Baytex Energy Corp. Q1 FY2025 earnings call

• Eric Greager noted efficient execution of exploration and development in Q1, with results consistent with full-year plan despite macroeconomic challenges. Benchmark WTI prices softened. Adjusted 2025 plan to enhance free cash flow and strengthen balance sheet, with 2025 E&D capital budget $1.2B-$1.3B supporting production 148k-152k BOE/day.
• Chad Kalmakoff discussed 84% oil/liquids production, hedging program mitigating revenue volatility, $53M free cash flow in Q1, $30M returned to shareholders, net debt reduction, and significant financial flexibility with credit facilities and long-term note maturity schedule.
• Chad Lundberg reported production of 144,200 BOE/day, E&D expenditures $405M, 96 wells on stream. Development program focused on black oil to condensate windows, progress in Canadian light oil (Pembina Duvernay), Viking (42 wells on stream), and heavy oil (Peavine, Peace River, Mannville Group) units.

In the first quarter, 84% of Baytex Energy Corp's production was weighted toward crude oil and liquids. Production was 144,200 BOE per day, a 2% increase in production per share compared to Q1 2024. Exploration and development expenditures totaled $405 million. The company generated $53 million in free cash flow in the first quarter. As of March 31st, 2025, net debt was $2.4 billion, representing a 10% reduction over the last 12 months. On a U.S. dollar basis, net debt decreased by approximately 15%. Credit facilities total $1.1 billion (CAD1.5 billion) and are less than 20% drawn, maturing in May 2028.

• 2025 E&D capital budget set at $1.2 billion to $1.3 billion, supporting production 148,000 to 152,000 BOE per day. Anticipate full-year CapEx and production to trend toward the low end of ranges. Expect approximately $200 million of free cash flow in 2025 assuming $60 per barrel WTI for the balance of the year. Allocate 100% of free cash flow to debt repayment after funding quarterly dividend.

• Macro-economic uncertainty, concerns over tariffs, global trade tensions. OpEx recent decisions to increase supply. Benchmark WTI prices softened recently, trading in US $55 to $60 per barrel range, down from $80 in early January.

Q: If oil were to fall to $50, how much could Baytex realistically pull from the $1.2 billion budget before production declines start to set in, and which assets would be the first to have capital pulled? What is the corporate decline rate?

A: Chad Kalmakoff said there's flex in capital, with CapEx removed primarily from Eagle Ford (couple pads) and Viking (five wells). Corporate decline rate sits at about 35%.

Q: Can you talk towards some of your end goals around your commodity risk management program? What are you specifically targeting around sustainability? Would you be interested in hedging more?

A: Eric Greager said hedging is anchored to balance sheet and asset base, 45% hedged on net crude exposure with $60 floor. Would like to hedge more in 2026 but faces challenges with price action.

Q: Could you speak to just what the quarterly cadence looks like in terms of CapEx and maybe equivalent production over the year, over the balance of the year?

A: Eric Greager said Q1 CapEx was $405M, Q2 expected ~$375M, Q3 ~$275M, Q4 balance. Production profile: Q2 ~147k BOE/day, Q3 ~151k BOE/day, Q4 ~150k BOE/day.

Q: As part of the debt reduction plan, would purchasing bonds be part of a debt reduction strategy?

A: Chad Kalmakoff said they consider repurchasing bonds as part of the plan, especially as bonds trade below par with commodity price weakness.

Q: With current weakness in WTI, what are the additional levers Baytex can pull?

A: Eric Greager said hedge book, liquidity, strong duration of term notes and 2028 facility, operational flexibility, capital discipline, prioritizing highest returning projects.

Q: Would Baytex consider asset sales as part of delevering or improving share price performance?

A: Eric Greager said they regularly review the portfolio, focusing on assets delivering most value, decisions guided by disciplined evaluation for long-term shareholder value.

Q: What steps are being taken to address underperformance of the shares?

A: Eric Greager said they are taking thoughtful and proactive measures, guiding capital program to low end, prioritizing free cash flow to debt repayment, focusing on strengthening financial position and managing controllable factors to deliver long-term value.