Mr. Dave Burton reports

LYCOS ENERGY INC. ANNOUNCES CLOSING OF BUSINESS COMBINATION WITH MAHIKAN OIL CORP. AND EQUITY FINANCING

Lycos Energy Inc. has successfully closed its previously announced strategic business combination with Mahikan Oil Corp. and fully subscribed equity financing.

Closing of strategic business combination

Lycos has acquired all the issued and outstanding common shares of Mahikan in an all-share transaction.

Under the terms of the transaction, former shareholders of Mahikan received an aggregate of 29,781,301 common shares of Lycos, issued at a deemed price of $1.20 per Lycos share. Total consideration for the transaction was approximately $49.7-million, including the assumption of Mahikan's net debt.

The transaction brings together two complementary heavy oil producers and establishes a larger, contiguous Mannville-focused land base with significant drilling inventory and development potential.

Dave Burton, president and chief executive officer of Lycos, commented:

"The transaction with Mahikan significantly expands Lycos's Mannville focused asset base and development inventory. We believe the transaction positions the company for continued production growth and long-term value creation. Looking ahead, Lycos intends to remain active in pursuing additional accretive opportunities, while maintaining a disciplined approach to capital allocation."

All of the Lycos shares issued to directors, officers and 10-per-cent shareholders of Mahikan, representing an aggregate of 21,150,001 Lycos shares on closing, are subject to a hold period and will be released as to one-third on each of the dates that is four, eight and 12 months following the closing. Lycos shares issued to all other shareholders of Mahikan are subject to a four-month hold period.

Equity financing

Concurrent with closing of the transaction, the company completed its previously announced non-brokered private placement equity financing for gross proceeds of approximately $30.0-million through the issuance of 25 million Lycos shares at a price of $1.20 per share.

The net proceeds from the offering were used to repay indebtedness incurred in connection with the transaction and are expected to finance development capital associated with the acquired assets and for general corporate purposes.

All securities issued under the offering are subject to a statutory hold period of four months and one day from the date of issuance in accordance with applicable securities laws.

Certain directors and officers of the company participated in the offering for an aggregate subscription of 3,353,675 Lycos 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 offering does not exceed 25 per cent of the market capitalization of the company, as determined in accordance with MI 61-101. The company did not file a material change report in respect of the related party transaction 21 days before the closing of the offering because the details of the participation of insiders had not been determined at such time. Further details will be provided in a material change report to be filed by the company subsequent to the dissemination of this news release.

The transaction and the offering have been conditionally accepted by the TSX Venture Exchange and remain subject to the final acceptance of the TSX-V.

Board appointments

In connection with closing of the transaction, Tom Coolen (chairperson) and Steve Buytels were appointed as directors of Lycos, joining Dave Burton and Bruce Beynon, two incumbent directors. The company is pleased to announce the appointment of Bruce Hall and Brendan Paton as the fifth and sixth directors of Lycos, respectively, as part of the transaction.

Mr. Hall is an independent businessman with over 30 years of experience in the oil and gas industry with a strong background in heavy oil development and a record for creating shareholder value. Mr. Hall has served in senior executive roles in both public and private companies, including as founder, president and chief executive officer of both Ricochet Oil Corp. and Rifle Shot Oil Corp. Mr. Hall graduated from the University of Alberta with a bachelor of science in petroleum engineering with distinction and is currently an independent director of two private oil companies.

Mr. Paton is the president and chief operating officer of Logan Energy, and brings over 15 years of experience in oil and gas exploration, development and acquisitions. He was part of the founding management team of Spartan Delta Corp. from its recapitalization in 2019 through to the reorganization and spinout of Logan Energy Corp. in July, 2023, where he served as vice-president of engineering. He brings strong technical and operational expertise in building and developing resource assets both organically and through strategic acquisitions. Mr. Paton holds a bachelor of applied science in mechanical engineering from the University of British Columbia and is a professional engineer.

