Earnings call transcript Q4 2022

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Operator

Thank you for standing by. This is the conference operator. Welcome to the Baytex Energy Year End 2022 Financial Results Conference Call.

As a reminder, all participants are in listen-only mode and the conference is being recorded. After the presentation, there will be an opportunity to ask questions. Instructions] [Operator

like ahead. conference now Ector. to turn go Please to would over the Brian I

Brian Ector

Ashier Good our you, results. for full Thank [ph]. XXXX joining thank gentlemen year us you and to and discuss financial fourth and morning quarter operating ladies and

I our Greager, President Chief Sustainability Executive by Operating and Financial Officer; Eric our Chad and Kalmakoff, Chief joined and am Chief Today, our Officer; Chad Lundberg, Officer.

meaning forward-looking of mind that securities some our statements please within you listening, contain the and gas refer regarding keep in I financial information, While advisories and in measures release. forward-looking applicable yesterday's management oil remarks laws. of the non-GAAP will to capital press and statements,

XXXX. today, be prepared of On been other the to disclosure the in accordance also will standards. with or States we respects which foreign in call all evaluations disclosure comparable These are Canadian United not have at discussing year-end standards, evaluation our reserves

amounts also Our our remarks are in reserves specified. remarks regarding All forward-looking referenced dollars otherwise are in Canadian unless dollar statements.

that, now Eric. like to the over call would with I to turn And

Eric Greager

with everyone, I Good opportunity meet year four continuing now community. investment many I forward investor And we Thanks you something for look our end relationships early with morning, base. call. the to I as Brian. to have welcome XXXX even been these during the in months. have Baytex and had days, conference our of to stronger This is build

Exchange, we trading and experience liquidity we shareholders. for trading returned on improve to Yesterday, look a forward York trading New and to the better Stock our

Texas. to point diversified in strong. over across portfolio is a the of many thing the opportunities asked always the high-quality occasions, portfolio, in the with hold decade business With conversations our Baytex? As to part of Baytex been I've we and Ford I is on what first you development Eagle The Canada and oil attracted shareholders,

flow cash meaningful financial production reliable and growth, leverage. while is free to annual modest, deliver objective maintaining Our generating reasonable

a stronger strong direct return on share in basis. shareholder per value time place an are shareholder framework more even and business and shareholder have over we building enhance a increase We resilient and returns committed to to

asset What than people. are for our has excites team is who Calgary shareholders. a the of value in Both field the impressed me of across are high-quality and really operations, the creating portfolio quality committed more this even This me. passionate to professionals

especially we Operationally, all we XX-degree benefit executed in December to snowfalls. volumes have delivered and facing the heavy the and when weeks days like and easy, that's are safe market programs stakeholders. and of manner with to a teams And always temperatures minus efficient not in our did

safely grateful and employees to for reliably. perseverance and their and We our to commitment are contractors operating

delivered free now for exciting We debt outstanding further direct net and record our little XX%. of shareholder production, initiated XXXX returns. our X.X% flow, Let's was an Baytex. more operating discuss generated our generated by and year strengthened year-over-year cash shares increase results, repurchased a in X% reduced detail. in results a strong sheet We balance

out at in per a for laid beginning approximately and production during day. full In to of million. averaged fourth other the the the free day, year quarter $XXX brought BOE XXXX, cash per we We fourth million all full BOE the XXXX. on words, generated of delivered which commitments $XXX record flow quarter XX,XXX Baytex Production XX,XXX the year

of in fourth during $X.X $XXX XXXX QX across the delivered million discipline was the inflationary in that capital totaled $XXX adjusted XXXX. for consistent the quarter and million year. industry pressures funds million economy. portfolio the Exploration despite our billion full and $XXX and development expenditures and We We broader maintained with flow

to of higher in net of XXXX. assets, income fourth primarily This During $XXX contributed in million as of million on impairments commodity recorded QX $XXX result previously million $XXX XXXX, we a quarter our prices. the reversed and forecasted

