Baytex and Raging River Exploration entered into an agreement to merge the two companies in mid June.  The deal is expected to close on August 22.  Company photo.

Baytex production up by 2 per cent in second quarter

In its second quarter financials, Baytex Energy Corp., says it increased its production in both its Canadian and United States plays during the second quarter of this year.

President and Chief Executive Officer Ed LaFehr said “we continued to deliver on our operational and financial targets in the second quarter, which included strong drilling results in Canada and the Eagle Ford”.

According to the company’s financials, production increased by 2 per cent over the first quarter of this year to average 70,664 barrels of oil equivalent per day (boe/d) during Q2.  Baytex reported generated adjusted funds flow of $107 million, or $136 million excluding realized financial derivatives gains and losses.

Production in the first half of 2018 averaged 70,095 boe/d.

According to the company, it realized an operating netback of $35.42/boe in the Eagle Ford, the strongest since the third quarter in 2014.  Baytex’s Eagle Ford light oil and condensate production was priced at US$67.62/barrel.  The company says its proximity to US Gulf Coast markets is part of the reason for the success.

Calgary-based Baytex says it increased production at its Eagle Ford wells by 25 per cent over Q2 2017.

In a press release, the company says “we allocated 61 per cent of our exploration and development expenditures to this asset and production averaged 36,622 boe/d during the second quarter, as compared to 36,017 boe/d” in the first quarter of this year.

In Canada, the company increased its production to 34,042 boe/d and Baytex reports that its first two northern Seal wells at Peace River generated 30-day initial production rates of 918 boe/d and 660 boe/d, respectively.

During the second quarter, exploration and development capital expenditures totalled $79 million, bringing the aggregate spending in the first half of 2018 to $172 million.

Baytex reports that in the second quarter, it drilled 36 (8.1 net) wells, with a 100 per cent success rate.

Stronger oil prices helped the company generate adjusted funds flow of $107 million, compared to $84 million in Q1 and $83 million in Q2 2017.

“Excluding realized financial derivatives gains and losses, adjusted funds flow in Q2/2018 was $136 million, compared to $94 million in Q1/2018”, said the company in a press release.

“This represents the highest quarterly adjusted funds flow, excluding realized financial derivatives gains and losses, since Q4/2014 and demonstrates the strength of our diversified asset portfolio.”

Baytex says it maintains strong financial liquidity, with 70 per cent of a US$575 million revolving credit facilities undrawn.  The company adds its first long-term not maturity is not until 2021.

“With our strategy to target exploration and development capital expenditures at a level that approximates our adjusted funds flow, we expect this liquidity position to be stable going forward.”

On June 28, the boards of directors of Baytex and Raging River announced the merger of the two companies.

The combined company is expected to have production of approximately 94,000 boe/d from a diverse portfolio of high quality oil assets, including Viking, Peace River, Lloydminster and East Duvernay Shale properties in Canada and the Eagle Ford in Texas.

“We believe the combined company will deliver a powerful combination of per share production growth and strong free cash flow. We will be well-positioned to optimize our capital investment across our high rate of return asset base,” said LaFehr.