Baytex Energy Corp. · TSX:BTE
Baytex Energy — Barclays Capital High Yield Bond & Syndicated Loan Conference 2014
34 slides from Baytex Energy's conference presentation, May 14, 2014
Slide 1: Barclays Capital High Yield Bond & Syndicated Loan Conference
Barclays Capital High Yield Bond & Syndicated Loan Conference Phoenix, AZ Rod Gray, Chief Financial Officer May 12-14, 2014 Brian Ector, Vice President, Capital Markets
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
Slide 3: Advisory (Cont.)
Advisory (Cont.) These forward-looking statements are based on certain key assumptions regarding, among other things: the receipt of regulatory, shareholder and other approvals for the Acquisition; our ability to execute and realize on the anticipated benefits of the Acquisition; petroleum and natur
Slide 4: Advisory (Cont.): Oil and Gas Information
Advisory (Cont.) Oil and Gas Information This presentation contains estimates of the volumes of the "contingent resources" for our oil resource plays in the Bluesky in the Peace River area of Alberta, the Mannville group in northeast Alberta and the Bakken/Three Forks in North Dakota as of December
Slide 5: Advisory (Cont.)
Advisory (Cont.) References herein to initial test production rates, 30-day IP rates and other short-term production rates are useful in confirming the presence of hydrocarbons; however, such rates are not determinative of the rates at which such wells will commence production and decline thereafter
Slide 6: Investment Highlights
Investment Highlights • Focus on per share growth in production and reserves Organic Oil Growth Long-term, Low-Cost Inventory • Sector-leading capital efficiency • Operational excellence Meaningful Dividend • Focus on dividend growth over the long-term Conservative Payout Ratio • Competitive differe
Slide 7: Corporate Profile
Corporate Profile Summary of Securities Trading Symbol TSX / NYSE: BTE Average Daily Volume (1) Canada: 1,105,900 / U.S.: 168,300 Shares Outstanding (Current) 126.4 million Market Capitalization / Enterprise Value $5.8 billion / $6.6 billion Total Monetary Debt (as of 3/31/14) $832 million Monthly D
Slide 8: Operating Areas
Operating Areas Production (Q1 2014) Company Total = 59,502 boe/d Lloydminster Peace River Heavy Oil 33% Heavy Oil 43% Light Oil 13% Gas 11% Operating Income (Q1 2014) Company Total = $197 million ($37/boe) Lloydminster Peace River Heavy Oil 38% Heavy Oil 42% Light Oil 16% Gas 4% 2P Reserves (Year E
Slide 9: Profit Investment Ratio by Play
Profit Investment Ratio 0.0x 0.5x 1.0x 1.5x 2.0x 2.5x 3.0x Seal Cold Heavy Multi-Lateral - Hz SE Sask Viewfield Bakken - Hz Ante Creek Montney (75% oil) - Hz Marcellus (dry gas) - Hz Kaybob Montney Oil - Tier 1 - Hz Marcellus (SW PA, wet gas) - Hz Lloyd Area Heavy - Vt AB Bakken (east, shallow) - Hz
Slide 10: Oil-Equivalent Production Growth
Oil-Equivalent Production Growth 60,000 40,000 boe / d 61,000 57,196 53,986 50,132 44,341 20,000 40,239 41,382 34,022 34,647 34,292 36,222 0 (1) 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 Percent Oil 73% 71% 73% 76% 77% 76% 79% 84% 87% 89% 89% (1) Based on mid point of guidance range of
Slide 11: Reserve Growth / Contingent Resources
Reserve Growth / Contingent Resources Proved Probable 350 Oil-Equivalent Reserves (MMboe) 318 300 292 252 250 229 159 200 187 197 96 148 168 89 150 141 146 61 68 52 107 123 39 43 100 37 30 159 140 156 144 116 126 129 50 86 102 103 77 0 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2P RLI (y
Slide 12: 2014 Operating Plan – Targeting 6% Growth