During initiated We an allocating share repurchased buyback common to of shares for XX.X XX% average million free million $X.XX shareholder program, share. a reduction. cash with $XXX allocated flow free annual cash price direct returns, at per debt flow XXXX, of to we XX% of

strong In addition, of strengthened times. the of sheet recycle ratio by years. significantly times, trailing last With and BOE. debt balance X.X million, sheet, we any a operating $XXX reducing X.X is PDP reserves, netback we net our debt-to-EBITDA a XX-month at representing XX ratio a to of of balance times ratio point than basis respect XX% in a per net year-end stronger $XX.XX our on X.X XXXX generated to on XP recycle based Today,

billion, $XXX year-end, our probable totaled million At XXXX. value up plus And BOE at XXX years we present billion to million from a totaled The $X.X tax life proved at reserves XX.X strong based before year-end reserves on proved million and our index probable of is reserve proved estimated $XXX reserves. plus reserves, $X.X totaled maintain XX% BOE, be discounted of PDP BOE. reserves

utilized approximately The forecast WTI evaluator, higher per commodity by $XX increase being attributable a using barrel reserves in dollars. US the is to consultant our price largely average of

undeveloped long-term Our for a net the working asset at at debt value is net XX% reserves $X.XX and per value capital. on This discounted plus estimated of share. year-end is acreage tax before XXXX based value

from producer, our produce a to we with gas greenhouse intensity. operations, for energy energy and our cost-effective are to intensity committed emissions responsible emissions strategies carbon lower to society targets monitoring setting pursuing a reduce As

annual tons equivalent the XXXX, emissions XXXX represents XX% by a COX off In road the X.X of of annually. is is reduced levels. an from XXXX and million our intensity equivalent, gas greenhouse reduction of This cars taking XXX,XXX which we from reduction our baseline XX%

to and strongest asset economics grow Clearwater continues while cash current our organically at profile. free enhancing Peavine. be the the Operationally, to commodity an our is the highlight at This prices, ability portfolio has flow within our generates development that,

per per barrels averaged day Clearwater XX,XXX production and the averaged barrels XXXX, the year fourth for During day. full quarter, X,XXX our

across with XX drilled Peavine, hold now wells the XX play. continuing at we initial assumptions, outperform we XXXX, to well initial performance wells drilled net curve top type and rate the During

net wells to bring on-stream expect approximately We in Peavine XXXX. at XX

we we forward, further across resource our in strong portfolio, Clearwater oil our delineate expect and Looking Duvernay XXXX, Peavine, advance light development our play. progress high-quality oil-weighted acreage as another year

are committed to capital efficiently allocating We to direct cash generate free increasing meaningful returns. shareholder and flow

time, Based remains expenditures $XXX Our XXXX XX,XXX forward to in $XXX with to shareholder and exploration helping the million million unchanged, returns to we XXXX, increasing cash expect of production XX% per on to of buyback generate guidance direct debt and XXXX flow expect as cash we anticipate of I'm net day, allocation to during business a reach XX,XXX which accelerating level QX, this target our forward. and approximately excited a free we continue million. move $XXX free share of strip, development to of BOE program. our million $XXX at flow

open we And to the for ready now call are operator, questions.

Operator

you. Thank

question-and-answer from will begin Please, TD [Operator now first ahead. Securities. We The Instructions] from go the Menno session. Hulshof question comes

Menno Hulshof

just morning, a having But the number? Thanks with And why how still averaged peak XX,XXX on the of around start TMX sounds at I'll XX,XXX first day per you that becomes everyone. you to which flow corner, the day as are XXXX, with day, it cash did settle sometime like It Clearwater. barrels largely committed rate? November generator. end point at the half per free production and barrels and good barrels let's with a say, in XX,XXX a goal is

Eric Greager

have Really, and Hey, question. And I we which the It's I Eric governing the kind closely one-on-one Menno. you operate. working is here. good for that the think morning, coffee. this constraint. over of with spoken of Thanks always We're communities cups in about

and We hard. that want a put that be to in of pressing position expectations be just sure we set respectful don't too us

minus of comfortable reached snowfalls day. to than are barrels XX,XXX It much operationally. heavy to there any XX,XXX in for this us, not pretty very band terribly XX-degree days, per when challenging challenging situation we've they're life. So It's and other feels

could which be of a just really set regard we handle resource within the bit want that. out we to could that in we the operate. the with certainly, move don't do impacts are If we communities line We Operationally, and it responsible expectations little have to want to that. can faster,

barrels to from using to we'll the surface within that XX,XXX is the can relationships everything a and we're continue to every to engage do communities the committed ensure we day So to we're doing I perspective short and cultural guess level answer XX,XXX that a at responsibly.

