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Corporate Presentation December 2011 – Baytex Energy Corp.

Baytex Energy Corp. · Dec 19, 2011 · 43 slides

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Slides

  1. Corporate Presentation December 2011 – Baytex Energy Corp. – slide 1
  2. Corporate Presentation December 2011 – Baytex Energy Corp. – slide 2
    Summary Sustainable model: Dividend + organic oil growth within internally- generated cash flow Focus on dividend growth + per share growth in production, reserves and cash flow Sector-leading capital efficiency Technical…
  3. Corporate Presentation December 2011 – Baytex Energy Corp. – slide 3
    Corporate History Baytex Energy Ltd. Publicly-traded E&P corporation from 1993-2003 One of only six independent E&P names from 1993 that are still traded on the TSX Heavy oil emphasis and infrastructure development began in 1997…
  4. Corporate Presentation December 2011 – Baytex Energy Corp. – slide 4
    Share Ownership Breakdown Europe - Institutional 3% Insiders 3% Ownership Breakdown: Institutional 70% US - Retail 12% Retail 28% Insiders 3% Canada - Institutional 52% 100% Canada - Retail 16% Canada 68% U.S. 26% Europe 3%…
  5. Corporate Presentation December 2011 – Baytex Energy Corp. – slide 5
    Operating Areas Product Mix (6:1) Company Total = 50,000 - 50,500 boe/d (Full Year Guidance 2011) Gas 16% Light Oil Heavy Oil 14% 70% Reserves by Product (Year End 2010) Gas 9% Light Oil Heavy Oil 18% 73%…
  6. Corporate Presentation December 2011 – Baytex Energy Corp. – slide 6
    Management Team Officer Position Education Previous Experience Anthony W. Marino President & CEO P. Eng., CFA, MBA, COO (Baytex) B. Sc. Engineering Pres. & CEO (Dominion Canada) W. Derek Aylesworth CFO CA, B. Comm. VP (Encana) Marty…
  7. Corporate Presentation December 2011 – Baytex Energy Corp. – slide 7
    Long Term Incentive Plan (LTIP) New LTIP approved by shareholders in conjunction with corporate conversion Replaced prior option-based plan from income trust era New LTIP is a full-value based plan with Restricted Shares and…
  8. Corporate Presentation December 2011 – Baytex Energy Corp. – slide 8
    Historical Performance Distribution / Dividend History Payout Ratio - Before DRIP (%) Payout Ratio - Net of DRIP (%) Monthly Dividend (C) 120% 0.30 100% 0.25 Monthly Dividend (C) 80% 0.20 Payout Ratio 60% 0.15…
  9. Corporate Presentation December 2011 – Baytex Energy Corp. – slide 9
    Oil-Equivalent Production Growth R wth Gro AG 9% 50,000 8 %C 40,000 30,000 boe / d 54,500 50,000 44,341 20,000 40,239 41,382 34,022 34,647 34,292 36,222 10,000 0 (1) (2) 2004 2005 2006 2007 2008 2009 2010 2011…
  10. Corporate Presentation December 2011 – Baytex Energy Corp. – slide 10
    Production / Capital Expenditures Full Year Full Year Guidance Guidance (2) (3) 2004 2005 2006 2007 2008 2009 2010 2011 2012 Production Light oil & NGL (bbl/d) 2,172 3,842 3,735 5,483 7,595 6,937 6,539 7,000 8,700 Heavy oil…
  11. Corporate Presentation December 2011 – Baytex Energy Corp. – slide 11
    Capital Program Efficiency 3-Year 5-Year Average Average Trust Era 2008 2009 2010 2008-10 2006-10 2004-10 FD&A Cost (P + P) (1) Excluding FDC (C/boe) 13.11 11.63 5.90 9.54 9.59 9.00 Including FDC (C/boe) 16.06 21.00 13.17 15.92…
