Baytex Energy Corp. · TSX:BTE
Baytex Energy — Investor Presentation (February 2020)
40 slides from Baytex Energy's investor presentation, February 2020
Slide 1: Investor Presentation February 2020
Investor Presentation February 2020
Slide 2: Advisory: Forward Looking Statements
Advisory Forward Looking Statements Any “financial outlook” or “future oriented financial information” in this presentation as defined by applicable securities laws, has been approved by management of Baytex. Such financial outlook or future oriented financial information is provided for the purpose
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 oil and natural gas prices and price differentials; availabilit
Slide 4: Advisory (Cont.)
Advisory (Cont.) “Net debt” is defined as the sum of monetary working capital (which is current liabilities (excluding current financial derivatives and onerous contracts)) and the principal amount of both the long-term notes of Baytex and the bank loans of Baytex. Management of Baytex believe that
Slide 5: Advisory (Cont.): Notice to United States Readers
Advisory (Cont.) Notice to United States Readers The petroleum and natural gas reserves contained in this presentation have generally been prepared in accordance with Canadian disclosure standards, which are not comparable in all respects to United States or other foreign disclosure standards. For e
Slide 6: Our Strategy for Value Creation
Our Strategy for Value Creation Vision: Top Tier North American Oil Producer Targeting 10-15% Annual Shareholder Returns ▪ Reduced net debt by $394 ▪ Relentless focus on driving million in 2019 cost and capital efficiencies ▪ Enhanced long-term note in our business maturity schedule with first ▪ Com
Slide 7: Corporate Profile
Corporate Profile Market Summary Ticker Symbol TSX / NYSE: BTE Average Daily Volume (1) CAN: 10.7 million / US: 2.2 million Shares Outstanding (2) 558 million Market Capitalization / Enterprise Value (2) $804 million / $2,691 million Operating Statistics Production (Gross W.I.) (3) 93,000 - 97,000 b
Slide 8: 2019 Highlights
2019 Highlights ▪ Capital expenditures of $552 million, which is the low end of Delivering on our original guidance Operating Plan ▪ Generated production of 97,680 boe/d, exceeding the high end of original guidance ▪ Free cash flow of $329 million generated in 2019 Generating Free ▪ Eagle Ford, Viki
Slide 9: 2020 Outlook
2020 Outlook 2020 capital program designed to 2020 Guidance (1) deliver stable production and E&D CapEx $500 - 575 million maximize free cash flow Production 93,000 - 97,000 boe/d Oil and NGLs 84% • Cash neutrality (capital program fully funded) at US$50/bbl WTI Capital Budget CapEx ($MM) (2) Drill,
Slide 10: 2020E Adjusted Funds Flow Matrix
2020E Adjusted Funds Flow Matrix High netback light oil drives 2020 adjusted funds flow WTI (US$/bbl) Adjusted Funds Flow ($ millions) (1) $50 $55 $60 $65 Differential (US$/bbl) $14 / $4 $660 $756 $867 $985 WCS / MSW (2) $16 / $6 $620 $716 $827 $946 $18 / $8 $580 $676 $788 $906 Adjusted funds $610 f
Slide 11: Balance Sheet and Liquidity
Balance Sheet and Liquidity Balance Sheet (1) $ millions • Strong financial liquidity Bank loan (2) $692 • Credit facilities ~ one-third Long-term notes (3) $1,167 undrawn Long-term debt $1,859 • > $300 million of liquidity Working Capital deficiency $28 Net Debt $1,887 • Enhanced maturity profile w
Slide 12: Crude Oil Hedge Portfolio
Crude Oil Hedge Portfolio Q1/2020 2020 WTI Fixed Hedges Volumes (bbl/d) 8,000 3,500 Fixed Price (US$/bbl) $56.95 $57.40 WTI 3-Way Option Volumes (bbl/d) 24,500 24,500 Average Sold Put / Put / Sold Call (US$/bbl) (1) $50/$58/$63 $50/$58/$63 Hedge (%) (2) 55% 48% Total Hedge Volumes (bbl/d) 32,500 28,
Slide 13: 2020E Adjusted Funds Flow Sensitivities
2020E Adjusted Funds Flow Sensitivities Estimated Effect on Annual Adjusted Funds Flow ($MM) (1) Sensitivities Excluding Hedges Including Hedges Change of US$1.00/bbl WTI crude oil $29.1 $21.6 Change of US$1.00/bbl WCS heavy oil differential $12.4 $11.2 Change of US$1.00/bbl MSW light oil differenti
Slide 14: Diversified Crude Oil Marketing Portfolio
Diversified Crude Oil Marketing Portfolio Viking Light Oil Crude Oil and NGL Sales Portfolio (1) • 36° API light oil contributes to top quartile field netbacks • Priced off Canadian Mixed Sweet NGLs 11% (“MSW”) blend WTI / MSW 28% Crude by Rail 14% LLS / Brent Exposure • Eagle Ford is proximal to Gu
Slide 15: Top Quartile Capital Efficiencies
Top Quartile Capital Efficiencies $45,000 $40,000 2018 All-In Capital Efficiencies, excl. A&D ($/boe/d) Weighted Average ($/boe/d) Oil $25,000 $35,000 Gas $12,800 $30,000 Mixed $21,600 All $19,500 $25,000 $20,000 $15,000 $10,000 $5,000 $0 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 BTE 22 23
Slide 16: Asset Overview
= SSS a me cy BAYTEX ENERGY CORP.
