.sedarplus.ca.

MESSAGE TO SHAREHOLDERS

Dear Shareholders,

As we reflect on 2025 and enter the second quarter of 2026, I am pleased to report on a transformational year for Lotus Creek. Our team executed on a focused strategy, strengthened our asset base, accelerated production growth, and demonstrated the powerful economics embedded within our portfolio, all while maintaining our commitment to balance sheet strength.

Who We Are

Lotus Creek is a growth-oriented light oil company built on two founding principles:

Drill highly profitable wells, and

Maintain a strong balance sheet.

Our business model is straightforward: deliver highly profitable growth per share that is transparent and visible in our financial statements. We operate with discipline, technical rigor, and a long-term ownership mindset.

2025: Building the Foundation for Scalable Growth

Continued Land Consolidation

During the year, we continued consolidating lands across one of the basin's highest-return plays. This expanded footprint strengthens our development runway and enhances capital efficiency as we scale.

Modern 3D Seismic Program

We shot a new 44 square mile 3D seismic program, confirming a deep inventory of drilling locations. The data materially de-risked our stacked Belly River opportunity and provides technical confidence for years of repeatable development.

Strategic Infrastructure Investment

We constructed a 5,000 boe per day battery with an expandable design, establishing critical infrastructure that forms the backbone of future production growth. This proactive investment increases operational control, lowers future tie-in costs, and positions the Company for scalable development.

Executing the Belly River Program

In 2025, we drilled our first four Belly River wells in Wilson Creek, successfully testing three of the six light-oil-charged Belly River sands that are densely stacked beneath our 3D seismic footprint.

Strong Operational and Financial Results

The four-well program exceeded expectations:

Fourth quarter 2025 production averaged 3,391 boe per day, up from 1,425 boe per day in the third quarter of 2025.

Adjusted funds from operations expanded to $7.9 million, up from $1.9 million in the third quarter, despite WTI oil prices declining more than US$5 per bbl quarter over quarter. Cash flow from operating activities was $5.5 million in the fourth quarter compared to $6.7 million in the third quarter.

As of the end of February 2026, the four wells have collectively produced approximately:

200,000 bbls of light oil

550,000 mcf of natural gas

70,000 bbls of NGLs

Within the $15.5 million drilling and completion capital program, three of the four wells have already achieved payout, demonstrating the powerful economics and repeatability of our inventory.

Spotlight Well: 104/06-26-042-05W5

Of particular note, the 104/06-26-042-05W5 well, which was brought on production November 18, 2025, has delivered exceptional results in the first 100 days producing approximately:

55,000 bbls of light oil

57,000 mcf of gas

8,000 bbls of NGLs

The well has continued to improve through optimization efforts achieving:

January 2026 average production: approximately 585 boe per day, 92% liquids (approximately 500 bbls per day light oil, 250 mcf per day gas and 40 bbls per day NGLs)

February 2026 average production: approximately 1,200 boe per day, 88% liquids (approximately 850 bbls per day light oil, 850 mcf per day gas and 200 bbls per day NGLs)

This performance highlights the quality of the reservoir and the strength of our operational and technical teams.

2026 Program and Accelerated Momentum

In December, we announced a disciplined 2026 capital plan based on US$57 per bbl WTI, featuring a back-half-weighted six-well program with two wells scheduled for the first quarter of 2026.

Stronger oil prices in January and February allowed us to expand our hedge position, locking in returns from the 2025 drilling program and reducing cash flow exposure to commodity volatility. Efficient execution on the first two wells supported increasing first quarter activity from two wells to three.

As a result of this accelerated activity, we have increased 2026 annual production guidance from 3,400-3,800 boe per day to 3,600-4,000 boe per day.

Our Commitment Going Forward

We will continue to be responsive and opportunistic in navigating both internal and external factors. As we move through the second quarter, we will closely monitor progress toward our 2026 objectives and keep shareholders informed as plans evolve. We are committed to transparency and will continue providing monthly operational and financial updates throughout 2026, ensuring shareholders can clearly track our performance.

Acknowledgment

I would like to congratulate and thank the entire Lotus Creek team for their extraordinary efforts throughout 2025 and into early 2026. The results achieved reflect disciplined execution, technical excellence, and a commitment to driving shareholder value.

Closing Thoughts

The 2025 four-well program has unlocked significant value for Lotus Creek shareholders. It demonstrates not only compelling single-well economics, but also the repeatability and scalability of our inventory.

We are building a company designed to endure: grounded in capital discipline, operational excellence, and a relentless focus on per-share value creation.

Thank you for your continued trust and support.

Sincerely,

Kevin Johnson

President & CEO

Lotus Creek Exploration Inc.

