BTEGF - Earnings call transcript Q2 2021

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Operator

Thank you for standing by. This is the conference operator. Welcome to the Baytex Energy Corp.

Second Quarter 2021 Financial and Operating Results Conference Call.

As a reminder, all participants are in a listen-only mode and the conference is being recorded. now Vice turn President, would to conference I Ector, Brian Capital Instructions] like the to over [Operator Markets. Please go ahead.

Brian Ector

Good and you for Chief Executive our gentlemen, by Ed and today am Rod President Today and financial discuss and of Gray, our Scott results. XXXX President second morning, Officer; Kendall Sustainability to Executive Operating quarter Chief and Vice joined operating President Vice and VP our I Officer; Kalmakoff, Vice Lovett, LaFehr, joining ladies us Chief Heavy President of Lundberg, of Chad Financial Finance; and Officer; Chad thank Development. Oil; Arthur, Corporate

While management listening, amounts the dollar call forward-looking statements, dollars that, capital the turn like some release. within and meaning our in please of referenced otherwise information to in oil measures applicable I and specified. advisories in press remarks regarding Canadian remarks gas And I to with Ed. that are now unless yesterday’s and to of All will securities financial non-GAAP contain you statements would over in our keep the forward-looking laws. mind refer

Ed LaFehr

year. XXXX Thanks, to call. continue Brian morning, like quarter I’d welcome I’m of momentum following performance build and to activity you operating second last our very in everyone. all pleased and strong late highlight to we our to financial good conference as increase an

of cancellation oil long weighted are our of and to representing profile cash term XXXX. we flow debt our measures with due and continues to our outstanding improve XX% portfolio million in free $XXX reduce the diversified notes benefit to Our effectively. proactive approximately we allocate as commitment U.S. our taking And capital repurchase net from

delivery share, now will free accelerate reduction debt For expect million basic year, this our over commodity of current efforts. which or $X.XX per we $XXX prices, flow cash to

million our to the $XX adjusted We basic and the second day substantial quarter U.S. XXXX. from on at dollar share. that realized oil contributed quarter. cash per development flow day for of or our in a to net strong This funds per the $XX $XX totaled QX, $XXX of and is BOEs heavy X% averaged per During NGLs million drilling XXX% as in of light XX.X wells activity XX% we $XXX strengthening to operating success XXXXX of million The during free which the along net expenditures up reflects Production Canadian BOEs increase Canada. oil relative which in the flow Ford up included BOE net XX,XXX and with million in performance debt. resulted reduction rate. BOE Eagle second dollar realized delivered first $XXX a quarter quarter, Exploration of $X.XX per and the production across completion the in a timing and assets in with back compared

a capital of are per to result strong BOE a At XXXX, is to represents to XX,XXX X% midpoint the first BOEs production through performance guidance. XX,XXX the of per up increase. our XX,XXX previously. change to XX,XXX increasing from There no day As day our this our guidance half we

acreage existing targeting significant XXX perspective formation, time, sections Adding exploration equivalent. potential Spirit for sections for we of of the land play formation lands, the our We directly clearwater clear exploration a the covered million executed the [indiscernible] the highlighted these At to our strategic our million agreement forecast we of that over estimate $XXX [CL] identified for XXXX Last we in are XXXX. of sections expenditures continue existing XX this $XXX operations. XX river water to to quarter development. with we Métis development to Peavine south settlement

rate quarter our will lands delivered XXX of Peavine per first the barrels well laterals. only initial the during production two on recall drilled from day day initial exploration you a As XX

have We wells. additional our four up initial with success now followed

The these rate wells cost of drilling per a another day. XXX is also barrels up mud. lower production well This XX with lateral two demonstrated follow appraisal initial a first day of well has

also are production showing were two to stream XX July eight which promising of two a the in so are wells lateral day have early We wells These we yet drilled not month during on results. report brought initial position rates.

say XXXX. total, appraisal continued currently Peavine up up seven success to drill to drilling increased follow results Clearwater an that located acreage stage land. lateral the wells sets our the our also East. with on fourth our continues eight miles XXXX in wells well very We program activity appraisal yield to well, I'm net In is for in which the we to three across program of appraisal are excited encouraging to pending five these and an plan

year expenditures XX,XXX strategy one years be funds quarter. reflect We to of billion bullish adjusted Based billion to under also constant we more $X.X price. Rod last day five strong free our flow of last the market In we on the prices outlook, less discuss in presented and production updated cash those expect words, current debt constant management. than as couple a planned other WTI generate price. is flow scenarios, the capitalization materials cumulative over period. cumulative billion quarter remaining the context to call this of sheet for over generate of XXXX approximately XXXX have Investor on over have extraordinary. at which a BOE our while our $XX sensitivities grounded $X year. Under a five to the a year-to-date introduced of continue this to now pricing $XX forward year over range. to one our WTI flow respectively year risk plan plan excess XX,XXX flow XXXX a outlook of a and per billion in $XX free is we on will we base in we for optimizing to The strength commodity to our based U.S. XX% with WTI we provide and target Relations cash the balance balance dollars $X.X barrel expect $XX of on the oil, XXXX turn a And environment and the free forecast pretty outlook cash pricing barrel of and our U.S. year the U.S. repayment for our accelerated by In I capital

