Lycos Energy Inc. is pleased to announce its 2025 budget, operations update and disposition of non-core assets.
2025 Budget Highlights
Lycos is pleased to announce its 2025 budget pro-forma the disposition:
Capital expenditures(1) of $80 million, which includes the drilling of approximately 32 (31.82 net) multi-lateral wells.
Lycos' 2025 drilling program will target existing pools in the Mannville stack, as well as new tests in five undrilled areas.
In Q1 2025 Lycos' intends to drill 8 (7.82 net) wells that are anticipated to substantially add to our current inventory.
Forecasted annual average production of 5,200 boe/d (net of the 325 boe/d non-core asset disposition) (99% oil), delivering production growth of 16.1% and growth in adjusted funds flow from operations(1) of 19.6%.
Expected net operating expense(1) on a per boe basis to decrease by an additional 17% from 2024.
Forecasted Q4 2025 annualized net debt to adjusted funds flow from operations ratio(1) of 0.3X.
Forecasted Q4 2025 production is expected to be greater than 6,000 boe/d (99% oil).
The 2025 budget is deliberately skewed to new inventory creation in Q1 with a shift to more development and production growth-based drilling in Q3 and Q4 to set up growth in 2026. Q1 locations, if successful, will add more than 70 unbooked locations to Lycos' inventory which would imply a location replacement ratio of over 200% relative to the total number of wells to be drilled in 2025.
Operations Update
Lycos completed its 2024 capital program, drilling 3 (3.0 net) multi-lateral wells in the fourth quarter. These wells included a new Waseca pool discovery at Moose Lake, that achieved an IP30 of 284 bbl/d representing a 49% increase to the unrisked Waseca type curve used to model forecasted results for the area. The Company drilled another successful Rex multi-lateral well in Viking-Kinsella successfully applying its updated geosteering and operational parameters to enhance results. The first well drilled using this method has achieved an IP 90 of more than 275 bbl/d of oil and the second well has been on since mid November 2024 with an average rate to date of more than 285 bbl/d of oil.
Corporate production for Q4 2024 was approximately 4,600 boe/d (97% oil). The Company continues to advance resumption of production on all shut in volumes at Wildmere and remains confident all wells will be back on stream consistently in Q1 2025.
Non-core Asset Disposition
Lycos disposed of certain non-core assets and facilities in Gull Lake and Lloydminster Saskatchewan to an arm's length purchaser on December 31, 2024 for total consideration of $9.75 million, subject to closing adjustments. This represents a cash flow multiple of approximately 5.8X (based on forecast 2025 annual cash flow of $1.69 million). The purchaser assumed approximately $7.7 million of undiscounted and uninflated decommissioning liabilities associated with the assets. Estimated 2025 production from the non-core assets was forecast to be approximately 325 boe/d (99% oil). The sale will result in a reduction in forecasted corporate 2025 net operating expenses.
As part of the transaction, Lycos retains the rights to drill on any and all undeveloped lands by way of a lease issued from the acquirer to Lycos. This lease is issued annually subject to Lycos drilling one well in the calendar year on the subject lands.