Calgary, Alberta–(Newsfile Corp. – April 18, 2024) – Lycos Energy Inc. (TSXV: LCX) (“Lycos” or the “Company“) is pleased to announce its operating and financial results for the three months and year ended December 31, 2023 and the results of Lycos’ year-end independent oil and gas reserves evaluation as of December 31, 2023, prepared by Sproule Associates Limited (“Sproule”). Selected financial and operating information is outlined below and should be read with Lycos’ audited annual consolidated financial statements and related management’s discussion and analysis (“MD&A”) for the three months and year ended December 31, 2023 and annual information form (“AIF”) for the year ended December 31, 2023 have been filed on SEDAR + at sedarplus.ca and are available on the Company’s website at www.lycosenergy.com.
Message to Shareholders
Lycos had a strong 2023 year, both operationally and financially. The year was highlighted by a 100% drilling success rate on our multi-lateral/fishbone, Mannville heavy oil drilling program, a total proved plus probable net asset value(1) of $5.53 per diluted share, a 44% increase from 2022 and added 112 net sections to the Company’s land base. With the ongoing development of the Company’s assets and the completion of four acquisitions, the Company has expanded its high-quality drilling inventory to approximately 200 net locations, more than seven years of inventory. The Company continues to advance the multi-lateral Mannville play and is now seeing the results of transforming inventory to producing assets.
We highlight the following fourth quarter and full year 2023 operating and financial results:
- Achieved record production in the fourth quarter of 2023 of 4,121 boe/d (99% crude oil) and exit December average production of 4,357 boe/d (99% crude oil). This represents a 267% increase from the fourth quarter of 2022 of 1,123 boe/d (99% crude oil) and a 35% increase from the third quarter of 2023 of 3,043 boe/d (99% crude oil).
- Reduced net operating expenses(2) to $21.87 per boe in the fourth quarter of 2023 compared to $40.16 per boe in the fourth quarter of 2022, a 46% reduction year over year and a 19% decrease from $26.98 per boe in the third quarter of 2023.
- Generated adjusted funds flow from operations(2) of $11.4 million representing a 5763% increase from ($0.2 million) in the fourth quarter of 2022 and a 5% increase from $10.8 million in the third quarter of 2023.
- Reduced general and administrative expenses to $2.65/boe in the fourth quarter of 2023, a 72% decline from $9.32/boe in the fourth quarter of 2022.
- Increased total proved reserves by 153% to 9.9 mmboe from 3.9 mmboe and total proved plus probable reserves by 130% to 17.4 mmboe from 7.5 mmboe as a result of a successful drilling program from its multi-lateral and fishbone wells and the completion of three corporate acquisitions.
- Production replacement(1) was 236% on a total proved basis and 363% on a total proved plus probable basis.
- Achieved finding and development (F&D) costs(1), including changes in future development costs of $16.71 per boe on a proven producing basis and finding, development and acquisition (FD&A) costs(1) of $20.62 per boe on a total proved plus probable basis.
- Based on a 2023 adjusted funds flow netback(2) of 28.99/boe, achieved a recycle ratio, excluding acquisitions(1) of 1.7 on a proven producing basis and recycle ratio, including acquisitions(1) on a total proved plus probable basis of 1.4.
(1) See Oil and Gas Metrics
(2) See Non-IFRS Measures, Non-IFRS Financial Ratios and Capital Management Measures
Financial and Operating Highlights
Three months ended | Year ended | |||||||||||||||||
December 31, | % change |
December 31, | % change |
|||||||||||||||
($ in thousands, except per share) | 2023 | 2022 | 2023 | 2022 | ||||||||||||||
Total petroleum and natural gas sales, net of blending(1) | 24,748 | 6,341 | 290% | 76,597 | 32,805 | 133% | ||||||||||||
Cash flow from operating activities | 14,235 | 910 | 1464% | 26,143 | 5,392 | 385% | ||||||||||||
Per share – basic | $ | 0.28 | $ | 0.06 | 367% | $ | 0.61 | $ | 0.47 | 30% | ||||||||
Per share – diluted | $ | 0.27 | $ | 0.06 | 350% | $ | 0.58 | $ | 0.38 | 53% | ||||||||
Adjusted funds flow from operations(1) |
11,382 | (201 | ) | 5763% | 31,834 | 5,956 | 434% | |||||||||||
Net income | 1,172 | (14,948 | ) | 108% | 24,719 | 3,671 | 573% | |||||||||||
Per share – basic | $ | 0.02 | $ | (0.93 | ) | 102% | $ | 0.58 | $ | 0.32 | 81% | |||||||
Per share – diluted | $ | 0.02 | $ | (0.93 | ) | 102% | $ | 0.55 | $ | 0.26 | 112% | |||||||
Capital expenditures – exploration & development |