Rod Gray

morning Thanks, everyone. Ed. And good

debt in interest. to $XXX term flow measures first the commitment mentioned, the principal principal we call cancel notes U.S. use additional of we levels. XXX to and our amount amount repurchase and an to approximately the reduce XXXX to proactive notes reduce of repurchased leverage As the May long $X.X our lower. X.XXX% plus Ed drive quarter cancelled On accrued at million subsequent million of taken U.S. term demonstrate half our our and and structure we X, have measures generated free cash X.XXX% These price cost of long

Following excess of these in we million continue repurchases $XXX to maintain liquidity.

June debt billion from totaled of our at down billion March $X.X net $X.XX X As XX XXXX. XX,

currently the targeting of will of base targets billion debt net plan are our XXXX. reach WTI $X.X timeframe the which will accelerated. $XX be billion commodity At under end to We $X prices, U.S higher of achieve by we to a our debt

to various Now and funds marketing crude maintain contracts to by financial our adjusted rail the management. risk flow. our and reduce We turning a approach derivative consistent risk to volatility utilizing management and

per For hedges protection utilizing net the XX% with we crude WTI approximately U.S. structure remainder per on of upside oil barrel, have at largely XXXX way three to of price $XX entered options into $XX exposure U.S. participation our provides a barrel. that

way structure on with protection hedges crude approximately barrel, U.S. net For three at provides oil price combination entered participation at of XX% a XXXX $XX $XX.XX we per swaptions of per utilizing into that barrel. per barrel a U.S. to XX.XX exposure have approximately our upside U.S. and options

on also our available Full and differential our be XXXX I'll heavy hedging light are found And QX of Canadian and our oil turn back XXXX Ed. details financial website. we with exposure. call statements to For can on and that, have program hedges the our in entered

Ed LaFehr

head commitment also the social to XXXX This pleased our our as Chad and our relevance. appointment We priorities to I'm of just our highlight the also and Chief progress responsibilities the term Operating announce governance light social are and and our and more our and as business in efforts our ESG Thanks long Sustainability our released of impacts sustainability biennial transparency oil accountability of would fifth Rod. time demonstrates and that and business. to environment, capital managing planning I existing strategic is will Lundberg spend Officer. and essential environment report Chad processes. like retain will report. know and our his viability linking efforts to explicitly allocation to

setting reduce by GHG for plan reduction and decarbonize the want have target, our surpassed we new first Having XXXX further we our by higher the GHG our our we have we future, goals. bar committed baseline. from to XX% to set operations intensity As

Additionally, to evaluating wells our XXXX. testing new to reduce we zero the we're by environmental our for XXXX a to of and to reduce bold operations target have set well our inactive footprint freshwater count And also reduce methods intensity.

all questions. And report key to and website have review available I if this ESG message. any would report close encourage the without will is reach and investors on out Our our you with I

free strong in a robust meaningful is deliver cash business we and plan Our to have place flow.

plans methods and creation. to look position or I conditions and/or the And you We're to the operator a to thereof to we in for to our ask great XXXX. questions. with with returns. continue could growth. enhance organic the on for start monitor will communicate open assess value reinvesting These combination buybacks, We please to forward include determine continuing best leverage shareholder for And market a that, call dividend as share execute will our off we to

Operator

Instructions] go Eight first Phil is Capital. Our [Operator caller Please Skolnick ahead. with Certainly.

Phil Skolnick

repeatable we're I Yes. you're questions using terms two but better differentiating results are? mean think? maybe with mean, Clearwater what only versus Clearwater. think some peers the Good other of seeing laterals, do you're I know where two are you're Clearwater. I of you in of morning. is it's on that where seeing do you parts in I'd getting your you of what others and may in start wells, Is kind the

Ed LaFehr

Yes. doing And Clearwater. question, a Phil. question. in me lot what the a Very in answer I the interest had we're before back step good let of take We've

a I up a year shout say landed there. also been we're a is integrating to would to us doing want Métis Peavine and play And ago, what or doing a we've with Peavine do with we years. Métis out thing settlement The a a the deal for evaluating who of with I job quarter are this working ago. couple first year great us the And and settlement give big support to a

this probably than run a well are and we or company. development as better Everybody We multilateral exploration that knows anyone.

we're the the are further results the right So anticipated drilling Peavine well last would in our years. course And generally now the so fifth reservoir mapping, of East. the geology far, confirming and All settlement. actually couple the the say it's the through of that team had to I

not surprise big So to is it's a just, us. this

surprised pleasantly results, are the We we're with confirming some general, but in I expectations. think of