ANNUAL HIGHLIGHTS

Delivered average production of 2,064 boe per day for 2025 comprised of 1,242 bbls per day of crude oil, 342 bbls per day of NGLs and 2,879 mcf per day of natural gas. Production was backend weighted with fourth quarter production of 3,391 boe per day.

Adjusted funds from operations ("adjusted FFO") for 2025 were $13.5 million ($19.87 per boe), inclusive of adjusted FFO for the fourth quarter of 2025 of $7.9 million ($25.39 per boe). Cash flow from operating activities for 2025 was $12.8 million ($18.81 per boe), inclusive of cash flow from operating activities for the fourth quarter of 2025 of $5.5 million ($17.71 per boe). See "Non-GAAP and Other Financial Measures" in this press release.

Lotus Creek invested a total of $43.1 million of capital which included the successful drilling activity in Wilson Creek, a 44 square mile 3D seismic program in Central Alberta and the construction of a new satellite facility and oil battery with an approximate capacity of 5,000 boe per day in Wilson Creek. This foundational key investment in capital will allow the Company to drive ongoing value creation into 2026.

Maintained a strong balance with exit net debt as at December 31, 2025 of $9.8 million and a net debt to quarterly annualized funds from operations of 0.3 times.

The Company generated net income of $1.8 million ($0.05 per basic and diluted share) in its first year of commercial operations.

QUARTERLY HIGHLIGHTS

Average production for the fourth quarter of 2025 was 3,391 boe per day comprised of 2,055 bbls per day of crude oil, 634 bbls per day of NGLs and 4,213 mcf per day of natural gas.

During the fourth quarter of 2025, the Company drilled and completed 2.0 gross (2.0 net) light oil Belly River wells in Wilson Creek. From December 1, 2025 to February 28, 2026, combined, the wells have averaged over 1,250 boe per day of estimated production (comprised of 84 per cent light oil and NGLs). One of those wells was optimized in February and averaged approximately 1,200 boe per day of estimated production in February, inclusive of approximately 850 bbls per day of crude oil.

Adjusted FFO for the fourth quarter of 2025 were $7.9 million ($25.39 per boe) as compared to $1.9 million ($14.85 per boe) for the third quarter of 2025, a 307 per cent increase. Cash flow from operating activities for the fourth quarter of 2025 was $5.5 million ($17.71 per boe) as compared to $6.7 million ($50.82 per boe) for the third quarter of 2025.

Lotus Creek invested a total of $11.2 million of capital during the fourth quarter, which included $7.5 million for successful drilling and completion activity in Wilson Creek, $2.6 million for facilities inclusive of the construction of the new satellite facility and $0.7 million to settle decommissioning liabilities.

During the fourth quarter, the Company amended its credit facilities with ATB Financial with an increase in the borrowing base from $35.0 million to $40.0 million. The Company is expected to have ample liquidity through its credit facilities.

OPERATIONAL UPDATE

In February 2026, Lotus Creek successfully completed its first quarter 2026 Belly River drilling program in Wilson Creek. The Company drilled 3.0 gross (2.9 net) light oil Belly River wells. The Company anticipates production from the 3.0 gross (2.9 net) light oil Belly River wells in Wilson Creek will commence in the month of March.

As a result of stronger commodity prices and the Company's ability to take advantage of operational synergies, the Company accelerated the 2026 drilling program and drilled 1.0 gross (0.9 net) well in the first quarter of 2026, that was originally budgeted to be drilled in the second half of 2026 in Wilson Creek.

2025 ACTUALS VERSUS 2025 GUIDANCE

The following table shows the Company's actual results in 2025 relative to the Company's published guidance for 2025:

2025 Fiscal

Guidance2025 Actuals

Annual production (boe/d)2,000 - 2,4002,064

Q4 average production (boe/d)3,000 - 3,4003,391

Capital and abandonment expenditures ($ millions)43.043.1

Crude oil and NGLs weighting (%)(1) (2)7877

Natural gas weighting (%)2223

Royalty rate (%)12 - 1312

Operating and transportation costs ($/boe)21.00 - 22.0021.41

General and administrative expense ($/boe) 6.50 - 7.007.83

Interest income and interest and financing charges ($/boe)0.50 - 1.000.73

(1) Light oil and NGLs weighting was 75 percent and 76 percent for 2025 guidance and 2025 actuals, respectively.

(2) Heavy oil weighting was 3 percent and 1 percent for 2025 fiscal guidance and 2025 actuals, respectively.

