Baytex Energy Corp. Q4 FY2024 earnings call

Eric Greager recognized the hard work of teams in Texas and Western Canada, noting field staff worked under tough conditions. Highlights included 2024 production and capital expenditures in line with guidance, free cash flow generation of $656 million, over 70% generated in the second half. Share buybacks of 48 million shares (6% of outstanding) and dividends declared. Chad Kalmakoff discussed free cash flow, debt reduction, and 2025 expected free cash flow of ~$400 million at US $70 WTI. Chad Lundberg talked about operating results: strong drilling and completions in Eagle Ford, Pembina Duvernay, Viking, and heavy oil, with plans for 2025 including two-rig, one-frac crew in Eagle Ford, expanded program in Pembina Duvernay, and heavy oil development.

In 2024, Baytex Energy's production was in line with original full-year guidance. They achieved 10% production per share growth and grew reserves per share across all categories. Cash costs were improved by 5% on a BOE basis. 2P net asset value per share increased by 13%. Net debt was reduced by 5% in Canadian dollars and 13% in U.S. dollars. Reserves replaced over 100% on both 1P and 2P bases, with strong PDP recycle ratios of 1.9 times (1P) and 2.7 times (2P).

2025 full-year guidance unchanged: exploration and development expenditures of $1.2 billion to $1.3 billion and production of 150,000 BOE a day at the midpoint. Planning efficient development in Eagle Ford, acceleration in Pembina Duvernay, and continued heavy oil and Viking operations.

Tariffs implemented, impacting import duties with second and third-order consequences; oil price volatility, which could lead to rationalization of low-returning projects; potential impact on Midwest refiners due to dependence on WCS.

Q: Regarding tariffs, are they effective and impact mechanics?

A: Tariffs effective, import duties charged, with second-order consequences impacting Midwest refiners.

Q: Oil prices bearish, how allocate capital?

A: Rationalize low-returning projects, pull back on capital activity, input costs fall.

Q: F&D costs lower, what drove improvement?

A: Capex and cash cost improvements, Eagle Ford performance with 8% improvement in 2024 and 7% expected in 2025.

Q: Duvernay activity timing?

A: Rig mobilized, drilling three three-well pads, expecting results in Q2, with improvements in cost and well performance.

Q: Asset exchange on Peavine Metis?

A: Cashless transaction, win-win, cored up around Peavine asset.

Q: Debt reporting in US vs Canadian dollars?

A: Most debt US dollar denominated, conversion to Canadian dollars for reporting, US dollar strength benefits revenues and free cash flow.

Q: Hedging FX related to debt?

A: Natural hedge against US business, considered hedges.

Q: Accelerate debt target?

A: Sell assets like Viking and Crawford Thermal to apply proceeds to debt.

Q: Shareholder return framework?

A: Fixed dividend, share buybacks, half free cash flow to debt repayment, debt term structured to 2030 and 2032.

Q: Share price and macro environment?

A: Monitor macro environment, react prudently to oil price volatility, US economy strong.