BTEGF - Earnings call transcript Q1 2022

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Operator

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

First Quarter 2022 Financial and Operating Results Conference Call. [Operator Instructions]. to Capital conference Markets. like Ector, to now President, Vice would turn over the Brian I Please ahead. go

Brian Ector

Thank Sustainability you, first Financial and Shareese. joined Executive thank our and you Officer; Good Lundberg, results. Officer; by morning, Officer. ladies joining operating Operating our President Chief to and and Ed us Rod LaFehr, Chad discuss and I Gray, Chief our Today, quarter our financial for XXXX and am gentlemen, Chief and VP Executive

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

Edward LaFehr

Thanks, morning, everyone. to quarter our like Brian, and to XXXX call. good welcome first conference everybody I'd

representing generating a our first discipline, focused net to program offer bid the of Stock and announce reduction returns, of up strength the debt results XX,XXX share flow for I'm shareholder pleased cash filing and issuer normal of production consistent quarter, billion. common remained day, very given flow XX our direct of a We million per cash of the to strong application that float. free course on our desire BOEs balance Board buyback Toronto shares, to our we a has financial of XX% of with reducing with Exchange capital public million the $XXX operating with and Directors approved almost the sheet delivered in and During debt. free XX% to $X.XX

in exciting expect discussed we with Baytex. is These times last shareholder are quarter. buyback commence the consistent which We return for to May, program the framework

a have to number today. we announcement, with you buyback share the share developments of to addition In positive

our increased update to Clearwater First success our the the and is our guidance, of made XXXX Peavine, is X-year plan. third second is development at we've

with drilling Let's our our XXXX up Clearwater XXXX program. QX Peavine results. Appraisal on with acreage followed exceptional start Program our We

started has up quarter from the during beginning X We drilled today. XXXX the X,XXX day have first XX and all barrels wells increased now of to approximately production per at

to quarter, successfully well design extended we first ERH areas. reach utilized our consist are These sensitive a their type environmentally X the the X-mile X be of are Western which wells laterals During drilled setbacks in X Canada horizontal more first first X-mile residents executed to of to provide versus and traditional wells, and appropriate among long laterals. comprised of

ERH approximately per wells initial per the Clearwater established and barrels play. on are wells strongest X-XX average well the rates X,XXX X first XX-day pad Our of drilled production have ever day the in

outperform X across X the the per X-XX Initial to to our brought addition, assumptions, top of now XXX rates type to on generate expected XX initial in to of day XXX production drilled wells March, on performance wells well April we In are stream barrels and the well. initial Clearwater and per XX-day curve date rate pad have play. continues were

a we we year-end. Peavine We quarter. have Clearwater drill at intend program through fourth X continue progress development now our to plan, full wells additional the As run during committed X rig to to

through and program ability operating a continued set for to consistent we net wells X-rig wells. stage up drill further As level of Maintaining expect the of in our XX,XXX plans the Northwest our combined heading in XXXX. free we our a production while barrels period, will million result, barrels cash When XX,XXX position could cumulative the second and XXXX, drive XXX X-year into activity of strong wells loading budget original flow. half momentum net from With approximately Clearwater XXXX that base, we the XX XX to acreage holds per section efficiencies to development. our XXX than With updated our estimate view in potential are sections we of day. land drilling success, XXXX. economics have locations for the per the to within XX expect with support cash this over payouts increasing less has net while prospective portfolio over updated to day XX our believe our date, $XXX legacy our include organically of Alberta, drilling over X strongest At sections among plan of grow that with play the land approximately generates generating ultimately over derisked continued Peavine XXX for enhancing To Clearwater during current commodity flow base, months production prices, free of the Clearwater profile. increase highly and we

and will growth $XXX our business program approximately XXXX per I for this BOE to year. XX,XXX day, share per day. of it forward. approximately expect now production for the continued expect XX,XXX excited per and on million our turn on forward to cash exit we what BOE outlook XX,XXX per we very XXXX update. to are to basic now or lands, We from previously. to XXXX up day XX,XXX Based increasing we operating XX,XXX are guidance guidance to XX,XXX $X.XX means going generate free production And the and to strip, momentum producing BOE QX our Clearwater flow With with strong our

flexibility allocate our I mentioned continue to returns shareholder expected and point, meaningful enhance approximately we As steps us part run direct to represents business of prices, cash XX our an million, of we our commodity cash cycles free share free net which current will of to provide flow price. net our we achieve expect to allocated which reduction net level At capital WTI At debt through to ratio flow a our will the debt $XXX in debt buyback early shareholders. of with debt announced debt-to-EBITDA consider program of to through expect shareholder earlier. at return of The net returns remainder previously of achieve this generate a the returns. level level be further until XXXX. will annual to Xx we framework, XX% to USD This price

