Lycos Energy Inc. Announces 2024 Reserves, Exploratory Drilling Update and the Initiation of a Comprehensive Strategic Review Process to Maximize Shareholder Value
March 04, 2025 7:00 AM EST | Source: Lycos Energy Inc.
Calgary, Alberta--(Newsfile Corp. - March 4, 2025) - Lycos Energy Inc. (TSXV: LCX) ("Lycos" or the "Company") is pleased to provide the results of the Company's 2024 year-end reserves evaluation as prepared by Sproule International Limited ("Sproule"), an exploratory drilling update and the initiation of a comprehensive strategic review process to identify, examine and consider strategic and financial alternatives available to the Company with the ultimate view of enhancing shareholder value (the "Strategic Review").
2024 Year End Reserve Highlights
Lycos' 2024 drilling program has increased the Company's reserve volume base through pool extensions, adding Proved Developed Producing ("PDP") reserves of 98 Mboe per well and Proved plus Probable Developed Producing ("P+PDP") reserves of 109 Mboe per well.
The Company's 2024 Total Proved ("TP") and Total Proved plus Probable ("TPP") Net Asset Value ("NAV") is $3.50 per diluted share ("Diluted Share") and $5.79 per Diluted Share. Lycos' TP NAV includes 65.5 net booked locations(1), representing 18.4% of the Company's net internally identified drilling locations(1). The TP NAV and TPP NAV per Diluted Share are approximately 61% and 166% higher than Lycos' current trading price of $2.18 per share.
The Company's 2024 Reserve Report (as defined herein), net of the 2024 dispositions(1)(2) to opening 2023 reserves, is highlighted as follows:
PDP reserves increased by 33% to 4.1 MMboe from 3.1 MMboe
TP reserves increased by 26% to 10.6 MMboe from 8.4 MMboe
TPP reserves increased by 15% to 16.8 MMboe from 14.7 MMboe
Achieved Finding and Development ("F&D") costs(3) of, including changes in future development costs of $26.10 per boe on a PDP basis, $21.97 per boe on a TP basis and $17.23 per boe on a TPP basis
Production replacement(3) of 82% on a TP basis and 82% on a TPP basis
Based on a 2024 adjusted funds flow netback(4)(5) of $36.05/boe, achieved recycle ratios(3) of 1.4 on a PDP basis, 1.6 on a TP basis and 2.1 on a TPP basis
(1) Disclosure of Oil and Gas Information
(2) See table titled "Reconciliation of Company Gross Reserves on Forecast Prices and Costs" below
(3) See Oil and Gas Metrics
(4) See Non-IFRS Measures, Non-IFRS Financial Ratios and Capital Management Measures
(5) See Unaudited Financial Information
2024 Year End Reserves
The Company's 2024 year end reserves were evaluated by independent reserves evaluator Sproule as at December 31, 2024, (the "Reserve Report") in compliance with National Instrument 51-101 - Standards of Disclosure for Oil and Gas Activities ("NI 51-101") and in accordance with the most recent publication of the Canadian Oil and Gas Evaluation Handbook (the "COGEH"). The Reserve Report was based on the average forecast pricing of Sproule Associates Ltd. at January 1, 2025 which is available on Sproule's website at www.sproule.com. See "Reader Advisories - Reserves and Future Net Revenue Disclosure" for more information. The numbers in the tables below may not add due to rounding.
