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Baytex Energy (BTE) - 2024 Q4 - Earnings Call Transcript
BTEBaytex Energy (BTE)2025-03-05 18:39
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Financial Data and Key Metrics Changes - In 2024, the company generated a 10% production per share growth and improved cash cost structure by 5% on a BOE basis [9][10] - The 2P net asset value per share increased by 13%, and net debt was reduced by 5% in Canadian dollar terms and 13% in U.S. dollar terms [10][14] - Free cash flow generated in 2024 was 656million,withover70656 million, with over 70% of this amount generated in the second half of the year [12][15] Business Line Data and Key Metrics Changes - The Eagle Ford region saw the completion of 64 wells, with an 8% improvement in operated drilling and completions costs per completed lateral foot compared to 2023 [17][19] - In the Pembina Duvernay, seven strong wells were brought on stream, and the company plans to expand its program in 2025 [18][19] - The heavy oil business continued to perform well, with 31 Clearwater wells and 40 wells across the broader Manville group brought on stream [19] Market Data and Key Metrics Changes - The company expects to generate approximately 400 million of free cash flow in 2025 at a WTI price of 70[15]−TheimpactoftariffsonCanadianenergyimportstotheU.S.isanticipatedtodisproportionatelyaffectMidwestrefiners[25][28]CompanyStrategyandDevelopmentDirection−Thecompanyremainsfocusedondisciplinedcapitalallocation,prioritizingsafeoperations,freecashflowgeneration,andshareholderreturns[21][22]−Plansfor2025includeaconsistenttwo−rig,one−fraccrewprogramintheEagleFordandfurtherdevelopmentinthePembinaDuvernay[21][18]Management′sCommentsonOperatingEnvironmentandFutureOutlook−Managementacknowledgedthechallengesposedbyfluctuatingoilpricesandindicatedreadinesstorationalizelow−returningprojectsifpricesdeclinesignificantly[32][34]−ThecompanyisoptimisticabouttheU.S.economy′sresilienceandispreparedtoreactprudentlytomarketcycles[84]OtherImportantInformation−Thecompanyrepurchased48millioncommonsharesin2024,representing670 [15] - The impact of tariffs on Canadian energy imports to the U.S. is anticipated to disproportionately affect Midwest refiners [25][28] Company Strategy and Development Direction - The company remains focused on disciplined capital allocation, prioritizing safe operations, free cash flow generation, and shareholder returns [21][22] - Plans for 2025 include a consistent two-rig, one-frac crew program in the Eagle Ford and further development in the Pembina Duvernay [21][18] Management's Comments on Operating Environment and Future Outlook - Management acknowledged the challenges posed by fluctuating oil prices and indicated readiness to rationalize low-returning projects if prices decline significantly [32][34] - The company is optimistic about the U.S. economy's resilience and is prepared to react prudently to market cycles [84] Other Important Information - The company repurchased 48 million common shares in 2024, representing 6% of shares outstanding, and declared four quarterly dividends of 2.25 cents per share [12][13] - The asset exchange in the Peavine Metis settlement area was a cashless transaction that strengthened the company's acreage position [55][58] Q&A Session Summary Question: Have the tariffs taken effect and what are the mechanics? - The tariffs have been implemented and are effective as of the morning of the call, impacting import duties on products flowing into the U.S. [25][26] Question: What changes in capital allocation are expected if oil prices drop to 60? - The company will likely pull back on capital activity, which should help address the issue of lower prices, while input costs may also fall [32][34] Question: What drove the improved F&D costs reported? - Improvements in capital expenditures and cash costs, along with better performance in high-value oil streams, contributed to lower F&D costs [41][42] Question: Can you provide details on the Duvernay drilling program? - The drilling rig has been mobilized, and the company is drilling three three-well pads, with results expected in the Q2 release timeframe [46][50] Question: What is the context of the U.S. dollar debt repayment? - Most of the company's debt is U.S. dollar denominated, and the company aims to report debt repayment in U.S. dollar terms for clarity [62][64] Question: Are there opportunities to accelerate the $1.5 billion debt target? - The company continues to explore opportunities within its portfolio to sell assets that do not disproportionately benefit overall cash flow [74][76] Question: What is the composition of the shareholder return framework? - The company maintains a fixed base dividend and allocates half of its free cash flow to debt repayment and the other half to shareholder returns through buybacks [78][79] Question: What are the thoughts on recent share price performance? - The macro environment is challenging for WTI prices, and the company will monitor the situation and react prudently [82][84]