Slide 17: Asset Highlights
Asset Highlights Geographic and play diversification with ~ 10 or more years drilling inventory in each core area Eagle Ford Viking Heavy Oil East Duvernay Free Cash Flow Free Cash Flow Low Decline Early Stage Light Light Oil Light Oil Heavy Oil Oil Growth Production 39,056 boe/d 22,545 boe/d 29,378
Slide 18: Eagle Ford: Core of Karnes County
Eagle Ford: Core of Karnes County • 19,900 net acres in the core of the Eagle Ford shale in south Texas Wilson • Four AMI’s (Longhorn, Sugarloaf, Ipanema and Excelsior) with average 25% W.I. Karnes • 2019 production of 39,100 LONGHORN boe/d (77% liquids) Atascosa • Achieved record production rates f
Slide 19: Eagle Ford: Strong Free Cash Flow and Deep Drilling Inventory
Eagle Ford: Strong Free Cash Flow and Deep Drilling Inventory Production Asset Level Free Cash Drilling Inventory (2) (mboe/d) Flow (1) (C$ millions) (net locations) Stable production and ~ $703MM cumulative free > 10 year inventory at deep inventory drives free cash flow since 2016 current pace cas
Slide 20: Enhanced Completions Drive Step Change in Well Performance
Enhanced Completions Drive Step Change in Well Performance 180 Day Cumulative Well Production 175 Well Economics (1) 17% increase 2019 over 2017 2019 150 5% increase 2019 over 2018 2018 WTI Oil Price $55/bbl $60/bbl Cumulative Production (mboe) 2017 125 Payout: 1.4 years 1.1 years 2016 IRR: 56% 77%
Slide 21: Viking Light Oil: Highly Prospective Sections
Viking Light Oil: 460 Highly Prospective Sections • Shallow (700 m), light oil (36° API) resource play with strong netbacks • Extended Reach Horizontals are enhancing returns • Produced 22,500 boe/d (92% oil) in 2019 Kerrobert • Added 229 net unbooked Plenty Esther/Hoosier drilling opportunities in
Slide 22: Viking – Shifting from Growth to Sustainable Free Cash Flow
Viking – Shifting from Growth to Sustainable Free Cash Flow Successful Transition from Organic Growth to Stable Production and Free Cash Flow Generation in 2019 25,000 Viking Oil Production (bbl/d) 20,000 15,000 10,000 5,000 0 Jan-12 Jul-12 Jan-13 Jul-13 Jan-14 Jul-14 Jan-15 Jul-15 Jan-16 Jul-16 Jan
Slide 23: High Netback Light Oil with Significant Running Room
High Netback Light Oil with Significant Running Room High Netback Light Oil Asset Level Free Cash Drilling Inventory (2) ($/boe) Flow (1) ($ millions) (Net locations) Strong Price Realizations ~ $80 million Free Cash ~ 10 year inventory at and Low Cost Structure Flow at US$55/bbl WTI current pace 2,
Slide 24: Technical Advancements Drive Productivity Improvement
Technical Advancements Drive Productivity Improvement Shift to ERH(1) Wells Drives Productivity 95%+ of Viking Development now Improvements ERH Wells 400 100% Viking Wells by Vintage 350 90% 80 80% 300 70% 70 250 60% 60 200 50% 40% Oil Rate (bbl/d) 50 150 30% 100 40 20% 50 10% 30 0 0% 2012 2013 2014
Slide 25: Peace River: Driving Production Growth and Cost Reductions
Peace River: Driving Production Growth and Cost Reductions North Seal Development • 2018/2019 program (10 multi- lateral horizontal wells) generated 30-day IP rates of ~ 700 boe/d per well Harmon Valley Performance Drivers Seal • Produced 16,800 boe/d in 2019 (86% oil) • Dominant 738 net sections •
Slide 26: Lloydminster: Significant Land Position and Drilling Inventory
Lloydminster: Significant Land Position and Drilling Inventory Performance Drivers • Produced 12,600 boe/d in 2019 (98% oil) Ardmore/Cold Lake • Strong capital efficiencies and economics at current oil prices Lindbergh • Applying multi-lateral Lloydminster Tangleflags horizontal drilling and Soda La
Slide 27: Strong Capital Efficiencies and Significant Torque to Higher Oil Prices
