Baytex Energy Corp. · TSX:BTE
Baytex Energy — Investor Presentation (June 2016)
34 slides from Baytex Energy's investor presentation, June 2016
Slide 1: June Presentation
June Presentation BAYTEX
Slide 2: Advisory: Forward-Looking Statements
Advisory Forward-Looking Statements In the interest of providing Baytex's shareholders and potential investors with information regarding Baytex, including management's assessment of Baytex's future plans and operations, certain statements made by the presenter and contained in these presentation ma
Slide 3: Advisory (Cont.)
Advisory (Cont.) Actual results achieved will vary from the information provided herein as a result of numerous known and unknown risks and uncertainties and other factors. Such factors include, but are not limited to: the volatility of natural gas prices; further declines or an extended period of t
Slide 4: Advisory (Cont.): Non-GAAP Financial Measures
Advisory (Cont.) Non-GAAP Financial Measures This presentation refers to funds from operations, net debt, operating netback and Bank EBITDA, which do not have any standardized meaning prescribed by generally accepted accounting principles in Canada ("GAAP"). We define funds from operations ("FFO") a
Slide 5: Baytex Key Attributes
Baytex Key Attributes Making the Right Choices In a Low Oil Price Environment Pro-actively worked with our bank lending Cost reduction focus syndicate to provide across all facets of our increased financial organization while flexibility; targeting capital maintaining efficiency in expenditures to M
Slide 6: Corporate Profile
Corporate Profile Market Summary Ticker Symbol TSX / NYSE: BTE Average Daily Volume (1) CAN: 10,200,000 / US: 2,800,000 Shares Outstanding 210.7 million Market Capitalization / Enterprise Value $1.3 billion / $3.3 billion Net Debt (2) $2.0 billion Corporate Summary Production (3) 68,000 – 72,000 boe
Slide 7: Three Key Resource Plays
Three Key Resource Plays Eagle FordTexas 34% Peace River Q1/16 production of Texas 34% Q1/16 production of 14,200 41,100 boe/d boe/d Heavy Oil 51% Expect to bring ~ 30 net Developed Light Oil 22% via multi-lateral wells on production in horizontal wells 2016 2016 development deferred Act
Slide 8: Q1 2016 Highlights
Q1 2016 Highlights Generated production of 75,800 boe/d (78% oil and NGL) Continued to Meet the Challenges of Low Oil Prices Directed 96% of exploration and development spending to the Eagle Ford which generates the highest rates of return and highest netbacks in our portfolio Pro-actively s
Slide 9: 2016 Capital Budget
2016 Capital Budget Summary of 2016 Expectations Exploration and Development Capital $225-$265 million Production 68,000 – 72,000 boe/d We are targeting capital expenditures to approximate funds from operations in order to minimize additional bank borrowings. Approximately 95% of planned expendi
Slide 10: Balance Sheet / Debt Composition
Balance Sheet / Debt Composition At March 31, 2016, long-term debt (bank loan and long-term notes) totaled $1.8 billion and we were 39% drawn on our credit facilities. Credit Capacity $2.3 Billion Long-Term Notes Maturity Schedule ($ Millions) Debt composition as at March 31, 2016. We have secured
Slide 11: Financial Covenant Flexibility
Financial Covenant Flexibility Baytex Position as at March 31, 2016 Senior Secured Debt (1) to Bank EBITDA (2) 0.61 : 1.00 Interest Coverage (3) 4.82 : 1.00 Ratio for the Quarter(s) ending: March 31, 2016 to June 30, 2018 to December 31, 2018 Thereafter March 31, 2018 September 30, 2018 Senior Secur