2026 GUIDANCE

In December 2025, Lotus Creek announced the approved 2026 budget. As a result of stronger commodity prices and the Company's ability to take advantage of operational synergies, the Company accelerated the 2026 drilling program and drilled 1.0 gross (0.9 net) well in February that was originally budgeted to be drilled in the second half of 2026. In total, the Company has drilled 3.0 gross (2.9 net) wells in the first quarter of 2026. The Company has revised its 2026 annual production guidance upward due to accelerated capital deployment and continued outperformance of the 2025 Wilson Creek wells relative to the expected production type curve. The full-year 2026 budget advances a strategy of disciplined, profitable per-share growth while maintaining financial resilience in a lower oil price environment. The Company intends to direct capital to its highest-value projects at Wilson Creek, ensuring every dollar deployed drives meaningful value creation. This strategy also further leverages the benefit of key foundational investments in 2025, including the 3D seismic program and the new Wilson Creek oil battery constructed in 2025.

2026 Revised

Guidance2026 Original

Guidance(1)

Annual production (boe/d)3,600 - 4,0003,400 - 3,800

Q4 average production (boe/d)3,800 - 4,2003,800 - 4,200

Capital and abandonment expenditures ($ millions)42.042.0

Crude oil and NGLs weighting (%)7777

Natural gas weighting (%)2323

(1) 2026 Original Guidance issued in press release of the Company dated December 10, 2025.

The following table summarizes selected highlights for the quarter and year ended December 31, 2025:

(Cdn$ thousands, except per share, share and per boe amounts)Three

months

ended

Dec 31,

2025Three

months

ended

Dec 31,

2024Three

months

ended

Sep 30,

2025Year

ended

Dec 31,

2025 (2)For the period

from date of

incorporation

Aug 21, 2024

to Dec 31, 2024

FINANCIAL

Adjusted funds from (used in) operations (1)7,920(10)1,94713,535(13)

Per weighted average basic share (5)0.20- 0.050.37-

Cash flows from operating activities5,526-6,66212,814-

Per weighted average basic share (5)0.14-0.170.35-

Net income (loss)2,638(10)(281)1,753(13)

Per weighted average basic share (5)0.07- (0.01)0.05-

Net debt (1)(9,848)(759)(6,519)(9,848)(759)

Weighted average shares, basic (thousands) (4)40,000- 40,00036,164-

Shares outstanding, end of period (thousands) (4) 40,000- 40,00040,000-

CAPITAL

Exploration and evaluation expenditures415-1,66212,689-

Property, plant and equipment expenditures10,117-16,89829,391-

Decommissioning liabilities settled676-2611,007-

Total capital and abandonment expenditures11,208-18,82143,087-

Net acquisitions (3)---58,631-

OPERATING

Production

Crude oil (bbl/d)2,055-8741,242-

Natural gas liquids (bbl/d)634-201342-

Natural gas (mcf/d)4,213-2,1002,879-

Total (boe/d)3,391-1,4252,064-

Average realized prices

Crude oil ($/bbl)74.88-84.6580.35-

Natural gas liquids ($/bbl)26.74-39.1831.62-

Natural gas ($/mcf)2.20-0.541.74-

Netback and selected financial results ($/boe)

Petroleum and natural gas sales53.11-58.2556.00-

Royalties(4.81)-(8.26)(6.68)-

Operating expenses(16.12)-(23.34)(20.06)-

Transportation expenses(0.70)-(2.17)(1.35)-

Operating netback (1)31.48-24.4827.91-

Realized risk management gain1.03-0.240.52-

General and administrative(6.23)-(8.82)(7.83)-

Interest income0.02-0.400.31-

Interest and financing charges(0.91)-(1.45)(1.04)-

Adjusted funds from operations (1)25.39-14.8519.87-

Cash flows from operating activities17.71-50.8218.81-

(1) Adjusted FFO, net (debt) surplus and operating netback do not have any standardized meanings under Canadian generally accepted accounting principles ("GAAP") and therefore may not be comparable to similar measures presented by other entities. For additional information related to these measures, including a reconciliation to the nearest GAAP measures, where applicable, see "Non-GAAP and Other Financial Measures".

(2) The commercial operations of Lotus Creek for the year ended December 31, 2025 are between February 5, 2025 and December 31, 2025.

(3) Net of decommissioning liabilities on date of acquisition.

(4) As at December 31, 2024 and for the three months ended December 31, 2024 and the period from date of incorporation, August 21, 2024 to December 31, 2024, one common share of the Company was outstanding.

(5) For the three months ended December 31, 2024 and the period from date of incorporation, August 21, 2024 to December 31, 2024, per weighted average basic share measures are not relevant financial measures as one common share of the Company was outstanding.