18,520 | 5,489 | 237% | 62,996 | 10,091 | 524% | ||||||||||||
Capital expenditures – net acquisitions & dispositions |
12,954 | – | 100% | 67,840 | (316 | ) | 21568% | |||||||||||
Adjusted working capital (net debt)(1) | (17,057 | ) | 56,835 | (130)% | (17,057 | ) | 56,835 | (130)% | ||||||||||
Weighted average shares outstanding (thousands) |
||||||||||||||||||
Basic | 50,876 | 15,999 | 218% | 42,621 | 11,372 | 275% | ||||||||||||
Diluted | 53,055 | 15,999 | 232% | 44,865 | 14,370 | 212% | ||||||||||||
Average daily production: | ||||||||||||||||||
Crude oil (bbls/d) | 4,081 | 1,109 | 268% | 2,983 | 993 | 200% | ||||||||||||
Natural gas (mcf/d) | 238 | 85 | 180% | 158 | 62 | 155% | ||||||||||||
Total (boe/d) | 4,121 | 1,123 | 267% | 3,009 | 1,004 | 200% | ||||||||||||
Realized prices: | ||||||||||||||||||
Crude oil ($/bbl)(2) | 65.56 | 57.20 | 15% | 69.44 | 85.88 | (19)% | ||||||||||||
Natural gas ($/mcf) | 2.38 | 4.76 | (50)% | 2.33 | 5.16 | (55)% | ||||||||||||
Total ($/boe) | 65.06 | 56.84 | 14% | 68.95 | 85.32 | (19)% | ||||||||||||
Operating netback ($/boe) | ||||||||||||||||||
Petroleum and natural gas revenues(2) | 65.06 | 56.84 | 14% | 68.95 | 85.32 | (19)% | ||||||||||||
Realized gain (loss) on financial derivatives | 0.97 | – | 100% | (0.12 | ) | – | (100)% | |||||||||||
Royalties | (9.29 | ) | (9.71 | ) | (4)% | (10.02 | ) | (13.85 | ) | (28)% | ||||||||
Net operating expenses(1) | (21.87 | ) | (40.16 | ) | (46)% | (25.02 | ) | (47.68 | ) | (48)% | ||||||||
Transportation expenses | (1.79 | ) | (0.75 | ) | 139% | (1.19 | ) | (0.73 | ) | 63% | ||||||||
Operating netback, including financial derivatives ($/boe)(1) |
33.08 | 6.22 | 432% | 32.60 | 23.06 | 41% | ||||||||||||
Adjusted funds flow from operations ($/boe)(1) |
30.03 | (1.94 | ) | 1648% | 28.99 | 16.25 | 78% | |||||||||||
(1) See Non-IFRS Measures, Non-IFRS Financial Ratios and Capital Management Measures. (2) Realized prices are based on revenue, net of blending expense. |
2023 RESERVES
Lycos is pleased to provide select highlights from the results of the year-end evaluation of the Company’s heavy oil reserves in the Lloydminster, Saskatchewan, Lloydminster & Greater Lloydminster Alberta and Gull Lake Saskatchewan areas as of December 31, 2023, as prepared by its independent qualified reserves evaluator Sproule. The evaluation of Lycos’ properties was prepared in accordance with the definitions, standards and procedures contained in the most recent publication of the Canadian Oil and Gas Evaluation Handbook (“COGEH”) and National Instrument 51-101 – Standards of Disclosure for Oil and Gas Activities (“NI 51-101”) and is based on Sproule’s published price forecast as of December 31, 2023. See “Reader Advisories – Reserves and Future Net Revenue Disclosure” for more information. Additional reserves information as required under NI 51-101 is included in the AIF. The numbers in the tables below may not add due to rounding.
Reserves Summary as at December 31, 2023
Total Company Reserves (1) | ||||||||||||||||||
Reserves Category | Heavy Oil | Light and Medium Oil | Condensate | NGL | Conventional Natural Gas | Total Oil Equivalent | ||||||||||||
(Mbbl) | (Mbbl) | (Mbbl) | (Mbbl) | (MMcf) | (Mboe) | |||||||||||||
Proved Developed Producing | 4,132 | 34 | – | 0.4 | 131 | 4,188 | ||||||||||||
Proved Developed Non-Producing | 183 | – | – | – | 5 | 184 | ||||||||||||
Proved Undeveloped | 5,523 | – | – | 0.2 | 74 | 5,535 | ||||||||||||
Total Proved | 9,837 | 34 | – | 0.6 | 211 | 9,907 | ||||||||||||
Probable | 7,430 | 12 | – | 0.5 | 151 | 7,468 | ||||||||||||
Total Proved Plus Probable | 17,267 | 46 | – | 1.1 | 362 | 17,375 | ||||||||||||
(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 | 113,568 | 112,340 | 104,457 | 96,208 | 88,902 | ||||||||||
Proved Developed Non-Producing | 4,436 | 3,762 | 3,242 | 2,831 | 2,501 | ||||||||||
Proved Undeveloped | 170,092 | 131,545 | 104,284 | 84,454 | 69,590 | ||||||||||
Total Proved | 288,096 | 247,647 | 211,982 | 183,493 | 160,994 | ||||||||||
Probable | 287,059 | 205,965 | 156,182 | 123,347 | 100,416 | ||||||||||
Total Proved Plus Probable | 575,155 | 453,612 | 368,163 | 306,840 | 261,410 | ||||||||||
(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. |
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 2023 is $83.0 million and FDC on total proved plus probable reserves is $131.5 million.
Proved Reserves | Proved Plus Probable Reserves | |||||
$M | $M | |||||
2024 | 38,568 | 59,912 | ||||
2025 | 24,066 | 38,354 | ||||
2026 | 20,374 | 33,274 | ||||
Total Undiscounted | 83,008 | 131,540 |
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, Greater Lloydminster area and Gull Lake, Saskatchewan.