Our the operational success, for the drilling pressures our program strong continued industry experienced inflationary economics capital review our the our us and throughout of to program being year. caused

expenditures and activity are million, $XXX reflects capital environment. which XXXX XX million approximately USD in of development of Eagle $XXX The to in a activity. to the increased our set incremental incremental oil from million, exploration pricing This $XXX now net million million a We activity $XXX reduced light wells up which X forecasting development set will Clearwater incremental and and Ford. is X result of on by $XX exploration the to expenditures, offset additional was lands $XX million

compared to cost industry our updated steel, assuming items million. inflation to an as to expected also capital In cost chemicals. pressures cost labor, development our plan are aggregate, XXXX XXXX. by increases approximately We and logistics, reflect This in X% $XX which as now frac, capital such we inflation, fuel, and tangible XXXX XX% related sand reflects incremental expenditures exploration and

update transportation due reduced higher reflect cost certain increased in to we expenses. will I our reduction outlook a reduced. capital prices, interest inflationary these X-year net on provide extent Rod, to our and Lastly, royalties unfolding, it our brief is a expense inflationary strong is fine-tuned With to a commodity now pressures several a for have assumptions debt who turn and Offsetting a to of operating and XXXX production increased and pressures pressures our cost -- and and to plan on liquidity want over structure.

Rodney Gray

April highlight our ago financial to operational our good Thanks, X everyone. to sustainability ability and X-year morning, plan meaningful XXXX introduced generate Ed, cash our and We free and flow. year in

as this to intend benchmark across base. plan drilling based the continue X-year environment, activity macro update to results our and land warranted on We our and results to

expenditures We than rolling a to X-year our plan less returns-based Through are flow. to period, funds of capture exploration we and development this XXXX. philosophy, planned at forward committed now allocation are period XX% the capital to targeting disciplined our adjusted XXXX

production the And We of a expect XXXX. XXXX are a price. strip Year based based our forward on in production XX of reaching X%, to XX,XXX X, through on generate is annual constant years the X% with X commodity prices. WTI to plan X and approximately day X-year XXXX, guidance to USD BOE growth XXXX

USD Our prices. period. Investor In cash focus more during we on website, cash XX delivering assumptions, USD including find these to available free on Relations plan, X-year billion cash flow planned free of our flow is May $X XX flow regarding pricing unchanged. at Under details our free the our WTI sensitivities approximately you'll generate and presentation, cumulative expect

that X, have XXXX facilities years XXX to facilities and $XXX not reviews. approximately approximately are had semiannual to XX. million USD Turning liquidity annual from revolving increased April have on credit we XXXX to support XX. at by April million. our April liquidity The We extend from borrowing extended our position XXX announced hand USD facilities. and to and facilities received or X been On modestly syndicate require lending from been March March at revolving credit base strong do The credit not bank of our million amend we

to at XXXX. current working from which $X.XX debt, At totaled XX, less XXXX with exit net down expect million. billion prices, XXXX, our and at notes long-term facilities, capital, net than Our XX, credit of billion debt we includes March $X.XX December $XXX

And call of cancel par X, intend million XXXX. over USD the XXX the amount XXXX back with repurchase notes to X.XXX% also We principal to I'll Ed. that, turn on remaining at June due and long-term

Edward LaFehr

Thanks, Rod.

development to this capital and free excited barrels We during materially Clearwater to focused incredibly have are enabled to us our cash remain X,XXX summarize, advanced per on We the day. these today. more wells exceptional debt. position reducing first generating flow we our production Clearwater be To and double than discipline, quarter, in

year. guidance add a increase wells to our this Clearwater X As pleased are new we late XXXX production and result,

delivering focus Our on is free unchanged. cash substantial flow

cumulative of to once flow. buyback again, $X commence program excited X-year updated share plan free is in May. And Directors approved has Board of that I'm is generate very Our a to cash approximately expected that expected billion our

business benefit call to I And plans with please to Our open operator will executing the the and for forward we is our ask that, questions. ongoing look all for of strong, the stakeholders.

