Lycos Energy signs definitive merger deal with Mahikan

Executive Summary

• Lycos Energy Inc. entered into a definitive agreement to acquire Mahikan Oil Corp. in an all-share transaction valued at approximately $49.7 million, including the assumption of net debt.
• Concurrent with the acquisition, Lycos announced a non-brokered private placement equity offering of up to 25 million shares at $1.20 per share, raising aggregate gross proceeds of up to $30.0 million.
• The transaction establishes a new core area with 45 net contiguous sections of stacked Mannville rights, adding significant oil-in-place resources and drilling inventory to Lycos's portfolio.

Key Details

• Transaction Structure: All-share strategic business combination; Mahikan becomes a wholly owned subsidiary.
• Acquisition Consideration: Total value of ~$49.7 million, consisting of 29,781,301 Lycos common shares (deemed price $1.20/share), representing 0.60 Lycos shares for each Mahikan share.
• Shareholder Acceptance: 100% of Mahikan shareholders have irrevocably accepted the offer and tendered their shares.
• Closing Timeline: Expected on or before March 31, 2026, subject to TSX Venture Exchange approval and customary conditions.
• Hold Periods:
  • Directors, officers, and 10% shareholders of Mahikan (21,150,001 shares): Released one-third at 4, 8, and 112 months post-closing.
  • Other Mahikan shareholders: 4-month hold period.
  • Equity offering shares: 4 months and 1 day statutory hold.
• Equity Offering Terms:
  • Up to 25 million shares at $1.20 per share.
  • Gross proceeds: Up to $30.0 million.
  • Insider subscription: ~$5.0 million anticipated from directors, officers, and employees.
  • Use of proceeds: Repay indebtedness from the combination, finance future development capital, and general corporate purposes.
  • Post-offering cash position: Expected net cash of ~$13.0 million.
• Strategic Asset Highlights:
  • Core Area: 45 net contiguous sections of largely undeveloped land in east-central Alberta.
  • Targets: Stacked Mannville pay with multizone optionality (Waseca, Sparky, General Petroleum, Lloydminster formations).
  • Resource Base: ~1.44 billion barrels of total petroleum initially-in-place (PIIP).
  • Drilling Inventory: ~698 gross/net locations identified, with additional upside potential.
• Management & Governance:
  • CEO Dave Burton remains President and CEO.
  • New Board Members: Tom Coolen (Chairperson) and Steve Buytels join from Mahikan; two additional independent directors to be appointed.
  • Mahikan leadership integration: Taylor Law (VP, Exploration), Craig Hutton (President, Mahikan Business Unit), and Brennan Kasper (Director, Land).
• Advisers:
  • Lycos Financial Adviser: National Bank Capital Markets.
  • Mahikan Financial Adviser: Peters & Co. Ltd.
  • Lycos Legal Counsel: Stikeman Elliott LLP.
  • Mahikan Legal Counsel: Torys LLP.