2014 Operating Plan – Targeting 6% Growth 2014 Production Guidance 2014 Capital Budget and Wells Drilled Amount Wells Drilled - $485 million capital budget ($ millions) (net) Peace River • 95% of expenditures directed Conventional 178 36 toward conventional Stratigraphic and Service 14 28 developmen
Slide 13: Corporate Growth Strategy
Corporate Growth Strategy Production (boe/d) Conventional Drilling Inventory Peace River Multi-laterals ~ 5 years Lloydminster Heavy Oil ~ 6.5 years North Dakota Bakken 10+ years Conventional Oil and Gas 10+ years Thermal Capacity – 2017(e) Kerrobert SAGD 2,000 bbl/d Cliffdale CSS 3,000 bbl/d Funds
Slide 14: 2014E Funds from Operations and Debt to FFO
2014E Funds from Operations (C$ mm) and Debt to FFO Heavy Oil Differential (% of WTI) 18% 23% 28% WTI (US$/bbl) $90 $710 (1.2x) $671 (1.3x) $632 (1.4x) $95 $743 (1.1x) $703 (1.2x) $661 (1.3x) $100 $776 (1.0x) $733 (1.1x) $690 (1.2x) Table assumes average production for 2014 of 61,000 boe/d (mid poin
Slide 15: Balance Sheet Strength
Balance Sheet Strength ($ millions) Q1 2014 Credit Facilities Unused Used Bank Loan (1) $300.6 Long-Term Debt (2),(3) $465.8 Working Capital Deficiency $65.9 Undrawn $549 million, or 65%(1) Total Monetary Debt (3) $832.3 Debt to EBITDA (4) 1.1x Debt to FFO (4) 1.2x Balance Sheet Strength Debt / Ente
Slide 16: Pending Eagle Ford Acquisition
Pending Eagle Ford Acquisition 16
Slide 17: Strategic Acquisition of Aurora Oil & Gas
Strategic Acquisition of Aurora Oil & Gas - Baytex has entered into an agreement to acquire Aurora Oil & Gas - Aurora is listed on the Toronto and Australia Stock Exchanges (TSX: AEF, ASX: AUT) - Acquisition to be completed by way of a Scheme of Arrangement under Australian law - Cash offer price of
Slide 18: Strategic Rationale
Strategic Rationale Exposure to World Class Oil Resource Play Increased Scale and Diversity of Production • Diversifies asset base into the core of the • Total gross production upon closing is forecast liquids-rich Eagle Ford, one of the premier oil to be ~ 88,000 boe/d (51% heavy oil, 35% light res
Slide 19: Baytex 2014E Pro Forma Production and FFO
Baytex 2014E Pro Forma Production and FFO Baytex Pro Forma Production (Mboe/d) 61 88-90 Funds from Operations (C$ billions) $0.7 $1.1-$1.2 Total Monetary Debt (C$ billions) $2.3 Debt to FFO 2.0x Pricing Assumptions Notes This pro forma analysis provides an indication of what the combined company WTI
Slide 20: Baytex Pro Forma Liquidity
Baytex Pro Forma Liquidity (C$ billions) Coupon Principal Due Pro Forma (1) Long Term Notes: Baytex Series B Debentures (US$) 6.750% Feb-2021 $0.2 Baytex Series C Debentures (C$) 6.625% Jul-2022 $0.3 Aurora Debentures (US$) 9.875% Feb-2017 $0.4 Aurora Debentures (US$) 7.500% Apr-2020 $0.3 Early Rede
Slide 21: Pro Forma Production and Reserves
Pro Forma Production and Reserves (1) Baytex Stand-Alone Baytex Pro Forma Aurora Production (2014E) = 60-62 Mboe/d Combined Production = 88 Mboe/d NGL 3% Natural Gas Light Oil Natural Gas 11% 11% 14% Light Oil NGL 13% 22% Heavy Oil Heavy Oil 75% 51% Proved + Probable Reserves (YE 2013) = 318 MMboe P
Slide 22: Eagle Ford Acreage Position
Eagle Ford Acreage Position Aurora holds 22,200 net contiguous acres in the prolific Sugarkane Field located in south Texas in the core of the liquids- rich Eagle Ford shale. The acquisition provides exposure to low-risk, repeatable, high-return assets with leading capital efficiencies. The Sugarkan
Slide 23: Key Attributes of Aurora
