Baytex Energy Corp. · TSX:BTE
Baytex Energy — Investor Presentation (April 2017)
32 slides from Baytex Energy's investor presentation, April 2017
Slide 1: April Presentation
; 7 BAYTEX April Presentation
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
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
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
Slide 5: Strategy to Sustain and Position Baytex for Growth
Baytex Key Attributes Strategy to Sustain and Position Baytex for Growth 67% undrawn on revolving DC&E costs 45% in the credit facility Eagle Ford Net debt reduced 13% to Operating expenses per $1.8 billion in 2016 boe 23% No near-term maturities on Transportation expenses long-term n
Slide 6: Corporate Profile
Corporate Profile Market Summary Ticker Symbol TSX / NYSE: BTE Average Daily Volume (1) CAN: 6,600,000 / US: 2,200,000 Shares Outstanding 234.2 million Market Capitalization / Enterprise Value $1.1 billion / $2.9 billion Net Debt (2) $1.8 billion Corporate Summary Production (3) 66,000 – 70,000 boe/
Slide 7: Capital Deployment Opportunities
Capital Deployment Opportunities Texas 34% Eagle Ford Texas 34% Peace River Heavy Oil First call on capital Strategic Light Oil $65 51% million acquisition 22% adds 3,000 Represents ~ 70% of boe/d of production 2017 budgeted E&D spending Drilling program commenced in Q1/2017 Currently runn
Slide 8: 2016 Highlights
2016 Highlights Generated production of 69,509 boe/d (79% oil and NGL), in line with guidance Delivered funds from operations of $276 million, which exceeded capital expenditures by $51 million Decreased cash costs (operating, transportation and G&A expenses) by 8% on a boe basis Reduced net
Slide 9: 2017 Operating Budget
2017 Operating Budget 2017 Budget Capital Efficiency ($/boe/d) of 2017 Program Exploration and development capital $300-$350 million $15,000 Production 66,000 – 70,000 boe/d $14,000 Expenses $13,000 Royalty rate ~ 23% $12,000 Operating $11.00 - $12.00/boe $11,000 Transportation $1.10 - $1.30/boe $10
Slide 10: 2017 Sustaining Capital and Free Cash Flow Scenarios
2017 Sustaining Capital and Free Cash Flow Scenarios Strong Capital Efficiencies Drive Low Sustaining Capital Requirements Significant Free Cash Flow Potential Total Sustaining Capital (1) ~ $300 million Conventional ~ 34,000 boe/d (2) Sustaining Capital Flexibility to invest in Lloydminster $100 mi
Slide 11: Crude Oil Hedge Portfolio
Crude Oil Hedge Portfolio Q1/17 Q2/17 Q3/17 Q4/17 2017 2018 WTI Fixed Hedges Volumes (bbl/d) 3,500 3,500 3,500 3,500 3,500 --- Fixed Price (US$/bbl) $54.46 $54.46 $54.46 $54.46 $54.46 --- WTI 3-Way Option Volumes (bbl/d) 14,500 14,500 14,500 14,500 14,500 2,000 Average Ceiling/Floor/Sold Floor $59/$
Slide 12: Balance Sheet / Debt Composition
Balance Sheet / Debt Composition Significant Liquidity, No Near-Term Maturities and Financial Covenant Flexibility 0.55x Senior Secured Debt (2) to Bank EBITDA (3) (maximum 5.0x through March 2018) 3.59x Interest Coverage (4) (minimum 1.25x through March 2018) Debt Composition(1) and Unutilized Capa
Slide 13: Reduced Cost Structure
Reduced Cost Structure We continue to emphasize cost reductions across all facets of our organization Operating and transportation expenses down 25% on a boe basis from Q4/2014. G&A expenses down 27% from Q4/2014 to $12 million per quarter. Operating Expenses Transportation Expenses Cash G&A Exp
Slide 14: Strong Rates of Return Across Portfolio
Strong Rates of Return Across Portfolio 175% 150% Internal Rate of Return (3) 125% Break-Even WTI (4) 100% 75% Eagle Ford - US$5.0M/well 50% Peace River - C$2.5M/well 25% Lloydminster - C$700K/well 0% $45 $50 $55 $60 $65 $70 WTI (US$/bbl) (1) Individual well economics are based on constant pricing a
Slide 15: Individual Well Economics – Sensitivity to WTI
Individual Well Economics – Sensitivity to WTI IRR (3) NPV (C$000s) – 10% discount rate Eagle Ford Peace River Lloydminster Eagle Ford Peace River Lloydminster US$45 58% 25% 35% US$45 $5,943 $716 $262 US$50 76% 50% 67% US$50 $7,502 $1,611 $581 US$55 96% 79% 105% US$55 $9,061 $2,459 $900 US$60 120% 1
Slide 16: The Eagle Ford
BAYTEX The Eagle Ford
Slide 17: Eagle Ford Development – Activity Shifts to Northern Oil Window
Eagle Ford Development – Activity Shifts to Northern Oil Window Premier Resource Play 30-day IP rates of 1,300 boe/d (36 net wells), up 20% from 2015. Record low DC&E costs of US$4.5 million while increasing proppant intensity. 2017 Development Production up 5% in the first two months of 2017
Slide 18: Eagle Ford New Well Highlights
Eagle Ford New Well Highlights Chapman Rogers - Q4 2015 5 well pad 2016 Development Avg 30 day IPs ~1,164 boepd Commenced production from 123 (36 net) wells 44% Lower Eagle Ford, 37% Foster – Q1 2016 5 well pad Upper Eagle Ford, 19% Avg 30 day IPs Austin Chalk ~1,399 boepd 102 wells establishe
Slide 19: Eagle Ford Performance
Eagle Ford Performance Improved Performance and Efficiency Improvements in drilling and completion design have increased 30-day IP rates by approximately 105% since Q4/2011 with 180-day cumulative recovery increasing 60% over the same time period Drilling times have decreased by 66% since Q4/201
Slide 20: Completion Improvements
Completion Improvements Increased Lateral Length, Frac Stages and Proppant Lateral Length and Total Depth Per Well Frac Stages and Proppant Per Well 20
Slide 21: Heavy Oil Overview
BAYTEX ENERGY CORP.
