Lycos Energy Inc. Announces $60.0 Million Asset Sale, Distribution of Proceeds to Shareholders and Normal Course Issuer Bid

Executive Summary

• Lycos Energy Inc. entered into a definitive purchase‑and‑sale agreement to sell assets in the Lindbergh, Moose Lake and Fishing Lake areas for cash consideration of $60 million.
• Net proceeds will be used to reduce debt by $9 million, return ≈$47.9 million to shareholders as a $0.90 per share “Sale Dividend”, and fund general corporate purposes.
• The TSX‑V conditionally approved Lycos’s Notice of Intention to commence a Normal Course Issuer Bid (NCIB) to repurchase up to 4,661,208 shares (10 % of float) starting 3 Nov 2025.

Key Details

• Transaction Structure – Cash purchase‑and‑sale agreement dated 7 Oct 2025; closing expected ~15 Oct 2025, subject to customary conditions and TSX‑V approval.
• Purchase Price – $60.0 million (pre‑closing adjustments).
• Asset Profile –
• Current production: ≈940 bbl/d (oil‑weighted).
• Proved Developed Producing reserves: 395 Mbbl (as of 31 Dec 2024).
• Booked drilling locations: 21 net.
• Valuation Metrics –
• 3.4× annualized Net Operating Income.
• $63,830 per flowing boe.
• $25.80 per boe of proved reserves (2,326 Mbbl).
• $19.54 per boe of proved + probable reserves (3,070 Mbbl).
• Use of Proceeds –
• Debt repayment: $9.0 million to bring net debt < $1.0 million.
• Shareholder return: ≈$47.9 million via Sale Dividend ($0.90 per common share).
• Remaining proceeds → general corporate purposes, working capital, ongoing operations.
• Credit Facility – Existing $50 million facility remains in place on unchanged terms after closing.
• Shareholder Distribution – Sale Dividend treated as a return of capital (reduction of stated capital) to be effected at a special shareholders’ meeting scheduled for 13 Nov 2025.
• NCIB Details –
• Maximum repurchase: 4,661,208 common shares (10 % of public float).
• Period: 3 Nov 2025 – 2 Nov 2026 (or earlier if limit reached/terminated).
• Broker: National Bank Financial Inc. (NBF) acting as broker and holder of an automatic share purchase plan to enable purchases during blackout periods.
• Financial Advisor & Legal Counsel – NBF (exclusive financial advisor); Stikeman Elliott LLP (legal counsel).

Notable Quotes

“The Asset Sale provides a meaningful opportunity to crystallize value and return capital to shareholders, while positioning Lycos for future growth initiatives.” – Dave Burton, President & CEO

Materiality Assessment: Material – Positive (significant cash proceeds, debt reduction, shareholder distribution, and strategic share repurchase program).