Baytex Energy Corp. · TSX:BTE

Baytex Energy — Investor Presentation (February 2016)

39 slides from Baytex Energy's investor presentation, February 2016

  1. Slide 1: February Presentation

    February Presentation BAYTEX

  2. Slide 2: Advisory

    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

  3. 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: declines in oil and natural gas prices; risks related to the accessibility, avail

  4. Slide 4: Advisory (Cont.)

    Advisory (Cont.) A range of contingent resources estimates (low, best and high) were prepared by Sproule and McDaniel. A low estimate (C1) is considered to be a conservative estimate of the quantity of the resources that will actually be recovered. It is likely that the actual remaining quantities r

  5. Slide 5: Baytex Key Attributes

    Baytex Key Attributes North American Oil Focused Producer Operating for Over 20 Years  Focus on per share growth in production, cash flow and reserves Exceptional  Production growth focused on crude oil and liquids Growth Platform  Significant inventory of development prospects  Sector leading e

  6. Slide 6: Corporate Profile

    Corporate Profile Market Summary Ticker Symbol TSX / NYSE: BTE Average Daily Volume (1) CAN: 11,700,000 / US: 2,500,000 Shares Outstanding 210.7 million Market Capitalization / Enterprise Value $0.6 billion / $2.5 billion Total Monetary Debt (2) $1.9 billion Corporate Summary Production (3) 74,000 –

  7. Slide 7: Three Key Resource Plays

    Three Key Resource Plays Eagle FordTexas 34% Peace River  Q3/15 production of Texas 34%  Q3/15 production of 39,000 boe/d 21,200 boe/d Heavy Oil 51%  Expect to bring 35-40 net  12 net wells planned for Light Oil 22% wells on production in 2016 2016  Developed via multi-lateral  Actively develo

  8. Slide 8: YTD 2015 Highlights

    YTD 2015 Highlights  Generated production of 85,800 boe/d (9 months actual), up 16% year-over-year  Advanced multi-zone development potential of Eagle Ford acreage  13 multi-zone projects in various stages of execution and production  Continued to focus on cost reduction initiatives  Drilling c

  9. Slide 9: 2016 Capital Budget & Commentary

    2016 Capital Budget & Commentary Summary of 2016 Expectations Exploration and Development Capital $325-$400 million Production 74,000 – 78,000 boe/d Commentary: - Our 2016 capital budget has been structured to ensure maximum flexibility with respect to both the timing and level of spend. - We are ta

  10. Slide 10: Balance Sheet / Debt Composition

    Balance Sheet / Debt Composition  Anticipate exiting 2015 with senior debt (bank debt and long-term notes) of $1.8 billion - $1.9 billion  Senior debt to Bank EBITDA ratio (twelve-month trailing) of approximately 3.0x at year-end 2015, compared to a permitted ratio of 5.25x to the end of 2017.  A

  11. Slide 11: 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.  We are focused on cost reduction initiatives Cost Reduction Initiatives through all facets of our business To

  12. Slide 12: Cost Reduction Initiatives – Drilling

    Cost Reduction Initiatives – Drilling Eagle Ford (US$) (1)  High graded best drilling rigs and completion crews $8.2M  Reduced drilling days despite longer well laterals $6.0M  Recent drill achieved a record of 6.5 days spud to total depth  Increased efficiency on completions (reduced frac times

  13. Slide 13: Cost Reduction Initiatives – Operating and G&A

    Cost Reduction Initiatives – Operating and G&A  Operating expenses reduced 15% vs. 2015 budget  On a per-boe basis, down 14% vs. budget (YTD 2015 actual = $10.55/boe)  Optimization of operational practices  Trucking and fluid hauling  Well servicing  Facility rationalization  Shut-in of uneco

  14. Slide 14: Strong Capital Efficiencies – Driving Down Costs

    Strong Capital Efficiencies – Driving Down Costs  Capital efficiency improvement in 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 drive

  15. Slide 15: Attractive Rates of Return

    Attractive Rates of Return 150% Internal Rate of Return (1) (2) (3) 125% Eagle Ford - US$6.0M/well Peace River - C$2.8M/well 100% Lloydminster - C$750K/well Break-Even WTI (4) 75% 50% 25% 0% $45 $50 $55 $60 $65 $70 WTI (US$/bbl) (1) Individual well economics are based on constant pricing and costs.

  16. Slide 16: High Quality Investment Opportunities

    High Quality Investment Opportunities Single Well Economics Eagle Ford Peace River Lloydminster Well Costs – DC&E (1) ($ millions) US$6.0 $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

  17. Slide 17: The Eagle Ford

    The Eagle Ford BANTEX

  18. Slide 18: 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

  19. Slide 19: Eagle Ford Development

    Eagle Ford Development Development to-date has targeted the Lower Eagle Ford  Development occurring at 40-acre and 60- acre spacing  We are seeing an approximate 28% improvement in 30-day IP rates since acquisition Extending Lower Eagle Ford Success  Austin Chalk now delineated on over 50% of our

  20. Slide 20: Eagle Ford “Stack and Frac” Highlights

    Eagle Ford “Stack and Frac” Highlights  Four well pad on production February 14, 2015  Four zones targeted: Lower EF, Upper-Lower Murphy Sinclair EF, Upper EF, Austin Chalk  Average 30-day IP rate ~1,450 boe/d Sienkiewicz  Average lateral length 5,466 feet Urrutia  Five-well pad on production A

