Mr. Dave Burton reports

LYCOS ENERGY INC. ANNOUNCES $60.0 MILLION ASSET SALE, DISTRIBUTION OF PROCEEDS TO SHAREHOLDERS AND NORMAL COURSE ISSUER BID

Lycos Energy Inc. has entered into a definitive purchase and sale agreement dated Oct. 7, 2025, with an arm's-length purchaser to divest of certain assets in the Lindbergh, Moose Lake and Fishing Lake areas of Alberta (the assets) for cash consideration of $60.0-million, subject to customary closing adjustments as provided for in the agreement. The company is also pleased to announce the conditional acceptance from the TSX Venture Exchange of its notice of intention to make a normal course issuer bid (the NCIB).

Key corporate highlights

Notwithstanding the conclusion of the company's strategic review process announced on May 29, 2025, the board of directors of the company and management continually examine opportunities to enhance the interests of the company to maximize shareholder value.

The Lycos board and management team view the asset sale as advantageous to the shareholders of Lycos as it provides a meaningful opportunity to crystallize value and return capital to shareholders. Highlights of the asset sale include:

• Debt reduction: $9.0-million of the net proceeds from the asset sale will be used to reduce fourth quarter net debt to below $1.0-million, affording the company greater financial flexibility to pursue initiatives aimed at further enhancing shareholder value, including potential accretive acquisitions, organic growth and/or share buybacks as outlined below.
• Cash distribution to shareholders. Lycos shareholders will realize an immediate and substantial cash distribution of 90 cents per common share, as further described below.
• Pro forma assets. Following the completion of the asset sale, Lycos will have approximately 1,700 boe/d (barrels of oil equivalent per day) of oil-weighted production (97 per cent crude oil) in central Alberta, including Swimming, Wildmere and Viking Kinsella.
• Strong balance sheet. Lycos will have less than $1.0-million of net debt and a $50.0-million credit facility, which will allow the company to continue to develop and acquire new multilateral development prospects to drive further returns to Lycos shareholders.

National Bank Financial Inc. (NBF) acted as exclusive financial adviser to Lycos in connection with the asset sale. NBF has provided the Lycos board with a fairness opinion that, as at the date of the agreement, the consideration to be received by Lycos pursuant to the asset sale is fair, from a financial point of view to Lycos. Based on the fairness opinion received from NBF and discussions with its financial and legal advisers, among other considerations, the Lycos board has unanimously determined that the asset sale and the entering into of the agreement are in the best interests of Lycos shareholders.

The asset sale

Pursuant to the agreement, Lycos is selling the assets for cash consideration of $60.0-million, before closing adjustments. The effective date of the asset sale is Sept. 1, 2025, and closing is expected to occur on or about Oct. 15, 2025, subject to the satisfaction of customary closing conditions. The asset sale represents a reviewable transaction under the policies of the TSX Venture Exchange and remains subject to TSX-V approval. A copy of the agreement will be filed on the company's SEDAR+ profile.

Lycos believes the asset sale is a compelling acceleration of value to the Lycos shareholder for the assets. The assets are currently producing approximately 940 bbl/d (barrels per day) and had proved developed producing reserves of 395 Mbbl (million barrels) as at Dec. 31, 2024, as evaluated by the company's independent reserves evaluator, Sproule Associates Ltd. The assets also include 21.0 (21.0 net) booked drilling locations.

Certain key sales metrics pertaining to the assets are as follows:

• 3.4 times annualized net operating income;
• $63,830 per flowing boe (barrels of oil equivalent);
• $25.80 per boe of proved reserves of 2,326 Mbbl;
• $19.54 per boe of proved and probable reserves of 3,070 Mbbl.

Proceeds of the asset sale

The company intends to direct approximately $9.0-million of the net proceeds of the asset sale towards debt repayment to strengthen the company's balance sheet. The company's lender has confirmed that the current $50.0-million credit facility will remain in place on the same terms following closing of the asset sale.

In addition, the company intends to return a total of approximately $47.9-million of the net proceeds of the asset sale to Lycos shareholders as a return of capital. Lycos shareholders will receive a sale dividend of 90 cents per common share. Further details regarding the sale dividend will be included in an information circular to be filed on SEDAR+ in connection with an upcoming special meeting of shareholders to be held on Nov. 13, 2025. At the meeting, Lycos shareholders will be asked to consider a special resolution authorizing the company to reduce the stated capital account maintained in respect of the common shares by $47.9-million. The sale dividend, for Canadian income tax purposes, will be treated as a return of capital by way of a reduction in the stated capital of the company's common shares. Any remaining proceeds from the asset sale will be used toward general corporate purposes, including funding continuing operations and/or working capital requirements.

Normal course issuer bid

Lycos is also pleased to announce that the TSX-V has conditionally accepted the company's notice of intention to make a NCIB to purchase for cancellation, from time to time, as the company considers advisable, up to a maximum of 4,661,208 common shares in the capital of the company, which represents 10.0 per cent of the company's 46,612,075 public float as defined by the TSX-V as at the date hereof. The NCIB will commence on Nov. 3, 2025, and terminate on the earlier of Nov. 2, 2026, and the date on which Lycos has acquired the maximum number of common shares allowable under the NCIB or the NCIB is terminated at the option of the company. Lycos has retained NBF as the broker to conduct the NCIB on the company's behalf.

The company is of the view that at certain times, the trading price of its common shares may not fully reflect the underlying value of the company's business. As such, having the ability to repurchase common shares for cancellation may represent an attractive opportunity to deploy financial resources as a means of potentially enhancing the company's per common share metrics, thereby increasing the underlying value of the common shares for all shareholders.

In connection with the NCIB, Lycos has entered into an automatic share purchase plan with its designated broker, NBF, to facilitate the purchase of common shares under the NCIB. The plan allows for purchases by the company of its common shares at any time, including, without limitation, when the company would ordinarily not be permitted to make purchases due to regulatory restriction or self-imposed blackout periods. Such purchases will be made by NBF based upon the parameters established by the company prior to any blackout period or any period when it is in possession of material undisclosed information. Outside of these blackout periods, common shares will be repurchased in accordance with management's discretion, subject to applicable law.

Purchases of common shares will be made on the open market through the facilities of the TSX-V and/or permitted alternative trading systems. The price that the company will pay for any common shares purchased will be the prevailing market price of the common shares at the time of such purchase. The actual number of common shares that may be purchased for cancellation and the timing of any such purchases will be determined by the company. Payment for the common shares will be made in accordance with TSX-V requirements and applicable securities laws. The company has not purchased any common shares in the past 12 months through a normal course issuer bid.

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 central Alberta.

Advisers

NBF acted as exclusive financial adviser to Lycos in connection with the asset sale.

Stikeman Elliott LLP is acting as legal counsel to Lycos in connection with the asset sale.

We seek Safe Harbor.