Baytex Energy Corp. · TSX:BTE
Baytex Energy — Q2 2020 Earnings Presentation
36 slides from Baytex Energy's earnings presentation, Jul 30, 2020
Slide 1: Investor Presentation
Investor Presentation August 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.) alternatives to and changing demand for petroleum products; risks associated with our use of information technology systems; risks associated with the ownership of our securities, including changes in market-based factors; risks for United States and other non-resident shareholders,
Slide 4: Advisory Regarding Oil and Gas Information
Advisory (Cont.) Advisory Regarding Oil and Gas Information The reserves information contained in this presentation has been prepared in accordance with National Instrument 51-101 -Standards of Disclosure for Oil and Gas Activities of the Canadian Securities Administrators ("NI 51-101"). The determi
Slide 5: Investment Highlights
Investment Highlights High Quality and ~ 10 or more years of projected drilling inventory in each of our Diversified Oil Portfolio core areas (Viking, Eagle Ford and Canadian heavy oil) Across Multiple Plays Strong capital efficiencies and flexibility on discretionary capital Track Record of E
Slide 6: Corporate Profile
Corporate Profile Market Summary Ticker Symbol TSX / NYSE: BTE Average Daily Volume (1) CAN: 7 million / US: 2 million Shares Outstanding (2) 561 million Market Capitalization / Enterprise Value (2) $359 million / $2,354 million Operating Statistics Production (Gross W.I.) (3) 78,000 - 82,000 boe/d
Slide 7: ESG Highlights
ESG Highlights GHG Emission Reduction Safety 15% reduction in GHG 41% reduction in lost time emissions intensity in 2019; incident frequency in 5 target 30% by 2021 years Gas Conservation Indigenous Relations 99.5% routine gas Recent agreements with conservation in Peace River Woodland Cree First in
Slide 8: H1 2020 Highlights
H1 2020 Highlights • Generated production of 85,479 boe/d (82% oil and NGL) • Delivered adjusted funds flow of $151 million ($0.27 per basic share) • Issued US$500 million principal amount of 8.75% senior unsecured notes due April 2027 • Redeemed two series of senior unsecured notes - US$400 million
Slide 9: Responding Decisively to COVID-19
Responding Decisively to COVID-19 • The oil and gas industry is facing an unprecedented challenge due to significant degradation and volatility in global crude oil prices • We are focused on protecting the health and safety of our personnel while maintaining our operations • We have implemented a nu
Slide 10: Maintain Financial Liquidity
Maintain Financial Liquidity • Credit Facilities ~ 35% Balance Sheet (1) $ millions Undrawn Bank loan $704 • $363 million of undrawn credit Long-term notes $1,226 capacity and liquidity, net of Long-term debt $1,930 working capital, of ~ $300 Working Capital deficiency $65 million Net Debt $1,995 •
Slide 11: Minimize Capital Outlays
Minimize Capital Outlays • 50% reduction in capital spending 2020 Guidance (1) • $260 to $290 million, from $500 to E&D CapEx $260 - 290 million $575 million, previously Production 78,000 - 82,000 boe/d • Drilling operations in Canada Oil and NGLs 83% suspended • Moderated pace of activity in the Ea
Slide 12: Emphasize Cost Reductions
Emphasize Cost Reductions Total Cost Reductions of ~ $98 million • Intensely focused on driving further efficiencies to capture or Discretionary spending eliminated; sustain cost reductions G&A reduced salaries and annual retainers paid to Board of Directors previously identified Marketing Fee reneg
Slide 13: Crude Oil Hedge Portfolio
Crude Oil Hedge Portfolio Q3/2020 Q4/2020 H2/2020 2021 WTI Fixed Hedges Volumes (bbl/d) 23,732 8,000 15,866 --- Fixed Price (US$/bbl) $36.41 $42.78 $38.02 --- WTI 3-Way Option Volumes (bbl/d) 24,500 24,500 24,500 5,000 Average Sold Put / Put / Sold Call (US$/bbl) (1) $50/$58/$63 $50/$58/$63 $50/$58/
Slide 14: 2020E Adjusted Funds Flow Sensitivities
2020E Adjusted Funds Flow Sensitivities Estimated Effect on Annual Adjusted Funds Flow ($MM) (1) (2) Sensitivities Excluding Hedges Including Hedges (3) Change of US$1.00/bbl WTI crude oil $24.3 $15.9 Change of US$1.00/bbl WCS heavy oil differential $7.1 $3.4 Change of US$1.00/bbl MSW light oil diff
Slide 15: Asset Overview
Asset Overview
Slide 16: Asset Highlights
Asset Highlights Geographic and play diversification with ~ 10 or more years drilling inventory in each core area Eagle Ford Viking Heavy Oil Pembina Duvernay Production 35,504 boe/d 22,206 boe/d 22,147 boe/d 1,258 boe/d (Gross; H1/2020) Oil and NGLs 77% 91% 92% 82% (Gross; H1/2020) 2P Reserves (1)
Slide 17: Eagle Ford: Core of Karnes County
