Baytex Energy Corp. · TSX:BTE
Baytex Energy — Investor Presentation (October 2016)
31 slides from Baytex Energy's investor presentation, October 2016
Slide 1: October Presentation
October Presentation BAYTEX
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.) 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: Baytex Key Attributes
Baytex Key Attributes Making the Right Choices In a Low Oil Price Environment Pro-actively worked with our bank lending Cost reduction focus syndicate to provide across all facets of our increased financial organization while flexibility; targeting capital maintaining efficiency in expenditures to M
Slide 6: Corporate Profile
Corporate Profile Market Summary Ticker Symbol TSX / NYSE: BTE Average Daily Volume (1) CAN: 10,600,000 / US: 2,800,000 Shares Outstanding 211.5 million Market Capitalization / Enterprise Value $1.2 billion / $3.1 billion Net Debt (2) $1.9 billion Corporate Summary Production (3) 67,000 – 69,000 boe
Slide 7: Capital Deployment Opportunities
Capital Deployment Opportunities Texas 34% Eagle Ford Texas 34% Peace River / Lloydminster Heavy Oil First call on capital 2016 51% Light Oilmulti-lateral development 22% at Peace Highest rate of return River and conventional asset at current prices development at Lloydminster deferred Highe
Slide 8: H1 2016 Highlights
H1 2016 Highlights Generated production of 72,902 boe/d (78% oil and NGL) Curtailed capital spending, focusing all development activity in the Eagle Ford, our highest rate of return and highest netback asset Reinitiated production from heavy oil wells shut-in during the first quarter of 2016 d
Slide 9: Balance Sheet / Debt Composition
Balance Sheet / Debt Composition Significant Liquidity, No Near-Term Maturities and Financial Covenant Flexibility 0.86x Senior Secured Debt (2) to Bank EBITDA (3) (maximum 5.0x through March 2018) 4.05x Interest Coverage (4) (minimum 1.25x through March 2018) Debt Composition(1) and Unutilized Capa
Slide 10: Crude Oil Hedge Portfolio
Crude Oil Hedge Portfolio Q3/2016 Q4/2016 H2 2016 2017 2018 WTI Fixed Hedges Volumes (bbl/d) 5,000 5,000 5,000 --- --- Fixed Price (US$/bbl) $63.79 $63.79 $63.79 --- --- WTI 3-Way Option Volumes (bbl/d) 10,000 10,000 10,000 13,500 --- Average Ceiling/Floor/Sold Floor $60/$50/$40 $60/$50/$40 $60/$50/
Slide 11: Natural Gas Hedge Portfolio
Natural Gas Hedge Portfolio Full-Year Full-Year Q3/2016 Q4/2016 H2 2016 2017 2018 AECO Fixed Hedges Volumes (GJ/day) 32,500 32,500 32,500 12,500 5,000 Price (C$/GJ) $2.39 $2.39 $2.39 $2.65 $2.67 NYMEX Fixed Hedges Volumes (mmbtu/d) 15,000 15,000 15,000 17,500 7,500 Price (US$/mmbtu) $2.98 $2.98 $2.9
Slide 12: Eagle Ford Provides Highest Rate of Return
Eagle Ford Provides Highest Rate of Return at Current Commodity Prices 175% Well costs reflect the most recent results achieved. No 150% heavy oil wells have been drilled at Peace River and Lloydminster 125% since mid-2015. Break-Even WTI (4) Rate of Return 100% 75% 50% Eagle Ford - US$5.2M/well Pea
Slide 13: Cost Targets Drive Return Improvement in Canada
Cost Targets Drive Return Improvement in Canada 175% With further cost savings in 150% Canada, heavy oil economics are competitive with the Eagle Ford at US$50-US$55/bbl 125% At US$50/bbl, all three assets Rate of Return would generate IRR’s ≥ 50% 100% 75% Eagle Ford - US$5.2M/well 50% Peace River -
Slide 14: 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 53% 25% 35% US$45 $5,688 $716 $262 US$50 69% 50% 67% US$50 $7,247 $1,611 $581 US$55 88% 79% 105% US$55 $8,806 $2,459 $900 US$60 110% 1
Slide 15: The Eagle Ford
The Eagle Ford BANTEX
Slide 16: Eagle Ford Development
Eagle Ford Development Concentrated Land Positon in Core of the Eagle Ford Advancements Since Late 2014 Significant advancements have been made to delineate the multi- zone potential of our Sugarkane acreage DC&E costs reduced by ~ 35% 30-day IP rates increased ~ 20% Drilling efficiency impr
Slide 17: Eagle Ford Highlights
Eagle Ford Highlights Chapman Rogers - Q4 2015 Sienkiewicz - Q2 2015 5 well pad 5 well pad Avg 30 day IPs Avg 30 day IPs ~1,164 boepd ~1,575 boepd 13 Multi-Zone Projects in Various Stages of Execution and Development Foster – Q1 2016 5 well pad Urrutia - Q2 2015 Avg 30 day IPs 3 well pad ~1,354 boep
Slide 18: Eagle Ford Performance
Eagle Ford Performance Improved Performance and Efficiency Improvements in drilling and completion design have increased 30-day IP rates by approximately 100% since Q4/2011 with 180-day cumulative recovery increasing 74% over the same time period Drilling times have decreased by 63% since Q4/201
Slide 19: Completion Improvements
Completion Improvements Increased Lateral Length, Frac Stages and Proppant Lateral Length and Total Depth Per Well Frac Stages and Proppant Per Well 19
Slide 20: 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 21: Heavy Oil Overview
Heavy Oil Overview 21
Slide 22: Peace River Oil Sands
Peace River Oil Sands Multi-Lateral Drilling Drives Strong Capital Efficiencies Area Statistics Land Holdings 338 net sections Production (Q2/2016) 13,100 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 23: 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 24: Lloydminster Heavy Oil
Lloydminster Lloydminster Heavy Oil Heavy Oil Shift to Horizontal Drilling Expands Inventory Area Statistics Land Position 652 net sections Production (Q2/2016) 10,200 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 25: 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 26: Free Cash Flow Scenarios
Free Cash Flow Scenarios Free Cash Flow(1) Positive at US$55/bbl As funds from operations increase: $250 $150 E&D capital deployed to offset production declines $ Millions $50 Invest in organic growth once -$50 free cash flow positive -$150 Potential for debt repayment -$250 $40 $45 $50 $55
Slide 27: Summary
Summary We are well positioned to benefit from an oil price recovery First call on capital – the Eagle Ford Cost targets drive return improvements in Canada Retain significant leverage to a rising crude oil price environment Exceptional asset base focused on crude oil & liquids Significant
Slide 28: Supplementary Information
Supplementary Information 28
Slide 29: Funds from Operations Sensitivities
Funds from Operations Sensitivities Estimated Effect on Annual Funds from Operations ($ Millions) Sensitivities Excluding Hedges Including Hedges Change of US$1.00/bbl WTI crude oil $16.4 $16.4 Change of US$1.00/bbl WCS heavy oil differential $8.5 $7.7 Change of US$0.25/mcf NYMEX natural gas $7.9 $4
Slide 30: Capital Program Efficiency
Capital Program Efficiency 3-Year 2013 2014 2015 Total / Average 2013-15 Capital Expenditures ($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 31: Contact Information
Contact Information Suite 2800, Centennial Place James L. Bowzer 520 – 3rd Avenue S.W. 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 President, Cap