Calgary, Alberta--(Newsfile Corp. - August 25, 2025) - Lycos Energy Inc. (TSXV: LCX) ("Lycos" or the "Company") is pleased to announce its operating and financial results for the three and six months ended June 30, 2025. Selected financial and operating information is outlined below and should be read with Lycos' unaudited condensed interim consolidated financial statements and related management's discussion and analysis ("MD&A") for the three and six months ended June 30, 2025. These filings are available on SEDAR+ at www.sedarplus.ca and the Company's website at www.lycosenergy.com.
Financial and Operating Highlights
| PER FS/ABSOLUTE NUMBERS | ||||||||||||||||
| BOE | 358,493 | 423,004 | 724,958 | 772,447 | ||||||||||||
| Three months ended June 30, | % change | Six months ended June 30, | % change | |||||||||||||
| ($ in thousands, except per share) | 2025 | 2024 | 2025 | 2024 | ||||||||||||
| Total petroleum and natural gas sales, net of blending(1) | 23,146 | 35,649 | (35)% | 49,987 | 59,541 | (16)% | ||||||||||
| Adjusted funds flow from operations(1) | 9,628 | 18,027 | (47)% | 22,140 | 27,618 | (20)% | ||||||||||
| Per share - basic | $ | 0.18 | $ | 0.34 | (47)% | $ | 0.42 | $ | 0.52 | (19)% | ||||||
| Per share - diluted | $ | 0.18 | $ | 0.33 | (45)% | $ | 0.42 | $ | 0.50 | (16)% | ||||||
| Net income (loss)(3) | (54,612 | ) | 10,245 | (633)% | (52,239 | ) | 8,831 | (692)% | ||||||||
| Per share - basic | $ | (1.03 | ) | $ | 0.19 | (642)% | $ | (0.98 | ) | $ | 0.17 | (676)% | ||||
| Per share - diluted | $ | (1.03 | ) | $ | 0.19 | (642)% | $ | (0.98 | ) | $ | 0.16 | (713)% | ||||
| Capital expenditures(1) - exploration & development | 5,351 | 21,258 | (75)% | 28,273 | 40,708 | (31)% | ||||||||||
| Capital expenditures(1) - net acquisitions & dispositions | 285 | - | 100% | 23,207 | $ | - | 100% | |||||||||
| Adjusted working capital (net debt)(1) | (19,453 | ) | (30,592 | ) | (36)% | (19,453 | ) | (30,592 | ) | (36)% | ||||||
| Weighted average shares outstanding (thousands) | ||||||||||||||||
| Basic | 53,238 | 53,104 | 0% | 53,238 | 53,093 | 0% | ||||||||||
| Diluted | 53,238 | 55,118 | (3)% | 53,238 | 54,987 | (3)% | ||||||||||
| Average daily production: | ||||||||||||||||
| Crude oil (bbls/d) | 3,795 | 4,614 | (18)% | 3,867 | 4,209 | (8)% | ||||||||||
| Natural gas (mcf/d) | 869 | 209 | 316% | 831 | 213 | 290% | ||||||||||
| Total (boe/d) | 3,940 | 4,648 | (15)% | 4,006 | 4,244 | (6)% | ||||||||||
| Realized prices: | ||||||||||||||||
| Crude oil ($/bbl)(2) | 66.77 | 84.85 | (21)% | 71.13 | 77.60 | (8)% | ||||||||||
| Natural gas ($/mcf) | 1.37 | 0.21 | 552% | 1.30 | 1.16 | 12% | ||||||||||
| Total ($/boe) | 64.62 | 84.23 | (23)% | 68.94 | 77.01 | (10)% | ||||||||||
| Operating netback ($/boe)(1) | ||||||||||||||||
| Petroleum and natural gas revenues(2) | 64.62 | 84.23 | (23)% | 68.94 | 77.01 | (10)% | ||||||||||
| Realized gain (loss) on financial derivatives | (1.04 | ) | (1.72 | ) | (40)% | (0.55 | ) | (0.49 | ) | 12% | ||||||
| Royalties | (10.87 | ) | (11.53 | ) | (6)% | (10.50 | ) | (11.11 | ) | (5)% | ||||||
| Net operating expenses(1) | (18.99 | ) | (22.66 | ) | (16)% | (21.00 | ) | (23.93 | ) | (12)% | ||||||
| Transportation expenses | (2.52 | ) | (1.53 | ) | 65% | (2.04 | ) | (1.60 | ) | 28% | ||||||
| Operating netback, including financial derivatives ($/boe)(1) | 31.20 | 46.79 | (33)% | 34.85 | 39.88 | (13)% | ||||||||||
| Adjusted funds flow from operations ($/boe)(1) | 26.86 | 42.62 | (37)% | 30.54 | 35.75 | (15)% | ||||||||||
(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 and six months ended June 30, 2025 includes a non-cash loss on disposals of $41.2 million and a non-cash impairment expense of $23.2 million.