Reserves Summary as at December 31, 2024
| Total Company Reserves (1) | ||||||
| Reserves Category | Heavy Oil | Light and Medium Oil | Condensate | NGL | Conventional Natural Gas | Total Oil Equivalent (Mboe) |
| (Mbbl) | (Mbbl) | (Mbbl) | (Mbbl) | (MMcf) | ||
| Proved Developed Producing | 4,028 | 25 | - | - | 272 | 4,098 |
| Proved Developed Non-Producing | 157 | - | - | - | - | 157 |
| Proved Undeveloped | 6,326 | - | - | 0 | 96 | 6,342 |
| Total Proved | 10,510 | 25 | - | 0 | 368 | 10,597 |
| Probable | 6,194 | 10 | - | 0 | 214 | 6,240 |
| Total Proved Plus Probable | 16,705 | 35 | - | 1 | 583 | 16,837 |
| (1) Reserves have been presented on a gross basis, which are the Company's total working interest share before the deduction of any royalties and without including any royalty interests of the Company. | ||||||
Net Present Value of Future Net Revenue
| Net Present Value of Future Net Revenue (1) | |||||
| Total Company | Before Income Taxes, Discounted at (% / year) | ||||
| 0% | 5% | 10% | 15% | 20% | |
| Reserves Category | ( M$) | ( M$) | ( M$) | ( M$) | ( M$) |
| Proved Developed Producing | 110,730 | 107,308 | 100,898 | 94,231 | 88,120 |
| Proved Developed Non-Producing | 3,877 | 3,434 | 3,068 | 2,763 | 2,505 |
| Proved Undeveloped | 169,560 | 133,289 | 107,029 | 87,545 | 72,698 |
| Total Proved | 284,168 | 244,030 | 210,995 | 184,538 | 163,323 |
| Probable | 242,061 | 174,699 | 134,785 | 108,713 | 90,489 |
| Total Proved Plus Probable | 526,229 | 418,729 | 345,780 | 293,251 | 253,812 |
| (1) All future net revenues are stated prior to the provision for general and administrative expenses, other income and interest expenses and after the deduction of royalties, net operating expenses, estimated well and facility abandonment and reclamation costs and estimated future capital expenditures. | |||||
Reconciliation of Company Gross Reserves on Forecast Prices and Costs
| Total PDP | Total Proved | Total Probable | Total Proved + | |
| (Mboe) | (Mboe) | (Mboe) | Probable (Mboe) | |
| December 31, 2023 | 4,188 | 9,907 | 7,468 | 17,375 |
| Discoveries | - | - | - | |
| Extensions | 2,366 | 2,543 | 904 | 3,447 |
| Infill Drilling | 3 | 793 | 389 | 1,183 |
| Technical Revisions | 282 | 493 | (1,337) | (844) |
| Dispositions | (1,107) | (1,512) | (1,195) | (2,707) |
| Economic Factors | 4 | 9 | 11 | 20 |
| Production | (1,637) | (1,637) | - | (1,637) |
| December 31, 2024 | 4,098 | 10,597 | 6,240 | 16,837 |
Future Development Costs ("FDC")
The following is a summary of the estimated FDC required to bring Proved Undeveloped reserves and Proved plus Probable Undeveloped reserves on production. FDC associated with the Company's total proved reserves at year end 2024 is $98.6 million and FDC on total proved plus probable reserves is $129.0 million.
| Proved Reserves | Proved Plus Probable Reserves | |
| $M | $M | |
| 2025 | 60,991 | 81,410 |
| 2026 | 31,041 | 36,542 |
| 2027 | 6,557 | 11,076 |
| Total Undiscounted | 98,589 | 129,027 |
Net Asset Value
The following table sets out a calculation of NAV based on the before-tax estimated net present value of future net revenue discounted at 10% ("NPV10 BT") associated with the TP and TPP reserves, as evaluated in the Reserve Report, including deductions for FDC and abandonment and reclamation obligations:
| Common Shares Outstanding (M) | TP | TPP |
| Reserve Value NPV10 (BT) ($M) | 210,995 | 345,780 |
| Less: Net Debt ($M) (1) | (17,896) | (17,896) |
| Add: Warrant Proceeds ($M) | 12,432 | 12,432 |
| Total Net Asset Value (M$) | 205,531 | 340,316 |
| Common Shares Outstanding (M) | 53,238 | 53,238 |
| Warrants Outstanding (M) | 5,550 | 5,550 |
| Estimate NAV per Diluted Share ($/diluted share)(2) | 3.50 | 5.79 |
| (1) See Unaudited Financial Information (2) For purposes of calculating the NAV per Diluted Share, the dilution impact from 3,885,725 stock options have been excluded as the weighted average exercise price of $4.02 at December 31, 2024 is out-of-the-money. | ||
Exploratory Drilling and Operations Update
The Company's 2025 drilling program is well underway with planned Q1 2025 activity of 9 gross (8.82 net) multi-lateral wells. As previously announced in its press release on January 6, 2025, the Company's Q1 2025 drilling program was deliberately designed for new inventory creation. To date in 2025, Lycos has drilled 6 gross (6.0 net) wells.
Lycos has extended its discovery at Moose Lake in the Middle Waseca formation with two delineation wells, both of which are demonstrating comparable early production capability to the initial Middle Waseca drilled in Q4 2024. The initial well has averaged over 260 boe/d (99% oil) in its first 90 days of production.
