Baytex Energy Corp. · TSX:BTE
Baytex Energy — Investor Presentation (November 2014)
42 slides from Baytex Energy's investor presentation, Nov 13, 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: Baytex Key Attributes
Baytex Key Attributes Profitable Growth and Income - Focus on per share growth in production and reserves Production Growth - Production growth focused on crude oil and liquids - Significant inventory of development prospects - Sector leading capital efficiencies in three core resource plays: Eagle
Slide 6: Corporate Profile
Corporate Profile Market Summary Ticker Symbol TSX / NYSE: BTE Average Daily Volume (1) Canada: 2,316,000/ U.S.: 630,610 Shares Outstanding (Current) 167 million Market Capitalization / Enterprise Value $5.4 billion / $7.7 billion Total Monetary Debt (2) $2.3 billion Monthly Dividend / Dividend Yiel
Slide 7: Three Key Resource Plays
Three Key Resource Plays Eagle FordTexas Peace River 34% - Q3/14 production ~ 34,000 - Q3/14 production ~26,000 boe/d Texas boe/d 34% - 5+ year drilling inventory Heavy Oil 51% - 5+ year drilling inventory Light Oil - ~ 25 to 30 net wells per year 22% - ~ 45-55 net wells per year - Developed via mul
Slide 8: Production Growth
Production Growth Production Breakdown H2/2014 Guidance 100,000 Production CAGR = 13% 550 91,000 – 92,000 boe/d 530 (per share CAGR = 7%) NGLs Gas 7% 80,000 500 15% Heavy Oil boe/d per thousand shares 50% 456 Light Oil 443 28% 60,000 450 77,500 422 boe/d 40,000 385 400 57,196 Production By Region 50
Slide 9: Reserves Growth / Contingent Resources
Reserves Growth / Contingent Resources Reserve CAGR = 17% 2P Reserve Breakdown (1) 500 (per share CAGR = 8%) 3.0 Company Total = 432 MMboe Gas NGLs 2.54 2.59 Heavy Oil 14%Gas 17% 2.40 53% 2.5 15%NGLs 400 NGLs 17% Light Oil 2.14 2.01 Natural17% Gas16% 2P Reserves (mmboe) 14% boe per million shares 2.
Slide 10: Type Curve Well Economics at US$80/bbl WTI
Type Curve Well Economics at US$80/bbl WTI (1) Eagle Ford Peace River Lloydminster Formation Lower Eagle Ford Bluesky Mannville Group Completion Multi-Stage Frac Open Hole Hz Slotted Liner Well Cost ($ millions) US$7.6 $3.4 $1.0 Production (boe/d) IP30 800 - 1,000 300 - 500 70 - 80 % Liquids 72% 100
Slide 11: Top 50 North America Resource Plays – Profit to Investment Ratio
Profit Investment Ratio (PIR) 0.0x 0.5x 1.0x 1.5x 2.0x 2.5x 3.0x Woodenhouse Heavy - Vt WTI of 20%. Seal Cold Heavy Multi-Lateral Ante Creek Montney (Tier 1) SE Sask Viewfield Bakken Musreau/Resthaven Montney SE SK Frobisher/Alida Dodsland Viking Kaybob Montney Oil SE Sask Border Torquay Bantry Glau
Slide 12: Balance Sheet Strength
Balance Sheet Strength Debt Composition Long -Term Debt Maturity Schedule ($ millions) ($ millions) Credit Capacity $2.6 billion No material repayments required until 2021 $616 $448 $300 $9 $0 $0 $7 $0 2017 2018 2019 2020 2021 2022 2023 2024 As at September 30, 2014. 12
Slide 13: Funds from Operations Sensitivities
Funds from Operations Sensitivities Estimated Effect on Estimated Effect on Annual Funds Flow Annual Funds Flow Sensitivities ($ Millions) (Per Share) Change of US$1.00/bbl WTI crude oil $14.5 $0.09 Change of 1% WCS heavy oil differential $10.0 $0.06 Change of US$0.25/mcf NYMEX natural gas $6.0 $0.0
Slide 14: The Eagle Ford
The Eagle Ford BANTEX
Slide 15: Eagle Ford Acreage Position
Eagle Ford 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 t
Slide 16: 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 17: 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 18: 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 19: Eagle Ford Development
Eagle Ford Development Development to date has targeted the Lower Eagle Ford - Originally developed at 80-acre spacing; current development is now 60-acre spacing (volatile oil) and 40-acre spacing (condensate gas) Extending Lower Eagle Ford / Austin Chalk success - YTD we are seeing an approximate
