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⁽¹⁾ See Non-IFRS Measures, Non-IFRS Financial Ratios and Capital Management Measures

The table below summarizes the Company's financial and operating results for the three and six months ended June 30, 2023 and June 30, 2022:

Operations Update

The Company continues to drill both multi-lateral and fishbone heavy oil wells with initial results exceeding type curves. With the refinement of pad drilling sites for stacked Mannville zones, significant efficiency improvements have resulted. Lycos has achieved its fastest fishbone drilling time to date, drilling a combined lateral length of 9,850 meters in nine (9) days (1,094 meters/day). This is a 20% improvement from the average 905 meters/day achieved in previous wells.

Lycos has brought one 8 leg well and three fishbone wells on stream in Q3 2023, all of which are in Alberta. The wells are currently producing at an aggregate rate of over 800 boe/d (99% crude oil).

Lycos continues to observe better performance on fishbone wells. Lycos brought on two wells directly beside each other in Q4 2022, one fishbone and one 8 leg well. The fishbone well has produced over 25,000 bbls to date, which exceeds the 8 leg well by more than 9,000 bbls over the same period.

Strategic Acquisition

Pursuant to the terms of the Acquisition Agreement, the Company will be acquiring Wyatt for total consideration of $8.8 million, consisting of $6.5 million in cash and $2.3 million of equity comprised of 5.1 million pre-Consolidation Lycos Shares at a deemed price of $0.4523 per Lycos Share (the "Acquisition"). The Acquisition will be funded by the Company's credit facilities and cash on hand.

Summary of the Acquisition

Acquisition Highlights

• Provides an entry point into a new core area in Frog Lake Alberta, as well as adding numerous locations within Lycos' current operations in the Lloydminster area of Alberta.

• Current production of approximately 400 boe/d (99% crude oil). Lycos forecasts its' corporate production at closing to be 3,700 boe/d (99% crude oil).

• 12,335 net acres of land predominantly at Wildmere and Frog Lake.

• More than 20 net identified Mannville heavy oil multilateral drilling locations.

Transaction Details

Concurrent with the execution of the Acquisition Agreement, shareholders of Wyatt representing 100% of the outstanding common shares of Wyatt executed letters of transmittal irrevocably accepting Lycos's offer and tendering their shares in connection with the Acquisition. The Acquisition Agreement provides for, among other things, a non-solicitation covenant on the part of Wyatt.

The Acquisition is expected to close on September 1, 2023, subject to certain customary conditions and approvals, including the approval of the TSX Venture Exchange (the "TSXV").

All of the Lycos Shares issued to the shareholders of Wyatt will be subject to a four-month escrow period.

2023 Guidance

The Company is increasing its 2023 acquisition expenditures⁽²⁾ to $59.0 million and its 2023 exploration, development and other capital expenditures to $47.0 million from $50.0 million and $37.0 million, respectively. The additional capital expenditures will fund a two (2) well drilling program on the newly acquired properties as well as the acquisition of additional undeveloped acreage. As a result, we are increasing our anticipated 2023 annual average production to be 3,150 boe/d (99% crude oil) from 3,000 boe/d (99% crude oil), respectively. Lycos expects to fund these additional capital expenditures through its existing working capital and revolving credit facility which will result in a revised estimated Exit Adjusted Working Capital (Net Debt)⁽¹⁾ of ($10.0) million.

⁽¹⁾ See Non-IFRS Measures, Non-IFRS Financial Ratios and Capital Management Measures
⁽²⁾ Revised acquisition expenditures is comprised of $56.7 million of cash and $2.3 million of equity.

Share Consolidation

The board of directors of the Company intends to effect the Consolidation on the basis of eight (8) pre-consolidation Lycos Shares for each post-consolidation Lycos Share to promote increased liquidity and reduce volatility in the trading of the Lycos Shares.

The Consolidation will be effective upon the filing of the Articles of Amendment for the Company and remains subject to the approval of the TSXV. Trading of the Lycos Shares on a post-Consolidation basis on the TSXV is expected to commence at market open on September 1, 2023 under the following new ISIN and CUSIP codes:

ISIN: CA55082H2063
CUSIP: 55082H206

The 318,147,806 Lycos Shares currently issued and outstanding will be reduced to approximately 39,768,476 Lycos Shares on a post-Consolidation basis. Following the completion of the Acquisition, the number of post-Consolidation Lycos Shares issued and outstanding will be 40,404,116. The record date for the Consolidation will take place on the close of business of the last trading day immediately prior to the date on which the post-Consolidation Lycos Shares commence trading on the facilities of the TSXV. No fractional shares will be issued. Any fractional interest in Lycos Shares that is less than 0.5 of a Lycos Share resulting from the Consolidation will be rounded down to the nearest whole post-Consolidation Lycos Share and any fractional interest in Lycos Shares that is equal to or greater than 0.5 of a Lycos Share resulting from the Consolidation will be rounded up to the nearest whole post-Consolidation Lycos Share. As a result of the Consolidation, there will be proportional adjustments to outstanding options and warrants to acquire Lycos Shares to preserve the rights of the holders of such securities to the relevant proportion of the Company's Lycos Shares post-Consolidation.

Letters of transmittal will be mailed to registered shareholders and registered shareholders will be required to deposit their share certificate(s), together with the duly completed letter of transmittal, with Odyssey Trust Company, the Company's registrar and transfer agent. Non-registered shareholders holding Lycos Shares through an intermediary (a securities broker, dealer, bank or financial institution) should be aware that the intermediary may have different procedures for processing the Consolidation than those that will be put in place by the Company for registered shareholders. If shareholders hold their Lycos Shares through an intermediary and they have questions in this regard, they are encouraged to contact their intermediaries.

