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NOVEMBER PRESENTATION – Baytex Energy Corp.

Baytex Energy Corp. · Nov 15, 2012 · 59 slides

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Slides

  1. NOVEMBER PRESENTATION – Baytex Energy Corp. – slide 1
    November Presentation
  2. NOVEMBER PRESENTATION – Baytex Energy Corp. – slide 2
    Advisory (Cont.) A range of contingent resource estimates (low, best and high) were prepared by Sproule and McDaniel. A low estimate (C1) is considered to be a conservative estimate of the quantity of the resource that will actually be…
  3. NOVEMBER PRESENTATION – Baytex Energy Corp. – slide 3
    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…
  4. NOVEMBER PRESENTATION – Baytex Energy Corp. – slide 4
    Corporate Background
  5. NOVEMBER PRESENTATION – Baytex Energy Corp. – slide 5
    Corporate Profile Summary of Securities Trading Symbol TSX / NYSE: BTE Average Daily Volume (1) TSX: 519,400 / NYSE: 127,000 Shares Outstanding (Current) 121.2 million Market Capitalization / Enterprise Value 5.5 billion / 6.0…
  6. NOVEMBER PRESENTATION – Baytex Energy Corp. – slide 6
    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%…
  7. NOVEMBER PRESENTATION – Baytex Energy Corp. – slide 7
    Operating Areas Product Mix (6:1) Company Total = 53,500 - 54,500 boe/d (Full Year Guidance 2012) Heavy Oil Light Oil 14% 73% Gas 13% 2P Reserves by Product (Year End 2011) Heavy Oil Light Oil 21% 71% Gas 8%…
  8. NOVEMBER PRESENTATION – Baytex Energy Corp. – slide 8
    Historical Performance
  9. NOVEMBER PRESENTATION – Baytex Energy Corp. – slide 9
    Distribution / Dividend History Payout Ratio - Before DRIP (%) Payout Ratio - Net of DRIP (%) Monthly Dividend (C) 120% 0.30 100% 0.25 Payout Ratio (Percent of FFO) Monthly Dividend (C) 80% 0.20 60% 0.15 40% 0.10…
  10. NOVEMBER PRESENTATION – Baytex Energy Corp. – slide 10
    Oil-Equivalent Production Growth 50,000 40,000 30,000 boe / d 54,000 50,132 44,341 20,000 40,239 41,382 34,022 34,647 34,292 36,222 10,000 0 (1) 2004 2005 2006 2007 2008 2009 2010 2011 2012 Percent Oil 73% 71% 73%…
  11. NOVEMBER PRESENTATION – Baytex Energy Corp. – slide 11
    Oil Production Growth Heavy Oil Light Oil & NGL 50,000 46,900 42,021 7,300 40,000 6,769 35,124 31,125 31,615 6,539 30,000 27,575 6,937 7,595 bbl / d 24,875 24,577 25,060 5,483 2,172 3,735 3,842 20,000 39,600 35,252…
  12. NOVEMBER PRESENTATION – Baytex Energy Corp. – slide 12
    Capital Program Efficiency 3-Year 5-Year Average Average Long Term 2009 2010 2011 2009-11 2007-11 2004-11 FD&A Cost (P + P) (1) Excluding FDC (C/boe) 11.63 5.90 12.46 9.52 10.46 9.55 Including FDC (C/boe) 21.00 13.17 18.57 16.83…
  13. NOVEMBER PRESENTATION – Baytex Energy Corp. – slide 13
    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) 10% 24% 13% 15% Total Reserves (boe/share) 9% 20% 10% 13% Oil Production…
  14. NOVEMBER PRESENTATION – Baytex Energy Corp. – slide 14
    Reserves / Contingent Resources
  15. NOVEMBER PRESENTATION – Baytex Energy Corp. – slide 15
    Reserve Growth / Contingent Resources Proved Probable 250 252 Oil-Equivalent Reserves (MMboe) 229 200 187 197 96 168 89 141 146 61 68 150 52 123 43 107 39 100 37 30 140 156 116 126 129 50 86 102 103 77 0 2003 2004…
  16. NOVEMBER PRESENTATION – Baytex Energy Corp. – slide 16
