Baytex Energy Corp. ("Baytex") reports its operating and financial results for the three and nine months ended September 30, 2024 (all amounts are in Canadian dollars unless otherwise noted).
"During the third quarter we generated $220 million of free cash flow, returned $101 million to shareholders through our share buyback program and quarterly dividend, and reduced net debt by 5%. Over the last fifteen months we have repurchased 9% of our shares outstanding. Our third quarter results demonstrate continued solid operational performance as well as our commitment to generating meaningful free cash flow and the delivery of strong shareholder returns. We expect to release our 2025 budget in early December. We are committed to prioritizing free cash flow and in the current commodity price environment this means moderating our growth profile and delivering stable crude oil production," commented Eric T. Greager, President and Chief Executive Officer.
Highlights
Generated production of 154,468 boe/d (86% oil and NGL) in Q3/2024, up 3% from Q3/2023. Crude oil production (light oil, condensate, and heavy oil) increased 2% from Q3/2023 to average 112,602 bbl/d.
Increased production per basic share by 10% in Q3/2024, compared to Q3/2023.
Executed a $306 million exploration and development program in Q3/2024, consistent with our full-year plan.
Reported cash flows from operating activities of $550 million ($0.69 per basic share) in Q3/2024.
Delivered adjusted funds flow(1) of $538 million ($0.68 per basic share) in Q3/2024.
Generated net income of $185 million ($0.23 per basic share) in Q3/2024.
Generated free cash flow(2) of $220 million ($0.28 per basic share) in Q3/2024 and returned $101 million to shareholders.
Repurchased 17.6 million common shares in Q3/2024 for $83 million, at an average price of $4.68 per share.
Paid a quarterly cash dividend of $18 million ($0.0225 per share) on October 1, 2024.
Reduced net debt(1) by 5% in Q3/2024 and 12% over the last four quarters, to $2.5 billion. Maintained balance sheet strength with a total debt(3) to Bank EBITDA(3) ratio of 1.0x.
2024 Outlook
We continue to execute our 2024 plan and anticipate full-year 2024 production of approximately 153,000 boe/d (previous guidance range of 152,000 to 154,000 boe/d). We anticipate full-year 2024 exploration and development expenditures of approximately $1.25 billion, consistent with our previous guidance range of $1.2 to $1.3 billion. Based on year-to-date actual results and the forward strip for the balance of 2024(4), we expect to generate free cash flow(2) of approximately $570 million ($0.71 per basic share) in 2024.
(1) Capital management measure. Refer to the Specified Financial Measures section in this press release for further information.
(2) Specified financial measure that does not have any standardized meaning prescribed by IFRS and may not be comparable with the calculation of similar measures presented by other entities. Refer to the Specified Financial Measures section in this press release for further information.
(3) Calculated in accordance with our amended credit facilities agreement which is available on SEDAR+ at www.sedarplus.ca.
(4) Q4/2024 commodity prices: WTI - US$69/bbl; WCS differential - US$14/bbl; NYMEX Gas - US$2.90/MMbtu; and Exchange Rate (CAD/USD) - 1.35.
Baytex is a well-capitalized, North American oil-weighted producer with 60% of our production in the Eagle Ford and the balance in western Canada. We are focused on disciplined capital allocation to prioritize free cash flow generation while maintaining a strong balance sheet. We currently allocate 50% of free cash flow to the balance sheet and 50% to shareholder returns, which includes a combination of share buybacks and a quarterly dividend.
Our 2025 capital budget is expected to be released in early December following approval by our Board of Directors. We are committed to prioritizing free cash flow and in the current commodity price environment this means moderating our growth profile and delivering stable crude oil production.
Financial Highlights
During the third quarter, we delivered operating and financial results consistent with our full-year plan. We increased production per basic share by 10% in Q3/2024, compared to Q3/2023, with production averaging 154,468 boe/d (86% oil and NGL). Exploration and development expenditures totaled $306 million and we brought 82 (69.2 net) wells onstream.
Adjusted funds flow(4) was $538 million or $0.68 per basic share and we generated net income of $185 million ($0.23 per basic share). During the third quarter we recorded approximately $22 million in insurance claim proceeds related to the 2023 Alberta wild fires and prior-period adjustments with respect to previously paid royalties.
During the third quarter we generated free cash flow(2) of $220 million ($0.28 per basic share) and returned $101 million to shareholders. We repurchased 17.6 million common shares for $83 million, at an average price of $4.68 per share, and paid a quarterly cash dividend of $18 million ($0.0225 per share).
Over the last five quarters, we returned $479 million to shareholders. We repurchased 75 million common shares for $387 million, representing 8.7% of our shares outstanding, at an average price of $5.14 per share, and paid total dividends of $92 million ($0.1125 per share).
Continuing to strengthen our balance sheet remains a priority. Our net debt(4) at September 30, 2024 was $2.5 billion, down 5% from June 30, 2024. Over the last four quarters, we reduced our net debt by 12%. Our total debt(5) (excluding working capital) at September 30, 2024 was $2.3 billion.