Key Attributes of Aurora - Material Production and High Quality Reserve Base - Substantial inventory of potential well locations to support future production growth - Reserve upside exists through additional horizons in the Austin Chalk and Upper Eagle Ford formations, downspacing and improving comp
Slide 24: Key Attributes of Aurora (continued)
Key Attributes of Aurora (continued) - Increasing Development Performance and Recovery - A subsidiary of Marathon Oil Corporation is the operator of the majority of Aurora’s Eagle Ford position - Continuous improvements in drilling and completion design have increased 30-day IP rates by approximatel
Slide 25: Eagle Ford – Opportunity Summary
Eagle Ford – Opportunity Summary Eagle Ford Type Log Current Development - 80,200 highly contiguous gross acres (22,200 net acres) in the most prolific area of the Eagle Ford - Lower Eagle Ford originally developed at 80-acre spacing; current development is now 60-acre spacing (volatile oil) and 40-
Slide 26: Summary of the Eagle Ford Acquisition
Summary of the Eagle Ford Acquisition - Baytex is acquiring premier acreage in the core of the Eagle Ford – one of the leading shale oil plays in the U.S. - The assets to be acquired are an excellent fit with our business model and position Baytex in another world-class oil resource play - Provides
Slide 27: Key Projects Overview
Key Projects Overview BAYTEX
Slide 28: Peace River Oil Sands
Peace River Oil Sands 306 net sections of oil sands leases 553 million barrels of economic contingent resource * Area Statistics Production (Q1/2014) 25,800 bbl/d 2P Reserves (YE13) (1) 114 mmbbls Drilling Inventory (2) ~ 5 years (1) 2P Reserve breakdown = 67 million barrels (primary) and 47 milli
Slide 29: Multi-Lateral Cold Horizontal Wells
Multi-Lateral Cold Horizontal Wells Reservoir Characteristics (1) Formation Bluesky Depth 600 – 700 metres Oil Quality 11 °API Average Porosity 28% Permeability 0.5 – 5.0 darcies Oil Saturation 70% Recovery Factor 5 – 7% Well Economics (1) Well Design 8-10 laterals Completed Well Cost $2.6-$3.4 MM
Slide 30: Lloydminster Heavy Oil
Lloydminster Lloydminster Heavy Oil Heavy Oil 730 net sections; 212 million barrels of economic contingent resource * Area Statistics Production (Q1/2014) 19,400 bbl/d 2P Reserves (YE13) (1) 114 mmbbls Drilling Inventory (2) ~ 6.5 years (1) Includes SAGD projects at Gemini (44 million barrels) and
Slide 31: Lloydminster Development
Lloydminster Development Vertical Wells Completed Well Cost $450,000 Production (30-day IP) 30-50 bbl/d EUR 30-50 mbbl Capital Efficiency $11,250 per bbl/d Development Cost $11.25/bbl Horizontal Wells Completed Well Cost $950,000 Production (30-day IP) 70-80 bbl/d EUR 60-80 mbbl Capital Efficiency
Slide 32: Baytex Pro Forma – Three Key Oil Resource Plays
Baytex Pro Forma – Three Key Oil Resource Plays > 80% of Baytex’s pro forma production comes from three oil plays Single Well Economics (excluding acreage acquisition costs) (1) Eagle Ford Peace River Heavy Oil Lloydminster Heavy Oil Condensate Volatile Oil Multi-Laterals Verticals Horizontals Compl
Slide 33: Summary
Summary Superior Asset Base Income Payout Proven Track Record - Low cost development - Committed to paying a - Best-in-class balance sheet inventory – oil focus meaningful dividend - Sophisticated risk - Sector leading capital - Over $1.7 billion distributed management efficiency to shareholders in
Slide 34: 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 Vice President
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