For more information on the Consolidation, shareholders are encouraged to refer to the management information circular of the Company dated May 1, 2023, which is available on the Company's SEDAR+ profile at www.sedarplus.ca.

Option Grant

The Company's board of directors also granted 300,000 options to purchase pre-Consolidation Lycos Shares to a newly appointed director. The stock options are exercisable at a price of $0.45 per Lycos Share, expire five years from the date hereof, and vest as to one-third on each of the first, second and third anniversary date of the grant.

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

For further information, please contact:

Dave Burton
President and Chief Executive Officer
T: (403) 616-3327
E: dburton@lycosenergy.com

Lindsay Goos
Vice President, Finance and Chief Financial Officer
T: (403) 542-3183
E: lgoos@lycosenergy.com

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. 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 completion of the Acquisition, including anticipated funding and timing thereof; satisfaction or waiver of the closing conditions to the Acquisition; receipt of required legal and regulatory approvals for the completion of the Acquisition; the anticipated benefits of the Acquisition, including the impact of the Acquisition on the Company's operations, reserves, inventory and opportunities, financial condition, access to capital and overall strategy; anticipated pro forma capital program and operational results for the remainder of 2023 including, but not limited to, estimated or anticipated growth, production levels, capital expenditures, drilling plans and locations; expectations regarding commodity prices; the Consolidation and timing thereof; anticipated benefits of the Consolidation; 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; and the source of funding for the Company's activities including development costs. 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 receipt of all approvals and satisfaction of all conditions to the completion of the Acquisition; the risk that trading of the Lycos Shares on a post-Consolidation basis may not take effect when expected; and the receipt of all approvals (including TSXV approval) and satisfaction of all conditions to the completion of the Consolidation; 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, counterparty risk to closing the Acquisition; unforeseen difficulties in integrating the assets to be acquired pursuant to the Acquisition into Lycos' operations; incorrect assessments of the value of benefits to be obtained from acquisitions and exploration and development programs (including the Acquisition); 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), volatility in the stock market and financial system, impacts of pandemics, the retention of key management and employees, risks with respect to unplanned third-party pipeline outages and risks relating to the Alberta wildfires, 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, 2022, and the 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, organic growth and acquisitions, operating costs, 2023 outlook and guidance, including capital, development and acquisition expenditures in 2023 and components thereof, including pro forma the completion of the Acquisition, 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 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' guidance. The Company's actual results may differ materially from these estimates.

Disclosure of Oil and Gas Information

Reserves Information. All reserves information in this press release relating to the Wyatt assets was prepared by Sproule Associates Limited ("Sproule") for Wyatt effective March 31, 2023 (the "Wyatt Reserves Report"). The evaluation of Wyatt's properties was prepared in accordance with the definitions, standards and procedures contained in National Instrument 51-101 - Standards of Disclosure for Oil and Gas Activities ("NI 51-101") and the most recent publication of the Canadian Oil and Gas Evaluations Handbook ("COGEH") and is based on Sproule's published price forecast as of March 31, 2023. Reserves values are based on working interest reserves of the Wyatt assets being acquired before deduction of royalties and without including any of royalty interest reserves.

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.

Drilling Locations. This press release discloses drilling locations in two categories: (i) booked locations; and (ii) unbooked locations. Booked locations are derived from the Wyatt Reserves Report 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. 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

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)" is calculated as current assets less current liabilities, excluding the current portion of decommissioning liabilities and financial derivative receivable. Adjusted working capital (Net Debt) is a capital management measure which management uses to assess the Company's liquidity. See the MD&A for a detailed calculation and reconciliation of Adjusted Working Capital (Net Debt) to the most directly comparable measure presented in accordance with IFRS.

• "Adjusted Funds Flow from Operations" 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. See the MD&A for a detailed calculation and reconciliation of Adjusted Funds Flow from Operations to the most directly comparable measure presented in accordance with IFRS.

• "Exit Adjusted Working Capital (Net Debt)" is calculated by taking the forecasted December 2023 current assets less current liabilities, excluding the current portion of decommissioning liabilities and financial derivative receivable. Exit adjusted working capital (Net Debt) is a capital management measure which management uses to assess the Company's liquidity.

• "Net Operating Expenses" is operating expenses, less processing income primarily generated by third party volumes at processing facilities where the Company has an ownership interest. The Company's principal business is not that of a midstream entity whose activities are dedicated to earning processing and other infrastructure payments. Where the Company has excess capacity at its facilities, it will look to process third party volumes as a means to reduce the cost of operating/owning the facility.

• "Operating Netback" is petroleum and natural gas revenues, less royalties, less net operating costs and transportation expenses, excluding the effects of financial derivatives. These metrics can also be calculated on a per boe basis, which results in them being considered a non-IFRS financial ratio. Management considers operating netback an important measure to evaluate Lycos' operational performance, as it demonstrates field level profitability relative to current commodity prices. See the MD&A for a detailed calculation and reconciliation of operating netback per boe to the most directly comparable measure presented in accordance with IFRS.

• "Total Petroleum and Natural Gas Sales, Net of Blending" is total petroleum and natural gas sales, net of blending expense to compare realized pricing to benchmark pricing. This is calculated by deducting the Company's blending expense from petroleum and natural gas sales. Blending expense is recorded within blending and transportation expense in the Condensed Interim Consolidated Financial Statements.

Please refer to the MD&A 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 profile on www.sedarplus.com.

Abbreviations

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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