Operator

Instructions]. [Operator

from Markets. The with Capital Patrick first comes question ATB O'Rourke

Patrick O'Rourke

barrel if percentage encompasses number or sort just of barrel you of more right us a a that acreage that I'm pads color and to recent within of with little most sections and in on wondering can what Really of bit XX,XXX a terms day, the about now. XX,XXX the number, day give right know day as you've those now? a scope to potential XX,XXX taken it to in barrels project play the here. impressive of I Clearwater. and you're respect that talking scale results a be for Question up your

Edward LaFehr

January Yes, barrels doubled Right. Well, day excited and is, we're -- it as from X,XXX a it this is that a very just X,XXX in Patrick. to quickly play moving over as barrels day. doubled

Now that, land and derisked with and portion has section derisked we have we us data of to to we needed those to the play, the our play west northwest the western that central in western the activity major in XX private sections south portion XX got of our central sections the Peavine now of of some us tells of us XX the our company activity entire -- portion that have We've has the believe in us, we now block. of performance the derisked. along

us we X barrels now play the wells what wells a X-year at in a XXX and that's to XX a day. wells us plan, a in barrels XXX grows wells, to Previously, XX,XXX developed had So being we our that's conservative section, into get X,XXX placed day. to manner

Based XXX you, got So that I barrels for a given locations we've told we of moved could to that XX,XXX some just that derisked. hold quite day. period flat on time, what we've

In And southeast done. X-year east. then our to question the type to to what east, areas we've it project be northeast. the going and in appraising derisking curve of meantime, center is higher the to look of is It's the to answering is X this The we're timing easy course pace over a and be the get the we'll barrels months. the what and of going So like that the several plan. question day, the does the next those XX,XXX months a the next and play which very be us to is over to

at barrel only here. it's a a west portion which north day XX,XXX So ready get very of day we're time. to point the very easy -- commit XX,XXX to to on But sections to the those those see It's easy is a we to for a hand, announced us XX program this why in it. other of this, barrels on

Patrick O'Rourke

derisking XX,XXX and well amount Or gap is from the derived the it to sort XX,XXX and primarily derived results from potential that the between there the areal then, So delineation? sort the more the of so a of of capitalization directed pace capital is play? of is of and

Edward LaFehr

a and portion know will context. to it's to as XX,XXX a XX think in some I of of now optionality us the can give We plans. much Well, want the think is of or day. those X-year large we barrels both. north we don't larger work little -- different barrels a XX,XXX I the that grow day the to to today that even sections that I northeast, said, to of If we to know the What plan field is. put We a east and consider it's to development get full extent how

a of could do get potential for over question field much derisking full. how done So it's also about derisking we that want question large how high blowdown development the to how It's barrels to of We extend on we east go need question this day. and going could go that. larger then. a mind of is bigger to to be matter no on go my early and in to that to we a decade. question a There's the XX,XXX versus want in But a do

Patrick O'Rourke

Okay.

-- that then. to with on respect Just question a final

You X-year that to the of for plan time What's place. a pace derisking frame there? that sort you're have in referring or

Edward LaFehr

We access up the remote some there. up the the think I east major be need derisking and part year. It's will quarter a of to northeast winter next northeast. area first more

to ice beyond and need roads until essentially so that are get go get wells jeep roads on to ready some there strap some we And we'll out over not down.

Operator

Nuttall from next Eric with Ninepoint The Partners. comes question

Eric Nuttall

share to weeks. pay price I X of turn Confusing to just reaction think and the seen return in out everybody they say on wanted just that the my capital. I come in to wells conversation career. gets to today, drilled some don't not back I've

to amazing fully the accomplishment able on focus support to X be share XXXX. As about at year. we free end ago. oil. your want larger now shareholder, to achieving I using XX% an buybacks We've your got to $XXX guys know cash We've debark versus lower status leverage, years field talk you by cash got net at you're I the price of a next trading you a But in lower deck.

thereof. that's and XX% shareholders free So deleveraging enhancing about and is should with now, to that XX% flow once reasonable as combination what's free you the if like percentage of further a of next get some we status, and you cash believe returns, dare we dream the cash expect reasonable? case, oil of talked flow in achieve current price, year, your Because buyback that's dividend, XX%

just leverage next you you a to be year what once target? get I wanted think achieve to return shareholders reasonable of your will So your sense

