Lycos Energy reports Q2 2026 results and operations update

Calgary, Alberta--(Newsfile Corp. - August 11, 2026) - 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, 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 and six months ended June 30, 2026 and 2025, copies of which are available on the Company's SEDAR+ profile at www.sedarplus.ca and the Company's website at www.lycosenergy.com .

Q2 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. (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 loss of $23.2 million.

Highlights for the three months ended June 30, 2026, include:

Drilled and completed 7.0 gross (7.0 net) wells in the Moonshine area, six of which were drilled from a single pad, achieving an average drill, complete and tie-in cost of $1.5 million per well. Wet weather on location extended the timing of the drilling program, with the wells brought on stream late in Q2 2026. The quarter reflects limited production contribution from the new wells, and the Company expects the benefit of the program to be realized in the third quarter of 2026.

Production averaged 1,887 boe/d (96% crude oil), a 14% increase over Q1 2026 average production of 1,653 boe/d (95% crude oil), driven by the first full quarter of production from the assets acquired in the Mahikan business combination, together with the stability of the Company's legacy asset base. Production decreased 52% from Q2 2025 primarily due to the 2025 Lloydminster and North dispositions, combined with natural declines, partially offset by the contribution of the Mahikan assets.

Generated adjusted funds flow from operations (1) of $7.3 million, a 60% increase over $4.6 million in Q1 2026, on stronger realized pricing of $97.65/boe, up 34% from Q1 2026, and higher production volumes. Operating netback (1) improved to $51.91/boe from $37.25/boe in Q1 2026. Adjusted funds flow from operations decreased 24% from Q2 2025, as the volume impact of the 2025 dispositions was substantially offset by materially stronger commodity pricing.

Invested $13.9 million in capital expenditures (1) , of which $2.6 million related to lease preparation and long-lead materials for the second half 2026 exploration and development program. Capital spending in excess of adjusted funds flow from operations was funded from the proceeds of the March 2026 private placement, consistent with the Company's plan to accelerate development of the Moonshine assets.

Exited the quarter with positive adjusted working capital (1) of $8.4 million.

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

Subsequent Event

On August 6, 2026, the Company closed the previously announced acquisition of certain assets in the Greater Provost area of Alberta (the " Provost Acquisition ") for cash consideration of $70.0 million, before closing adjustments. The assets add approximately 1,000 boe/d (91% heavy crude, 1% natural gas liquids and 8% natural gas) of production supported by waterflood operations. Concurrent with closing, the Company completed a bought-deal offering at $1.52 per share for gross proceeds of $34.5 million, including the exercise of the overallotment option in full (the " Bought-Deal Offering "). Net proceeds from the Bought-Deal Offering were used to fund the Provost Acquisition. Concurrently with the Provost Acquisition and Bought-Deal Offering, the Company expanded its existing credit facility to $55.0 million, with an uncommitted accordion feature to increase total capacity up to $75.0 million.

Operations Update

Current production is approximately 3,600 boe/d (96% crude oil) reflecting the strong contribution of the Moonshine Q2 drilling program and the assets acquired in the Greater Provost area of Alberta. The 01-32 pad continues to perform in line with expectations, with current aggregate oil production greater than 900 bbl/d. Results to date have confirmed the effectiveness of Lycos' circulating string approach across the range of API gravities encountered at Moonshine. As with any new approach, the wells require active production management, and the Company continues to refine its operating practices as it builds run-time history across the pool.

Lycos continues to improve capital efficiency across its Moonshine development program, with average drill, complete and tie-in costs of $1.5 million per well and initial production rates that imply capital cost efficiency of less than $15,000 per boe/d of added production. Pad-based development and consistent execution have supported these results.

Further to the drilling plans outlined in the Company's news release dated July 20, 2026, Lycos has drilled, completed and brought on stream 2.0 gross (2.0 net) HVSM wells at Moonshine, comprising a step-out delineation well targeting the General Petroleum (" GP ") formation and a test well targeting the Sparky formation. The Company continues to evaluate production performance from these wells.

In late July 2026, Lycos also spud a 1.0 gross (1.0 net) multi-lateral well in the Wildmere area, which is expected to be brought on stream in mid-August 2026.

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 improving capital efficiency of its Moonshine capital program, bringing the Company's multi-lateral well in the Wildmere area on stream in mid-August 2026, and timing for receiving production data from same. 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 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 acquired assets 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 and the Provost Acquisition); 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 in 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 press release 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 press release 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" include light crude oil, medium crude oil, heavy oil and tight oil combined. References to "natural gas liquids" include pentane, butane, propane and ethane. References to "gas" or "natural gas" relates to conventional natural gas.

Short Term Results. References in this press release to production test rates, initial test production rates, initial production rates 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 produce, 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 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 defined as operating netback plus realized gains or losses on financial derivatives.

" 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 16 and 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

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/309245

Newsfile Corp.

August 11, 2026 - 1:02 PM PDT

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