Baytex Energy Corp. · TSX:BTE

Baytex Energy — Investor Presentation (February 2018)

29 slides from Baytex Energy's investor presentation, February 2018

1. Slide 1: February Presentation

   February Presentation

2. 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

3. Slide 3: Advisory (Cont.)

   Advisory (Cont.) Readers are cautioned that the foregoing list of risk factors is not exhaustive. New risk factors emerge from time to time, and it is not possible for management to predict all of such factors and to assess in advance the impact of each such factor on our business or the extent to w

4. Slide 4: Advisory (Cont.): Non-GAAP Financial Measures

   Advisory (Cont.) Non-GAAP Financial Measures This presentation refers to funds from operations, net debt, free cash flow, sustaining capital, operating netback and Bank EBITDA, which do not have any standardized meaning prescribed by generally accepted accounting principles in Canada ("GAAP"). We de

5. Slide 5: Baytex Key Attributes

   Baytex Key Attributes  2/3 undrawn on US$575  D&C costs remain at or million credit facility near all-time lows  First long-term note  Operating expenses maturity not until 2021 reduced to $10.50/boe  Expect stable liquidity  G&A reduced to position going forward $1.72/boe 2018 Financial Cost

6. Slide 6: Corporate Profile

   Corporate Profile Market Summary Ticker Symbol TSX / NYSE: BTE Average Daily Volume (1) CAN: 6,500,000 / US: 2,100,000 Shares Outstanding 235.5 million Market Capitalization / Enterprise Value $0.9 billion / $2.6 billion Net Debt (2) $1.7 billion Corporate Summary Production (3) 68,000 - 72,000 boe/

7. Slide 7: Capital Deployment Opportunities

   Capital Deployment Opportunities Texas 34% Eagle Ford Texas 34% Peace River  Heavy Oil 35% reduction51% in acquired property operating costs Light Oil  First call on capital 22%  ~ 18 multi-lateral wells in  Represents ~ 55% of 2018, double the pace of 2018 budgeted E&D activity from 2017 spendi

8. Slide 8: YTD 2017 Results Demonstrate Growth at US$50/bbl

   YTD 2017 Results Demonstrate Growth at US$50/bbl 2017 Production Growth  Production on track at high end of 80,000 guidance range 70,000  Capital program fully funded from 60,000 cash flow 50,000 Boe/d 40,000  Operational Momentum Canada 30,000 U.S. o Strong well performance in the 20,000 Eagle F

9. Slide 9: 2018 Operating Budget Highlights

   2018 Operating Budget Highlights – Building on the Momentum Established in 2017 2018 Budget E&D CapEx ($ millions) $325 - $375 million Production (boe/d) 68,000 - 72,000 boe/d Operating Expense ($/boe) 10.50 - 11.25/boe G&A Expense ($/boe) ~ 1.72/boe  Targeting capital program within cash flow  Al

10. Slide 10: 2018 Free Cash Flow Scenarios

    2018 Free Cash Flow Scenarios Significant Free Cash Flow Potential $300 2018 free cash flow estimate based  Free cash flow provides on forward strip (4) flexibility to invest in organic $200 growth and/or debt repayment $ Millions $100  Demonstrating sustaining $0 capital efficiencies of $13,000 p

11. Slide 11: Strong Rates of Return Across Portfolio

    Strong Rates of Return Across Portfolio 175% IRR based on forward strip (2): Eagle Ford 80% 150% Lloydminster 65% Internal Rate of Return (4) Peace River 40% 125% 100% 75% Eagle Ford 50% Peace River 25% Lloydminster 0% $45 $50 $55 $60 $65 $70 WTI (US$/bbl) (1) Individual well economics for the chart

12. Slide 12: Crude Oil Hedge Portfolio

    Crude Oil Hedge Portfolio Q4/2017 2018 WTI Fixed Hedges Volumes (bbl/d) 3,500 14,000 Fixed Price (US$/bbl) $54.46 $52.26 WTI 3-Way Option Volumes (bbl/d) 14,500 2,000 Average Ceiling/Floor/Sold Floor (US$/bbl)(1) $59/$47/$37 $60/$54/$40 Brent Fixed Hedges Volumes (bbl/d) --- 4,000 Fixed Price (US$/b

13. Slide 13: Balance Sheet / Debt Composition

    Balance Sheet / Debt Composition Significant Liquidity, No Near-Term Maturities and Financial Covenant Flexibility 0.6x Senior Secured Debt (1) to Bank EBITDA (2) (maximum 4.0x through December 2018) 4.2x Interest Coverage (3) (minimum 1.75x through December 2018) Debt Composition(4) and Unutilized

14. Slide 14: 2018E Funds from Operations Sensitivities

    2018E 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 $18.6 $11.2 Change of US$1.00/bbl WCS heavy oil differential $10.6 $7.3 Change of US$0.25/mcf NYMEX natural gas

