Bay­tex En­ergy to spend up to $375M in 2018

Bay­tex En­ergy Corp. plans to spend up to $375-mil­lion in 2018. It ex­pects pro­duc­tion of up to 72,000 bar­rels of oil equiv­a­lent per day in 2018. The com­pany ex­pects in­ter­nal rates of re­turn of over 50 per cent on a per-well ba­sis.

Stockwatch Daily - - FRONT PAGE - Mr. Ed LaFehr re­ports

BAY­TEX EN­ERGY Corp.’s board of di­rec­tors has ap­proved a 2018 cap­i­tal bud­get of $325mil­lion to $375-mil­lion, which is de­signed to gen­er­ate av­er­age an­nual pro­duc­tion of 68,000 to 72,000 bar­rels of oil equiv­a­lent per day.

Com­ment­ing on the an­nounce­ment, Ed LaFehr, pres­i­dent and chief ex­ec­u­tive of­fi­cer, said: “Our 2018 bud­get builds on the op­er­a­tional mo­men­tum es­tab­lished in 2017 which has po­si­tioned our business for suc­cess in to­day’s crude oil price en­vi­ron­ment. Fo­cus­ing on our three high-re­turn re­source plays, we will con­tinue to grow our pro­duc­tion and cash flow, with a mod­estly in­creased ac­tiv­ity set. Im­por­tantly, af­ter in­te­grat­ing the Seal ac­qui­si­tion at Peace River, we have now set the stage for pro­duc­tion growth in 2018 and be­yond.”

Highlights of the 2018 bud­get:

• As in 2017, the com­pany is tar­get­ing 2018 cap­i­tal ex­pen­di­tures to ap­prox­i­mate funds from op­er­a­tions in or­der to min­i­mize ad­di­tional bank bor­row­ings.

• The cap­i­tal pro­gram is ex­pected to gen­er­ate in­ter­nal rates of re­turn in ex­cess of 50 per cent on a per-well ba­sis.

• The cap­i­tal pro­gram re­flects ef­fi­cien­cies on an an­nual ba­sis of ap­prox­i­mately $12,000 per boe/d ($14,000 per boe/d in­clud­ing fa­cil­i­ties).

• The com­pany ex­pects a tar­geted exit pro­duc­tion rate for 2018 of 72,000 to 73,000 boe/d. This rep­re­sents 6-per-cent growth over the com­pany’s ex­pected exit pro­duc­tion rate for 2017 of 68,000 to 69,000 boe/d.

This bud­get will be weighted to drilling and com­ple­tion ac­tiv­i­ties (ap­prox­i­mately 83 per cent) with the bal­ance for fa­cil­i­ties (ap­prox­i­mately 16 per cent) and land and seis­mic (ap­prox­i­mately 1 per cent).

Based on the mid­point of the com­pany’s guid­ance range of 70,000 boe/d, ap­prox­i­mately 51 per cent of the com­pany’s pro­duc­tion is ex­pected to be gen­er­ated in the Ea­gle Ford with the re­main­ing 49 per cent from Canada. The com­pany’s pro­duc­tion mix is fore­cast to be 80 per cent liq­uids (38 per cent heavy oil, 30 per cent light oil and con­den­sate, and 12 per cent nat­u­ral gas liq­uids) and 20 per cent nat­u­ral gas, based on a 6:1 nat­u­ral-gas-to-oil equiv­a­lency.

Ea­gle Ford

Ap­prox­i­mately 55 per cent of the com pany’s plann ed cap­i­tal in­vest­ment will be di­rected to the Ea­gle Ford. The com­pany ex­pects a sim­i­lar pace of ac­tiv­ity to 2017, bring­ing ap­prox­i­mately 30 net wells on pro­duc­tion. De­vel­op­ment will be con­cen­trated in the Lower Ea­gle Ford for­ma­tion across the com­pany’s four areas of mu­tual in­ter­est. The com­pany ex­pects strong well per­for­mance to con­tinue driven by en­hanced com­ple­tions and as it con­tin­ues to ex­ploit the oil win­dow on the west­ern por­tion of its lands. The com­pany is cur­rently run­ning five drilling rigs and one com­ple­tion crew in the Ea­gle Ford.

Canada

The com­pany is ac­cel­er­at­ing de­vel­op­ment of its heavy oil as­sets at Peace River and Lloy­d­min­ster and ex­pects to en­ter 2018 with four drilling rigs run­ning. Ap­prox­i­mately 45 per cent of the com­pany’s planned cap­i­tal in­vest­ment will be di­rected to Canada, which rep­re­sents a 40-per-cent in­crease from 2017. At Peace River, the com­pany plans to drill 18 net mul­ti­lat­eral hor­i­zon­tal wells, dou­bling the pace of ac­tiv­ity from 2017. At Lloy­d­min­ster, the com­pany plans to drill 63 net wells (in­clud­ing 16 net mul­ti­lat­eral hor­i­zon­tal wells), rep­re­sent­ing an 80-per-cent in­crease in ac­tiv­ity.

Strate­gic in­fra­struc­ture in­vest­ment

The com­pany’s 2018 cap­i­tal bud­get in­cludes ap­prox­i­mately $30-mil­lion of non-re­cur­ring strate­gic in­fra­struc­ture in­vest­ment in Peace River and Lloy­d­min­ster to sup­port fu­ture de­vel­op­ment and growth, in­clud­ing:

• The com­pany plans con­struc­tion of a nat­u­ral gas plant with de­sign ca­pac­ity of 18 mil­lion cu­bic feet per day and re­lated pipe­line in­fra­struc­ture (Bay­tex work­ing in­ter­est 50 per cent).

• In­fra­struc­ture spend­ing on the com­pany’s Seal (Peace River re­gion) lands ac­quired in Jan­uary, 2017, will set the stage for de­vel­op­ment drilling in 2018 and fu­ture years. This in­cludes pipe­lines, com­pres­sion and road con­struc­tion. Once com­plete, the com­pany ex­pects to drill ap­prox­i­mately nine net mul­ti­lat­eral hor­i­zon­tal wells in the Seal re­gion in 2018.

• The com­pany plans ex­pan­sion of its Ker­robert

ther­mal fa­cil­ity to ac­com­mo­date a three-well steam-as­sisted grav­ity drainage (SAGD) pro­gram in 2018 and an ad­di­tional two-well SAGD pro­gram in 2019. First pro­duc­tion from the SAGD project is tar­geted for the fourth quar­ter of 2018.

(See BTE Ta­ble 1 on page 23)

Board suc­ces­sion John Brussa and Rusty Goe­pel, two long-stand­ing board mem­bers, will be re­tir­ing at the 2018 an­nual meet­ing of share­hold­ers to be held in May, 2018. Bay­tex thanks Mr. Brussa and Mr. Goe­pel for their val­ued con­tri­bu­tions dur­ing their ten­ure on the board.

We seek Safe Har­bor.

Erika Flores con­densed this news re­lease (erikaf@stock­watch.com). Mark Bly, James L Bowzer, John Al­bert Brussa, Ray­mond Tat­sun Chan, Ed­ward Ch­wyl, Trudy Marie Cur­ran, Naveen Dar­gan, Rus­ton Ernest Tre­mayne Goe­pel, Ed LaFehr, Gregory Knowles Melchin, Mary Ellen Peters, Dale Or­west Sh­wed

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