When I first wrote about Lycos (LCX) as a Special Briefing last year, I referred to it as a "proto-racehorse". Well, today, LCX is graduating to the main track. Late on Friday, the company announced that it is acquiring Mahikan Oil, resulting in a combined company that will hold a 100% interest in 45 contiguous sections prospective for heavy oil within the Mannville stack. The drilling inventory consists of 698 drilling locations and the lands contain some 1.4 billion barrels of oil-in-place. That's the kind of scale and inventory that captures real market and industry attention. The company's website says that a new corporate presentation is being worked on, so I'll keep an eye out for that in order to get more specific details on the play. What I do know is that this land block (45 contiguous sections is a huge block of land) was sought after by many, but only Mahikan was able to capture it. LCX is issuing a combination of shares and cash to Mahikan, and the Mahikan shareholders will continue on as shareholders in LCX. The deal is definitive. The timing? Excellent in my view.

This deal provides LCX with a level of scale and cohesiveness that it has never had before. If LCX learned anything from version 1.0 it was that scale and coherence matter to the market. Even at 5% recovery, the opportunity presents a 70 million barrel (recoverable) prize with the potential for over 100 million barrels if some formations, like the G.P. sand, get something closer to a 10-15% recovery. I expect that well details and target horizons will be more fully discussed when the company gets its corporate slide deck updated. Individual wells will probably take around a week to drill and typically produce in the low-hundreds-of-barrels-per day. The combination of pad development and quick drill times means that production can ramp up at a good clip.

I'm sure that LCX won't waste any time in terms of starting to drill. These heavy-oil lands are ready to be developed… they were just in the hands of a private company looking for the right vessel with which to merge. This is where Dave Burton and his team are showing their depth and capabilities in terms of their industry relationships and ability to get quality deals done. This is right up their alley in terms of an asset where they can leverage their experience and technical expertise.

The associated financing is fully subscribed and insiders are showing their confidence by putting $5 million into the private placement at $1.20… I doubt the stock ever sees that level. Roughly 55 million shares will be issued, consisting of 29.8 million shares to be issued to Mahikan shareholders and 25 million shares at $1.20 in the financing. Proforma, LCX will have around 110 million shares outstanding and $13 million of cash, with an undrawn $50 million bank line. Tom Coolen (a director of Trican) and Steve Buytels (president of Tamarack Valley Energy) are joining the board, along with two additional directors at a future date. Dave Burton will continue in his role as CEO. Closing of the acquisition is expected on or about March 31, 2026. Peters & Co. and National Bank Capital Markets acted as advisers on the deal to Mahikan and Lycos respectively.

Welcome to the main track, LCX. We look forward to seeing you run. I couldn't have asked for a better "relaunch" transaction and I believe this sets LCX up for a significant increase in market attention and awareness. The scale and quality of the asset that has been captured is high. Not everyone is aware of LCX, so it'll be interesting to see how fast the news travels, but I'm confident that as it does, it will be well-received.

Monday marks Day 1 of LCX 2.0 and I like how it's striding out of the gate. This is the kind of thing you see when you back the right horse. I know that a lot of people will want to know what my thinking is in terms of the potential value that's on the table here. That's always the question, but it's impossible to put a number on it at this point based on what's known. Given that this could be a 70-100+ million barrel recoverable opportunity, my instincts remain the same with LCX – I am playing for dollars, not for dimes (think: "a market cap of a few hundred million" in due course). This is an asset that hits all the right buttons in terms of what the market likes in that it's a large resource ready for development with the repeatability and scalability that makes for an attractive long-term investment opportunity (this is an oil "manufacturing" operation now). I'm sure the company will do some marketing tours in the coming weeks to raise awareness of LCX 2.0 as drilling operations get underway. This is LCX's first acquisition, but probably not its last. There's a lot of race left to run…

Happy hunting.