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AUGUST PRESENTATION – Baytex Energy Corp.

Baytex Energy Corp. · Aug 16, 2013 · 49 slides

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Slides

  1. AUGUST PRESENTATION – Baytex Energy Corp. – slide 1
    August Presentation
  2. AUGUST PRESENTATION – Baytex Energy Corp. – slide 2
    Investment Highlights Focus on per share growth in production and reserves Organic Oil Growth Long-term, Low-Cost Inventory Sector-leading capital efficiency Operational excellence Meaningful Dividend Focus on dividend growth…
  3. AUGUST PRESENTATION – Baytex Energy Corp. – slide 3
    Corporate Profile Summary of Securities Trading Symbol TSX / NYSE: BTE Average Daily Volume (1) Canada: 745,300 / U.S.: 165,200 Shares Outstanding (Current) 124.1 million Market Capitalization / Enterprise Value 5.2 billion / 6.0…
  4. AUGUST PRESENTATION – Baytex Energy Corp. – slide 4
    Operating Areas 7
  5. AUGUST PRESENTATION – Baytex Energy Corp. – slide 5
    2013 YTD Highlights Record Quarterly Production in Q2/2013 - Produced a record 58,236 boe/d in Q2/2013, an increase of 12% over Q1/2013 - Tightened 2013 production guidance range to 57,000 to 58,000 boe/d, up from the previously…
  6. AUGUST PRESENTATION – Baytex Energy Corp. – slide 6
    Corporate Growth Strategy Exploit existing oil assets at Peace River (multi-lateral wells), Lloydminster (growing use of horizontal wells) and North Dakota (Bakken-Three Forks development) Near Term (1-2 years) Cold Development…
  7. AUGUST PRESENTATION – Baytex Energy Corp. – slide 7
    Oil-Equivalent Production Growth 60,000 40,000 boe / d 53,986 57,000 50,132 41,382 44,341 20,000 36,222 40,239 34,022 34,647 34,292 0 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013(1) Percent Oil 73% 71% 73%…
  8. AUGUST PRESENTATION – Baytex Energy Corp. – slide 8
    Reserve Growth / Contingent Resources 292 229 252 187 197 168 141 146 107 123 2P RLI (years) 8.0 9.5 10.1 11.5 11.7 12.2 12.6 13.9 13.0 14.5 Oil Weighting 83% 78% 79% 83% 85% 84% 89% 91% 92% 93% Low (C1) 622 MMboe…
  9. AUGUST PRESENTATION – Baytex Energy Corp. – slide 9
    Balance Sheet Strength ( millions) Q2 2013 Credit Facilities Unused Used Bank Loan (1) 225.4 Long-Term Debt (2),(3) 457.7 Working Capital Deficiency 87.4 Undrawn 625 million, or 74%(1) Total Monetary Debt (3) 770.5 Debt to…
  10. AUGUST PRESENTATION – Baytex Energy Corp. – slide 10
    Marketing
  11. AUGUST PRESENTATION – Baytex Energy Corp. – slide 11
    Heavy Oil Differential WCS and Maya Sources: Net Energy Inc., Argus Media, PIRA 14
  12. AUGUST PRESENTATION – Baytex Energy Corp. – slide 12
    Crude Oil Rail Exports North Dakota Western Canada 700 600 500 J.P. Morgan YE13 Estimate Mbbl/d (400 mbbl/d load capacity) 400 YE13 Estimate based on North Dakota experience 300 (300 mbbl/d load capacity) 200 PIRA…
  13. AUGUST PRESENTATION – Baytex Energy Corp. – slide 13
    Marketing Transportation Options Trucking Flexibility Rail a Key Component of Market Access - Optimizes value of production - Initially expected rail to comprise 10% of our sales portfolio - Helps mitigate downstream upsets - Has…