Slide 22: Peace River Heavy Oil
Peace River Heavy Oil Strategic Acquisition More than Doubles Land Base and Increases Inventory by 75% Q1/2017 Drilling Program Initiated 4 wells drilled in Q1/2017. First well (13-laterals) generated 30-day IP of ~ 600 bbl/d; top decile performance. DC&E costs 7% below budget. Peace River A
Slide 23: Peace River Acquisition Highlights
Peace River Acquisition Highlights Acquisition Highlights (1) Purchase Price $65 million Consistent with our strategy to enhance asset base Closing January 2017 Increases our drilling inventory for future growth Land Position 392 net sections Current Production 3,000 boe/d Drives efficiencie
Slide 24: 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. Drilling Program Commenced in Q1/2017
Slide 25: Lloydminster Heavy Oil – Significant Land Position and Drilling Inventory
Lloydminster Heavy Oil Significant Land Position and Drilling Inventory Multi-Lateral Drilling Applying multi-lateral horizontal drilling and production techniques from Peace River. 25% improvement in individual well capital efficiencies compared to single-lateral horizontal wells. Q1/2017 Dri
Slide 26: Lloydminster Development
Lloydminster Development Increased Multi-Lateral Drilling at Lloydminster is Leading to a 25% Improvement in Capital Efficiencies Reservoir Characteristics (1) Formation Mannville Group Depth 350 – 800 metres Completion Horizontal Slotted Liner / Vertical Stacked Pays Oil Quality 10 – 16 °API Aver
Slide 27: Summary
Summary High Quality Assets with Strong Capital Efficiencies 2017 development program reflects capital efficiencies on an annual basis of $11,500 per boe/d ($13,500 per boe/d including facilities) > 50% internal rate of return across our three core assets at US$50/bbl flat oil price Active Q
Slide 28: Supplementary Information
Supplementary Information = “~°"
Slide 29: Funds from Operations Sensitivities
Funds from Operations Sensitivities Estimated Effect on Annual Funds from Operations ($ Millions) Sensitivities Excluding Hedges Including Hedges Change of US$1.00/bbl WTI crude oil $18.0 $18.0 Change of US$1.00/bbl WCS heavy oil differential $9.9 $9.2 Change of US$0.25/mcf NYMEX natural gas $4.0 $1
Slide 30: Natural Gas Hedge Portfolio
Natural Gas Hedge Portfolio Q1/17 Q2/17 Q3/17 Q4/17 2017 2018 AECO Fixed Hedges Volumes (GJl/day) 22,500 22,500 22,500 22,500 22,500 5,000 Price (C$/GJ) $2.85 $2.85 $2.85 $2.85 $2.85 $2.67 NYMEX Fixed Hedges Volumes (mmbtu/d) 22,500 22,500 22,500 22,500 22,500 7,500 Price (US$/mmbtu) $2.98 $2.98 $2.
Slide 31: Capital Program Efficiency
Capital Program Efficiency 3-Year 2014 2015 2016 Total / Average 2014-16 Capital Expenditures ($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
Slide 32: Contact Information
Contact Information James L. Bowzer Chief Executive Officer (587) 952-3000 Suite 2800, Centennial Place Edward D. LaFehr 520 – 3rd Avenue S.W. President Calgary, Alberta T2P 0R3 (587) 952-3000 T: (587) 952-3000 1-800-524-5521 www.baytexenergy.com Rodney D. Gray Chief Financial Officer (587) 952-3160