  12. Corporate Presentation December 2011 – Baytex Energy Corp. – slide 12
    Per Share Metrics - For Comparison to Non-Dividend Paying Companies Debt and Dividend Adjusted CAGR 1-Year 3-Year 5-Year Trust Era Oil Reserves (bbl/share) 29% 17% 15% 15% Total Reserves (boe/share) 26% 14% 12% 14% Oil…
  13. Corporate Presentation December 2011 – Baytex Energy Corp. – slide 13
    Reserves / Contingent Resources Reserve Growth / Contingent Resources Proved Probable 250 Oil-Equivalent Reserves (MMboe) 229 200 187 197 168 89 141 146 61 68 150 52 123 43 107 39 100 37 30 126 129 140 50 102 103…
  14. Corporate Presentation December 2011 – Baytex Energy Corp. – slide 14
    Oil-Equivalent Reserve Growth Heavy Oil Light Oil & NGL Natural Gas Oil-Equivalent Reserves (MMboe) 250 wth R Gro 229 CAG 16% 10% 197 21 200 187 22 40 168 30 146 25 29 150 141 31 123 24 21 30 107 12 27 13 100 18 8…
  15. Corporate Presentation December 2011 – Baytex Energy Corp. – slide 15
    Contingent Resource Assessment (Recoverable Volumes From Three Resource Plays) Contingent Resources (2) As at May 1, 2011 Low (C1) Best (C2) High (C3) (millions of barrels of oil equivalent and bitumen) (1) Estimate Estimate…
  16. Corporate Presentation December 2011 – Baytex Energy Corp. – slide 16
    Long Range Plan Long Range Plan - Construction Long Range Plan = Well-by-well economic model of Baytex Projects all PDP wells individually All organic development projects currently identified within existing land base, using…
  17. Corporate Presentation December 2011 – Baytex Energy Corp. – slide 17
    Sustainable Business Model Uses of FFO Dividends Monthly dividend of 0.22 per share History of three consecutive years of dividend increases (2009 2011) Income tax Commodity assumptions: flat real 90 WTI, 15% WCS differential, 4…
  18. Corporate Presentation December 2011 – Baytex Energy Corp. – slide 18
    Heavy Oil Projects Seal Heavy Oil Resource Play 19
  19. Corporate Presentation December 2011 – Baytex Energy Corp. – slide 19
    Seal Primary Development Land position Seal Production - Crown Purchases 1999-2005 20,000 - 67,000 acres (105 sections) of 100% land 5 Hz wells Q3/11 - Estimated original oil in place (OOIP) per 18,000 14 Hz wells prospective…
  20. Corporate Presentation December 2011 – Baytex Energy Corp. – slide 20
    Seal Multi-Lateral Analysis 400% 350% Multiple of Single Lateral Well 300% 250% 200% 150% 100% 50% 0% 1 2 3 4 5 6 7 8 Number of Laterals per Well Initial Rate Ultimate Recovery Note: Analysis prepared by…
  21. Corporate Presentation December 2011 – Baytex Energy Corp. – slide 21
    Seal Harmon Valley Thermal EOR Pilot Original thermal EOR (CSS) test - Harmon Valley is currently being developed by cold primary methods Actual Cold Projected Cold Post-Steam - Steam test was in a single lateral 1000 horizontal…
  22. Corporate Presentation December 2011 – Baytex Energy Corp. – slide 22
    Seal Cliffdale Thermal Pilot Cycle Progression Cumulative Oil Production for Each 14,000 12,000 Steam Volume = 26,100 BW 10,000 Cycle (bbls) 8,000 Steam Volume = 15,100 BW 6,000 4,000 Steam Volume = 12,600 BW 2,000…
