Baytex Energy Corp. · TSX:BTE
Baytex Energy — Investor Presentation (April 2016)
35 slides from Baytex Energy's investor presentation, April 2016
Slide 1: April Presentation
April Presentation HAYTER
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.) 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
Slide 4: Advisory (Cont.) - Non-GAAP Financial Measures
Advisory (Cont.) Non-GAAP Financial Measures This presentation refers to funds from operations, total monetary debt, operating netback and Bank EBITDA, which do not have any standardized meaning prescribed by generally accepted accounting principles in Canada ("GAAP"). We define funds from operation
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
Slide 6: Corporate Profile
Corporate Profile Market Summary Ticker Symbol TSX / NYSE: BTE Average Daily Volume (1) CAN: 15,000,000 / US: 3,100,000 Shares Outstanding 210.7 million Market Capitalization / Enterprise Value $1.1 billion / $3.1 billion Net Debt (2) $2.0 billion Corporate Summary Production (3) 68,000 – 72,000 boe
Slide 7: Three Key Resource Plays
Three Key Resource Plays Eagle FordTexas 34% Peace River Q4/15 production of Texas 34% Q4/15 production of 40,300 boe/d 19,600 boe/d Heavy Oil 51% Expect to bring ~ 30 net Developed Light Oil 22% via multi-lateral wells on production in horizontal wells 2016 2016 development deferred Act
Slide 8: 2015 Highlights
2015 Highlights Generated production of 84,650 boe/d, up 8% year-over-year Advanced multi-zone development potential of Eagle Ford acreage Targeting up to three zones in the Eagle Ford formation in addition to the overlying Austin Chalk. Continued to focus on cost reduction initiatives Rea
Slide 9: 2016 Capital Budget
2016 Capital Budget Summary of 2016 Expectations Exploration and Development Capital $225-$265 million Production 68,000 – 72,000 boe/d We are targeting capital expenditures to approximate funds from operations in order to minimize additional bank borrowings. Approximately 95% of planned expendi
Slide 10: Balance Sheet / Debt Composition
Balance Sheet / Debt Composition At December 31, 2015, long-term debt (bank loan and long-term notes) totaled $1.9 billion and we were 32% drawn on our revised credit facilities. Credit Capacity $2.4 Billion Long-Term Notes Maturity Schedule ($ Millions) Debt composition as at December 31, 2015. W
Slide 11: Financial Covenant Flexibility
Financial Covenant Flexibility Baytex Position as at December 31, 2015 Senior Secured Debt (1) to Bank EBITDA (2) 0.43 : 1.00 (Maximum Ratio) Interest Coverage (3) 6.11 : 1.00 (Minimum Ratio) Ratio for the Quarter(s) ending: March 31, 2016 to June 30, 2018 to December 31, 2018 Thereafter March 31, 2
Slide 12: 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. Drilling costs reduced 27% in the Eagle Ford Realized Over $150 Million in Operating expenses reduced 18% f
Slide 13: 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
Slide 14: Attractive Rates of Return
Attractive Rates of Return 175% 150% Eagle Ford - US$5.6M/well Rate of Return (1) (2) (3) Peace River - C$2.8M/well 125% Lloydminster - C$750K/well Break-Even WTI (4) 100% 75% 50% 25% 0% $45 $50 $55 $60 $65 $70 WTI (US$/bbl) (1) Individual well economics are based on constant pricing and costs. Pric
Slide 15: High Quality Investment Opportunities
High Quality Investment Opportunities Single Well Economics Eagle Ford Peace River Lloydminster Well Costs – DC&E (1) ($ millions) US$5.6 $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
Slide 16: The Eagle Ford
The Eagle Ford BANTEX
Slide 17: 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
Slide 18: Eagle Ford Development
Eagle Ford Development Significant advancements were made in 2015 to delineate the multi-zone development potential of our Sugarkane acreage 50 net wells drilled in 2015 (56% Lower Eagle Ford, 26% Austin Chalk, 11% Upper Eagle Ford, 7% Upper portion of Lower Eagle Ford) In Q4/2015, 46 wells es