  14. AUGUST PRESENTATION – Baytex Energy Corp. – slide 14
    2013 Oil Marketing Portfolio Heavy Oil Sales Portfolio WTI Financial Hedging Q3 / 2013 % Hedged 72% Fixed Price US99.71/bbl Q4 / 2013 % Hedged 62% Fixed Price US98.88/bbl FY 2014 % Hedged 10% Fixed Price US98.17/bbl…
  15. AUGUST PRESENTATION – Baytex Energy Corp. – slide 15
    Heavy Oil Hedge Coverage Q3/2013 Q4/2013 FY 2014 Fixed Physical Delivery (Pipeline) Blended WCS (bbl/d) 9,500 9,500 2,000 Equivalent Heavy Production (bbl/d) 7,315 7,315 1,540 % of Gross Heavy Production 16% 16% 3% WCS Dollar…
  16. AUGUST PRESENTATION – Baytex Energy Corp. – slide 16
    Key Projects Overview 19
  17. AUGUST PRESENTATION – Baytex Energy Corp. – slide 17
    Peace River Oil Sands 306 net sections of oil sands leases 551 million barrels of economic contingent resource * Primary Development Production (Q2/2013) 22,600 bbl/d 2P Reserves (YE12) 64 mmbbls Project Inventory(1) 238 net…
  18. AUGUST PRESENTATION – Baytex Energy Corp. – slide 18
    Peace River Multi-Lateral Cold Horizontal Primary (Cold) Development (1) Well Design 8-10 laterals Completed Well Cost 2.6-3.4 MM Production (30-day IP) 300-700 bbl/d EUR 275-550 mbbl Capital Efficiency 5,000-9,000 per bbl/d…
  19. AUGUST PRESENTATION – Baytex Energy Corp. – slide 19
    Peace River Production Performance Production Performance (1) 600 500 400 Bbl/d 300 200 2010 (13 wells) 100 2011 (17 wells) 2012 (20 wells) 2011 (23 wells, including 6 high productivity) 0 0 3 6 9 12 Month…
  20. AUGUST PRESENTATION – Baytex Energy Corp. – slide 20
    Peace River Cliffdale Thermal EOR Development Recovery per 15-well Module (Baytex estimates based on Cliffdale pilot) - CAPEX = 55 million - Recovery factor 30% based on numerical reservoir simulation - Oil rate = 2,000 bbl/d…
  21. AUGUST PRESENTATION – Baytex Energy Corp. – slide 21
    Peace River - Cliffdale Development 10-Well Module Full first-cycle steaming complete in Q4/12 Current production (August 2013) = 700 bbl/d 15-Well Module Regulatory approval March 2013 Facility construction complete…
  22. AUGUST PRESENTATION – Baytex Energy Corp. – slide 22
    Lloydminster Lloydminster Heavy Oil Heavy Oil 730 net sections; 217 million barrels of economic contingent resource * Area Statistics Production (Q2/2013) 19,500 bbl/d 2P Reserves (YE12) 116 mmbbls Oil Gravity 11 to 18 API…
  23. AUGUST PRESENTATION – Baytex Energy Corp. – slide 23
    Lloydminster Development Vertical Wells Completed Well Cost 450,000 Production (30-day IP) 30-50 bbl/d EUR 30-50 mbbl Project Inventory (1) 200 net locations Capital Efficiency 11,250 per bbl/d Development Cost 11.25/bbl…
  24. AUGUST PRESENTATION – Baytex Energy Corp. – slide 24
    Bakken / Three Forks Development 126 net sections; 27 million barrels of economic contingent resource * SASKATCHEWAN Bakken-Three Forks Baytex Lands Production (Q2/2013) 3,100 bbl/d 2P Reserves (YE12) 34 mmbbl NORTH DAKOTA…
  25. AUGUST PRESENTATION – Baytex Energy Corp. – slide 25