    Oil Reserve Growth Heavy Oil Light Oil & NGL 250 Oil & NGL Reserves (MMboe) 231 208 52 200 175 40 158 143 29 150 32 122 21 111 12 96 13 100 89 179 8 14 168 146 110 122 126 50 81 82 98 0 2003 2004 2005 2006…
  17. NOVEMBER PRESENTATION – Baytex Energy Corp. – slide 17
    Contingent Resource Assessment Contingent Resource Assessment (Recoverable Volumes From Four Resource Plays) (Recoverable Volumes From Four Resource Plays) Contingent Resources (2) As at December 31, 2011 Low (C1) Best (C2) High…
  18. NOVEMBER PRESENTATION – Baytex Energy Corp. – slide 18
    NPV of Reserves / Contingent Resource Net Present Value At December 31, 2011 (10% , pre-tax) - Blns Forecast prices and costs Proved + Reserves at December 31, 2011 Proved (1P) Probable (2P) (based on Sproule price forecast…
  19. NOVEMBER PRESENTATION – Baytex Energy Corp. – slide 19
    Long Range Plan
  20. NOVEMBER PRESENTATION – Baytex Energy Corp. – slide 20
    Long Range Plan - Construction Long Range Plan = Internal well-by-well economic model of Baytex Projects all PDP wells individually All organic development projects currently internally identified within existing land base, using…
  21. NOVEMBER PRESENTATION – Baytex Energy Corp. – slide 21
    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…
  22. NOVEMBER PRESENTATION – Baytex Energy Corp. – slide 22
    Projected Organic Production Growth 100,000 90,000 80,000 70,000 60,000 BOED 50,000 40,000 30,000 20,000 10,000 0 2012 2013 2014 2015 2016 2017 Heavy Oil - Lloyd Heavy Oil - Seal Cold Heavy Oil - Seal…
  23. NOVEMBER PRESENTATION – Baytex Energy Corp. – slide 23
    Heavy Oil Projects
  24. NOVEMBER PRESENTATION – Baytex Energy Corp. – slide 24
    Peace River Oil Sands 306 net sections of oil sands leases; 531 million barrels of contingent resource * Primary Development Production (Q3/12) 20,930 bbl/d 2P Reserves (YE11)...............69 mmbbls Land Assigned Reserves34…
  25. NOVEMBER PRESENTATION – Baytex Energy Corp. – slide 25
    Peace River Primary Development Primary (Cold) Development Oil Production (bbl/d) 25,000 Well Design...8-laterals Completed Well Cost...... 2.1 mm 20,000 IP (30-day)....400-500 bbl/d EUR460 mbbl 15,000 Development Cost4.60/bbl…
  26. NOVEMBER PRESENTATION – Baytex Energy Corp. – slide 26
    Peace River Multi-Lateral Cold Horizontal Total Number of Laterals Total (3) Wells Single Two Three Four Six/Seven Eight Eight Laterals 2004 2 2 --- --- --- --- --- --- 2 2005 4 4 --- --- --- --- --- --- 4 2006 2 2 --- --- ---…
  27. NOVEMBER PRESENTATION – Baytex Energy Corp. – slide 27
    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…
  28. NOVEMBER PRESENTATION – Baytex Energy Corp. – slide 28
    Seal - Cliffdale Development Operation of first commercial module commenced in December 2011 Project Status (Q3/12 update): Average production = 420 bbl/d, consistent with project design parameters Five wells received steam…
  29. NOVEMBER PRESENTATION – Baytex Energy Corp. – slide 29
    Seal Cliffdale 1 Well Performance Pre-Steam Post-Steam 500 Cycle 1 SOR = 2.7 BS/BO 450 Cycle 2 SOR = 1.9 BS/BO Cycle 3 SOR = 1.8 BS/BO Barrels of Oil Per Day 400 Fuel Requirement = 0.44 MCF/BS 350 300 250 Injection Cycle…
  30. NOVEMBER PRESENTATION – Baytex Energy Corp. – slide 30
