Baytex Energy Corp. · TSX:BTE
Baytex Energy — Investor Presentation (November 2014)
40 slides from Baytex Energy's investor presentation, November 2014
Slide 1: November Presentation
November Presentation BAXTER
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.) 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: failure to realize the anticipated benefits of the acquisition of the Eagle Ford
Slide 4: Advisory (Cont.)
Advisory (Cont.) A range of contingent resources estimates (low, best and high) were prepared by Sproule and McDaniel. A low estimate (C1) is considered to be a conservative estimate of the quantity of the resources that will actually be recovered. It is likely that the actual remaining quantities r
Slide 5: 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 6: Corporate Profile
Corporate Profile Summary of Securities Trading Symbol TSX / NYSE: BTE Average Daily Volume (1) Canada: 2,316,000/ U.S.: 630,610 Shares Outstanding (Current) 166.1 million Market Capitalization / Enterprise Value $5.8 billion / $8.1 billion Total Monetary Debt (2) $2.3 billion Monthly Dividend / Div
Slide 7: Operating Areas
Operating Areas Production (2H/2014 Guidance) Company Total = 91,000 – 92,000 boe/d NGLs Gas 7% 15% Heavy Oil 50% Light Oil 28% 2P Reserves (1) (2) Company Total = 432 MMboe NGLs Gas 17% 14% Heavy Oil 53% Light Oil 16% Production by Region North Dakota Texas 4% 36% Texas Lloydminster Peace River 33%
Slide 8: Oil-Equivalent Production Growth
Oil-Equivalent Production Growth 80,000 60,000 boe / d 40,000 77,500 57,196 50,132 53,986 20,000 40,239 41,382 44,341 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% 85% (1) Based on mid point of guidance ra
Slide 9: 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 10: Baytex – Three Key Oil Resource Plays
Baytex – 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 Completed Well
Slide 11: Profit Investment Ratio
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 12: The Eagle Ford
The Eagle Ford BANTEX
Slide 13: Strategic Entry into the Eagle Ford
Strategic Entry into the Eagle Ford 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 ex
Slide 14: Eagle Ford – Gas/Liquids Window Map
Eagle Ford – Gas/Liquids Window Map Nine Eagle Ford Sub-Play Areas Eagle Ford Play Eagle Ford Play • Study based on production information received from the Texas Railroad Commission as of April 2014 • Over 8,500 wells included in the analysis • Excludes Austin Chalk, Olmos, Pearsall etc. Wood Macke
Slide 15: Eagle Ford - Wells Completed 2009 to 2014
Eagle Ford - Wells Completed 2009 to 2014 Wood Mackenzie breaks the Eagle Ford into nine distinct sub-play areas: (1) Northeast Oil, (2) Black Oil, (3) Karnes Trough Condensate, (4) Edwards Condensate, (5) Southeast Gas, (6) Southwest Gas, (7) Maverick Condensate, (8) Maverick Oil and (9) Hawkville
Slide 16: Eagle Ford – Sub Play Economics
Eagle Ford – Sub Play Economics Sub-Play Analysis Type Well Breakeven Source: Wood Mackenzie. Wood Mackenzie breaks the Eagle Ford into nine distinct sub-play areas: (1) Northeast Oil, (2) Black Oil, (3) Karnes Trough Condensate, (4) Edwards Condensate, (5) Southeast Gas, (6) Southwest Gas, (7) Mave
Slide 17: Eagle Ford – Opportunity Summary
Eagle Ford – Opportunity Summary Current Development Eagle Ford Type Log - Lower Eagle Ford originally developed at 80-acre spacing; current development is now 60-acre spacing (volatile oil) and 40-acre spacing (condensate gas) - Realizing ~20% improvement in 30 day IP rates on wells drilled in 2014
Slide 18: Eagle Ford – Improving Performance
Eagle Ford – Improving Performance Increasing Development Performance and Recovery - Continuous improvements in drilling and completion design have increased 30-day IP rates by approximately 97% since Q4/2011 with 180-day cumulative recovery increasing 57% over the same time period - Drilling times
Slide 19: Eagle Ford - Key Attributes
Eagle Ford - Key Attributes - 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 c
Slide 20: Heavy Oil Overview
Heavy Oil Overview 20
Slide 21: Peace River Oil Sands
Peace River Oil Sands 308 net sections of oil sands leases 553 million barrels of economic contingent resource * Area Statistics Production (Q3/2014) 26,000 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 22: 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 23: Lloydminster Heavy Oil
Lloydminster Lloydminster Heavy Oil Heavy Oil 730 net sections; 212 million barrels of economic contingent resource * Area Statistics Production (Q3/2014) 19,500 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 24: 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 25: Why Invest in Baytex
Why Invest in Baytex Superior Asset Base Income Payout Proven Track Record - Low cost development - Committed to paying a - Strong balance sheet inventory – oil focus meaningful dividend - Sophisticated risk - Sector leading capital - Over $1.7 billion distributed management efficiency to shareholde
Slide 26: Appendix: Crude Oil Marketing
Appendix: Crude Oil Marketing
Slide 27: 2014: A Break Out Year for Canadian Heavy?