  23. Corporate Presentation December 2011 – Baytex Energy Corp. – slide 23
    Seal Low Environmental Impact Baytex Seal Thermal Project Non-Mining Oil Sands Development Lloydminster Heavy Oil 9 Months 2011 Production = 20,600 boe/d (42% of total Baytex volumes) Oil Gravity = 11 to 18 API YE 2010…
  24. Corporate Presentation December 2011 – Baytex Energy Corp. – slide 24
    Lloydminster Drilling Inventory 5 year drilling inventory Area Production (boe/d) Drilling inventory has increased 40,000 by 75% over the past five years 35,000 Development includes vertical & 30,000 horizontal cold /…
  25. Corporate Presentation December 2011 – Baytex Energy Corp. – slide 25
    Profit Investment Ratio (PIR) 0.5x 1.0x 1.5x 2.0x 2.5x 3.0x 3.5x Assumptions: S. AB. Plains Belly River - Vt Non-core Haynesville - Hz Pine Creek Cardium - Hz Before Tax ROR (%) Core Haynesville - Hz Niton Rock Creek -…
  26. Corporate Presentation December 2011 – Baytex Energy Corp. – slide 26
    Heavy Oil Pricing Heavy Oil Differential Summer (high demand) season (Apr Sep) Winter (low demand) season (Oct Mar) 60 50 Lloyd Blend Differential (% of WTI Price) 40 30 20 1Q12 Hedges 10 0 2005 2006 2007…
  27. Corporate Presentation December 2011 – Baytex Energy Corp. – slide 27
    Heavy Oil Differential / WTI Relationship 40 ) .1 5 2 =0 n (R s io res Reg 30 007 5 2 200 Lloyd Differential (US/bbl) 36) 2 = 0. (R sion res 20 1 Reg 201 8 2012 Hedges 200 e s Hedg 2011 10 0 0 25 50 75…
  28. Corporate Presentation December 2011 – Baytex Energy Corp. – slide 28
    Midstream Heavy Oil Fundamentals Pipeline Capacity vs. Crude Production Source: Canadian Association of Petroleum Producers, June 2011. Notes: Black lines represent Western Canadian crude supply including diluent volumes. Even…
  29. Corporate Presentation December 2011 – Baytex Energy Corp. – slide 29
    Heavy Oil Demand Supply Balance Refinery/upgrader expansions to run additional heavy blend and raw heavy oil Does not include potential US Gulf Coast refinery demand Values shown are average additional capacity during each calendar…
  30. Corporate Presentation December 2011 – Baytex Energy Corp. – slide 30
    Light Oil Resource Plays Viking Bakken / Three Forks Light Oil Resource Potential Contingent Resource (2) Estimated (millions of barrels of oil) Initial Rate (1) Recovery (1) Well Cost (1) Potential Net Low (C1) Best…
  31. Corporate Presentation December 2011 – Baytex Energy Corp. – slide 31
    Bakken / Three Forks Land Position SASKATCHEWAN Approximately 130,000 net 3 7N / 5 4E 3 7 N/ 5 5 E 3 7N / 5 6E 3 7 N/ 5 7 E 3 7 N/ 5 8 E 1 6 4 N/ 1 0 3 W 16 4N / 1 02 W 1 6 4 N/ 1 0 1 W 16 4N / 1 00 W 1 6 4N / 9 9W 16 4N /…
  32. Corporate Presentation December 2011 – Baytex Energy Corp. – slide 32
    Bakken / Three Forks Light Oil Development Current development predominantly in the Three Forks formation North Dakota Production (boe/d) Additional potential to develop Middle Bakken 2,000 1,800 180-square mile 3D to guide…
  33. Corporate Presentation December 2011 – Baytex Energy Corp. – slide 33