    Seal Cliffdale 1 Cycle Progression 25,000 Cumulative Oil Production for 20,000 Each Cycle (bbls) Steam Volume = 61,100 BW 15,000 Steam Volume = 26,100 BW Cycle SOR = 1.8 10,000 Steam Volume = 15,100 BW Cycle SOR =…
  31. NOVEMBER PRESENTATION – Baytex Energy Corp. – slide 31
    Seal Low Environmental Impact Baytex Seal Thermal Project Non-Mining Oil Sands Development
  32. NOVEMBER PRESENTATION – Baytex Energy Corp. – slide 32
    Lloydminster Lloydminster Heavy Oil Heavy Oil 700 net sections; 130 million barrels of contingent resource * Area Statistics Production (Q3/12)...19,230 bbl/d 2P Reserves (YE11)....83 mmboe Oil Gravity.11 to 18 API Drilling…
  33. NOVEMBER PRESENTATION – Baytex Energy Corp. – slide 33
    Lloydminster Development Vertical Wells Completed Well Cost............450,000 Production (30-day IP)..........30-50 bbl/d EUR.........30-50 mbbl Project Inventory(1).................210 locations Capital…
  34. NOVEMBER PRESENTATION – Baytex Energy Corp. – slide 34
    Cold Lake SAGD Acquisition 120 million purchase to close COLD LAKE / ARDMORE early October SUGDEN 100% W.I. in approximately 46 sections of oil sands leases Regulatory approval received for a LINDBERGH commercial SAGD…
  35. NOVEMBER PRESENTATION – Baytex Energy Corp. – slide 35
    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…
  36. NOVEMBER PRESENTATION – Baytex Energy Corp. – slide 36
    Heavy Oil Investment Metrics 500 Seal Cold Before Tax ROR (%) 400 Lloyd Area Cold Vertical Lloyd Area Cold Horizontal 300 200 100 0 30 40 50 60 70 80 90 100 WTI (US) Assumptions: Lloyd Blend differential to WTI =…
  37. NOVEMBER PRESENTATION – Baytex Energy Corp. – slide 37
    Profit Investment Ratio (PIR) 0.0x 0.5x 1.0x 1.5x 2.0x 2.5x 3.0x 3.5x Niobrara - Hz Ante Creek Montney (50% oil) - Hz Anadarko Mississippian (West) - Hz Swan Hills Beaverhill Lake - Primary - Hz Eagle Ford (oil) - Hz…
  38. NOVEMBER PRESENTATION – Baytex Energy Corp. – slide 38
    Light Oil Projects
  39. NOVEMBER PRESENTATION – Baytex Energy Corp. – slide 39
    Bakken / Three Forks Development 113 net sections; 66 million barrels of contingent resource * SASKATCHEWAN Baytex Lands Bakken-Three Forks Production (Q3/12). 1,900 bbl/d 2P Reserves (YE11) (1) .........15 mmbbls NORTH…
  40. NOVEMBER PRESENTATION – Baytex Energy Corp. – slide 40
    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 3,000 2,500 180-square mile 3D to guide…
  41. NOVEMBER PRESENTATION – Baytex Energy Corp. – slide 41
    Light Oil Investment Metrics 100 Viking - Multi-Lateral (AB) Viking - Multi-Stage Frac (SK) Before Tax ROR (%) 80 Bakken-Three Forks - 1280-Acre (ND) Bakken-Three Forks - 640-Acre (ND) 60 40 20 0 40 50 60 70 80 90…
  42. NOVEMBER PRESENTATION – Baytex Energy Corp. – slide 42
    Marketing and Hedging
  43. NOVEMBER PRESENTATION – Baytex Energy Corp. – slide 43
    Marketing Transportation Options AIM 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…
  44. NOVEMBER PRESENTATION – Baytex Energy Corp. – slide 44
    Oil Hedge Coverage 2H2012 2013 2014 WTI Crude Oil % of Crude Oil Volumes Hedged (1) (2) Fixed Price 2H2012 average: US97.31/bbl, 2013 average: US99.88/bbl 39% 20% 0% (3) Costless Collars 2012 Floor-Ceiling Range: US97.00/bbl -…
  45. NOVEMBER PRESENTATION – Baytex Energy Corp. – slide 45