Operating Results
In the Eagle Ford, production averaged 89,800 boe/d (82% oil and NGL) in Q3/2024, up from 87,311 boe/d (85% oil and NGL) in Q3/2023. We are executing our 2024 development program consistent with our full-year plan. During the third quarter we brought onstream 21 net wells, including 17 net operated wells. Through the first nine months of 2024, we brought onstream 58 net wells, including 46 net operated wells.
(1) As announced on July 25, 2024.
(2) Specified financial measure that does not have any standardized meaning prescribed by IFRS and may not be comparable with the calculation of similar measures presented by other entities. Refer to the Specified Financial Measures section in this press release for further information.
(3) Calculated as operating, transportation, general and administrative, cash interest expense, or current income tax expense (recovery) divided by barrels of oil equivalent volume for the applicable period.
(4) Capital management measure. Refer to the Specified Financial Measures section in this press release for further information.
(5) Calculated in accordance with our amended credit facilities agreement which is available on SEDAR+ at www.sedarplus.ca.
Our development program is largely focused on the black oil and volatile oil windows of our acreage where we typically generate 30-day peak crude oil rates of 700 to 800 bbl/d (900 to 1,100 boe/d) per well with average lateral lengths of 9,000 to 9,500 feet. Year-to-date, we have realized an 8% improvement in operated drilling and completion costs per completed lateral foot over 2023.
In our Canadian light oil business unit, production averaged 20,428 boe/d (84% oil and NGL) in Q3/2024. We have made substantial strides in advancing our understanding of the Pembina Duvernay and production averaged 7,550 boe/d (83% oil and NGL) in Q3/2024, up from 4,758 boe/d (86% oil and NGL) in Q3/2023. In the Viking, we brought onstream 35 (34.9 net) wells and the asset continues to perform in line with expectations.
In the Pembina Duvernay, we were pleased with the efficiency of our two-pad, seven-well drilling program which saw a 21% improvement in drilling days (spud to rig release) and a 10% improvement in drilling costs. Through a combination of facility and completion design optimization, our average 30-day peak production rates improved by 40%, as compared to 2023 well results, with only a 4% increase in lateral length.
The first pad (3-wells) was brought onstream in May with an average completed lateral length of 11,000 feet and generated an average 30-day peak production rate of 1,354 boe/d per well (890 bbl/d of crude oil, 326 bbl/d of NGLs, 826 Mcf/d of natural gas). The second pad (4-wells) was brought onstream in August with an average completed lateral length of 9,250 feet and generated an average 30-day peak production rate of 968 boe/d per well (725 bbl/d of crude oil, 171 bbl/d of NGLs, 434 Mcf/d of natural gas).
In our heavy oil business unit, production averaged 44,240 boe/d (95% oil and NGL) in Q3/2024, up from 37,506 boe/d (94% oil and NGL) in Q3/2023. Peavine continued to outperform expectations with production averaging 20,085 bbl/d (100% heavy oil) in Q3/2024, up from 13,821 bbl/d (100% heavy oil) in Q3/2023. During the third quarter, we brought onstream 7 (7.0 net) wells. At Peace River, we brought onstream 5 multi-lateral horizontal wells, including one successful Bluesky exploration well on a recently acquired 66-section land block contiguous to our existing acreage position. At Lloydminster, we brought onstream 11 (10.2 net) multi-lateral horizontal wells across the broader Mannville group.
Management Change
Baytex is pleased to announce that Taylor Young has been promoted to Vice President and General Manager, U.S. Eagle Ford Operations. Mr. Young has over 14 years industry experience and holds a Bachelor of Science in Mechanical Engineering from the Colorado School of Mines. He has been with Baytex and its predecessor companies for the last four years, most recently as Director, Subsurface for our U.S. Eagle Ford Operations.
Julia Gwaltney, Senior Vice President and General Manager, U.S. Eagle Ford Operations, has stepped down to pursue another opportunity. Baytex would like to thank Ms. Gwaltney for her contributions and wish her success in her future endeavors.
Quarterly Dividend
The Board of Directors has declared a quarterly cash dividend of $0.0225 per share, to be paid on January 2, 2025 to shareholders of record on December 13, 2024.
Additional Information
Our condensed consolidated interim unaudited financial statements for the three and nine months ended September 30, 2024 and the related Management's Discussion and Analysis of the operating and financial results can be accessed on our website at www.baytexenergy.com and will be available shortly through SEDAR+ at www.sedarplus.ca and EDGAR at www.sec.gov/edgar.shtml.
Conference Call Tomorrow
9:00 a.m. MT (11:00 a.m. ET)
Baytex will host a conference call tomorrow, November 1, 2024, starting at 9:00am MT (11:00am ET). To participate, please dial toll free in North America 1-844-763-8274 or international 1-647-484-8814. Alternatively, to listen to the conference call online, please enter https://event.choruscall.com/mediaframe/webcast.html?webcastid=OkApicVw in your web browser. To register, visit our website at https://www.baytexenergy.com/investors/events-presentations.
An archived recording of the conference call will be available shortly after the event by accessing the webcast link above. The conference call will also be archived on the Baytex website at www.baytexenergy.com.
