Baytex Energy Ups Guidance After Strong Q2 Results

Baytex Energy Corp. (TSX: BTE) cites strong well results in the Eagle Ford combined with reactivations on the acquired Peace River properties

SmallCapPower | August 2, 2017: Baytex Energy Corp. (TSX: BTE) Tuesday reported strong operating and financial results for Q2’17. Production increased 5% from Q1’17 and 12% from Q4’16 and averaged 72,812 boe/d in the quarter. Baytex Energy generated funds from operations (FFO) of $83.1 million while investing $78.0 million on exploration and development capital expenditures. Baytex Energy had released its operational data for the second quarter on June 26, 2017. Post this, its share price has surged 19% to its current price of $3.59.

Related: WTI Crude Price Pullback Could Ignite Investor Interest in Baytex Energy Corp

Baytex Energy Corp reported total production of 72,812 boe/d for Q2’17 (up 5% QoQ). Strong well results in the Eagle Ford and initial new well production from its Canadian capital program, combined with reactivations on the acquired Peace River properties, contributed to higher Q2’17 production. FFO totaled at $83.1 million ($0.35 per share) in the quarter as compared to $81.4 million ($0.35 per share) in the prior year quarter. The increase in FFO was due largely to higher production volumes, which more than mitigated the decline in crude oil prices.

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Post the impressive results, Baytex Energy increased its 2017 production guidance range to 69,000 to 70,000 boe/d (previously 68,000 to 70,000 boe/d). On the expenses side, Baytex Energy reduced its full-year 2017 guidance for exploration and development capital expenditures of $310 million to $330 million (previously $325 to $350 million), and also reduced its guidance for operating expenses by 4% (at the mid-point) to $10.75-$11.25/boe, as Baytex Energy continues to drive cost efficiencies in its business.

Baytex Energy holds superior quality assets and achieved sector-leading capital efficiencies of $11,500 per boe/d and > 50% ROR’s across our three core assets at US$50/bbl WTI crude price. The breakeven WTI price is only $30 for its Eagle Ford play and ~$40 for its other two (Peace River Oil Sands and Lloydminster heavy oil) plays.

In terms of valuation, Baytex Energy Corp currently trades at price to sales value of 1.13x and price to book value of 0.45x.

Disclosure: Neither the author nor any of the principals at Small Cap Power, or their family members, own shares in any of the companies mentioned above.

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