Edward LaFehr

Yes. very have, as those come debt Well, and targets exciting pricing. and under current firstly, continue as up have to, really on great that -- quickly we'll us they it's

significant below flow we shareholders this the the trading for NAV. unanimous So returns of to I often, and I just form XX% we've that. first aware all say support just free buybacks. of committed but year to intrinsic talked directly Board are for callers returning to in of we over share of form our fairly absolutely our else, and want in Eric, had this, everyone know onboard, you're buybacks, cash to We're And

improved, to with that all-time And we be. day look is improved, performance we level pricing asset low an back has place exciting absolute shares historical or relatively very fact our we a our combination have when despite in buy value, the all portfolio improved. at our formula has We long. to want has multiple an are on where This

happens at script. second what in about we in more the a committed we've as to just I we're early that in Potentially free in well, in be to of development. really to $XXX the we trading is direct form through even returns that the Potentially point with to have form dividend the next as providing Board. Clearwater shareholders are more And that and there we hit if buybacks, expect the the we're more today. be said going of form announced, year, question generating time, your as Now to target when of million we cash flow debate and Clearwater by

will add we So Rod with hand there. to options additional but it to this, any that, over to have I'm on flavor just going

being say, offer help. we can I a additional you are nearly specific debt-free go you can't you where to today, Rod, give XXXX context beyond just Maybe, As early to far in number. some

Rodney Gray

I It's running us driving more Ed to going Eric. optionality. level and debt us flexibility XXXX. into direct we leverage I to system, more see with indicated, less just with shareholder committed would and you've we're have lower, the that, context, said, gives the returns, as in providing are expect But as much that

Eric Nuttall

Like guys, debt-free, I look to low no got cash you growth, at problem. you a

Cenovus shareholders. we've cash free So flow XXX% to got of pledging back

the So now, I just board but but assume are the commit I truly it it's numbers just anything yet. XX%, right it's a decision, you average that know I to guy just would can't don't gets think eye-popping.

Edward LaFehr

a could Yes. very large be And number. very, it

and question. call the for thanks So the

Operator

from question with The Bison. next Josh Young comes

Joshua Young

results. in it a Thank questions about terms Yes, in you is report. of So that it part changed and just bit already, this for a them that for results additional you these in were What are excellent yielding? guys kind what was obviously, fantastic this each of Clearwater talk And Can what longer inventory great in field? just that of the little of is -- fewer mean the this best-in-play announced? great those drove does laterals, these are you but there of wells. these

Edward LaFehr

Josh, moving just portion and progressively towards the simply central of Well, is moving large part the field that, there. of

So not moved in in pad, in the was We offsetting we DST conventional that start had agreed West. XX-XX a quite center the with the early structure Far that some was and field. the the would was we settlement that up to knew exciting it then logs. of on We

knew trend wells. And potentially the when into of better X-mile wells, X the you the would things in a within the now, do wells really a day things core strong to so you're with as while you're also, there some and permeability with in exciting with this really that really strong and your heart some lateral clean -- get XXX, into of to lateral -- development thicker a new The with to from you location. better hamlets standpoint X we the reservoir X were move in drilling. mode. efficiencies and thing of the we we lateral technology ability drilling us X-mile We settlement south roads, on these full the generate the field. is is XXX-barrel proved as little a this the then But undershoot this social that giving knew the ROPs this consistent once And up we moving meterage same say, bottom, sand, tend

be think of So were waiting not for but I completed. drill and the better -- in super to able these because pad the also, we're facilities only heart we're we our for to wells trend costs

with us XX quite is like you the the the and days, to these will, if large what these of did. just new but wells full done first, configuration that's a this XX lateral first these which pads are getting facilities in ready and during allows these in risk, the bringing to the mode completed wells on with facilities So hiccups, super exactly to XX we've on, go. production move to of wells of We amount team less was a X place a inventory to the got that's bit this. breakup, did There

came a these X,XXX So pad None barrels the we're on now. really right X in wells. on All are same wells on for example, XQ X these QX. other the on day, them of bringing

all right area, another XX a a QX a But play of would good the sections is I by land is beyond of that wells. And in good and this got which we've that the that's So probably That's X, is impact. XX X now. multiply lot and wells. say of core

building we X,XXX for that. these core the do keep out we entire that a now, need to from on pacesetter incredibly day basin But excited and got now will we wells. we've new barrel So are a the

