Calgary, Alberta--(Newsfile Corp. - May 22, 2024) - Lycos Energy Inc. (TSXV: LCX) ("Lycos" or the "Company") is pleased to announce its operating and financial results for the three months ended March 31, 2024. 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 months ended March 31, 2024. These filings are available on SEDAR+ at www.sedarplus.ca and the Company's website at www.lycosenergy.com.

Financial and Operating Highlights

Q1 2024 Financial and Operating Highlights

Highlights for the three months ended March 31, 2024 include:

• Average production volumes increased to 3,840 boe/d (99% crude oil) in the first quarter of 2024 compared to 1,940 boe/d in the first quarter of 2023, representing a 98% increase. Exit March production averaged over 4,100 boe/day.

• Net operating expenses⁽¹⁾ were $25.48 per boe in the first quarter of 2024, representing a 14% decrease from $29.55 per boe in the comparable period of 2023.

• Adjusted funds flow from operations⁽¹⁾ of $9.6 million in the first quarter of 2024 compared to $2.6 million in the first quarter of 2023, representing a 266% increase.

• Reduced G&A expense to $3.79 per boe in the first quarter of 2024, a 17% decrease compared to $4.54 per boe in the same period of 2023.

• Successfully drilled and completed 7.0 wells in the Lloydminster and Greater Lloydminster area, including 6.0 net wells (2.0 wine rack and 4.0 multi-lateral) brought on stream by the end of March 2024 and 1.0 net disposal well. Lycos commenced the drilling of an additional wine rack well that was brought on stream after the first quarter of 2024.

⁽¹⁾ See Non-IFRS Measures, Non-IFRS Financial Ratios and Capital Management Measures

Operations Update

Drilling operations in Q1 2024 and the first half of Q2 2024 have been focused on our Alberta properties. To date, the Company has drilled and brought 10.0 net multi-lateral wells on production, of which 6.0 net wells were drilled using our wine rack design. The Company's 2024 drilling program targeted a 4-well pad, therefore eliminating shutting down the drilling rig for spring break up as well as realizing cost savings on rig moves. Lycos is currently drilling 2.0 net wells and expects to bring these on production by the end of May 2024. Current average production is approximately 4,500 boe/day (99% crude oil).

The following table highlights Lycos' drilling results from the first half of 2024 for all wells that have been on production for more than 30 days. Six of the seven wells listed were drilled in Q1 2024 and the 04/03-29-048-05W4 well was drilled in Q2 2024.

Outlook

As Lycos converts inventory on lands acquired from last year, results are well above expectations. The recent success has added two new core areas to the Company's portfolio and the next round of drilling through Q3 2024 will test three new areas expected to add multiple follow up locations to our inventory on the success of those drills. Lycos plans to drill and complete 19 gross (18.6 net) multi-laterals in Q2 2024 and Q3 2024 with 3 gross (3 net) wells being drilled in Saskatchewan to take advantage of the new multi-lateral royalty relief program there.

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; anticipated capital program, drilling plans, outlook and operational results for the remainder of 2024; 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.

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; 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 recently acquired assets into Lycos' operations; incorrect assessments of the value of benefits to be obtained from acquisitions and exploration and development programs; fluctuations in commodity prices, changes in industry regulations and political landscape both domestically and abroad, wars (including Russia's military actions in Ukraine and the Israel-Palestinian conflict), 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, 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, 2023, 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.

Future Oriented Financial Information

This press release contains future oriented financial information and financial outlook information (collectively, "FOFI") about Lycos' prospective results of operations and production, organic growth and acquisitions, operating costs, 2024 outlook, including exploration, development and acquisition expenditures in 2024 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 the remainder of 2024. 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 activities or 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, differences in the timing of capital expenditures, and variances in average production estimates can have a significant impact on the key performance measures included in Lycos' guidance. 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").

Short Term Results. References in this press release to peak rates, initial production rates, IP30, IP60, IP90 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. Drilling Locations. This press release discloses multi-lateral drilling locations in two categories: (i) booked locations and (ii) unbooked locations. Booked locations are derived from an evaluation prepared by Sproule Associates Limited, the Company's independent qualified reserve evaluator, in accordance with NI 51-101 and the most recent publication of the Canadian Oil and Gas Evaluations Handbook as of December 31, 2023 (the "Reserves Report") and account for drilling locations that have associated proved and probable reserves identified in the Reserves Report, 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 19.0 (18.6 net) drilling locations identified herein 11.0 (11.0 net) are proved locations, 1.0 (0.6 net) are probable locations and 7.0 (7.0 net) are unbooked locations. 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.

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.

"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 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

All dollar figures included herein are presented in Canadian dollars, unless otherwise noted.

Neither the TSX Venture Exchange nor its Regulation Services Provider (as that term is defined in the policies of the TSX Venture Exchange) accepts responsibility for the adequacy or accuracy of this release.

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