I assets think those key that of the responsible relationships one are maintain. operators

And so, very it's us, to important.

now. to reliably. higher, And that doing XX,XXX guess, but are if band today, is that push to we'll can continue can let's we to delivered there's what sit Menno, XX,XXX ensure an for committed as So opportunity, and it with I we here stick we we

Menno Hulshof

WTI of to assumptions, lot Terrific. of back But Yeah. to then about in funded being And breakeven, XXXX talked cases, WTI just the shifted over That budget the some makes down looking just sense. you a in a at lot. some around, $XX December. moving they've all

cases, Some little. a

for differential it noticed prices. today heavy gas then some and like using better, a a lower than the wider I for Some bit that's natural quite is that you're the worst,

that So you all think of today? if roll your kind where of up, breakeven stands WTI do you

Eric Greager

bit would say. little lower, I Yeah. It's a

reason oily returns aren't in pricing companies. the as there's improved. differentially plays for those increasingly, they're and release and has with fairly industry more operators service where strip gas resources reduction are the would the what's resources more returns, is, profitable gassier moving Henry happening plays is it I So both Hub the interesting the that say also from a And to operators where the getting of because the dramatic

some so improving which pressure inflation, out And results. a resources, of has of means taken which there's what that the the is, is flow of upward

I half result essentially we little would what third have those quarter a baked XXXX, inflationary had -- when third led quarter, up it, fourth that of set I into it just pressures. the or a bit. And XXXX as yeah, $XX mentioned, thing, other second The is, of the comment, of maybe say

price an happen. the it. speaking, pressures that at $XX, with number the so as already arithmetic $XX. generally price to And see set funded But moved when obviously, $XX to begun we've that down we inflationary And drops the

So just more bit resources come us, breakeven. differentially, available which little for our a lowered WTI we're has seeing

Menno Hulshof

pass Eric. back. it I'll Thanks,

Eric Greager

Thank you.

Operator

Arif Please go The next question ATB comes Capital from Amir from ahead. Markets.

Amir Arif

guys. morning Good Thanks.

couple of quick a questions. Just

Ford? just had the you little Can us Eagle technical on that the revisions negative reserve you in color give first a on reserves. Just more

Eric Greager

Yes. Yes.

Ford everyone up, of function a prices a price. fracture it stacking the stimulated is move play dependency. stack the primarily is extent So, I'll around These up comment, Eagle in revisions Ford. I'll were look blanks. and if of sort a want and others Eagle technical the to horizon see -- a can knows. There's that the to when spacing is negative to And the in make you and play the in follow a fill room then as The in price

the puts some the the revisions takes we of because but So, are is prices generally see cost also some technical takes is across all there's And the longer plays. tail it what happened move structure, unconventionals around the commodity as place, price, up, all of there and negative and spacing most down -- curves. has of out of essentially, basically of that taken cash and

PV up. the almost inconsequential, So, the impact but shows volume impact is

to. And point would this of one so, is the that I things

And primarily and curves. I you It Eagle focused portfolio, year-end differentially notice improved of tail Ford in was that improving asset look you'll would say incrementally in is the the that the across if XXXX or the in Canada focused our reserves.

that's say I I what here. would probably think

understand. result booking of to and But the outperforming really generally speaking, a it's Clearwater spectacular simple pretty reduction Peavine obviously the and primarily to took at conservative asset. an things year-over-year expectations our also absolutely approach We is a

as a likewise. there left so, capacity continue lot And Duvernay, we develop there's and to Peavine of

of excited pace stepped resource, quality reserves. about not our our reflected but year-end the development, and very of I'm in the up XXXX that's we

booking conservative a fracture Peavine. resource so stimulated both play on And as and Duvernay

think, we refresh course, of a commentary I the simple show then, reserves, total the up in that for of And was just it sold good does business, but some reserve.

