Baytex reaffirms commitment to Eagle Ford for 2018

By Luke Geiver | December 11, 2017

The Eagle Ford shale will be Baytex Energy Corp.’s first call for capital deployment in 2018. With internal rates of return of 70 percent possible at $55 oil, the Canadian exploration and production firm intends to spend roughly 55 percent of its entire 2018 exploration and development budget in South Texas.

At a pace similar to this year, Baytex will bring 30 net wells onto production in the play next year. The costs to drill and complete a well in the Eagle Ford are roughly $5.2 million for Baytex. The laterals on the wells are drilled with 5,500 foot laterals. Since 2011, Baytex said it has increased 30-day initial production rates on its Eagle Ford wells by more than 100 percent. Improvements in drilling and completion design have brought the improvements. Lateral lengths that reach at least 6,000 feet show the best results. The company has also found that the effective number of fracture stages needed for better IPs is at least 28 stages. Proppant placed per lateral foot has also increased from 1,800 per foot from 1,000 pounds used in 2016.

Next year, Baytex will focus on operating within cashflow to minimize bank borrowings, said Ed LaFeher, president and CEO. The average WTI price assumed for operational projections in 2018 has been set at $55/b. The majority of the 2018 Baytex budget—between $325 and $375 million—will be spend on E&P activities (83 percent) followed by facilities work (16 percent) and seismic data capture (1 percent).

In the Eagle Ford, Baytex is currently running five drilling rigs and a single completion crew.

Apart from the work in Texas, Baytex will also focus on heavy oil processing activity in the Peace River and Lloydminster areas. Four drilling rigs will help to bring 18 net horizontal wells at Peace River and 63 net wells at Lloydminster.