Lycos Energy Inc. Announces Closing of Previously Announced Durham Creek Exploration Ltd. Acquisition, $35.0 Million Equity Financing and Recent Drilling Results

Calgary, Alberta--(Newsfile Corp. - October 16, 2023) - Lycos Energy Inc. (TSXV: LCX) ("Lycos" or the "Company") is pleased to advise that it has closed the previously announced acquisition (the "Acquisition") of Durham Creek Exploration Ltd. ("DCEL"), a privately held, heavy oil producer. Lycos acquired all of the issued and outstanding common shares of DCEL for total consideration of $22.5 million, consisting of $12.5 million in cash and 2,816,907 common shares of Lycos ("Lycos Shares") at a deemed price of $3.55 per Lycos Share. Significant growth opportunities have been identified on the 55 net sections of DCEL land, including over 70 drilling locations.

Concurrent with the Acquisition, Lycos completed a bought-deal financing including the exercise of the over-allotment option (the "Offering") of 9,860,100 Lycos Shares at a price of $3.55 per Lycos Share for gross proceeds of approximately $35.0 million. A portion of the net proceeds from the Offering were used to fund the cash purchase price of the Acquisition. Following the completion of the Acquisition and the Offering, there are 53,081,147 Lycos Shares issued and outstanding.

Recent Drilling Results

Lycos is pleased to provide results on its most recent Mannville multi-lateral oil wells, consisting of one extended reach "sweeper" 17,000m fishbone, three shorter fishbones, one conventional multi-lateral and two new generation "wine rack" multi-laterals.

Five of the seven wells on stream have substantially outperformed expectations. Lycos is very encouraged by the "sweeper" extended length Sparky fishbone, with an IP25 of over 375 boe/d, making it the best fishbone well drilled by the Company to date. Drilling length, well geometry and changes in drilling design have substantially increased observed initial rates. The two Alberta Sparky wells were drilled with prior generation fluid systems and have taken longer to clean up. Both wells continue to improve in oil rates and decline in water rates.

Lycos plans to bring on one more "wine rack" well, two more fishbones and one more conventional multi-lateral by year end. The Company's current production exceeds 4,000 boe/d.

Advisors

National Bank Financial Inc. acted as exclusive financial advisor to Lycos with respect to the Acquisition.

Stikeman Elliott LLP acted as legal counsel to Lycos with respect to the Acquisition and the Offering.

Burnet, Duckworth & Palmer LLP acted as legal counsel to DCEL with respect to the Acquisition and as legal counsel to the Underwriters in respect of the Offering.

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, Greater Lloydminster area and Gull Lake, Saskatchewan.

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. 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 anticipated benefits of the Acquisition; use of proceeds from the Offering; the performance characteristics of the Company's oil and natural gas properties; future drilling plans; and the ability of the Company to achieve drilling success consistent with management's expectations.

The forward-looking statements and information are based on certain key expectations and assumptions made by Lycos, including 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, including those acquired in connection with the Acquisition; prevailing 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; 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, unforeseen difficulties in integrating the DCEL assets into Lycos' operations; incorrect assessments of the value of benefits to be obtained from acquisitions and exploration and development programs (including the Acquisition); fluctuations in commodity prices, changes in industry regulations and political landscape both domestically and abroad, wars (including Russia's military actions in Ukraine), 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, risks with respect to unplanned third-party pipeline outages and risks relating to the Alberta wildfires, 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 annual information form for the year ended December 31, 2022, and the management discussion and analysis for the three and six months ended June 30, 2023, 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.

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 in National Instrument 51-101 - Standards of Disclosure for Oil and Gas Activities.

Short Term Results. References in this press release to peak rates, production rates since inception, current production rates, 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 commence production and decline thereafter and are not indicative of long-term performance or of ultimate recovery. While encouraging, readers are cautioned not to place reliance on such rates in calculating the aggregate production of Lycos.

Drilling Locations. The >70 drilling locations disclosed in this press release in respect of the assets acquired pursuant to the Acquisition are unbooked locations. 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. 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.

Abbreviations

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