    Light Oil Investment Metrics 100 Viking - Multi-Lateral (AB) Viking - Multi-Stage Frac (SK) 80 Before Tax ROR (%) Bakken-Three Forks - 1280-Acre (ND) Bakken-Three Forks - 640-Acre (ND) 60 40 20 0 40 50 60 70 80 90 100…
  34. Corporate Presentation December 2011 – Baytex Energy Corp. – slide 34
    Hedging Oil Hedge Coverage 2nd Half Full-Year Full-Year Full-Year 2011 2012 2013 2014 WTI Crude Oil % of Crude Oil Volumes Hedged (1) Fixed Price 2H2011 average: US91.33/bbl, 30% 24% 0% 0% 2012 average: US94.24/bbl Costless…
  35. Corporate Presentation December 2011 – Baytex Energy Corp. – slide 35
    Other Commodities / FOREX Hedge Coverage 2nd Half Full-Year Full-Year Full-Year 2011 2012 2013 2014 Natural Gas % of Natural Gas Volumes Hedged (1) Costless Collars Floor-Ceiling: 2011 C5.80/mcf - C7.49/mcf 6% 0% 0% 0% Fixed Price…
  36. Corporate Presentation December 2011 – Baytex Energy Corp. – slide 36
    Balance Sheet Balance Sheet Improvement 3.0 Debt / FFO 2.0 3.0 1.0 1.9 1.3 1.6 1.4 1.2 1.1 0.0 4 5 6 7 8 9 0 /0 /0 /0 /0 /0 /0 /1 31 31 31 31 31…
  37. Corporate Presentation December 2011 – Baytex Energy Corp. – slide 37
    Debt Composition Dec 31 Dec 31 Dec 31 Dec 31 Dec 31 Dec 31 Dec 31 Sept 30 C Million 2004 2005 2006 2007 2008 2009 2010 2011 US Sr Unsecured Debentures (4) 217 210 210 178 220 - - 156(3) Cdn Sr Unsecured Debentures (4) - - - - - 150…
  38. Corporate Presentation December 2011 – Baytex Energy Corp. – slide 38
    Financial Projections 2011E Funds From Operations (C Millions) Strip Q4/11 Heavy Oil Differential (% of WTI) 10% 15% 20% 80 538 526 515 Q4/11 WTI 90 554 542 529 (US/bbl) 100 571 558 543 2011 Funds From Operations using…
  39. Corporate Presentation December 2011 – Baytex Energy Corp. – slide 39
    2012E Funds From Operations (C Millions) Strip Heavy Oil Differential (% of WTI) 10% 15% 20% Strip 90 639 586 533 WTI 100Strip 730 689 672 613 (US/bbl) 110 824 759 694 2012 Funds From Operations using November 29, 2011…
  40. Corporate Presentation December 2011 – Baytex Energy Corp. – slide 40
    2012E Funds From Operations Sensitivities Funds From Operations Impact (C Millions) With Current Without Hedges Hedges WTI +/- US1.00/bbl 9.0 11.8 Natural Gas +/- C0.25/mcf 1.9 3.0 Heavy Oil Differential +/- 1% 11.7 15.3 FX…
  41. Corporate Presentation December 2011 – Baytex Energy Corp. – slide 41
    Tax Treatment of Dividends US Recipients Canadian Is dividend taxable Is Foreign Tax Is refund available Type of Recipient withholding tax to recipient in Credit available for for excess Cdn w/h rate country of receipt Cdn w/h tax…
  42. Corporate Presentation December 2011 – Baytex Energy Corp. – slide 42
    Relative Performance / Valuation Total Return Performance Baytex Energy S&P/TSX Oil & Gas E & P Index S&P/TSX Capped Energy Trust Index S&P/TSX Composite Index S&P 500 1200 1000 800 600 400 200 0 Jul-04 Jul-05…
  43. Corporate Presentation December 2011 – Baytex Energy Corp. – slide 43
    Value Comparison to Oil-Weighted Canadian Corporations EV-Weighted Group Average Baytex (Range) EV / Production (C/boe/d) 138,000 173,600 (32,200 389,700) EV + FDC / P+P Reserves (C/boe) 35.47 37.29 (4.79 511.29) EV/DACF…

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