Mr. Dave Burton reports

LYCOS ENERGY INC. ANNOUNCES CLOSING OF PREVIOUSLY ANNOUNCED STRATEGIC ACQUISITION OF SPARKY WATERFLOOD ASSETS, $34.5 MILLION EQUITY FINANCING AND EXPANDED CREDIT FACILITY

Lycos Energy Inc. has closed its previously announced acquisition of high-netback assets under water flood targeting the Sparky formation in the Greater Provost area of Alberta for cash consideration of $70.0-million, prior to closing adjustments.

Lycos is also pleased to announce the closing of the previously announced bought deal equity financing, including the full exercise of the overallotment option, which was led by National Bank of Canada Capital Markets and Peters & Co. Ltd., as joint bookrunners and co-lead underwriters, and the previously announced expanded credit facility with National Bank of Canada providing for an available facility of $55.0-million, with an uncommitted accordion feature to increase total capacity up to $75.0-million.

Pursuant to the equity financing, the company issued 22,697,550 common shares of Lycos at a price of $1.52 per common share for gross proceeds of approximately $34.5-million. In connection with the equity financing, the company paid the underwriters a cash fee equal to $1,662,503.80, being 5.0 per cent of the gross proceeds of the equity financing, other than in respect of proceeds from the sale of common shares to certain president's list purchasers identified by the company for which the company paid the underwriters a cash fee equal to 2.5 per cent of the gross proceeds of the equity financing. The net proceeds of the equity financing, together with cash on hand and a drawdown under the expanded credit facility, were used to satisfy the purchase price for the acquisition.

After giving effect to the equity financing, the company will have 131,852,762 common shares outstanding.

Certain directors and officers of the company participated in the equity financing under the president's list for an aggregate subscription of 1,398,290 common shares, which is considered a related-party transaction pursuant to Multilateral Instrument 61-101 (Protection of Minority Security Holders in Special Transactions). The company is relying on exemptions from the formal valuation and minority shareholder approval requirements provided under sections 5.5(a) and 5.7(1)(a) of MI 61-101 on the basis that the fair market value of the aggregate participation of the insiders in the equity financing does not exceed 25 per cent of the market capitalization of the company, as determined in accordance with MI 61-101.

The equity financing has been conditionally accepted by the TSX Venture Exchange and remains subject to the final acceptance of the TSX-V.

Early warning reporting

Following completion of the transaction, 24 Capital Corp., together with 1351940 Alberta Ltd. and Elkhorn Capital Ltd., each of which is beneficially owned and controlled by Tom Coolen, a director of Lycos, and Mr. Coolen hold, directly or indirectly, or exercise control or direction over, an aggregate of 17,312,212 common shares, 22,321 common share purchase warrants, 45,000 stock options to acquire common shares and 45,000 restricted share awards convertible into common shares, representing approximately 13.13 per cent of the issued and outstanding common shares on a non-diluted basis. A total of 934,211 of these common shares were acquired by 1351940 Alberta in the equity financing. 1351940 Alberta acquired these common shares for investment purposes, and may, from time to time, acquire additional securities of Lycos or dispose of such securities as it may deem appropriate. Prior to the completion of the equity financing, 24 Capital beneficially owned, or exercised control or direction over, 16,378,001 common shares, representing approximately 15.00 per cent of the issued and outstanding common shares on a non-diluted basis. For further details regarding the acquisition of common shares described above, see the early warning report, which will be available on Lycos's SEDAR+ profile.

About Lycos Energy Inc.

Lycos is an oil-focused, exploration, development and production company based in Calgary, Alta., operating high-quality, heavy oil development assets in the east-central Alberta area.