Slide 12: Crude Oil Hedge Portfolio
Crude Oil Hedge Portfolio Q2/2016 Q3/2016 Q4/2016 Balance of Full-Year 2016 2017 WTI Fixed Hedges Volumes (bbl/d) 8,000 5,000 5,000 6,000 --- Fixed Price (US$/bbl) $59.84 $63.79 $63.79 $62.03 --- WTI 3-Way Option Volumes (bbl/d) 9,500 10,000 10,000 9,833 10,000 Average Ceiling/Floor/Sold Floor $60/$
Slide 13: Natural Gas Hedge Portfolio
Natural Gas Hedge Portfolio Balance of Full-Year Q2/2016 Q3/2016 Q4/2016 2016 2017 AECO Fixed Hedges Volumes (GJ/day) 28,333 32,500 32,500 31,111 10,000 Price (C$/GJ) $2.50 $2.50 $2.39 $2.46 $2.65 NYMEX Fixed Hedges Volumes (mmbtu/d) 15,000 15,000 15,000 15,000 15,000 Price (US$/mmbtu) $2.98 $2.98 $
Slide 14: Cost Reduction Focus
Cost Reduction Focus Baytex continues to take active measures to reduce costs where possible while maintaining efficiency in our operations and the safety of our employees and contractors. Drilling costs reduced 27% in the Eagle Ford Realized Over $150 Million in Operating expenses reduced 18% f
Slide 15: Strong Capital Efficiencies – Driving Down Costs
Strong Capital Efficiencies – Driving Down Costs Capital efficiency improvement since 2014 driven by portfolio enhancements, including: Addition of the Eagle Ford Divestiture of North Dakota and other non-core assets Reduced thermal expenditures We anticipate further improvements as we dri
Slide 16: Attractive Rates of Return
Attractive Rates of Return 175% 150% Eagle Ford - US$5.6M/well Rate of Return (1) (2) (3) Peace River - C$2.8M/well 125% Lloydminster - C$750K/well Break-Even WTI (4) 100% 75% 50% 25% 0% $45 $50 $55 $60 $65 $70 WTI (US$/bbl) (1) Individual well economics are based on constant pricing and costs. Pric
Slide 17: High Quality Investment Opportunities
High Quality Investment Opportunities Single Well Economics Eagle Ford Peace River Lloydminster Well Costs – DC&E (1) ($ millions) US$5.6 $2.8 $0.75 Production (boe/d) IP30 1,000 - 1,200 300 - 500 70 - 80 % Liquids 60% - 70% 100% 100% EUR (2) (mboe) 800 300 70 Single Well Economics @ US$50/bbl (cons
Slide 18: The Eagle Ford
The Eagle Ford BANTEX
Slide 19: Baytex Acreage Position
Baytex Acreage Position The Eagle Ford Provides Baytex With Exposure to a World Class Oil Resource Play Overview of Acreage 23,000 net contiguous acres in the Sugarkane Field in the core of the liquids-rich Eagle Ford shale The Sugarkane Field has been largely delineated which is expected to fac
Slide 20: Eagle Ford Development
Eagle Ford Development Significant advancements have been made to delineate the multi-zone development potential of our Sugarkane acreage Commenced production from 34 wells in Q1/2016 (47% Upper Eagle Ford, 35% Lower Eagle Ford, 18% Austin Chalk) A total of 19 wells established 30-day IP rates
Slide 21: Eagle Ford “Stack and Frac” Highlights
Eagle Ford “Stack and Frac” Highlights Chapman Rogers - Q4 2015 Sienkiewicz - Q2 2015 5 well pad 5 well pad Avg 30 day IPs Avg 30 day IPs ~1,164 boepd ~1,575 boepd 13 Multi-Zone Projects in Various Stages of Execution and Development Foster – Q1 2016 Urrutia - Q2 2015 5 well pad 3 well pad Avg 30 da
Slide 22: Eagle Ford Performance
Eagle Ford Performance Increasing Performance and Efficiency Improvements in drilling and completion design have increased 30-day IP rates by approximately 106% since Q4/2011 with 180-day cumulative recovery increasing 74% over the same time period Drilling times have decreased by 60% since Q4/2