Joshua Young

That's you're how technology means inventory oil could for for great. this That's be results what a might as that applicable and Peace inventory? color. you the then Clearwater And for your at about, at techniques these talk And helpful River the the other and this follow-up, other Lloydminster? heavy great in using

Edward LaFehr

Yes.

the see think in multilateral -- I way. in to We operator know developer this for been we're oil explorer, this now Clearwater. lead have Lloydminster, the we're that decades and doing heavy the probably of ourselves it applying We Peace you River, wells. do and certainly

and of we single on of continuity continuous This get there the opened laterals, we on kinds In way reservoir. has going where configuration We combination out all appraisal of And the our be multilaterals, in a in Seal of what's lands Peace configurations leg-type certainly be core miles. X-mile do get we X-mile as at an to end year. will be will to doing have in new an drill structure it well X things likely a X have confidence that depending more a more reservoir the to our Lloydminster, different of need a you really wouldn't of the to this opposed appraisal it River shooter -- of configuration second But mode, likely we'll legacy the the eyes well. up because needed.

we have inventory in our look the strongest probably Lloydminster. deepest entire it. always we'll in and at So And company

running start going in rig the the to rig after up full Peace X-rig We're program. Peavine we're we'll So River just breakup be be fairway, a go running in with that a going a that year year. rest proper, after in program these and of along be and X We'll Lloydminster. to wells, added full now running with rig breakup full for

So multilateral though, we'll different Josh. of a out is configurations. real change incredibly time step going the start excited doing in are heavy Clearwater rigs We're have kinds X lateral looking It of in properties, the breakup going a oil this way at variety development. full of coming about people to and

Operator

The Raymond next comes with question from McCrea Jeremy James.

Jeremy McCrea

how just that's respect much to up on see get sales. on wells? here. some want your of into employ going to of up And numbers revising the terms have could are and we Josh's trying the here, of numbers -- really and sense up. -- how been on you're there XXXX? see like today, in do heading your a guys you technology development conservative big we've could you just your I'm more up always other -- you as following the you you follow again And this you into how numbers questions like are we revising guys much Just the on every Eric guys of here. are follow to your Like Clearwater you be, like seeing you just just built are even what the M&A some and numbers And that have how much And to with Is here? of up conservative with think in what more. conservatism in -- -- this land a you just that, quarter, -- how

comment that quick as on a of some Just well.

Edward LaFehr

but Yes. we XXX on we've Well, said Clearwater. sections of sales, the comment we don't have in land highly lands prospective got

Northwest So that's Peavine the another XX of play. in Clearwater in XX then and region the up

land numbers, conservative? those can we quarterly don't think sales. we have we development of know X just don't but deliver. we and to Yes. years. earnings X we I or What kind ever miss production or quarterly we we promised market, in So don't targets. comment generic Are on offer our We

to So we like can we out that things beat. put

your basis is barrels this partly seen of day already at that today, we're the and question. You've a X,XXX

Our XX,XXX exit to the barrels it Peavine of to bigger plan early to flat. Clearwater day be a end be And conveyor our then belt should hold fairly XX,XXX to the and rate at then a it's in in X,XXX close X-year the day, very we'll getting a in top X-year plan. barrels

that So the beat do towards we yes, day to push XX,XXX barrels to But going we question previous is to how to want our or into the market. to question external to higher. particularly do be plan numbers, activity a like much the go the

We and have way company, progress good inside we're things the we targets very and as the along stretched innovate well. about how

know learning we're in play The day we Clearwater sooner. But only very, best quickly are the what XX,XXX this. answers barrels So a a at very a whole It's play. level. is brand-new at

day. that We want to Clearwater day a area. barrels than substantially of across to beats, the for XX,XXX alone an be to barrels got to be so XX% think XXX,XXX the production builder, projecting call -- play regional We higher we've is going day, a want our XXX,XXX it what to a Let that. level now are plan aggregator at going do. go barrels And to a we a and big to the go analysts like forward. to you on we area that, look if of in the as go and and we're more part developer a That's many

Operator

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

Brian Ector

thanks, Shareese, call. Have first a conference and day. participating for XXXX Thank in great quarter you, our everyone,

Operator

conference today's concludes call. This

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

Baytex Energy (BTE) 29 Apr 222022 Q1 Earnings call transcript