Slide 19: Eagle Ford “Stack and Frac” Highlights
Eagle Ford “Stack and Frac” Highlights Chapman Rogers Q4 2015 5 well pad Avg 30 day IPs ~1,164 boepd Four Tier “Stack and Frac” Urrutia Sienkiewicz Development Q2 2015 Q2 2015 Kowalik 3 well pad Q4 2015 5 well pad Three Tier “Stack and Frac” Avg 30 day IPs Avg 30 day IPs 5 well pad ~1,200 boepd Deve
Slide 20: Eagle Ford Performance
Eagle Ford Performance Increasing Performance and Efficiency Improvements in drilling and completion design have increased 30-day IP rates by approximately 80% since Q4/2011 with 180-day cumulative recovery increasing 74% over the same time period Drilling times have decreased by 60% since Q4/20
Slide 21: Completion Improvements
Completion Improvements Increasing Lateral Length, Frac Stages and Proppant Since 2011, the average lateral length per well has increased 19% to approximately 5,700 feet, the number of frac stages per well has increased 38% to 22 stages and the amount of total proppant per well has increased 44% t
Slide 22: 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
Slide 23: Heavy Oil Overview
Heavy Oil Overview 23
Slide 24: Peace River Oil Sands
Peace River Oil Sands Multi-Lateral Drilling Drives Strong Capital Efficiencies Area Statistics Land Holdings 310 net sections Production (Q4/2015) 19,600 boe/d 2P Reserves (YE15) (1) 73.6 mmboe Drilling Inventory (2) 7.5 years (1) In addition, we have 18.2 mmbbl of bitumen reserves related to our
Slide 25: 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
Slide 26: Lloydminster Heavy Oil
Lloydminster Lloydminster Heavy Oil Heavy Oil Shift to Horizontal Drilling Expands Inventory Area Statistics Land Position 652 net sections Production (Q4/2015) 13,400 boe/d 2P Reserves (YE15) (1) 33.2 mmboe Drilling Inventory (2) ~ 7.5 years (1) In addition, we have 43.4 mmbbl of bitumen reserves
Slide 27: 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
Slide 28: 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
Slide 29: Supplementary Information
Supplementary Information 29
Slide 30: 2016 Funds from Operations Sensitivities
2016 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 $17.7 $14.9 Change of US$1.00/bbl WCS heavy oil differential $9.0 $8.1 Change of US$0.25/mcf NYMEX natural gas $8
Slide 31: Crude Oil Hedge Portfolio
Crude Oil Hedge Portfolio Q1/2016 Q2/2016 Q3/2016 Q4/2016 2016 2017 WTI Fixed Hedges Volumes (bbl/d) 9,000 8,000 5,000 5,000 6,750 --- Fixed Price (US$/bbl) $60.45 $59.84 $63.79 $63.79 $61.50 --- WTI 3-Way Option Volumes (bbl/d) 9,500 9.500 9,500 9,500 9,500 6,500 Average Ceiling/Floor/Sold Floor $6
Slide 32: Natural Gas Hedge Portfolio
Natural Gas Hedge Portfolio Q1/2016 Q2/2016 Q3/2016 Q4/2016 2016 2017 AECO Fixed Hedges Volumes (GJ/day) 18,333 20,000 20,000 20,000 19,583 10,000 Price (C$/GJ) $2.88 $2.85 $2.85 $2.85 $2.86 $2.65 NYMEX Fixed Hedges Volumes (mmbtu/d) 13,333 15,000 15,000 15,000 14,583 15,000 Price (US$/mmbtu) $3.04
Slide 33: Share Ownership Breakdown
Share Ownership Breakdown Ownership Breakdown Institutional 60% Institutional - Institutional - Retail 40% U.S. Retail - Canada Europe / Asia 15% 100% 26% 4% Canada 67% Retail - U.S. Institutional - 14% U.S. 29% Canada 41% Europe/Asia 4% 100% Baytex shareholder base, estimated as at December 2015. S
Slide 34: Capital Program Efficiency
Capital Program Efficiency 3-Year 2013 2014 2015 Total / Average 2013-15 Capital Expenditures ($millions) Exploration and development 550.9 766.1 521.0 1,838.0 Acquisitions (net of dispositions) (39.1) 2,545.1 1.6 2,507.7 Total 511.8 3,311.2 522.7 4,345.7 Proved plus Probable Reserve Additions (mboe
Slide 35: 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