Additionally, Lycos completed the drilling of a deeper, medium gravity Glauconitic oil well with over 7,700 meters of multi-lateral open hole. The well has encountered virgin reservoir pressure and is currently flowing back.
Based on drilling to date in Q1 2025, Lycos expects to add more than 70 wells to its current estimated inventory.
Lycos estimated current production is approximately 4,665 boe/d (97% oil), after the disposition of 325 boe/d (99% oil) in January 2025. The Company has brought back on approximately 500 boe/d (83% oil) of the 810 boe/d (83% oil) which was shut-in due to gas egress issues as previously released.
Strategic Review
Lycos has been one of the most active drillers in the Mannville Stack, validating its technical thesis with respect to multi-lateral development with recent wells realizing strong initial production rates that consistently exceed internal type curves. Lycos is forecasting 2025 annual average production of 5,200 boe/d (99% oil), representing annual production growth of approximately 16%, while generating $69.5 million of adjusted funds flow(1).
Despite the successful delineation of its asset base, substantial additions to its inventory and ongoing operational success, the Company's Common Shares continue to trade at a significant discount to the intrinsic value of its assets. In addition, the junior oil-weighted peer group continues to lag its larger, public markets peers and suffers from a lack of liquidity. These factors have led to an increasingly wider gap between the implied Net Asset Value and the public markets value of the Company.
The Company's board of directors (the "Board"), acting in the best interests of Lycos and its shareholders, has determined that it is timely and prudent to initiate a comprehensive process to explore, review and evaluate a number of strategic repositioning alternatives available to the Company with a view to maximizing and accelerating value to its shareholders. The Strategic Review will include the evaluation of a broad range of alternatives including, but not limited to, a corporate sale, merger, corporate restructuring, sale of select assets, purchase of assets, or any combination of these potential alternatives.
Lycos has not yet established a definitive timeline to complete its Strategic Review. The Company does not intend to disclose developments with respect to the Strategic Review, periodically or otherwise, until the Board has approved a definitive transaction or strategic alternative, or otherwise determines that disclosure is necessary or appropriate. The Company cautions that there are no assurances or guarantees that the process will result in a transaction or, if a transaction is undertaken, the terms or timing of such a transaction. The Board and management team of the Company believe that the Strategic Review will ultimately benefit the shareholders of Lycos. The Company's business will not be impacted by the Strategic Review, and it will continue to execute on its 2025 drilling program.
Lycos has engaged National Bank Financial Inc. ("NBF") to act as its exclusive financial advisor in connection with the Strategic Review. Lycos and NBF have created a virtual data room which is available for review by interested parties upon execution of a confidentiality agreement.
(1) See Non-IFRS Measures, Non-IFRS Financial Ratios and Capital Management Measures
About Lycos
Lycos is an oil-focused, exploration, development and production company based in Calgary, Alberta, operating high-quality, heavy-oil, development assets in the Lloydminster and Greater Lloydminster area.
Additional Information
For further information, please contact:
Reader Advisories
Forward-Looking and Cautionary Statements
Certain statements contained within this press release constitute forward-looking statements within the meaning of applicable Canadian securities legislation. All statements other than statements of historical fact may be forward-looking statements. Forward-looking statements are often, but not always, identified by the use of words such as "anticipate", "budget", "plan", "endeavor", "continue", "estimate", "evaluate", "expect", "forecast", "monitor", "may", "will", "can", "able", "potential", "target", "intend", "consider", "focus", "identify", "use", "utilize", "manage", "maintain", "remain", "result", "cultivate", "could", "should", "believe" and similar expressions (including negatives and variations thereof). Lycos believes that the expectations reflected in such forward-looking statements are reasonable as of the date hereof, but no assurance can be given that such expectations will prove to be correct and such forward-looking statements should not be unduly relied upon. Without limitation, this press release contains forward-looking statements pertaining to: Lycos' business strategy, objectives, strength and focus; the Company's anticipated capital program, drilling plans, outlook and operational results for 2025; the Company's expectations regarding recently drilled wells, drilling plans, forecasted annual average production, net operating expenses, estimated well and facility abandonment and reclamation costs, estimated future capital expenditures and growth forecasts; the expectation that the Strategic Review process may elicit change and enhance shareholder value; expectations regarding commodity prices and heavy oil differentials; the performance characteristics of the Company's oil and natural gas properties; the ability of the Company to achieve drilling success consistent with management's expectations; expectations in respect of the Company's wells, including anticipated benefits and results; and the source of funding for the Company's activities. Statements relating to production, reserves, recovery, replacement, costs and valuation are also deemed to be forward-looking statements, as they involve the implied assessment, based on certain estimates and assumptions, that the reserves described exist in the quantities predicted or estimated and that the reserves can be profitably produced in the future.
