Baytex outlines 2020 Eagle Ford shale spend

By Luke Geiver | December 10, 2019

Calgary-based Baytex Energy Corp. has approved a 2020 capital budget of up to $575 million. The 2020 budget should generate roughly 95,000 barrels of oil equivalent per day. In 2020 the exploration and production company will continue to focus on oil plays in Canada and the Eagle Ford of South Texas.

Ed LaFehr, president and CEO, said the company will generate roughly $300 million in free cash flow this year. The 2020 plan will also focus on free cash flow generation, had added.

Highlights of the 2020 Budget

-Funding of Capital Program. Capital program fully funded from adjusted funds flow at a WTI price of US$50/bbl.

-Sustaining Capital. Capital program includes $520 million directed to sustaining and maintenance capital, with an additional $20 million invested in our gas conservation and emission reduction initiatives.

-Free Cash Flow. Through the first nine months of 2019, net debt has been reduced by $294 million. Based on the forward strip(1), we expect to generate in excess of $100 million of free cash flow during 2020, which will support our de-leveraging strategy.

-Capital Efficiency. Our capital program is expected to generate strong capital efficiencies of approximately $17,000 per boe/d across the portfolio.

-Capital Allocation. Approximately 80 percent of our capital program will be directed to our high netback light oil assets in the Viking and Eagle Ford and 15 percent will be directed to our heavy oil assets at Peace River and Lloydminster.

-Risk Management. Approximately 40 percent of our net crude oil exposure has been hedged for 2020, largely utilizing a 3-way option structure that provides price protection at US$58.04/bbl with upside participation to US$63.27/bbl.

Across its Eagle Ford operations next year, Baytex will spend roughly 30 percent ($165 million) of the total 2020 capital budget there on drilling and completing roughly 22 wells. Roughly 37 percent of the free cash flow generation created by Baytex in 2020 will come from its Eagle Ford assets.