Amir. So yes, right it let park there. Thank you, me

Amir Arif

Eric. I appreciate that,

to clarify just that. So,

tail end. you've rate be that little causing are that higher the fair? on it's locations Is added additional the a decline So, basically that to

Eric Greager

higher value the to under economic basis. curves cost but life, the operating you've slightly per economic got causes a it's more out time. impact, an higher -- and tail out are of in a curve, it time, on volumes got business, again, has no economic it's returns some the essentially curve on curves, And of limit discounted it's But the end in the Well, side below because impact. the the of it limit go in volume you've at out effectively, but has

stacking assumptions. price, commodity moves costs and spacing according to And of course, this and implied down up and cash

So, on moves and conventional a development. fracture always is it stimulated up than more down, noisier little on play it's but it

Amir Arif

flow on the that appreciate free shareholders. then Okay. allocation And No, I to cash to just color. moving

As in during XX% you for to going later remain allocation move year, now, to the entirely or the the from preference third the XX% that to quarter is buybacks?

Eric Greager

Yeah. Yeah.

still is as accelerating -- commodity reasonable QX price we point plan. a repurchase continue at see assumption plan our the of and is plan our view as it share Our to today, we given this is see and

Amir Arif

more just of early final And move on got still Duvernay. to pads start you the question in Okay. development phase? the a is development you've two, try feel information a of production or stage moving Once you do into three-well enough then drilled; too this to have these more XXXX, this to it to

Eric Greager

execution. operationally. gone two and out been two, solid wells three two just Well, pads. or well of I'm -- with six we've released It from casing, pleased a has really first drilling, really the cementing, We're really, got wells way the have

regression probably little underway been in information done efforts that in on we has the the will we've I have And of only would modeling have early such have terms the will have of of we that toll experiment of to we are too structured have that collection say little only should structured that of by So design been the data we terms information, say experiment the rigorous we TD But teams. on and it's a but a two pads, design has and soon that case wells that certainly we will. design technical the information. declare should way enough we the This it's -- the the to released experiment structured the releases, we've information. work because two

and And and of going about on to in -- side data need QX, the by up lot it experiment. of would just performance stimulation levers will then and to at flow going to with if and virtue back and a sensitivities variabilities then casing, all into design break that's end, you drilling, of it the collection we're come be and I various pressure the think production run, built of then probably cementing sensitivities the and reservoir is say,

information what of development. is which So it's demonstration time for to data have take effort would are move necessary call just and going that derisking have we in, but flow from should to to to I to the part the phase, structured today the

Amir Arif

Okay.

Sounds good. Thanks.

Eric Greager

Thank you.

Operator

next question from Raymond from Jeremy go The comes McCrea James. Please ahead.

Jeremy McCrea

your trying looking play and portfolio? today, I that and seeing somewhat happen you're in that more base Thanks. of suddenly what where of here. Hi, on out back to Eric. These questions are of understand most a here, level where came Just here bit the just think high big at drilling other Clearwater questions, I'm in look market almost completion of nowhere. by just technology potential the the think? assets you you little But the terms some underappreciated the the do what is next your with the asset just at is new

Eric Greager

that question. should Jeremy, I company asset but where Clearwater absolutely around fairway same Hey, on saying our it. base. and our that quarter Peavine, and the that the mover endeavoring oil acres with in size true poke us you the is the that little on this and exploration a balance jewel when across net and asset little great this at we Yeah. a around advantage size crown organic team a foxy sounds exploration We position discovered million about broader gave play program. ring-fenced have now have it land-based it's think that's a have hokey, do was, sit is And around an a oil -- our River. the And a the ongoing first- team is geoscience Clearwater the Peace the and the to and of of

in it's it's we a program good about but are of quite so because lot the that an the year, ongoing and not are something And terms talk early of teams development, to at. results in the

I the Operationally board, sharp the be just Technically, in team capabilities. really happier really, and is the and across couldn't subsurface. this financially, with

million budget team so And and unlock is it. where and we've sit a capabilities We net quarter and to a on and a oil a lot was. acres, oil of got

groups the So talked there. learn I exploration what to we've and hope think we in about organic smaller program

Let me would just pretty But leave it I at -- company. excited a that. potential, of the say about I'm the there's capability it's demonstrated and

Jeremy McCrea

question you of kind personal just more here. maybe And for Okay. just a

Like for to own of now personal potential, different there want of basins want here. that just to months kind here where that here, of now from talked everything. really Guidance where groups terms you shift M&A to seen is in been wasn't you've you you've just bias to the grow, take So you the your changed, where four company in company? terms bias and want your but

Eric Greager

Yes.

