Lycos Energy Reports Q1 2026 Results and Operations Update

Calgary, Alberta--(Newsfile Corp. - May 26, 2026) - 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, 2026. 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, 2026, copies of which are available on the Company's SEDAR+ profile at www.sedarplus.ca and the Company's website at www.lycosenergy.com . Q1 2026 Financial and Operating Highlights   (1) See Non-IFRS Measures, Non-IFRS Financial Ratios and Capital Management Measures. (2) Realized prices are based on revenue, net of blending expense.

Highlights for the three months ended March 31, 2026, include: Average production of 1,653 boe/d (95% crude oil) generated adjusted funds flow from operations (1) of $4.6 million in Q1 2026, compared to $12.5 million on average production of 4,072 boe/d (97% crude oil) in Q1 2025, representing a 63% decrease, primarily as a result of Q2 and Q4 2025 asset dispositions and lower exploration and development expenditures in the period. Production remained relatively consistent with Q4 2025 levels, reflecting the stability of the Company's continuing asset base ahead of the commencement of its 2026 development program. Net operating expenses (1) per boe improved to $21.22/boe in Q1 2026 from $22.96/boe in Q1 2025.

As previously announced, on March 30, 2026, the Company closed the business combination with Mahikan Oil Corporation ("Mahikan"). Pursuant to the transaction, Lycos acquired all of the issued and outstanding common shares of Mahikan in exchange for 29,781,301 common shares of Lycos, representing an exchange ratio of 0.60 Lycos common shares for each Mahikan share held, and the assumption of Mahikan's outstanding indebtedness. Concurrent with closing, the Company completed a non-brokered private placement of common shares at $1.20 per share for gross proceeds of $30.0 million.

Successfully drilled and rig released a well on the acquired Mahikan lands prior to closing the business combination, with initial production and operating results expected to contribute to Lycos' Q2 2026 results. Exited Q1 2026 with positive adjusted working capital (1) of $13.9 million following the receipt of proceeds from the non-brokered private placement and completion of the business combination with Mahikan. (1) See Non-IFRS Measures, Non-IFRS Financial Ratios and Capital Management Measures. Operations Update The Company's first Moonshine Mannville high velocity solids management ("HVSM") well (102/01-33-057-02W4/00) continues to demonstrate strong performance, achieving a 60-day initial production ("IP60") rate of approximately 160 boe/d (99% crude oil).

As a result of continued wellbore optimization, the well is currently producing in excess of 200 boe/d. In May 2026, the Company mobilized a drilling rig to a new location within the Moonshine area and commenced drilling operations on its second HVSM well, a delineation well targeting the General Petroleum ("GP") formation. The well has since been drilled, completed and brought on production, with the Company continuing to evaluate production performance.

Further updates will be provided as additional data becomes available. Following the GP delineation well, the Company commenced a six-well HVSM-style development program in the GP formation, offsetting the Company's initial 01-33 GP Moonshine Mannville well. Given the strong early results from our HVSM drilling program, the Company intends to evaluate potential enhancements to its H2 2026 capital plans in conjunction with its second quarter results.

Share Award Incentive Plan The Company is pleased to announce that it has received conditional approval from the TSX Venture Exchange (the "Exchange") for the adoption of a Share Award Incentive Plan (the "Plan"). The Plan, together with the Company's current stock option plan, constitutes a "rolling up to 10%" plan for purposes of Exchange policies. In connection with the adoption of the Plan, the Company's Board of Directors approved the grant (the "Grant") of an aggregate of 2.1 million restricted share awards ("RSAs"), of which 1.5 million were granted to officers and directors of the Company.

Each RSA entitles the holder to receive one common share of the Company upon vesting, with one-third vesting on each of the first, second and third anniversaries of the date of grant. Final Exchange approval of the Plan and the Grant remain subject to the satisfaction of customary Exchange conditions, including receipt of the requisite shareholder approval at the Company's next annual general meeting. 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 East Central, Alberta area.

Additional Information For further information, please contact:   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: the Company's drilling plans, additional updates being provided with respect to second HVSM well targeting the GP formation and Exchange final approval and shareholder approval of the Plan and the Grant. 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 oil exists in the quantities predicted or estimated and that the oil 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 expectations and assumptions concerning the business plan of Lycos; the receipt of requisite approvals for the Grant and the Plan; 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 Lycos' 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 assets acquired pursuant to the business combination into Lycos' operations; incorrect assessments of the value of benefits to be obtained from business combinations and exploration and development programs (including the business combination with Mahikan); fluctuations in commodity prices, changes in industry regulations and political landscape both domestically and abroad, wars (including in the Middle East and 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 the Middle East 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, 2025, and the MD&A for additional risk factors relating to Lycos, which can be accessed either on Lycos' website at www.lycosenergy.com or under Lycos' 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.

Any financial outlook or future-oriented financial information contained in this presentation has been approved by management as of the date hereof, is provided for the purpose of conveying the anticipated effects of the Company's planned activities and strategies and may not be appropriate for other purposes. 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). References to "gas" or "natural gas" relate to conventional natural gas. Short Term Results.

References in this press release to production test rates, initial test production rates, initial production rates (including IP60) 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 the Company. 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. 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 derivative financial instruments, decommissioning obligations, and lease 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.

Adjusted funds flow netback is calculated by dividing adjusted funds flow from operations by production for the period. " 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 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 13 to 15 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. To view the source version of this press release, please visit https://www.newsfilecorp.com/release/298943 Source: Lycos Energy Inc.