The forward-looking statements and information are based on certain key expectations and assumptions made by Lycos, including expectations and assumptions concerning the business plan of Lycos; the timing of and success of future drilling, development and completion activities; the geological characteristics of Lycos' properties; prevailing commodity prices, price volatility, price differentials and the actual prices received for the Company's products; the availability and performance of drilling rigs, facilities, pipelines and other oilfield services; the timing of past operations and activities in the planned areas of focus; the drilling, completion and tie-in of wells being completed as planned; the performance of new and existing wells; the application of existing drilling and fracturing techniques; prevailing weather and break-up conditions; royalty regimes and exchange rates; the application of regulatory and licensing requirements; the continued availability of capital and skilled personnel; the ability to maintain or grow its credit facility; the accuracy of Lycos' geological interpretation of its drilling and land opportunities, including the ability of seismic activity to enhance such interpretation; and Lycos' ability to execute its plans and strategies.
Although Lycos believes that the expectations and assumptions on which such forward-looking statements and information are based are reasonable, undue reliance should not be placed on the forward-looking statements and information because Lycos can give no assurance that they will prove to be correct. By its nature, such forward-looking information is subject to various risks and uncertainties, which could cause the actual results and expectations to differ materially from the anticipated results or expectations expressed. These risks and uncertainties include, but are not limited to: incorrect assessments of the value of benefits to be obtained from acquisitions and exploration and development programs; failure to achieve anticipated benefits from the Strategic Review or any transactions undertaken pursuant to its Strategic Review; fluctuations in commodity prices; changes in industry regulations and political landscape both domestically and abroad; the risk that the new U.S. administration imposes tariffs on Canadian goods, including crude oil and natural gas, and that such tariffs (and/or the Canadian government's response to such tariffs) adversely affect the demand and/or market price for the Company's products and/or otherwise adversely affects the Company; wars (including Russia's military actions in Ukraine and the Israel-Hamas conflict in Gaza); hostilities; civil insurrections; foreign exchange or interest rates; increased operating and capital costs due to inflationary pressures (actual and anticipated); volatility in the stock market and financial system; impacts of pandemics; the retention of key management and employees; and risks with respect to unplanned third-party pipeline outages, including in respect of safety, asset integrity and shutting in production. Ongoing military actions between Russia and Ukraine have the potential to threaten the supply of oil and gas from the region. The long-term impacts of the actions between these nations remains uncertain. Please refer to the annual information form for the year ended December 31, 2023 ("AIF") and the Company's latest management discussion and analysis ("MD&A") for additional risk factors relating to Lycos, which can be accessed either on the Company's website at www.lycosenergy.com or under the Company's SEDAR+ profile at www.sedarplus.ca. Readers are cautioned not to place undue reliance on this forward-looking information, which is given as of the date hereof, and to not use such forward-looking information for anything other than its intended purpose. Lycos undertakes no obligation to update publicly or revise any forward-looking information, whether as a result of new information, future events or otherwise, except as required by law.
Future Oriented Financial Information
This press release contains future oriented financial information and financial outlook information (collectively, "FOFI") about Lycos' prospective results of operations and production, future drilling locations and plans, forecasted annual average production, forecasted adjusted funds flow, expected growth rates, growth in adjusted funds flow, operating costs and expected net operating expenses, all of which are subject to the same assumptions, risk factors, limitations and qualifications as set forth in the above paragraphs. FOFI contained in this document was approved by management as of the date of this document and was provided for the purpose of providing further information about Lycos' proposed business activities in 2025. Lycos and its management believe that FOFI has been prepared on a reasonable basis, reflecting management's best estimates and judgments, and represent, to the best of management's knowledge and opinion, the Company's expected course of action. However, because this information is highly subjective, it should not be relied on as necessarily indicative of future activities or results. Lycos disclaims any intention or obligation to update or revise any FOFI contained in this document, whether as a result of new information, future events or otherwise, unless required pursuant to applicable law. Readers are cautioned that the FOFI contained in this document should not be used for purposes other than for which it is disclosed herein. Changes in forecast commodity prices, differences in the timing of capital expenditures, and variances in average production estimates can have a significant impact on the key performance measures included in Lycos' guidance. The Company's actual results may differ materially from these estimates.