Eagle Ford: Core of Karnes County • 19,900 net acres in the core of the Eagle Ford shale in south Texas Wilson • Four AMI’s (Longhorn, Sugarloaf, Ipanema and Excelsior) with average 25% W.I. Karnes • H1/2020 production of LONGHORN 35,500 boe/d (77% liquids) Atascosa • 47 gross (10.7 net) wells SUGAR
Slide 18: Eagle Ford: Strong Free Cash Flow and Deep Drilling Inventory
Eagle Ford: Strong Free Cash Flow and Deep Drilling Inventory Production Asset Level Free Cash Drilling Inventory (2) (mboe/d) Flow (1) (C$ millions) (net locations) Stable production and ~ $749MM cumulative > 10 year inventory at deep inventory drives asset level free cash flow current pace asset l
Slide 19: Enhanced Completions Drive Step Change in Well Performance
Enhanced Completions Drive Step Change in Well Performance 180 Day Cumulative Well Production Completion Activity 175 Stage Hz Length Proppant # of 17% increase 2019 over 2017 2019 Spacing (ft) (lbs/ft) Stages 5% increase 2019 over 2018 2018 (ft) 150 H1 Cumulative Production (mboe) 6,000 2,600 230 2
Slide 20: 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 • Produced 22,200 boe/d (91% oil) in H1/2020 • Added 229 net unbooked drilling opportunities in 2019 through multiple Kerrobert deals and asset swaps Plenty Esther/Hoosier Grea
Slide 21: 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) 150 50 30% 100 40 20% 50 10% 30 0 0% 2012 2013 2014
Slide 22: Peace River: Innovative Multi-Lateral Development
Peace River: Innovative Multi-Lateral Development Performance Drivers • Produced 11,000 boe/d in H1/2020 (86% oil) Golden • Dominant 560 net sections • Strong capital efficiencies Seal Harmon Valley Peavine Lands • Q1/2020 strategic agreement with Peavine Metis settlement • 60 sections of land • Ear
Slide 23: Lloydminster: Significant Land Position and Drilling Inventory
Lloydminster: Significant Land Position and Drilling Inventory Performance Drivers • Produced 11,200 boe/d in H1/2020 (98% oil) Ardmore/Cold Lake • Strong capital efficiencies • Applying multi-lateral horizontal drilling and Lindbergh production techniques Lloydminster Tangleflags • Ramp-up of Kerro
Slide 24: Heavy Oil Innovation
Heavy Oil Innovation Lloydminster Peace River Horizontal Multi-Lateral Horizontal 24
Slide 25: Pembina Area Duvernay Light Oil: Emerging Resource Play
Pembina Area Duvernay Light Oil: Emerging Resource Play Pembina Duvernay • 275 sections of 100% WI lands • Nine wells drilled to date have delineated a minimum of 100- 125 sections • Produced 1,300 boe/d (82% liquids) in H1/2020 • Two wells on-stream in 2019 Black Oil generated average 30-day IP rat
Slide 26: High Quality Oil Development
High Quality Oil Development Eagle Ford Viking Peace River (1) Lloydminster (1) Pembina 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° Condensat
Slide 27: Corporate Sustainability
Corporate Sustainability BAYTEX ENERGY CORP.
Slide 28: 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 29: GHG Emissions Reduction
GHG Emissions Reduction Target to reduce GHG emission intensity (tonnes of CO2 per boe) by 30% by 2021. GHG Intensity Target 0.120 30% reduction Our emissions reduction strategy Tonnes of CO2 per boe from baseline includes: 0.080 • Increasing gas conservation • Reusing associated gas as fuel for 0.0
Slide 30: A Culture of Commitment
A Culture of Commitment How it contributes to Objective What we’ve done Result value creation Ensure our employees and 42% reduction in corporate spill Reduces costs and maintains ENVIRONMENT Responsibly develop contractors uphold our procedures volumes, over 5 years social license our assets for sp
Slide 31: Supplementary Information
Supplementary Information BAYTEX ENERGY CORP.
Slide 32: 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 Q1 2020 Q2 2020 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 $46.17 $27.85 NYMEX natural gas (US$/mcf) $3.00 $2.80 $2
Slide 33: Reserves Summary (Gross)
Reserves Summary (Gross) 2P Reserves Breakdown 2P Reserves by Asset 2P Reserves by Commodity Pembina Other Duvernay Natural Gas PDP Heavy Eagle Probable Ford Oil Light Oil Heavy + NGL Oil PDNP + PUD Viking Pembina Category (1) Eagle Ford Viking Heavy Oil Other Total Duvernay Proved Developed Produci
Slide 34: 2020 Guidance and Cost Assumptions
2020 Guidance and Cost Assumptions Exploration and development expenditures ($ millions) $260 - $290 Production (boe/d) 78,000 - 82,000 Expenses: Royalty rate (%) 18.5% Operating ($/boe) $11.75 - $12.50 Transportation ($/boe) $0.95 - $1.05 General and administrative ($ millions) $38 ($1.30/boe) Inte
Slide 35: Notes
Notes BAYTEX ENERGY CORP. Tsx | NYSE 35
Slide 36: 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.