Director resignations

In connection with the closing of the transaction and the new appointments to the board of directors of Lycos, Kevin Olson, Geri Greenall and Ali Horvath have resigned as directors of the company. The board and management of Lycos thank Mr. Olson, Ms. Greenall and Ms. Horvath for their service and contributions to the company, and wish them well in their future endeavours.

Officer appointments

Lycos is pleased to announce the appointment of Taylor Law as vice-president, exploration, and Mike Bucholtz as vice-president, engineering and business development. These appointments further strengthen Lycos' technical leadership as the company advances its expanded Mannville-focused asset base and development inventory.

Mr. Law is a professional geologist with over 15 years of experience in oil and gas exploration and new venture development. He was a co-founder of Buffalo Mission Energy Corp. and has held senior technical leadership roles, including vice-president, exploration, at Mahikan, along with various senior geological positions across the Western Canadian sedimentary basin. Mr. Law holds a bachelor of science in geology from the University of Calgary.

Mr. Bucholtz has over 15 years of upstream oil and gas experience focused on development and exploitation engineering. He has served as manager of engineering at Lycos since November, 2022, and previously held engineering roles at Whitecap Resources Inc. and Canadian Natural Resources Ltd. Mr. Bucholtz's technical and strategic expertise will support the advancement of Lycos's expanded development inventory and future strategic initiatives.

Officer resignations

In connection with the transaction, Jamie Conboy has resigned as vice-president, exploration, and Jeff Rideout has resigned as vice-president, land. The company would like to extend its sincere thanks to Mr. Conboy and Mr. Rideout for their leadership, dedication and contributions to Lycos during their tenure, and wish them success in their future endeavours.

Surrender of Lycos options

Lycos also announces that it has cancelled an aggregate of 2,362,300 Lycos share stock options. The cancelled options were voluntarily surrendered by the holders thereof for no consideration. In addition, an aggregate of 728,125 Lycos share stock options held by exiting directors and management are expected to terminate in 30 days in accordance with Lycos's option plan.

Early warning disclosure

Following completion of the transaction, 24 Capital Corp., together with certain other entities beneficially owned and controlled by Mr. Coolen, holds, directly or indirectly, or exercises control or direction over, an aggregate of 16,678,001 Lycos shares and 22,321 Lycos share purchase warrants, of which 13,800,001 Lycos shares were acquired in consideration for shares of Mahikan held prior to closing of the transaction and 1,375,000 Lycos shares were acquired pursuant to the offering, and in aggregate representing approximately 15.44 per cent of the issued and outstanding Lycos shares on a non-diluted basis. Prior to the completion of the transaction, 24 Capital, together with such other entities, beneficially owned, or exercised control or direction over, 1,503,000 Lycos shares, representing approximately 2.82 per cent of the issued and outstanding Lycos shares on a non-diluted basis. 24 Capital acquired these securities for investment purposes, and may, from time to time, acquire additional securities of Lycos or dispose of such securities as it may deem appropriate. For the purposes of National Instrument 62-103, The Early Warning System and Related Take-Over Bid and Insider Reporting Issues, early warning reporting, the address of 24 Capital is 2720, 308 4th Ave., SW, Calgary, Alta., T2P 0H7. For further details regarding the acquisition of Lycos shares described above, see the early warning report which will be available on Lycos's SEDAR+ profile.

Advisers

National Bank Capital Markets acted as financial adviser to Lycos in connection with the transaction and as lead financial adviser to Lycos in connection with the offering. Velocity Wedbush Partners, ATB Cormark Capital Markets, BMO Capital Markets, Haywood Securities Inc. and Canaccord Genuity Corp. acted as strategic advisers to Lycos in connection with the transaction and the offering.

Peters & Co. Ltd. acted as financial adviser to Mahikan in connection with the transaction and as co-financial adviser to Lycos in connection with the offering.

Advisers received aggregate compensation equal to $2.3-million in cash in connection with the transaction and the offering.

Stikeman Elliott LLP acted as legal counsel to Lycos in connection with the transaction and the offering.

Torys LLP acted as legal counsel to Mahikan in connection with the transaction.

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.

We seek Safe Harbor.