  21. Slide 21: Eagle Ford Performance

    Eagle Ford Performance Increasing Performance and Efficiency - Improvements in drilling and completion design have increased 30-day IP rates by approximately 84% since Q4/2011 with 180-day cumulative recovery increasing 69% over the same time period - Drilling times have decreased by 64% since Q4/20

  22. Slide 22: Completion Improvements

    Completion Improvements Increasing Lateral Length, Frac Stages and Proppant - Since 2011, the average lateral length per well has increased 18% to approximately 5,700 feet, the number of frac stages per well has increased 44% to 23 stages and the amount of total proppant per well has increased 40% t

  23. Slide 23: 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

  24. Slide 24: Heavy Oil Overview

    Heavy Oil Overview 24

  25. Slide 25: Peace River Oil Sands

     Peace River Oil Sands Multi-Lateral Drilling Drives Strong Capital Efficiencies Area Statistics Land Holdings 310 net sections Production (Q3/2015) 21,200 boe/d 2P Reserves (YE14) (1) 72.6 mmboe Drilling Inventory (2) 6.5 years (1) In addition, we have 38 mmbbl of bitumen reserves related to our t

  26. Slide 26: 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

  27. Slide 27: Lloydminster Heavy Oil

    Lloydminster Lloydminster Heavy Oil Heavy Oil  Shift to Horizontal Drilling Expands Inventory Area Statistics Land Position 652 net sections Production (Q3/2015) 13,800 boe/d 2P Reserves (YE14) (1) 49.5 mmboe Drilling Inventory (2) ~ 6.5 years (1) In addition, we have 43.4 mmbbl of bitumen reserves

  28. Slide 28: 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

  29. Slide 29: The Value Proposition

    The Value Proposition We have recalibrated our business to the current oil price environment  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

  30. Slide 30: Supplementary Information

    Supplementary Information 30

  31. Slide 31: Production Growth

    Production Growth Production Breakdown 5 Year Production CAGR = 9% 2016 Guidance NGLs 12% Light Oil 32% Heavy Oil 34% Gas 22% Production by Region 2016 Guidance United States Canada Oil (%) 87% 88% 86% 81% 78% 78% 53% 47% 31

  32. Slide 32: Reserves Growth / Contingent Resources

    Reserves Growth / Contingent Resources 5 Year Reserve CAGR = 17% 2P Gross Reserves Breakdown (per share CAGR = 7%) Company Total = 432 MMboe Gas NGLs Heavy Oil 14% Gas 17% 53% NGLs 15% NGLsLight NGLs Oil 22% 17% 17% 16% Natural Gas Natural Gas 16% HeavyHeavy Oil Oil 16% 53% 48% Heavy Oil Light Oil 5

  33. Slide 33: 2016 Funds from Operations Sensitivities

    2016 Funds from Operations Sensitivities Estimated Effect on Estimated Effect on Annual Funds from Annual Funds from Sensitivities (excludes effect of hedging) Operations ($ Millions) Operations (Per Share) Change of US$1.00/bbl WTI crude oil $18.0 $0.09 Change of US$1.00/bbl WCS heavy oil different

  34. Slide 34: Crude Oil Hedge Portfolio

    Crude Oil Hedge Portfolio Q4/2015 2016 2017 Fixed Hedges Volumes (bbl/d) 9,667 6,250 --- Hedge (%) (1) 20% 16% --- Fixed Price (US$/bbl) $76.37 $63.64 --- 3-Way Option Volumes (bbl/d) 1,000 9,500 2,000 Hedge (%) (1) 2% 24% 5% Average Ceiling/Floor/Sold Floor (US$/bbl) (2) $62.50/$50/$40 $60/$50/$40

  35. Slide 35: Natural Gas / Foreign Exchange Hedge Coverage

    Natural Gas / Foreign Exchange Hedge Coverage Q4/15 2016 2017 Natural Gas AECO Volumes Hedged (GJ/day) 20,000 15,000 --- % of Volumes Hedged at Fixed Price (1) 25% 18% --- Average AECO Swap Price (C$/GJ) $2.88 $2.96 --- NYMEX Volumes Hedged (mmbtu/day) 15,000 10,000 --- % of Volumes Hedged at Fixed

  36. Slide 36: Marketing - Crude by Rail

    Marketing - Crude by Rail Rail a Key Component of Market Access - Trucking flexibility helps optimize value of production - Rail has become an effective vehicle for management of heavy oil differentials - Undiluted heavy oil sales provide Baytex with a sustainable competitive advantage Baytex Heavy

  37. Slide 37: Share Ownership Breakdown

    Share Ownership Breakdown Ownership Breakdown Institutional 60% Institutional - Institutional - Retail 40% U.S. Retail - Canada Europe / Asia 15% 100% 26% 4% Canada 67% Retail - U.S. Institutional - 14% U.S. 29% Canada 41% Europe/Asia 4% 100% Baytex shareholder base, estimated as at December 2015. S

  38. Slide 38: Capital Program Efficiency

    Capital Program Efficiency 3-Year 2012 2013 2014 Average 2012-14 Capital Expenditures ($millions) Exploration and development 418.6 550.9 766.1 1,735.6 Acquisitions (net of dispositions) (170.9) (39.1) 2,545.1 2,335.1 Total 247.7 511.8 3,311.2 4,070.7 Proved plus Probable Reserve Additions (mboe) Ex

  39. Slide 39: 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

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