Unaudited Financial Information
Certain financial and operating results included in this news release, including operating netbacks, capital expenditures, net debt and production information, are based on unaudited estimated results. These estimated results are subject to change upon completion of the Company's audited annual financial statements as at and for the years ended December 31, 2024 and 2023, and changes could be material. Lycos anticipates filing its audited annual financial statements and related MD&A as at and for the years ended December 31, 2024 and 2023, on or near April 8, 2025.
Disclosure of Oil and Gas Information
Annual Information Form
Lycos's Statement of Reserves Data and Other Oil and Gas Information on Form 51-101F1 dated effective as at December 31, 2024, which will include further disclosure of Lycos's oil and gas reserves and other oil and gas information in accordance with NI 51-101 and COGEH forming the basis of this news release, will be included in the AIF which will be available on SEDAR+ at www.sedarplus.ca on or near April 8, 2025.
2024 Dispositions. This press release discloses the changes in the Company's reserves, net the impact of certain dispositions completed by the Company in the 2024 financial year. The depositions, which have not been accounted for in the Company highlights presented under the heading "2024 Year End Reserves Highlights" above, amount to 1,107 Mboe PDP, 1,512 Mboe TP and 2,707 Mboe TPP.
Unit Cost Calculation. The term barrels of oil equivalent ("boe") may be misleading, particularly if used in isolation. A boe conversion ratio of six thousand cubic feet per barrel (6 Mcf/bbl) of natural gas to barrels of oil equivalence is based on an energy equivalency conversion method primarily applicable at the burner tip and does not represent a value equivalency at the wellhead. All boe conversions in the report are derived from converting gas to oil in the ratio mix of six thousand cubic feet of gas to one barrel of oil.
Product Types. Throughout this press release, "crude oil" or "oil" refers to heavy crude oil product types as defined by NI 51-101.
Short Term Results. References in this press release to initial production rates and other short-term production rates are useful in confirming the presence of hydrocarbons, however such rates are not determinative of the rates at which such wells will commence production and decline thereafter and are not indicative of long-term performance or of ultimate recovery. While encouraging, readers are cautioned not to place reliance on such rates in calculating the aggregate production of Lycos.
Type Curves. This press release contains references to type well production and economics, which are derived, at least in part, from available information respecting the well economics of other companies and, as such, there is no guarantee that Lycos will achieve the stated or similar results per well. Type curve disclosure referenced herein represents volumes expected to be recovered from wells. The type curves represent what management thinks an average well will achieve, based on methodology that is analogous to wells with similar geological features. Individual wells may be higher or lower but over a larger number of wells, management expects the average to come out to the type curve. Over time, type curves can and will change based on achieving more production history on older wells or more recent completion information on newer wells.
Drilling Locations. This press release discloses drilling locations in two categories: (i) booked locations and (ii) unbooked locations. Booked locations are derived from the Reserves Report and account for drilling locations that have associated proved and probable reserves estimated by the Company's independent qualified reserve evaluator Sproule, in accordance with NI 51-101 and the COGEH, and account for drilling locations that have associated proved and/or probable reserves, as applicable. Unbooked locations are internal estimates based on the Company's assumptions as to the number of wells that can be drilled per section based on industry practice and internal review. Unbooked locations do not have attributed reserves or resources. Of the approximately 359 (355.4 net) drilling locations identified herein, 67 (65.5 net) are proved locations, 25 (24.2 net) are probable locations and 267 (265.7 net) are unbooked locations (inclusive of the 70 estimated future unbooked locations anticipated to be added to the Company's inventory assuming the successful completion of the Company's Q1 2025 drilling program. Unbooked locations have been identified by management as an estimation of Company's multi-year drilling activities based on evaluation of applicable geologic, seismic, engineering, production and reserves information. There is no certainty that the Company will drill all unbooked drilling locations and if drilled there is no certainty that such locations will result in additional oil and gas reserves, resources or production. The drilling locations considered for future development will ultimately depend upon the availability of capital, regulatory approvals, seasonal restrictions, oil and natural gas prices, costs, actual drilling results, additional reservoir information that is obtained and other factors. While certain of the unbooked drilling locations have been derisked by the drilling of existing wells in relative close proximity to such unbooked drilling locations, other unbooked drilling locations are farther away from existing wells where management has less information about the characteristics of the reservoir and therefore there is more uncertainty whether wells will be drilled in such locations and if drilled there is more uncertainty that such wells will result in additional oil and gas reserves, resources or production.