Peavine, results. spectacular a So technical the The just cash a of team I'm to what of leg a unlock say, encouraged very plateau terms free to the Spin-off the of resource nice us quality earlier according about capabilities big here barrels excited. potential. company I've let's that flow kind The going pile day. XX,XXX really to obviously, it's XX,XXX to I'm create and gives seen the in Duvernay really up. at, and just our conversation, and of

own. to And the commentary. so to position the for up leveling team a us And quality, development that in hire capabilities and bit is of leg add exploration to we two kind Duvernay, resource those little technical are a around according One on then spectacular subsurface things: poke organic already freeing real results a it's out, more

of side organic business. the the on all that's So

point both to you've at really solid you heavy really, River, Ed great company. heavy, that par regulatory exposure or TMX of press about feel the the of press When exposed including I when Viking a I I I commodity, price it to portfolio and feel a leverage presents single kind to the the you about about is to got single it's assets when And just things prices exposure like about you piece and is good higher operating can environment get broader advantages, but light, feel create in think itself and or risks. really play running like this of one there. exposure Peace diversification a a single things advantage and to Peavine. really love good about opportunity in business, of WCS, hard to an the Lloyd.

It's We Viking. got on netbacks capabilities in engine a keeps these in production fabulous just generating an that super and efficient.

level trading You our it, south of Ford, of load and look the of you year the production, an cash pricing which, ship Then the got play runs channel just at you've TI is throughout border flow exposed in notionally half but plus and it one-third and our reliably. Eagle opportunity this LNG at premium isn't moment, elements. different Freeport to exposure to great, gas, the

about What of and in the resources your business you it these around not put or and reliable this you way and and more and themselves a to have create you're around able risk ultimately, to don't to more kind -- move spread correlated press advantages correlated concentrate I profitable capital is, is enterprise. both risk another balanced your then to and like exposure business to create you're

So organic. that's all

shareholder to it's A&D, M&A in interest side, value of do of creation. On M&A wants the would doing sake never one the all I for or say, serving inorganic the

down say, on think marginal could dollar an or use you you use the pay flow if the so of company whatever free of cash return a debt about that the And I at operating look, is. marginal resource

is. the on cash back operating buy can flow You return dollar that incremental at whatever shares

You can in your reinvest business.

multiples, the recognize best our now, return. an many and the of business also in we overprint direct Right by of that return, is there get investor need to desire is, but reinvesting kind

be committing time. so return why framework that to a And we've over we to in of got strong we're growing that's this, believe what capital place very

incremental speaks together want of understand. cash operating kind free all flow So flow their of a those of construct. Understanding which or that certainly of okay, money I to, all put cash uses three the investors you kind you on and returns say are that back, incremental

that. your If base on you to and metrics, through fairway, can that and business that the create can of is our to you by to I think side value time, business all you good accretion incremental you the run continuing organic can business down accretive, so do the do is your then risk-adjusted while all off the at do same create would

you building debt, time. lower wouldn't over of bigger the have do go M&A and all M&A bigger. of of sake capital interest better, generate cost lower reliable, returns But more that to businesses higher getting for doing durable, It's get over for resilient or to just more of cost about shareholders the for want can access time

Let of stop because just two me there pieces. the kind that's

Jeremy McCrea

Okay.

for thanks there. Well, Okay. comments your

Eric Greager

Thank you.

Operator

Thank to I to for any concludes like questions the you. turn the Ector Brian over conference session. This would back remarks. closing

Brian Ector

Yes. call. everyone Thanks, Have Thanks in year-end for day. great our a conference Ashier [ph]. participating

Operator

concludes This conference today's call.

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

Baytex Energy (BTE) 24 Feb 232022 Q4 Earnings call transcript