• Free Cash Flow: $220 million generated in Q3 2024.
• Shareholder Returns: $101 million returned through share buybacks and dividends in Q3 2024.
• Net Debt Reduction: Reduced by 5% in Q3 2024; 12% reduction over the last four quarters.
• Production: Averaged over 154,000 BOE per day in Q3 2024, with 86% oil and NGLs.
• Crude Oil Production: Increased 2% from Q3 2023, averaging over 112,000 barrels per day.
• Adjusted Funds Flow: $538 million or $0.68 per share in Q3 2024.
• Net Income: $185 million or $0.23 per share in Q3 2024.
• Net Debt: $2.5 billion as of September 30, 2024.
• Total Debt: $2.3 billion as of September 30, 2024.
• Leverage Ratio: Total debt-to-EBITDA of 1.0 times.
• Eagle Ford Production: Averaged approximately 90,000 BOE per day in Q3 2024.
• Pembina Duvernay Production: Averaged 7,600 BOE per day in Q3 2024, up from 4,800 BOE per day a year ago.
• Exploration and Development Expenditures: Approximately $1.25 billion expected for full year 2024.

• Warning! GuruFocus has detected 1 Warning Sign with BTE.

Release Date: November 01, 2024

For the complete transcript of the earnings call, please refer to the full earnings call transcript.

Positive Points

• Baytex Energy Corp (NYSE:BTE) generated $220 million of free cash flow in Q3 2024, demonstrating strong financial performance.
• The company returned $101 million to shareholders through share buybacks and dividends, highlighting its commitment to shareholder returns.
• Production per share increased by 10% compared to Q3 2023, with production averaging over 154,000 BOE per day.
• Baytex Energy Corp (NYSE:BTE) reduced its net debt by 5% during the quarter, showing progress in debt management.
• The company achieved an 8% improvement in drilling and completion costs per completed lateral foot, indicating operational efficiency gains.

Negative Points

• Baytex Energy Corp (NYSE:BTE) still holds a significant net debt of $2.5 billion as of September 30, 2024, which may pose financial risks.
• The company is in the demonstration stage of development for the Pembina Duvernay, which may involve uncertainties and risks.
• Despite strong oil production, weak gas prices have a minimal impact on revenue, indicating potential vulnerability to commodity price fluctuations.
• The company's hedging strategy involves a significant portion of crude oil volumes hedged, which may limit upside potential in a rising oil price environment.
• Baytex Energy Corp (NYSE:BTE) is still working through its budgeting process for 2025, which may create uncertainty regarding future capital allocation and growth plans.

Q & A Highlights

Q: Can you outline your drilling plans and expectations for the Duvernay asset through the balance of this year and into next year? A: Eric Greager, President and CEO, explained that Baytex is continuing the demonstration stage into next year. They plan to budget a seven to nine well program for 2025, with the potential to ramp up towards full development in 2026, depending on continued performance improvements and success.

Q: Could you provide more details on the Peace River Blue Sky well and the 66 sections of land? A: Eric Greager, President and CEO, stated that the 66 sections were acquired through a private farm-in. They drilled two exploratory wells and have seen successful performance. This marks the fourth discovery in four years in their heavy oil business, with continued exploration expected to replace inventory and production.

Q: What is the company's approach to using excess cash, particularly in terms of reducing debt or buying back shares? A: Eric Greager, President and CEO, emphasized a balanced framework until reaching a $1.5 billion debt level. Over the last five quarters, Baytex repurchased 75 million shares, representing 25% of shares issued for the Ranger transaction, while maintaining a modest fixed base dividend and reducing debt.

Q: Can you elaborate on Baytex's hedging strategy and current positions? A: Chad Kalmakoff, CFO, explained that Baytex focuses on crude oil hedging as an insurance policy, aiming for a $60 floor. They sell calls to fund the put floor, with hedging for 2025 at around 45% of crude oil volumes. Gas volumes are also hedged, though they have less impact on revenue.

Q: What are Baytex's capital efficiencies and opportunities for further improvements? A: Eric Greager, President and CEO, highlighted the Pembina Duvernay as a highly capital-efficient project. Chad Lundberg, COO, added that efficiencies come from long-term relationships with service companies, cross-border interactions, and focusing on safety, resulting in cost reductions in drilling operations.

For the complete transcript of the earnings call, please refer to the full earnings call transcript.