Slide 20: Eagle Ford Performance
Eagle Ford 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 have decreas
Slide 21: 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 22: Heavy Oil Overview
Heavy Oil Overview 22
Slide 23: Peace River Oil Sands
Peace River Oil Sands Multi-Lateral Drilling Drives Strong Capital Efficiencies Area Statistics Land Holdings 308 net sections 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 million
Slide 24: 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 at US$80/bbl (1) Well Design ~ 12 laterals Comple
Slide 25: Lloydminster Heavy Oil
Lloydminster Lloydminster Heavy Oil Heavy Oil Shift to Horizontal Drilling Expands Inventory Area Statistics Land Position 730 net sections Production (Q3/2014) 20,000 boe/d 2P Reserves (YE13) (1) 114 mmbbls Drilling Inventory (2) ~ 6.5 years (1) Includes SAGD projects at Gemini (44 million barrel
Slide 26: Lloydminster Development
Lloydminster Development Reservoir Characteristics (1) Formation Mannville Group Depth 350 – 800 metres Completion Horizontal Slotted Liner / Vertical Stacked Pays Oil Quality 11 – 18 °API Average Porosity 30% Permeability 0.5 – 5.0 darcies Oil Saturation 70% Horizontal Well Economics at US$80/bbl
Slide 27: Why Invest in Baytex
Why Invest in Baytex Superior Asset Base Income Payout Proven Track Record - Low risk inventory – oil - Committed to paying a - Sophisticated risk focus meaningful dividend management - Sector leading capital - Over $1.7 billion distributed - Significant credit capacity efficiency to shareholders in
Slide 28: Appendix: Crude Oil Marketing
Appendix: Crude Oil Marketing
Slide 29: 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 30: Heavy Oil Differential – WCS and Maya
Heavy Oil Differential – WCS and Maya 30
Slide 31: 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 32: 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 33: 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$94.66/bbl Percentage of hedged volumes are based on 2014 production guidance, net of roya
Slide 34: Heavy Oil Hedge Coverage
Heavy Oil Hedge Coverage Q4/2014 Q1/2015 Term Pipeline Blended WCS (bbl/d) 5,000 0 Equivalent Heavy Production (bbl/d) 3,850 - % of Gross Heavy Production 8% 0% Financial Derivatives Financial Blended WCS index (bbl/d) 2,325 0 % of Gross Heavy Production 5% 0% Term Rail (1,2) Heavy Production (bbl/d
Slide 35: Midstream Heavy Oil Fundamentals – Infrastructure Development
Midstream Heavy Oil Fundamentals – Infrastructure Development Longer-Term Pipeline Initiatives Capacity Targeted In- Pipeline (mbbl/d) Service Date Enbridge AB Clipper Expansion 350 Q3/15 Trans Mountain Expansion 590 Q4/17 TransCanada Keystone XL 830 2017 Enbridge Northern Gateway 525 Q3/18 TransCan
Slide 36: U.S. Gulf Coast Heavy Oil Demand
U.S. Gulf Coast HeavyUS OilGulf Coast Heavy Oil Demand Demand • U.S. imports of Canadian heavy oil rose • Total U.S. heavy oil imports averaged to 1.93 mb/d in July 2014, and has 3.94 million bbl/d over 2014 YTD, 43% averaged 1.71 mb/d over 2014 YTD originated from Canada • Market penetration to U.S
Slide 37: Supplementary Information - Financial
Supplementary Information - Financial 37
Slide 38: Baytex Liquidity (C$ 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$400 Jun-2024 448.3
Slide 39: Other Commodities / FOREX Hedge Coverage
Other Commodities / FOREX Hedge Coverage Q4/2014 Q1/2014 FY 2015 Natural Gas % of Volumes Hedged at Fixed Price (1) 42% 32% 12% Average Fixed Price (US$/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 40: 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 41: 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 42: 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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