Reserves and Future Net Revenue Disclosure. All reserves values, future net revenue and ancillary information contained in this press release are derived from the Reserves Report unless otherwise noted. All reserve references in this press release are "Company gross reserves". Company gross reserves are the Company's total working interest reserves before the deduction of any royalties payable by the Company. Estimates of reserves and future net revenue for individual properties may not reflect the same level of confidence as estimates of reserves and future net revenue for all properties, due to the effect of aggregation. There is no assurance that the forecast price and cost assumptions applied by Sproule in evaluating Lycos' reserves will be attained and variances could be material.
All evaluations and summaries of future net revenue are stated prior to the provision for interest, debt service charges or general and administrative expenses and after deduction of royalties, operating costs, estimated well abandonment and reclamation costs and estimated future capital expenditures. It should not be assumed that the estimates of future net revenues presented in the tables below represent the fair market value of the reserves. The recovery and reserve estimates of Lycos' crude oil, natural gas liquids and natural gas reserves provided herein are estimates only and there is no guarantee that the estimated reserves will be recovered. Actual crude oil, natural gas and natural gas liquids reserves may be greater than or less than the estimates provided herein. There are numerous uncertainties inherent in estimating quantities of crude oil, reserves and the future cash flows attributed to such reserves. The reserve and associated cash flow information set forth herein are estimates only.
Proved reserves are those reserves that can be estimated with a high degree of certainty to be recoverable. It is likely that the actual remaining quantities recovered will exceed the estimated proved reserves. Probable reserves are those additional reserves that are less certain to be recovered than proved reserves. It is equally likely that the actual remaining quantities recovered will be greater or less than the sum of the estimated proved plus probable reserves. Proved developed producing reserves are those reserves that are expected to be recovered from completion intervals open at the time of the estimate. These reserves may be currently producing or, if shut-in, they must have previously been on production, and the date of resumption of production must be known with reasonable certainty. Undeveloped reserves are those reserves expected to be recovered from known accumulations where a significant expenditure (e.g., when compared to the cost of drilling a well) is required to render them capable of production. They must fully meet the requirements of the reserves category (proved, probable, possible) to which they are assigned. Certain terms used in this press release but not defined are defined in NI 51-101, CSA Staff Notice 51-324 - Revised Glossary to NI 51-101, Revised Glossary to NI 51-101, Standards of Disclosure for Oil and Gas Activities ("CSA Staff Notice 51-324") and/or the COGEH and, unless the context otherwise requires, shall have the same meanings herein as in NI 51-101, CSA Staff Notice 51-324 and the COGEH, as the case may be.
Oil and Gas Metrics
This press release contains metrics commonly used in the oil and natural gas industry which have been prepared by management. These terms do not have a standardized meaning and may not be comparable to similar measures presented by other companies, and therefore should not be used to make such comparisons. Management uses these oil and gas metrics for its own performance measurements and to provide shareholders with measures to compare our operations over time. Readers are cautioned that the information provided by these metrics, or that can be derived from the metrics presented in this presentation, should not be relied upon for investment or other purposes.
"FDC" (future development capital) are the future capital cost estimated for each respective category in year-end reserves attributed with realizing those reserves and associated future net revenue.
"F&D costs" are calculated as the sum of sum of capital expenditures - property, plant and equipment and capital expenditures - exploration and evaluation in the year of $67.8 million (excluding $2.2 million associated with undeveloped lands and $0.1 million associated with head office), plus the change in FDC for each respective reserve category in the year divided by the change in reserve volumes for the year. The change in reserve volumes are represented net the impact of dispositions on reserve volumes.
"Net Asset Value" is calculated as reserve value, before tax, discounted at 10%, less the Company's net debt at December 31, 2024 of $17.9 million, plus $12.4 million of proceeds from the exercise of warrants divided by the sum of common shares outstanding of 53.2 million and 5.6 million of warrants outstanding.
