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.
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.
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.
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 ([email protected]watch.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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