Q2 2025 Financial and Operating Highlights
- Average production volumes of 3,940 boe/d (96% crude oil) generating adjusted funds flow from operations(1) of $9.6 million in Q2 2025.
- Net operating expense(1) per boe decreased 16% to $18.99 in Q2 2025 from $22.66 in the comparable period of 2024 and $22.96 from prior quarter of 2025. The decrease is primarily the result of the Company's Southwest Saskatchewan disposition on December 31, 2024 and its Frog Lake disposition on February 28, 2025. Both properties had higher net operating expenses per boe, averaging approximately $43.27/boe and $49.20/boe, respectively.
- In the second quarter of 2025, the Company completed the disposition of its properties in the Frog Lake area of Alberta for total consideration of $2.9 million, net of transaction costs and subject to final closing adjustments. These properties were previously held for sale at March 31, 2025.
- Exit net debt(1) of $19.5 million, representing 0.5X annualized net debt to adjusted funds flow from operations ratio(1).
(1) See Non-IFRS Measures, Non-IFRS Financial Ratios and Capital Management Measures
Non-Core Dispositions
Lycos disposed of certain non-core assets and facilities in Lloydminster, Saskatchewan to an arm's length purchaser on June 30, 2025 for total consideration of $2.5 million, subject to closing adjustments (the "Non-Core Saskatchewan Disposition"). This represents a cash flow multiple of approximately 2.5X (based on forecast 2025 forecast annual cash flow of $1.0 million). The purchaser assumed approximately $12.9 million of decommissioning liabilities (unescalated and undiscounted) representing approximately 38% of the Company's total decommissioning liability and 54% of the Company's total inactive liability. Annual 2025 production from the assets was forecast to be approximately 360 boe/d (100% oil). The assets carried higher net operating expenses of approximately $46 per boe, resulting in forecast H2 2025 net operating expenses dropping below $18 per boe. The transaction marks a pivotal step to streamline operations and concentrate Lycos efforts on the core Lloydminster assets, particularly in the Bonnyville region.
As part of the transaction, Lycos retains the rights to drill on any and all undeveloped lands by way of a lease issued from the acquirer to Lycos. This lease is renewed annually subject to Lycos drilling one well in the calendar year on the subject lands. In conjunction with the transaction, Lycos extended the lease on the Southwest Saskatchewan assets until December 31, 2026.
The Non-Core Saskatchewan Disposition did not impact Lycos' borrowing base under its existing credit facilities, preserving financial flexibility to pursue the Company's planned H2 2025 exploration and development program.
Outlook
With a leaner asset base and reduced liabilities, Lycos is strategically positioned to deliver enhanced value to shareholders through the development of its Lloydminster, Alberta core assets. As previously announced on May 29, 2025, Lycos will resume its capital expenditures program in Q3 2025. The drilling program will be focused in the Company's highest-return areas in the Bonnyville region.
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", "outlook", "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 resumption of the Company's capital program and drilling plans in September 2025; anticipated H2 2025 production and capital expenditures; the Company's outlook and operational results for the remainder of 2025 and 2026, including exit net debt; the timing and expected production of recently spud / drilled wells; expectations regarding commodity prices and heavy oil differentials; the performance characteristics of the Company's oil and natural gas properties; the Company's plans to drill on undeveloped lands pursuant to the leased rights pertaining to the Non-Core Saskatchewan Disposition; 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.
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) and the risk of an extended period of low oil and natural gas prices; changes in industry regulations and political landscape both domestically and abroad; the impact of tariffs and other restrictive trade measures imposed or threatened by the U.S. administration, the Canadian administration and foreign governments, including retaliatory or countermeasures, 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 Company's annual information form for the year ended December 31, 2024, and the MD&A for additional risk factors relating to Lycos, which can be accessed either on the Company's website at www.lycosenergy.com or 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.
This press release contains future-oriented financial information and financial outlook information (collectively, "FOFI") about the Company's prospective results of operations and production and growth, exit 2025 net debt, exit 2026 net debt, anticipated H2 2025 production and capital expenditures, and expectations, and components thereof, all of which are subject to the same assumptions, risk factors, limitations, and qualifications as set forth in the above paragraphs. FOFI contained in this document was approved by management as of the date of this document and was provided for the purpose of providing further information about Lycos' proposed business activities in 2025. Lycos and its management believe that FOFI has been prepared on a reasonable basis, reflecting management's best estimates and judgments, and represent, to the best of management's knowledge and opinion, the Company's expected course of action. However, because this information is highly subjective, it should not be relied on as necessarily indicative of future results. Lycos disclaims any intention or obligation to update or revise any FOFI contained in this document, whether as a result of new information, future events or otherwise, unless required pursuant to applicable law. Readers are cautioned that the FOFI contained in this document should not be used for purposes other than for which it is disclosed herein. Changes in forecast commodity prices, exchange rates, differences in the timing of capital expenditures, and variances in average production estimates can have a significant impact on the Company's key performance measures. The Company's actual results may differ materially from these estimates.
