Lycos Energy Inc. Announces Second Quarter Financial Results and Operations Update

Executive Summary

• Lycos Energy Inc. reported its operating and financial results for the three and six months ended June 30, 2025, highlighting a significant decline in revenue and net income due to lower crude oil prices and production volumes, offset by a substantial increase in natural gas realization.
• The company completed the disposition of non-core assets in the Frog Lake area of Alberta for $2.9 million and the Lloydminster, Saskatchewan assets for $2.5 million, retaining drilling rights on undeveloped lands via a new lease.
• Lycos exited the quarter with $19.5 million in net debt (0.5x annualized net debt to adjusted funds flow ratio) and announced plans to resume its capital expenditures and drilling program in Q3 2025, focusing on high-return areas in the Bonnyville region.

Key Details

• Production Volumes:
  • Q2 2025 Average Daily Production: 3,940 boe/d (96% crude oil).
  • Crude Oil: 3,795 bbls/d (down 18% from Q2 2024).
  • Natural Gas: 869 mcf/d (up 316% from Q2 2024).
  • Six Months Ended June 30, 2025 Total Production: 724,958 boe.
• Financial Performance (Three Months Ended June 30, 2025):
  • Total Petroleum and Natural Gas Sales: $23.1 million (down 35% from $35.6 million in Q2 2024).
  • Adjusted Funds Flow from Operations: $9.6 million (down 47% from $18.0 million).
  • Net Loss: $(54.6) million (compared to net income of $10.2 million in Q2 2024).
  • Net Loss included a non-cash loss on disposals of $41.2 million and a non-cash impairment expense of $23.2 million.
  • Adjusted Funds Flow Per Share (Basic): $0.18 (down from $0.34).
• Financial Performance (Six Months Ended June 30, 2025):
  • Total Petroleum and Natural Gas Sales: $50.0 million (down 16% from $59.5 million).
  • Adjusted Funds Flow from Operations: $22.1 million (down 20% from $27.6 million).
  • Net Loss: $(52.2) million (compared to net income of $8.8 million).
• Realized Prices:
  • Crude Oil: $66.77/bbl (down 21% from $84.85/bbl in Q2 2024).
  • Natural Gas: $1.37/mcf (up 552% from $0.21/mcf in Q2 2024).
  • Total Realized Price: $64.62/boe (down 23% from $84.23/boe).
• Operating Metrics:
  • Operating Netback (including financial derivatives): $31.20/boe (down from $46.79/boe in Q2 2024).
  • Net Operating Expenses: $18.99/boe (down 16% from $22.66/boe in Q2 2024), driven by dispositions of higher-cost properties.
  • Capital Expenditures (Exploration & Development): $5.4 million in Q2 2025 (down 75% from $21.3 million).
• Asset Dispositions:
  • Frog Lake, Alberta: Disposed for total consideration of $2.9 million (net of transaction costs). Properties were held for sale at March 31, 2025.
  • Lloydminster, Saskatchewan (Non-Core): Disposed on June 30, 2025, for $2.5 million (subject to closing adjustments).
    • Cash flow multiple of ~2.5x based on forecast 2025 annual cash flow of $1.0 million.
    • Purchaser assumed ~$12.9 million of decommissioning liabilities (38% of total, 54% of inactive).
    • Forecast 2025 production from these assets was ~360 boe/d (100% oil) with net operating expenses of ~$46/boe.
    • Lycos retains drilling rights on undeveloped lands via an annually renewed lease requiring one well per calendar year.
    • Lease on Southwest Saskatchewan assets extended until December 31, 2026.
• Balance Sheet & Liquidity:
  • Adjusted Working Capital (Net Debt): $(19.5) million.
  • Net Debt to Adjusted Funds Flow Ratio: 0.5x annualized.
  • Borrowing base under credit facilities was not impacted by the dispositions.
• Outlook:
  • Capital expenditures program to resume in Q3 2025.
  • Drilling program focused on highest-return areas in the Bonnyville region.