    Bakken / Three Forks Development Current development predominantly in the Three Forks formation Additional potential to develop Middle Bakken Evolution of frac staging: initially 6 stages/well 20 stages/well in 2011 30+…
  26. AUGUST PRESENTATION – Baytex Energy Corp. – slide 26
    North America Resource Play Comparables Half Cycle Payouts 5.0 4.5 Baytex Oil Plays 4.0 Natural Gas Plays Oil Plays 3.5 3.0 Years 2.5 2.0 1.5 1.0 0.5 0.0 The above chart represents the Top North American Resource…
  27. AUGUST PRESENTATION – Baytex Energy Corp. – slide 27
    North America Resource Play Comparables Rate of Return 250% 225% Baytex Oil Plays 200% Natural Gas Plays 175% Oil Plays Rate of Return 150% 125% 100% 75% 50% 25% 0% The above chart represents the Top North American…
  28. AUGUST PRESENTATION – Baytex Energy Corp. – slide 28
    Corporate Growth Strategy
  29. AUGUST PRESENTATION – Baytex Energy Corp. – slide 29
    2013 Operating Plans Targeting 8% Oil Growth Conventional Development 2013 Capital Budget and Wells Drilled - 430 million for conventional development Original guidance range 56,000-58,000 boe/d. Amount Wells Drilled ( millions)…
  30. AUGUST PRESENTATION – Baytex Energy Corp. – slide 30
    Corporate Growth Strategy Long Range Plan Production (boe/d) Drilling Plan: 2013 - 2017 (total of net wells) Peace River Region: 8% CAGR - Oil Multi-lateral wells (8-10 laterals) 238 6% CAGR Boe Thermal (CSS) 110 Lloydminster…
  31. AUGUST PRESENTATION – Baytex Energy Corp. – slide 31
    Why Invest in Baytex Superior Asset Base Income Payout Proven Track Record - Low cost development - Committed to paying a - Best-in-class balance sheet inventory oil focus meaningful dividend - Sophisticated risk - Sector leading…
  32. AUGUST PRESENTATION – Baytex Energy Corp. – slide 32
    Supplementary Information - Oil Projects 35
  33. AUGUST PRESENTATION – Baytex Energy Corp. – slide 33
    Cold Lake SAGD Acquisition 120 million purchase closed COLD LAKE / ARDMORE October 2, 2012 SUGDEN 100% W.I. in approximately 46 sections of oil sands leases Regulatory approval received for a LINDBERGH commercial SAGD…
  34. AUGUST PRESENTATION – Baytex Energy Corp. – slide 34
    Cold Lake SAGD Reservoir Characteristics GP Channel - Viscosity: 40,000 - 120,000 c.p. - Porosity: 36% - Depth: 375 metres - Permeability: 3 darcies - Channel Thickness: 30 metres - Bitumen Saturation: 80% - Average Clean Net…
  35. AUGUST PRESENTATION – Baytex Energy Corp. – slide 35
    Supplementary Information - Financial 38
  36. AUGUST PRESENTATION – Baytex Energy Corp. – slide 36
    Share Ownership Breakdown Ownership Breakdown Institutional 77% Retail 21% Europe/Asia - Institutional 5% Insiders 2% Insiders 2% US - Retail 5% 100% Canada 74% US - Institutional 14% Canada - Institutional 58% U.S. 19%…
  37. AUGUST PRESENTATION – Baytex Energy Corp. – slide 37
    2013E Funds from Operations (C mm) and Debt to FFO Heavy Oil Differential (% of WTI) 17% 20% 23% WTI (US/bbl) 90 590 (1.2x) 582 (1.3x) 573 (1.3x) 100 611 (1.2x) 601 (1.2x) 591 (1.2x) 110 631 (1.1x) 620 (1.1x) 609 (1.2x)…
  38. AUGUST PRESENTATION – Baytex Energy Corp. – slide 38