Slide 23: Completion Improvements
Completion Improvements Increasing Lateral Length, Frac Stages and Proppant Lateral Length and Total Depth Per Well Frac Stages and Proppant Per Well 23
Slide 24: Pricing Exposure
Pricing Exposure The Eagle Ford Significantly Enhances Our Operating Netback Our light oil and condensate production in the Eagle Ford is priced primarily off a Louisiana Light Sweet (LLS) benchmark, which typically trades at a premium to WTI. Strong waterborne pricing, combined with low cash co
Slide 25: Heavy Oil Overview
Heavy Oil Overview 25
Slide 26: Peace River Oil Sands
Peace River Oil Sands Multi-Lateral Drilling Drives Strong Capital Efficiencies Area Statistics Land Holdings 338 net sections Production (Q1/2016) 14,200 boe/d 2P Reserves (YE15) (1) 73.6 mmboe Drilling Inventory (2) 7.5 years (1) In addition, we have 18.2 mmbbl of bitumen reserves related to our
Slide 27: Multi-Lateral Cold Horizontal Wells
Multi-Lateral Cold Horizontal Wells Reservoir Characteristics (1) Formation Bluesky Depth ~ 600 metres Completion Open Hole Oil Quality 11 °API Average Porosity 28% Permeability 1 - 5 darcies Oil Saturation 70% Recovery Factor 5 - 7% Well Economics (1) Well Design ~ 12 laterals Completed Well Cost
Slide 28: Lloydminster Heavy Oil
Lloydminster Lloydminster Heavy Oil Heavy Oil Shift to Horizontal Drilling Expands Inventory Area Statistics Land Position 652 net sections Production (Q1/2015) 11,500 boe/d 2P Reserves (YE15) (1) 33.2 mmboe Drilling Inventory (2) ~ 7.5 years (1) In addition, we have 43.4 mmbbl of bitumen reserves
Slide 29: Lloydminster Development
Lloydminster Development Reservoir Characteristics (1) Formation Mannville Group Depth 350 – 800 metres Completion Horizontal Slotted Liner / Vertical Stacked Pays Oil Quality 10 – 16 °API Average Porosity 30% Permeability 0.5 – 5.0 darcies Oil Saturation 70% Horizontal Well Economics (1) Complete
Slide 30: Summary
Summary We are well positioned to benefit from an oil price recovery Retain significant leverage to a rising crude oil price environment Exceptional asset base focused on crude oil & liquids Significant inventory of development projects Advancing multi-zone potential of Eagle Ford acreage
Slide 31: Supplementary Information
Supplementary Information 31
Slide 32: 2016 Funds from Operations Sensitivities
2016 Funds from Operations Sensitivities Estimated Effect on Annual Funds from Operations ($ Millions) Sensitivities Excluding Hedges Including Hedges Change of US$1.00/bbl WTI crude oil $17.8 $15.1 Change of US$1.00/bbl WCS heavy oil differential $9.7 $7.4 Change of US$0.25/mcf NYMEX natural gas $7
Slide 33: Capital Program Efficiency
Capital Program Efficiency 3-Year 2013 2014 2015 Total / Average 2013-15 Capital Expenditures ($millions) Exploration and development 550.9 766.1 521.0 1,838.0 Acquisitions (net of dispositions) (39.1) 2,545.1 1.6 2,507.7 Total 511.8 3,311.2 522.7 4,345.7 Proved plus Probable Reserve Additions (mboe
Slide 34: Contact Information
Contact Information Suite 2800, Centennial Place James L. Bowzer 520 – 3rd Avenue S.W. President & Chief Executive Officer Calgary, Alberta T2P 0R3 (587) 952-3000 T: (587) 952-3000 1-800-524-5521 Rodney D. Gray www.baytexenergy.com Chief Financial Officer (587) 952-3160 Brian G. Ector Senior Vice Pr