Disclosure of Oil and Gas Information
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 National Instrument 51-101 - Standards of Disclosure for Oil and Gas Activities ("NI 51-101").
Non-IFRS Measures, Non-IFRS Financial Ratios and Capital Management Measures
This press release includes various specified financial measures, including non-IFRS financial measures, non-IFRS financial ratios and capital management measures as further described herein. These measures do not have a standardized meaning prescribed by International Financial Reporting Standards ("IFRS") and, therefore, may not be comparable with the calculation of similar measures by other companies.
"Adjusted working capital (net debt) (capital management measure)" is calculated as current assets less current liabilities, excluding the current portion of decommissioning liabilities and financial derivative receivable and liabilities. Adjusted working capital (Net Debt) is a capital management measure which management uses to assess the Company's liquidity. See the MD&A for a detailed calculation and reconciliation of adjusted working capital (net debt) to the most directly comparable measure presented in accordance with IFRS.
"Adjusted funds flow from operations (capital management measure)" is funds flow is calculated by taking cash flow from operating activities and adding back changes in non-cash working capital. Adjusted funds flow is further calculated by adding back decommissioning costs incurred and transaction costs. Management considers adjusted funds flow from operations to be a key measure to assess the performance of the Company's oil and gas properties and the Company's ability to fund future capital investment. Adjusted funds flow from operations is an indicator of operating performance as it varies in response to production levels and management of costs. Changes in non-cash working capital, decommissioning costs incurred and transaction costs vary from period to period and management believes that excluding the impact of these provides a useful measure of Lycos' ability to generate the funds necessary to manage the capital needs of the Company. See the MD&A for a detailed calculation and reconciliation of adjusted funds flow from operations to the most directly comparable measure presented in accordance with IFRS.
"Capital expenditures (non-IFRS financial measure)" includes exploration and development capital, facilities, land and seismic and acquisitions and dispositions. Management considers capital expenditures to be a key measure to assess the Company's capital investment in exploration and production activity, as well as property acquisitions and dispositions. The directly comparable IFRS measure to capital expenditures is net cash used in investing activities.
"Net debt to adjusted funds flow from operations ratio (non-IFRS financial ratio)" is calculated as net debt divided by adjusted funds flow from operations for the applicable period. Lycos utilizes net debt to adjusted funds flow from operations to measure the Company's overall debt position and to measure the strength of the Company's balance sheet. Lycos monitors this ratio and uses this as a key measure in making decisions regarding financing, capital expenditures and shareholder returns.
"Net operating expenses (non-IFRS financial measure)" is operating expenses, less processing income primarily generated by third party volumes at processing facilities where the Company has an ownership interest. The Company's principal business is not that of a midstream entity whose activities are dedicated to earning processing and other infrastructure payments. Where the Company has excess capacity at its facilities, it will look to process third party volumes as a means to reduce the cost of operating/owning the facility.
"Operating netback (non-IFRS financial measure)" is petroleum and natural gas revenues, less royalties, less net operating costs and transportation expenses, excluding the effects of financial derivatives. These metrics can also be calculated on a per boe basis, which results in them being considered a non-IFRS financial ratio. Management considers operating netback an important measure to evaluate Lycos' operational performance, as it demonstrates field level profitability relative to current commodity prices. See the MD&A for a detailed calculation and reconciliation of operating netback per boe to the most directly comparable measure presented in accordance with IFRS. "Operating netback, including financial derivatives" is calculated as petroleum and natural gas revenues, less royalties, less net operating costs and transportation expenses.
"Total petroleum and natural gas sales, net of blending (non-IFRS financial measure)" is total petroleum and natural gas sales, net of blending expense to compare realized pricing to benchmark pricing. This is calculated by deducting the Company's blending expense from petroleum and natural gas sales. Blending expense is recorded within blending and transportation expense in the condensed interim consolidated financial statements. See the MD&A for a detailed calculation and reconciliation of total petroleum and natural gas sales, net of blending, to the most directly comparable measure presented in accordance with IFRS.
Please refer to the MD&A on pages 15 to 17 for additional information relating to specified financial measures, including non-IFRS financial measures, non-IFRS financial ratios and capital management measures. The MD&A can be accessed either on the Company's website or under the Company's SEDAR+ profile on www.sedarplus.ca.
Abbreviations
| bbl bbl/d boe boe/d Mbbl Mboe Mcf MMbbl MMboe MMcf H2 Q1 Q2 Q3 | barrels of oil barrels of oil per day barrels of oil equivalent barrels of oil equivalent per day thousand barrels of oil thousand barrels of oil equivalent thousand cubic feet million barrels of oil million barrels of oil equivalent million cubic feet second half of the calendar year (July 1 - December 31) first financial quarter (January 1 - March 31) second financial quarter (April 1 - June 30) third financial quarter (July 1 - September 30) |
All dollar figures included herein are presented in Canadian dollars, unless otherwise noted.
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SOURCE: Lycos Energy Inc.