    2013E Funds from Operations Sensitivities Funds from Operations Impact (C Millions) With Current Without Hedges Hedges WTI +/- US1.00/bbl 11.9 14.8 Natural Gas +/- C0.25/mcf 3.0 3.3 Heavy Oil Differential +/- 1% 10.6 15.2…
  39. AUGUST PRESENTATION – Baytex Energy Corp. – slide 39
    Other Commodities / FOREX Hedge Coverage Q3/2013 Q4/2013 FY 2013 FY 2014 Natural Gas % of Volumes Hedged at Fixed Price (1) 27% 21% 23% 6% Average Fixed Price (US/mmBtu) 3.94 3.89 4.07 4.45 % of Volumes Hedged Using Collars (1) 29% 31%…
  40. AUGUST PRESENTATION – Baytex Energy Corp. – slide 40
    Distribution / Dividend History Payout Ratio - Net of DRIP (% ) Monthly Dividend (C) Payout Ratio - Before DRIP (% ) 120% 0.30 100% 0.25 Payout Ratio (Percent of FFO) Monthly Dividend (C) 80% 0.20 60% 0.15 40% 0.10…
  41. AUGUST PRESENTATION – Baytex Energy Corp. – slide 41
    Capital Program Efficiency 3-Year 5-Year Average Average 2010 2011 2012 2010-12 2008-12 FD&A Cost (P + P) (1) Excluding FDC (C/boe) 5.90 12.46 4.19 7.05 8.60 Including FDC (C/boe) 13.17 18.57 11.61 14.06 15.22 Recycle Ratio (P…
  42. AUGUST PRESENTATION – Baytex Energy Corp. – slide 42
    Per Share Metrics For Comparison to Non-Dividend Paying Companies Debt and Dividend Adjusted CAGR 1-Year 3-Year 5-Year Long-Term Oil Reserves (bbl/share) 14% 17% 15% 15% Total Reserves (boe/share) 12% 16% 13% 13% Oil Production…
  43. AUGUST PRESENTATION – Baytex Energy Corp. – slide 43
    Appendix: Heavy Oil Pricing 46
  44. AUGUST PRESENTATION – Baytex Energy Corp. – slide 44
    Midstream Heavy Oil Fundamentals Infrastructure Development Source: Canadian Association of Petroleum Producers Crude Oil Forecast, Markets and Pipelines Report, June 2012. 47
  45. AUGUST PRESENTATION – Baytex Energy Corp. – slide 45
    Midstream Heavy Oil Fundamentals Near-Term Pipeline Projects: Enbridge Mainline 1. Toledo (Line 17) Partial Twin: 80,000 bbl/d Early-2013 2. Line 9 Reversal: 240,000 bbl/d Early-2014 3. Line 5 Expansion: 50,000 bbl/d Early-2013 4.…
  46. AUGUST PRESENTATION – Baytex Energy Corp. – slide 46
    Midstream Heavy Oil Fundamentals Near-Term Pipeline Projects: Seaway and Flanagan South Source: Enbridge 49
  47. AUGUST PRESENTATION – Baytex Energy Corp. – slide 47
    WCSB Heavy Oil Production / Potential Midstream Capacity 4,000 3,500 Heavy Oil to Market (mbbls/day) TransMtn Expansion (mid-2017) - 450kbd 3,000 Blended Heavy Production Forecasts Keystone XL (mid-2015) - 400kbd (PIRA /…
  48. AUGUST PRESENTATION – Baytex Energy Corp. – slide 48
    US Gulf Coast Heavy US Gulf Coast Heavy Oil Demand Oil Demand U.S. imports of Canadian heavy oil Total U.S. heavy oil imports fell to 3.6 rose to 1.59 million bbl/d in February million bbl/d in February 2013 on 2013 (increase of…
  49. AUGUST PRESENTATION – Baytex Energy Corp. – slide 49
    Portfolio Management of Differentials Canadian heavy oil differentials: market developments and outlook WCS strengthened over July and August, expect continued volatility going forward PADD II and Canadian refineries returned from…

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