2025 YEAR END RESERVES HIGHLIGHTS

The Company is pleased to provide below both an overview summary and select highlights of its first year-end oil and gas reserves evaluation as at December 31, 2025. The year-end 2025 reserves were evaluated by independent reserves evaluator Sproule International Limited ("Sproule ERCE") in accordance with the definitions, standards and procedures contained in the Canadian Oil and Gas Evaluation Handbook ("COGE Handbook") and National Instrument 51-101 Standards of Disclosure for Oil and Gas Activities ("NI 51-101"). A reserves committee, comprised of independent members of the Company's Board of Directors, reviewed the qualifications and appointment of the independent reserves evaluator and reviewed the procedures for providing information to the evaluators. The reserves evaluation was based on an average of price forecasts prepared by Sproule ERCE, GLJ Petroleum Consultants Ltd. and McDaniel & Associates Consulting Ltd. effective at January 1, 2026. Reserves included herein are stated on a company gross basis (working interest before deduction of royalties without inclusion of any royalty interests) unless noted otherwise. Additional reserves information required under NI 51-101 will be included in Lotus Creek's Annual Information Form to be filed on SEDAR+ on or before March 31, 2026.

The Company's proved developed producing ("PDP") reserves are 4.7 Mboe, total proved ("TP") reserves are 7.2 Mboe, and total proved plus probable ("TPP") reserves are 11.2 Mboe as at December 31, 2025.

The before-tax net present value ("NPV") of reserves, discounted at 10%, was approximately $92.8 million for PDP, $119.5 million for TP, and $187.0 million for TPP.

The after-tax NPV of reserves, discounted at 10%, was approximately $84.7 million for PDP, $103.7 million for TP, and $154.4 million for TPP.

The Company's reserve report includes Future Development Capital ("FDC") of $41.2 million for TP and $70.6 million for TPP.

The reserve life index ("RLI") for PDP, TP, and TPP, is 3.2, 4.9, and 7.4 years, respectively.

Utilizing the evaluator average price forecast at January 1, 2026 and provisions for undeveloped land value and net debt, net asset values ("NAV") for PDP, TP, and TPP, as set forth in the table below, are $2.26 per share, $2.93 per share and $4.61 per share, respectively.

The following tables outline Lotus Creek's reserves as at December 31, 2025. No provision for interest, risk management contracts, debt service charges and general and administrative expenses have been made and it should not be assumed that the net present values of the reserves estimated by Sproule ERCE represents the fair market value of the reserves.

Reserves Summary at Dec 31, 2025 Using Forecast Costs and January 1, 2026 Evaluator Average Forecast Prices

Company GrossLight

Oil

(Mbbl) Heavy

Oil

(Mbbl)NGLs

(Mbbl)Natural

Gas

(MMcf)Equivalent

(Mboe)Liquids

Ratio

(%)

Proved Developed Producing2,5281898776,5794,69077

Proved Developed Non-Producing95-3118615780

Proved Undeveloped1,0721805592,9622,30579

Total Proved3,6963691,4679,7277,15277

Total Probable1,7864658595,4824,02377

Total Proved plus Probable5,4818342,32515,20811,17577

Net Present Value of Future Revenues Before Income Taxes Under Forecast Prices and Costs

Company GrossUndiscountedDiscountedDiscountedDiscountedDiscounted

($ thousands)

@ 5%@ 10%@ 15%@ 20%

Proved Developed Producing109,714103,89092,76982,96875,078

Proved Developed Non-Producing3,3812,7662,2921,9211,624

Proved Undeveloped48,41433,91224,41317,93013,313

Total Proved161,509140,568119,474102,81890,015

Total Probable123,34689,11967,48153,43043,761

Total Proved plus Probable284,855229,688186,955156,249133,776

Net Present Value of Future Revenues After Income Taxes Under Forecast Prices and Costs

Company GrossUndiscountedDiscountedDiscountedDiscountedDiscounted

($ thousands)

@ 5%@ 10%@ 15%@ 20%

Proved Developed Producing98,15894,37384,73976,05669,031

Proved Developed Non-Producing2,5572,0811,7151,4281,199

Proved Undeveloped37,43525,23717,27511,8708,044

Total Proved138,151121,690103,72889,35478,274

Total Probable95,01367,92450,71039,60732,019

Total Proved plus Probable233,164189,615154,438128,961110,293

Net Future Development Capital ("FDC") Under Forecast Prices and Costs

($ thousands)ProvedProbableTPP

202623,800-23,800

20275,41419,24424,658

202811,96610,21722,183

Undiscounted Total41,17929,46170,640

Reserves Life Index ("RLI")

(years)2025

Proved Developed Producing3.2

Total Proved4.9

Total Proved plus Probable7.4

Net Asset Value ("NAV") at December 31, 2025

($ millions, except per share amounts)PDPTPTPP

Value of Company Interest Discounted at 10% (Before Tax)92.8119.5187.0

Undeveloped Land(1)7.47.47.4

Net Debt(9.8)(9.8)(9.8)

NAV90.4117.1184.5

Shares Outstanding (millions)40.040.040.0

NAV per Share2.262.934.61

(1) Undeveloped land has been based on internal estimates of the value of the Company's undeveloped land.