"Production Replacement" is a ratio calculated as total net change in reserves in the year for each respective reserve category divided by the annual average production for the year of 4,475 boe/d.
"Recycle Ratio " is measured by dividing the adjusted funds flow from operations of $36.05/boe by the F&D cost per boe for the year.
Non-IFRS Measures, Non-IFRS Financial Ratios and Capital Management Measures
This press release includes various specified financial measures, including non-IFRS financial measures, non-IFRS financial ratios and capital management measures as further described herein. These measures do not have a standardized meaning prescribed by International Financial Reporting Standards ("IFRS") and, therefore, may not be comparable with the calculation of similar measures by other companies.
"Adjusted working capital (net debt) (capital management measure)" is calculated as current assets less current liabilities, excluding the current portion of decommissioning liabilities and financial derivative receivable and liabilities. Adjusted working capital (Net Debt) is a capital management measure which management uses to assess the Company's liquidity. A reconciliation of adjusted working capital (net debt) to the most directly comparable measure calculated and presented in accordance with IFRS is as follows:
| (in thousands) | December 31, 2024 | ||
| Working capital | (19,207 | ) | |
| Current portion of decommissioning liabilities | 1,400 | ||
| Current portion of other obligations | (89 | ) | |
| Adjusted working capital (net debt) | (17,896 | ) |
"Adjusted funds flow from operations (capital management measure)" is funds flow is calculated by taking cash flow from operating activities and adding back changes in non-cash working capital. Adjusted funds flow is further calculated by adding back decommissioning costs incurred and transaction costs. Management considers adjusted funds flow from operations to be a key measure to assess the performance of the Company's oil and gas properties and the Company's ability to fund future capital investment. Adjusted funds flow from operations is an indicator of operating performance as it varies in response to production levels and management of costs. Changes in non-cash working capital, decommissioning costs incurred and transaction costs vary from period to period and management believes that excluding the impact of these provides a useful measure of Lycos' ability to generate the funds necessary to manage the capital needs of the Company. A reconciliation of adjusted funds flow from operations to the most directly comparable measure calculated and presented in accordance with IFRS is as follows:
| (in thousands) | December 31, 2024 | ||
| Cash flow from operating activities | 50,791 | ||
| Changes in non-cash working capital | 6,680 | ||
| Funds from operations | 57,471 | ||
| Decommissioning costs incurred | 1,358 | ||
| Transaction costs | 215 | ||
| Adjusted funds flow from operations | 59,044 | ||
| Adjusted funds flow from operations per boe ($) | 36.05 |
"Capital expenditures (non-IFRS financial measure)" includes exploration and development capital, facilities, land and seismic and acquisitions and dispositions. Management considers capital expenditures to be a key measure to assess the Company's capital investment in exploration and production activity, as well as property acquisitions and dispositions. The directly comparable IFRS measure to capital expenditures is net cash used in investing activities.
Please refer to the Company's Q3 2024 MD&A on pages 16 to 18 for additional information relating to specified financial measures, including non-IFRS financial measures, non-IFRS financial ratios and capital management measures. The MD&A can be accessed either on the Company's website or under the Company's SEDAR+ profile on www.sedarplus.ca.
Abbreviations
| bbl | barrels of oil | |
| bbl/d | barrels of oil per day | |
| boe | barrels of oil equivalent | |
| boe/d | barrels of oil equivalent per day | |
| CDN$ | Canadian dollars | |
| Mbbl | thousand barrels of oil | |
| Mboe | thousand barrels of oil equivalent | |
| Mcf | thousand cubic feet | |
| MMbbl | million barrels of oil | |
| MMboe | million barrels of oil equivalent | |
| MMcf | million cubic feet | |
| Q1 | first financial quarter (January 1 - March 31) | |
| Q4 | fourth financial quarter (October 1 - December 31) | |
| US | United States | |
| US$ | US dollars | |
| WCS | Western Canadian Select | |
| WTI | West Texas Intermediate |
All dollar figures included herein are presented in Canadian dollars, unless otherwise noted.
Neither the TSX Venture Exchange nor its Regulation Services Provider (as that term is defined in the policies of the TSX Venture Exchange) accepts responsibility for the adequacy or accuracy of this release.
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