2014: A Break Out Year for Canadian Heavy? - Market conditions remain positive with the forward market indicating a WCS differential of ~ 16% for Q4/2014 - Positive catalysts in 2014 are contributing to lower differentials and stronger heavy oil pricing - BP Whiting repositioning adds ~ 250,000 bbl/
Slide 28: Heavy Oil Differential – WCS and Maya
Heavy Oil Differential – WCS and Maya 28
Slide 29: Crude by Rail in Western Canada
Crude by Rail in Western Canada Industry Outlook Major Loading Terminals - Rail is playing a meaningful role in the transportation of crude oil in Western Canada as major pipeline expansions are unlikely to be in place for many years. - Significant infrastructure investment suggests growth in rail c
Slide 30: Marketing - Crude by Rail
Marketing - Crude by Rail Rail a Key Component of Market Access - Trucking flexibility helps optimize value of production - Rail has become an effective vehicle for management of heavy oil differentials - Undiluted heavy oil sales provide Baytex with a sustainable competitive advantage Baytex Heavy
Slide 31: Oil Marketing Portfolio
Oil Marketing Portfolio Q4 2014 Heavy Oil Sales Portfolio WTI Financial Hedging Q4 / 2014 % Hedged 51% Fixed Price US$96.45/bbl Q1/ 2015 % Hedged 45% Fixed Price US$96.54/bbl FY 2015 % Hedged 24% Fixed Price US$94.66/bbl Percentage of hedged volumes are based on 2014 production guidance, net of roya
Slide 32: Heavy Oil Hedge Coverage
Heavy Oil Hedge Coverage Q4/2014 Q1/2015 Term Pipeline Blended WCS (bbl/d) 5,000 0 Equivalent Heavy Production (bbl/d) 3,850 - % of Gross Heavy Production 8% 0% Financial Derivatives Financial Blended WCS index (bbl/d) 2,325 0 % of Gross Heavy Production 5% 0% Term Rail (1,2) Heavy Production (bbl/d
Slide 33: Midstream Heavy Oil Fundamentals – Infrastructure Development
Midstream Heavy Oil Fundamentals – Infrastructure Development Longer-Term Pipeline Initiatives Capacity Targeted In- Pipeline (mbbl/d) Service Date Enbridge AB Clipper Expansion 350 Q3/15 Trans Mountain Expansion 590 Q4/17 TransCanada Keystone XL 830 2017 Enbridge Northern Gateway 525 Q3/18 TransCan
Slide 34: U.S. Gulf Coast Heavy Oil Demand
U.S. Gulf Coast HeavyUS OilGulf Coast Heavy Oil Demand Demand • U.S. imports of Canadian heavy oil rose • Total U.S. heavy oil imports averaged to 1.93 mb/d in July 2014, and has 3.94 million bbl/d over 2014 YTD, 43% averaged 1.71 mb/d over 2014 YTD originated from Canada • Market penetration to U.S
Slide 35: Supplementary Information - Financial
Supplementary Information - Financial 35
Slide 36: Baytex Liquidity (C$ millions)
Baytex Liquidity (C$ millions) Principal Principal Due Monetary Debt (C$) (1) Long Term Debt: 9.875% notes US$7.9 Feb-2017 $8.9 7.500% notes US$6.4 Apr-2020 7.2 6.750% notes US$150 Feb-2021 168.1 6.625% notes C$300 Jul-2022 300.0 5.125% notes US$400 Jun-2021 448.3 5.625% notes US$400 Jun-2024 448.3
Slide 37: Other Commodities / FOREX Hedge Coverage
Other Commodities / FOREX Hedge Coverage Q4/2014 Q1/2014 FY 2015 Natural Gas % of Volumes Hedged at Fixed Price (1) 42% 32% 12% Average Fixed Price (US$/mmBtu) 4.15 4.19 4.19 % of Volumes Hedged Using Collars (1) 12% 0% 0% Average Collar Floor/Ceiling 3.90/4.50 - - Foreign Exchange % of Foreign Exch
Slide 38: Share Ownership Breakdown
Share Ownership Breakdown Institutional - Retail - U.S. Institutional - Ownership Breakdown Europe / Asia 7% U.S. 4% 11% Institutional 57% Insiders 2% Retail 41% Insiders 2% 100% Retail - Institutional - Canada 76% Canada Canada 34% 42% U.S. 18% Europe/Asia 4% Insiders 2% 100% Baytex shareholder bas
Slide 39: Capital Program Efficiency
Capital Program Efficiency 3-Year 2011 2012 2013 Average 2011-13 Capital Expenditures ($millions) Exploration and development 367.9 418.6 550.9 1,337.4 Acquisitions (net of dispositions) 148.8 (170.9) (39.1) (61.2) Total 516.6 247.7 511.8 1,276.1 Proved plus Probable Reserve Additions (mboe) Explora
Slide 40: 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
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