• Production Growth: 10% production per share growth in 2024.
• Reserves Growth: Increased reserves per share across all categories.
• Cash Cost Structure: Improved by 5% on a BOE basis.
• 2P Net Asset Value: Increased by 13% per share.
• Net Debt Reduction: Reduced by 5% in Canadian dollars and 13% in US dollars.
• Free Cash Flow: Generated $656 million in 2024, with over 70% in the second half of the year.
• Share Repurchase: Repurchased 48 million common shares, representing 6% of shares outstanding.
• Dividends: Declared four quarterly dividends of $0.0225 per share.
• Debt Reduction Priority: Continued focus on reducing net debt.
• Drilling and Completions Efficiency: 8% improvement in costs per completed lateral foot in the Eagle Ford over 2023.

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

Release Date: March 05, 2025

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

Positive Points

• Baytex Energy Corp (NYSE:BTE) achieved a 10% production per share growth and increased reserves per share across all categories in 2024.
• The company improved its cash cost structure by 5% on a BOE basis, enhancing operational efficiency.
• Baytex Energy Corp (NYSE:BTE) reduced net debt by 5% in Canadian dollar terms and 13% in US dollar terms, demonstrating effective debt management.
• The company generated strong PDP recycle ratios of 1.9 times and 2.7 times on a 1P and 2P basis, reflecting the efficiency of its capital program.
• Baytex Energy Corp (NYSE:BTE) repurchased 48 million common shares, representing 6% of its shares outstanding, and declared four quarterly dividends, enhancing shareholder returns.

Negative Points

• The implementation of tariffs on Canadian energy imports to the US could disproportionately impact Midwest refiners and potentially affect Baytex Energy Corp (NYSE:BTE)'s operations.
• There is growing bearishness in oil prices, with concerns about potential impacts if prices fall to $60 per barrel.
• The company's debt is primarily US dollar-denominated, which can lead to unfavorable currency translation effects when reported in Canadian dollars.
• Baytex Energy Corp (NYSE:BTE) faces challenges in maintaining capital efficiency and may need to rationalize low-returning projects if oil prices decline.
• The macro environment, including OPEC's decision to unwind production cuts, has contributed to volatility in WTI prices, impacting Baytex Energy Corp (NYSE:BTE)'s market performance.

Q & A Highlights

Q: Have the tariffs taken effect, and how might they impact Baytex Energy Corp? A: Eric Greager, President and CEO, confirmed that the tariffs are effective as of the morning of the call. The tariffs are import duties on products entering the U.S., which could negatively impact Midwest refiners due to their reliance on Canadian energy imports. However, Baytex is somewhat insulated as 60% of its production is based in the U.S., which mitigates the impact of these tariffs.

Q: With the current bearish outlook on oil prices, how would Baytex adjust its capital allocation if prices drop to $60? A: Eric Greager stated that Baytex would rationalize low-return projects if oil prices fall to $60, potentially pulling back on capital activity. This would help address the issue, and reduced activity could lower input costs, thus lowering breakevens across the industry.

Q: What drove the lower F&D costs reported for 2024 compared to 2023? A: Eric Greager attributed the improved F&D costs to enhancements in CapEx and cash costs, as well as performance improvements and high-value oil stream quality. Chad Lundberg, COO, highlighted an 8% improvement in capital costs in the Eagle Ford, contributing to stronger F&D results.

Q: Can you provide details on the Duvernay activity planned for 2025? A: Eric Greager mentioned that Baytex has mobilized its drilling rig and is executing a plan involving three three-well pads. The company is making improvements in design and execution, with results expected in the Q2 release timeframe. Chad Lundberg added that they are seeing a 40% increase in IPs and a 15% bump in EURs over the 2023 program.

Q: How does Baytex manage its US dollar-denominated debt, and is there a strategy to hedge the FX rate? A: Eric Greager explained that most of Baytex's debt is in US dollars, and the company reports it in Canadian dollars for reporting purposes. The strengthening US dollar benefits Baytex's revenues and free cash flow. Chad Kalmakoff, CFO, noted that the US dollar debt is naturally hedged against the US business, and they consider it already hedged.

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