15. Slide 15: The Eagle Ford

    BAYTEX The Eagle Ford

16. Slide 16: Improved Performance and Growth in the Eagle Ford

    Improved Performance and Growth in the Eagle Ford Performance Drivers  Q3/2017 production up 8% from Q4/2016 to ~ 36,250 boe/d (1)  Improved performance from higher intensity frac’s in the northern oil window  Q3/2017 activity 3-4 drilling rigs and 1-2 completion crews (90 gross wells onstream YT

17. Slide 17: Eagle Ford Improved Performance

    Eagle Ford Improved Performance  22 gross (5.8 net) wells in Production (30-day IP) Q3/2017 delivered 30-day IP rates of 1,500 boe/d  Karnes City pads (11 wells) delivered 30-day IP rates of 2,150 boe/d per well in Q2/2017  Improvements in drilling and completion design have increased 30-day IP r

18. Slide 18: Eagle Ford Q3/2017 Well Performance

    Eagle Ford Q3/2017 Well Performance Oxford 6 well oil pad Davila LEF (5) / UEF (1) 5 well condensate pad Avg 30 day IP: 1,300 boe/d LEF (4) / AC (1) Karnes Best Well: 1,450 boe/d Avg 30 day IP: 1,600 boe/d Best Well: 1,800 boe/d Kennedy 3 well condensate pad LEF(3) Avg 30 day IP: 1,700 boe/d Best We

19. Slide 19: Heavy Oil Overview

    BAYTEX ENERGY CORP.

20. Slide 20: Peace River: Driving Production Growth and Cost Reductions

     Peace River: Driving Production Growth and Cost Reductions Performance Drivers  Peace River production up 22% from Q4/2016 to 18,400 boe/d in Q3/2017  Acquired properties producing ~ 3,800 boe/d, up 26% due to well workovers and production optimization  Drilled 8 wells in 2017 with average 30-d

21. Slide 21: Multi-Lateral Horizontal Wells

     Multi-Lateral 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% (1) Baytex internal estimates. 21

22. Slide 22: Lloydminster: Significant Land Position and Drilling Inventory

    Lloydminster: Significant Land Position and Drilling Inventory  Performance Drivers  Applying multi-lateral horizontal drilling and production techniques from Peace River  40% improvement in individual well capital efficiencies compared to single-lateral horizontal wells  Most recent 3 operated

23. Slide 23: 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% (1) Baytex internal estimates. 23

24. Slide 24: Kerrobert Thermal – SAGD Expansion

    Kerrobert Thermal – SAGD Expansion  Production o Current (Nov 2017): 800 bbl/d o Target (2019): 2,500 bbl/d  Expansion Capital o Total Project: $25 million o 2017 - $4 million; 2018 - $14 million; 2019 - $7 million Baytex Kerrobert Waseca Oil Pool  Timeline o Q1/2018 - 3 SAGD well pairs o Q3/2018

25. Slide 25: Summary

    Summary  Allocating capital to high quality assets o 40% - 80% ROR’s across our three core assets at the forward strip o 2018 capital efficiencies of $12,000 per boe/d ($14,000 per boe/d including facilities) o Generating production growth of 6% (to 72,000-73,000 boe/d, 2018 exit rate)  Generating

26. Slide 26: Supplementary Information

    - Tat Supplementary Information enero

27. Slide 27: Natural Gas Hedge Portfolio

    Natural Gas Hedge Portfolio Q4/17 2018 AECO Fixed Hedges Volumes (GJ/day) 22,500 5,000 Price (C$/GJ) $2.85 $2.67 NYMEX Fixed Hedges Volumes (mmbtu/d) 22,500 14,600 Price (US$/mmbtu) $2.98 $3.01 Total Hedge Volume (mmbtu/d) 43,800 19,300 Hedge (%) (1) 68% 29% (1) Percentage of hedged volumes are base

28. Slide 28: Capital Program Efficiency

    Capital Program Efficiency 3-Year 2014 2015 2016 Total / Average 2014-16 Capital Expenditures ($millions) Exploration and development 766.1 521.0 224.8 1511.9 Acquisitions (net of dispositions) 2,545.1 1.6 (63.6) 2483.1 Total 3,311.2 522.7 161.2 3995.0 Proved plus Probable Reserve Additions (mboe) E

29. Slide 29: Contact Information

    Contact Information Edward D. LaFehr President and Chief Executive Officer (587) 952-3000 Suite 2800, Centennial Place Rodney D. Gray 520 – 3rd Avenue S.W. Chief Financial Officer Calgary, Alberta T2P 0R3 (587) 952-3160 T: (587) 952-3000 1-800-524-5521 www.baytexenergy.com Brian G. Ector Senior Vice

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