    Other Commodities / FOREX Hedge Coverage 2H2012 2013 2014 Natural Gas % of Natural Gas Volumes Hedged (1) (2) Fixed Price Average Price: 2H2012: C3.65/mcf. 2013: C3.62/mcf. 38% 20% 0% Sold Calls Average Strike/Premium: 2H2012:…
  46. NOVEMBER PRESENTATION – Baytex Energy Corp. – slide 46
    Balance Sheet
  47. NOVEMBER PRESENTATION – Baytex Energy Corp. – slide 47
    Balance Sheet Strength ( mlns) Q3 2012 Credit Facilities Bank Loan (1) 0 Long-Term Notes (2) 440 Working Capital Deficiency 40 Undrawn 700 million, or 100% Total Monetary Debt 480 Debt to EBITDA (3) 0.8x Debt to FFO (3) 0.8x Debt /…
  48. NOVEMBER PRESENTATION – Baytex Energy Corp. – slide 48
    Financial Projections
  49. NOVEMBER PRESENTATION – Baytex Energy Corp. – slide 49
    2012E Funds From Operations (C Millions) H2 / 2012 Heavy Oil Differential (% of WTI) Strip 20% 25% 30% H2 / 2012 WTI (US/bbl) Strip 90 521 500 479 514 100 550 526 503 110 579 554 528 2012 Funds From Operations using…
  50. NOVEMBER PRESENTATION – Baytex Energy Corp. – slide 50
    2012E Funds From Operations Sensitivities Funds From Operations Impact (C Millions) With Current Without Hedges Hedges WTI +/- US1.00/bbl 7.9 11.8 Natural Gas +/- C0.25/mcf 1.9 3.0 Heavy Oil Differential +/- 1% 12.1 15.3 FX…
  51. NOVEMBER PRESENTATION – Baytex Energy Corp. – slide 51
    Appendix: Heavy Oil Pricing
  52. NOVEMBER PRESENTATION – Baytex Energy Corp. – slide 52
    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 WCS 20 Hedges 10 0 2005 2006 2007 2008 2009 2010 2011 2012…
  53. NOVEMBER PRESENTATION – Baytex Energy Corp. – slide 53
    Midstream Heavy Oil Fundamentals Infrastructure Development Source: Canadian Association of Petroleum Producers Crude Oil Forecast, Markets and Pipelines Report, June 2012.
  54. NOVEMBER PRESENTATION – Baytex Energy Corp. – slide 54
    WCSB Heavy Oil Production / Potential Midstream and Refinery Capacity N. Gateway 3,500 Keystone XL Flanagan South 3,000 Oil to Market (mbbls/day) 2,500 2,000 1,500 1,000 500 0 2012 2013 2014 2015 2016…
  55. NOVEMBER PRESENTATION – Baytex Energy Corp. – slide 55
    US Gulf Coast Heavy US Gulf Coast Heavy Oil Demand Oil Demand Total Canadian imports of heavy oil Total US heavy oil imports 4.0 into the US = 1.5 million barrels per million barrels per day day (YTD April 2012) PADD III imported…
  56. NOVEMBER PRESENTATION – Baytex Energy Corp. – slide 56
    Downstream Heavy Oil Fundamentals Mid-Continent Refining Margins Maya Coking (USGC) Brent Cracking 50 Bonny Lt Cracking WTI Cracking 40 Forcados Cracking Refining Margin (US/bbl) Arab Lt. Cracking 30 Arab Hvy Coking…
  57. NOVEMBER PRESENTATION – Baytex Energy Corp. – slide 57
    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 for each calendar…
  58. NOVEMBER PRESENTATION – Baytex Energy Corp. – slide 58
    Portfolio Management of Differentials Near-term outlook for Canadian heavy oil differentials Recent weakness in heavy diffs (since Oct 2012) driven by: Series of unplanned refinery problems and planned seasonal refinery maintenance…
  59. NOVEMBER PRESENTATION – Baytex Energy Corp. – slide 59
    Contact Information Suite 2800, Centennial Place James L. Bowzer 520 3rd Avenue S.W. President & Chief Executive Officer Calgary, Alberta T2P 0R3 (587) 952-3000 T: (587) 952-3000 1-800-524-5521 W. Derek Aylesworth www.baytex.ab.ca…

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