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Baytex Energy Corp. has entered into a definitive agreement to sell certain of its Viking assets located at Forgan and Plato in southwest Saskatchewan, for $113.23 million (CAD 153.8 million), effective October 1.
The transaction is expected to close before the end of the year, Baytex said in a news release Monday, adding that net proceeds from the sale will be applied to its outstanding bank debts. The company estimated production from the assets to be approximately 4,000 barrels of oil equivalent per day (boepd), consisting of 100 percent light and medium crude oil. The buyer was not disclosed.
Meanwhile, Baytex reported net income of $93.8 million (CAD 127.4 million) for the third quarter, compared to $123.24 million (CAD 167.4 million) in the previous-year period. Petroleum and natural gas sales for the quarter were $0.85 billion (CAD 1.16 billion), compared to $524.27 million (CAD 712.1 million) in the same period in 2022.
In the third quarter, the Calgary-based company generated production of 150,600 boepd, consisting of 85 percent oil and natural gas liquids (NGLs). It brought 13 operated Eagle Ford wells onstream, of which seven wells from three pads generated average 30-day initial production rates of approximately 2,000 boepd, consisting of 65 percent oil and NGLs, per well.
Baytex also executed a two-rig drilling program at Peavine and brought 14 Clearwater wells onstream in the quarter. Production at Peavine averaged 13,821 barrels per day (bpd), a 69 percent year-over-year increase. The company added that September production averaged 16,400 bpd.
Further, Baytex said it continued the commercialization program in Pembina Duvernay with a six-well program delivering “strong results”. The company expanded its heavy oil development fairway through two land extensions, including a 10-section agreement with the Peavine Métis settlement adjacent to its existing 80 section land position and a farm-in on 17.75 sections of land prospective for the Mannville development near Cold Lake in northeast Alberta.
“Our third-quarter results represent the first full quarter of combined operations following the Ranger acquisition and demonstrate the strength of our diversified North American oil-weighted portfolio”, Baytex President and CEO Eric Greager said. “The integration has progressed extremely well and we have delivered strong results from Western Canada and the Eagle Ford in Texas. We are building momentum with current production exceeding 155,000 boepd (84 percent oil and NGLs). Currently, we expect to generate free cash flow of approximately [CAD] 400 million in Q4/2023 and [CAD] 650 million for this year. As a result of this strong free cash flow, we have increased the pace of our share buyback program during the fourth quarter. We are also excited to announce two new land extensions at Peavine and Cold Lake as we continue to leverage our heavy oil expertise and recent exploration successes”.
Baytex expects full-year 2023 production of 121,500 to 122,000 boepd, up from its previous guidance range of 120,500 to 122,500 boepd. It anticipates fourth-quarter production to average 158,000 to 160,000 boepd, with 84 percent weighted to oil and NGLs and 16 percent to natural gas.
In June, Baytex closed its acquisition of Ranger Oil Corporation for approximately $2.2 billion (CAD 2.9 billion), including the assumption of net debt. Under the terms of the agreement, Ranger shareholders received 7.49 Baytex shares plus $13.31 cash for each share of Ranger common stock.
The acquisition materially increases the scale of Baytex’s Eagle Ford operations, the company said in an earlier news release. It adds 162,000 net acres in the crude oil window of the Eagle Ford, on-trend with Baytex’s non-operated position in the Karnes Trough, and 741 net undrilled locations, representing an inventory life of 12 to 15 years, the company said. “The transaction increases our exposure to premium U.S. Gulf Coast pricing and includes substantial infrastructure in place with low operating and transportation costs”, the company added.
“We are excited to close the Ranger acquisition, which materially increases our scale in the Eagle Ford while building quality operating capability in a premier basin”, Greager said. “We have emerged from this transaction as a well-capitalized and diversified North American exploration and production company with a portfolio of high-quality oil weighted assets in Western Canada and the Eagle Ford shale in Texas. The transaction enhances our inventory and creates a more resilient and sustainable business with an attractive free cash flow profile. With our strong financial position we intend to increase our direct shareholder returns to 50 percent of free cash flow and introduce a dividend”.
To contact the author, email rocky.teodoro@rizone.com
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