Strong Capital Efficiencies and Significant Torq to Higher Oil Prices Strong Capital Efficiencies (1) Asset Level Free Cash Drilling Inventory (3) ($/boe/d) Flow (2) (C$ millions) (Net locations) Ability to Add Production Significant Torq Above > 10 year inventory Cost Efficiently US$50/bbl $120 700
Slide 28: Heavy Oil: Innovation Enhances Economic Returns
Heavy Oil: Innovation Enhances Economic Returns Peace River Lloydminster Multi-Lateral Horizontal Horizontal Well Economics (1) WTI Oil Price $55/bbl $60/bbl WTI Oil Price $55/bbl $60/bbl Payout: 1.9 years 1.2 years Payout: 1.6 years 1.2 years IRR: 35% 73% IRR: 47% 83% Recycle Ratio: 1.3x 1.9x Recyc
Slide 29: East Duvernay Shale Light Oil: Emerging Resource Play
East Duvernay Shale Light Oil: Emerging Resource Play Pembina Region • 275 sections of 100% WI lands • Seven wells drilled to date have delineated a minimum of 100- 125 sections • Produced 1,700 boe/d (84% liquids) in 2019 • Two wells on-stream in 2019 generated average 30-day IP Pembina rate of ~ 1
Slide 30: High Quality Oil Development
High Quality Oil Development Eagle Ford Viking Peace River (1) Lloydminster (1) East Duvernay Formation Lower Eagle Ford Viking Bluesky Mannville Group Duvernay Upper Eagle Ford Austin Chalk Depth (metres) 3,300-3,900 700 600 350-800 2,200-2,400 Oil API Oil: 40-45° 36° 11° 10-16° 42-44° Condensate:
Slide 31: Corporate Sustainability
Corporate Sustainability
Slide 32: Corporate Sustainability
Corporate Sustainability At Baytex, we believe that commitment to corporate responsibility is just as important as delivering financial and operational targets. We publish a biennial Corporate Sustainability Report which provides transparent reporting and clear goals on the topics that matter: Safet
Slide 33: GHG Emissions Reduction
GHG Emissions Reduction Target to reduce GHG emission intensity (tonnes of CO2 per boe) by 30% by 2021. Our emissions reduction strategy includes: • Increasing gas conservation • Reusing associated gas as fuel for field activities • Reducing emissions from storage tanks • Monitoring and preventing f
Slide 34: A Culture of Commitment
A Culture of Commitment How it contributes to Objective What we’ve done Result value creation Ensure our employees and 76% reduction in corporate spill ENVIRONMENT Reduces costs and maintains Responsibly develop contractors uphold our procedures volumes, over 5 years social license our assets for sp
Slide 35: Supplementary Information
Supplementary Information BAYTEX ENERGY CORP.
Slide 36: Summary of Operating and Financial Metrics
Summary of Operating and Financial Metrics Q1 2018 Q2 2018 Q3 2018 Q4 2018 2018 Q1 2019 Q2 2019 Q3 2019 Q4 2019 2019 Benchmark Prices WTI crude oil (US$/bbl) $62.87 $67.88 $69.50 $58.81 $64.77 $54.90 $59.81 $56.45 $56.96 $57.03 NYMEX natural gas (US$/mcf) $3.00 $2.80 $2.90 $3.64 $3.09 $3.15 $2.64 $2
Slide 37: Reserves Summary (Gross)
Reserves Summary (Gross) 2P Reserves Breakdown 2P Reserves by Asset 2P Reserves by Commodity East Other Duvernay Natural Gas PDP Heavy Eagle Probable Ford Oil Light Oil Heavy + NGL Oil PDNP + PUD Viking East BT NPV-10 Total Debt Category (1) Eagle Ford Viking Heavy Oil Other Total Duvernay ($MM) Cov
Slide 38: 2020 Guidance and Cost Assumptions
2020 Guidance and Cost Assumptions Exploration and development expenditures ($ millions) $500 - $575 Production (boe/d) 93,000 - 97,000 Expenses: Royalty rate (%) 18.0% - 18.5% Operating ($/boe) $11.25 - $12.00 Transportation ($/boe) $1.20 - $1.30 General and administrative ($ millions) $45 ($1.30/b
Slide 39: Notes
Notes BAYTEX ENERGY CORP. TSX | Nyse 39
Slide 40: Contact Information
Contact Information Baytex Energy Corp. Edward D. LaFehr President and Chief Executive Officer Suite 2800, Centennial Place 587.952.3000 520 – 3rd Avenue S.W. Calgary, Alberta T2P 0R3 Rodney D. Gray T 587.952.3000 Executive Vice President and Chief Financial Officer Toll Free 1.800.524.5521 587.952.
Baytex Energy — Investor Presentation (February 2020) on 6ix