XX, we second got a in so level can the a one about roughly flow think which multi early. laterals right IP you greater same sure Phil, see don't barrel two July initial was a And XXth day. two a now leg base, it's discovery brought the per very are QX. We've than back I now of the that in barrels day, our well lateral you're at to day. early we've based a referring is the based XX less XX mud water days can be. day July results We of will mud were know I announced you drilled brought XX expensive eight We're XXX system its tell day, of in got barrels it's oil water when on had what cheaper, release XXX initial now online production. And XXX press on But and that that and saying for

all flow. variable will be across cold And of in of that's reservoir sitting. are. are it like where where kind this we we're will these So depend things It

important on second third in producing according next still fourth The to But east. back And results all sitting is And another the to the going we eight now that early eight out plan. report. is We're drilling the the to mud. or leg well don't legger drilling of leg any that's have test.

would So lead said But as let's get just excited, in these developing that tests. timing. I script, process encouraged. year. round where us appraising and But It's that, hopefully the to all September important the in of we're these Phil are and next step a We're very increase lands. very activity we see

Phil Skolnick

important And expectancy one sure. you what is mentioned test. East that there? the Yes, testing another And just exactly you out you are for

Ed LaFehr

were down associated Yes. further a with well this well producing Well pad I has day, wells. east. us four first risks deep, The now we're discovery as the drilling XXX knew said fifth barrels to that that's down the on got and we we dip, miles is is one the three well with we

believe we structure the what And to that of out East. extend up So happens is that from that drilling the the seeing the there deep. we're we're discovery laterals moves pad off

confirming our view it's So structure. of

you oil up for move potential there we improved. As lighter and as lighter structure, mobilities is a see oils,

is rigs trucks the well And what we're and acreage everything hopefully supply closer bit East lighter structure fluids some it's that So far. testing up really But so little is to the that's But and settlement. our the managing we're we going equipment. to with but will of logistics and see. further a

Phil Skolnick

great, you. Okay, thank

Operator

question Mccrea next Raymond James. Please Jeremy Te ahead. from from is go

Jeremy Mccrea

days wanting Yes. see a next a the Hi. more putting This interact you see and from these there capital does XXX like, you with before bit over this QX, given the XX the here of for play you what capital dragging really into guys from first And results the to plan other just five play this play year some Phil's five into here follow initial there? from too. do here start years where areas? your how barrels question going just that up a day Clearwater Like where four, are Clearwater is does

Ed LaFehr

Well, is we've Clearwater, said. sections got that of in perspective in Peavine, as about XXX of the land about I and the XX

So north, and area. XX our sections to main the beyond in [indiscernible]

wells of kind lot a four That's the scope the quite We've of that's of got a So section. play. inventory.

XXX done per do year. got, weight would rig we've a year, that section, is one drill on I which to risk wells. XX a wells what XX that's work So couple wells we've sections XX and four can we If

So XX year that's prospect about a inventory. inventory of

beauty think the within beauty of it paybacks, XXX% development we we areas the cash to do. if it, is few it And very own and the So benchmarks Clearwater believe of other what its similar this grows is, flow. There are two places And it's times can The corporation that if does, we it go burden year very into a then economics as a it to than are put on less strong. recycle mode. three to returns, doesn't XXX% ratios. that's

XXX PXX at expectation barrel So to about a to would day economic XXX,XXX IP our we base, those to generate by results and grow was expect and our XXX,XXX it. barrels [indiscernible]

into got XXXX to in We're success would quite very think will the year, It on to of program I've move as us could up see if what I the set it level we've but the on this we be riskier a budget kind alluded straightforward clearly XX those there. in I from very So and could mean? to. next we that have subtly September going fall make to answer to we know to thinking well about XX program that hard. for calls that

Jeremy Mccrea

everything. that's Okay,

Operator

concludes question like any Ector over to the conference answer and This I'd remarks. to the session. closing Brian turn back for

Brian Ector

participating Alright, conference day. thanks, great second [Elene]. everyone, quarter in call. a Have for our Thanks,

Operator

This conference concludes call. today's

participating pleasant for you disconnect your day. Thank and You lines. may have a

Brian Ector	Vice President, Capital Markets
Ed LaFehr	President and Chief Executive Officer
Rod Gray	Executive Vice President and Chief Financial Officer
Chad Lundberg	Chief Operating and Sustainability Officer
Kendall Arthur	Vice President of Heavy Oil
Chad Kalmakoff	Vice President, Finance
Scott Lovett	Vice President of Corporate Development
Manav Gupta	Credit Suisse
Greg Pardy	RBC Capital Markets
Jason Mandel	RBC Capital Markets
Patrick O'Rourke	ATB Capital Markets

Baytex Energy (BTE) 29 Jul 212021 Q2 Earnings call transcript