Lycos Energy

We put out a special briefing on LCX earlier this month, so I won't repeat it here. The financing associated with the Mahikan acquisition was sold out in a heartbeat and the deal is expected to close in or around the last week of March. Drilling is already underway on the assets. LCX has identified 1.4 billion barrels of oil in place on its new lands and has identified 698 drilling locations targeting heavy oil. Individual well rates will likely average 100-200 bopd, and drilling will be fast and cheap, with wells taking only 5–6 days to drill at a cost of roughly $1.5 million each (*note: the flow rates, drill times, and costs are all my guesstimates as I await an updated corporate presentation and/or guidance). I couldn't have asked for a better "reboot" deal as this gives LCX scale and a depth of inventory that it has never had before. The asset is right down the fairway in terms of LCX's internal expertise, so I'll be glad to ride along patiently here as the team executes on its development plans… especially in this oil tape. LCX is now in the oil manufacturing business and has a huge inventory of wells to drill. Once the deal closes, the company could probably drill 10-15 wells this year from cash on hand and cash flow without dipping into its undrawn credit line.

Little LCX has been doing very, very well since we first wrote about it here and it probably doesn't hurt that the energy sector as a whole has benefited from positive funds flow from money managers in search of defensible value. Nothing about my LCX thesis has changed. At some point in the not-too-distant future, I believe that the company will settle on an asset/play that will start the journey of "Lycos version 2.0" under CEO Dave Burton and his team. LCX management is fully capable of building a small-mid cap company – my personal goal here is to see a market cap measured in the "hundreds of millions" in due course. This is a company with a quality team, a clean balance sheet, good shareholders, access to capital, unified management/shareholder vision, and a tight capital structure. It is a vessel waiting for a growth asset to be brought into it. When that happens, I think that the journey will really begin. The first move in the stock is just the prologue... there's just so much story to be written here yet. I've said it before and I'll say it again... I'm playing for dollars here, not dimes. Even a 50c move in the stock is only about $25 million in market cap, which really puts things in perspective. I've also said before that LCX reminds me of ATU before ATU became TNZ and I maintain that view. Since late 2025, the LCX shareholder base has almost completely turned over, with most institutional investors exiting the name because of its small size and its value as a tax-loss candidate heading into year-end. I think those shares ended up in patient and supportive hands (mine included) that are willing to back the LCX team as they look to re-launch the company through the identification and capture of a scalable asset that is capable of attracting and holding market attention. At US$60 WTI, LCX's existing 1,700 bopd production base and associated reserves has a 1P net asset value (NAV) of $1.31/share and a 2P NAV of $2.21/share – and with oil at US$66 as I type this, I think those NAVs easily support a share price between those goalposts.

I believe that the most recent price and volume spike in LCX was driven by a new group of investors who agree with my thesis on this story in terms of the parallels it has with TNZ's predecessor, Altura Energy (ATU). That group had also followed me into TNZ, so between them and the Circle membership, I think there are likely a lot of common shareholders between the two companies. Given what TNZ holders learned by being patient with that stock, I expect LCX will benefit from a "sticky" shareholder base as long as Dave Burton and his team execute on their vision of creating a new growth story.

One final thing I'll point out is that – in any oil tape – LCX has the advantage of being a buyer of assets who can surface/create value for 1) the sellers of the assets and 2) the shareholders of LCX. My dream scenario would see Lycos acquire an asset from a private or public company for a combination of cash and shares, whereby the seller could participate in the creation of value through share ownership in LCX. This kind of structure is common in the mining industry and is a way for sellers to realize even higher value for their assets by simply taking a longer-term/partnership view. I'm really looking forward to seeing how this story plays out and I have nothing but patience here.

No change here since my recent focused brief on the company (in the Briefings section), the stock is treading water in the mid-to-high 50c range and I'll just wait to see what their next move brings into the company.

With a clean balance sheet, stable production, and an undrawn bank line, this is a call option on management finding a new focus area that the market will like. Sporting a tight share structure and a tiny ~$30 million market cap, this one has a lot of leverage to asset capture and a management team that is fully capable of sourcing a new project.

I think this is a "when, not if" situation and the current low oil price may allow LCX to capture a new project on reasonable/attractive terms. It's nice to be a buyer of things when prices are low.