CALGARY,
AB, Jan. 16, 2023 /CNW/ - Lycos Energy
Inc. ("Lycos" or the "Company") (TSXV: LCX) is
pleased to provide an operational update and announce a new
$20.0 million senior-secured credit
facility with the National Bank of Canada (the "Lender").
Operational Update
Lycos is extremely optimistic about the results of its first
multi-leg "fishbone" well drilled at 08-33-043-22W3. This
100% working interest well has been on production since late
November 2022. The well achieved an average 30-day production
("IP30") rate of 149 boe/d and is currently producing 150
boe/d (100% oil). At recent strip pricing of USD 50$/bbl WCS,
the well is expected to achieve payout in less than 10 months.
A second 8 leg multi-lateral well was drilled at 08-31-043-22W3
from the same drilling pad. This well achieved an IP30 of 97
boe/d and is currently producing 89 boe/d (100% oil). At
recent strip pricing of USD$50/bbl
WCS, the well is expected to achieve payout in less than 15 months.
The significantly better result on the fishbone is consistent with
pre-drill estimates regarding production enhancement from the
fishbone geometry well.
Based on the results of these two wells, Lycos has confirmed
that the increased reservoir contact provided by the "fishbone"
design appears to provide superior capital efficiency with an
approximate 60% increase in productivity with a 10%-15% increase in
capital expenditures, compared to single and multi-leg wells
drilled in the vicinity.
As a follow up to these successful results, Lycos is embarking
on a drilling campaign in Q1 2023 which will consist of fishbone
drills and additional water disposal wells.
Credit Facility
Lycos entered into a credit agreement in respect of a new
revolving credit facility for up to $20.0
million. The credit facility is undrawn, uncommitted and
payable on demand. The credit facility provides added financial
flexibility to support the Company's growth.
Outlook
The Company's current production is approximately 1,250 boe/d
(98.5% oil) in Saskatchewan. Additionally, Lycos owns a
21.85% equity interest in Chronos Duvernay Limited Partnership,
which is currently producing 1,225 boe/d (gross, 100% oil) in
Alberta.
Lycos has demonstrated that its ability to apply multi-lateral
well design to make previously uneconomic drilling locations
economic. The new well shows very compelling returns and
short payouts at current WCS pricing, and Lycos intends to use its
strong cash position and balance sheet to organically develop and
opportunistically acquire substantial inventory of new
multi-lateral development prospects to drive increased shareholder
returns.
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
Gull Lake area of southwest
Saskatchewan and heavy-oil assets
in the Lloydminster area.
Additional Information
Reader Advisory
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. 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: the business plan and strategy of Lycos;
Lycos's anticipated operational results including, but not limited
to, estimated or anticipated production levels, capital
expenditures and drilling plans; Lycos's plans to deliver strong
operational performance and to generate growth and increased
shareholder returns; management's expectations regarding
encouraging drilling results and ability to replicate past
performance; and pursuing immediate production optimization and
future growth with organic drilling and opportunistic
acquisitions.
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 performance of existing wells, the
performance of new wells, the availability and performance of
facilities and pipelines, the geological characteristics of Lycos's
properties, the successful integration of the recently acquired
assets into Lycos's operations, the successful application of
drilling, completion and seismic technology, prevailing weather
conditions, prevailing legislation affecting the oil and gas
industry, prevailing commodity prices, price volatility, price
differentials and the actual prices received for the Company's
products, impact of inflation on costs, royalty regimes and
exchange rates, the application of regulatory and licensing
requirements, the availability of capital, including under the new
credit facility, labour and services, the creditworthiness of
industry partners and the ability to source and complete
acquisitions.
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, fluctuations in commodity prices, changes in
industry regulations and political landscape both domestically and
abroad, wars (including Russia's
military actions in Ukraine),
hostilities, civil insurrections, foreign exchange or interest
rates, increased operating and capital costs due to inflationary
pressures (actual and anticipated), stock market volatility,
impacts of the current COVID-19 pandemic and the retention of key
management and employees. 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. 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's prospective results of operations and
production, organic growth and acquisitions, operating costs,
capital expenditures, payout of wells, Lycos's corporate outlook
and components thereof, 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's proposed business activities in 2023. 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's guidance. The Company's
actual results may differ materially from these estimates.
BOE and Oil Disclosure
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.
Throughout this press release, "crude oil" or "oil" refers to
light, medium and heavy crude oil product types as defined by
National Instrument 51-101 – Standards of Disclosure of Oil and Gas
Activities.
References in this press release to peak rates, IP30 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.
In this press release, the Company has provided certain
information on the prospectivity and the production rate of wells
on properties adjacent to the Company's acreage which is "analogous
information" as defined by applicable securities laws. This
analogous information is derived from publicly available
information sources which the Company believes are predominantly
independent in nature. Some of this data may not have been prepared
by qualified reserves evaluators or auditors and the preparation of
any estimates may not be in strict accordance with the most recent
publication of the Canadian Oil and Gas Evaluation Handbook.
Regardless, estimates by engineering and geotechnical practitioners
may vary and the differences may be significant. The Company
believes that the provision of this analogous information is
relevant to the Company's activities and forecasting, given its
property ownership in the area; however, readers are cautioned that
there is no certainty that the forecasts provided herein based on
analogous information will be accurate.
Abbreviations
bbl
barrels of oil
boe barrels of oil
equivalent
boe/d barrels of oil equivalent per
day
WCS Western Canada Select
All dollar figures included herein are presented in Canadian
dollars, unless otherwise noted.
The TSX Venture Exchange Inc. has in no way passed upon the
merits of the proposed transaction and has neither approved nor
disapproved the contents of this news release.
SOURCE Lycos Energy Inc