Investor Presentation November 2018
Advisory Forward Looking Statements Any “financial outlook” or “future oriented financial information” in this presentation as defined by applicable securities laws, has been approved by management of Baytex. Such financial outlook or future oriented financial information is provided for the purpose of providing information about management’s current expectations and plans relating to the future. Readers are cautioned that reliance on such information may not be appropriate for other circumstances. In the interest of providing the shareholders of Baytex and potential investors with information regarding Baytex, including management's assessment of future plans and operations, certain statements in this presentation are "forward-looking statements" within the meaning of the United States Private Securities Litigation Reform Act of 1995 and "forward-looking information" within the meaning of applicable Canadian securities legislation (collectively, "forward-looking statements"). In some cases, forward-looking statements can be identified by terminology such as "anticipate", "believe", "continue", "could", "estimate", "expect", "forecast", "intend", "may", "objective", "ongoing", "outlook", "potential", "project", "plan", "should", "target", "would", "will" or similar words suggesting future outcomes, events or performance. The forward-looking statements contained in this presentation peak only as of the date hereof and are expressly qualified by this cautionary statement. Specifically, this presentation contains forward-looking statements relating to but not limited to: the vision for Baytex, including that: it will be a top tier North American oil producer focused on per share value creation, have disciplined growth and return of capital to shareholders, target 10-15% annual total return to shareholders, be a self-funded business model, target net debt to adjusted funds flow ratio of <1.5x, consider share buybacks and/or reinstating a dividend at the appropriate time, have strong asset quality, be more than 80% liquids-weighted and more than 80% operated, have a long term decline rate of less than 30%, target accretive acquisitions and focus on “next play” capture; the outlook for production volumes, adjusted funds flow and net debt to adjusted funds flow ratio from now until year-end 2023; Baytex’s estimates of reserves; 2019 preliminary guidance for annual production, production mix and exploration and development capital; that Baytex will have world class assets, high return light oil assets, an attractive growth and free cash flow, a superior capability to optimize capital allocation, a strong balance sheet and a top tier management team; expectations for Baytex, including: 5-10% annual production growth, 2019 adjusted funds flow and free cash flow, that there is 10+ years of inventory, the ratio of net debt to adjusted funds flow; that Baytex has an enhanced platform for growth, will build on strong operational momentum and drive further operational excellence and shareholder returns; expectations as to Baytex’s production and operating cash flow by area and production and revenue by commodity for 2019; our reduced guidance for 2018 operating and general and administrative expenses; the impact of our heavy oil optimization strategy; our plans to optimize heavy oil prices, including: the volume of oil we expect to deliver to market by rail and the percentage of our rail commitments exposed to WCS pricing; that our top priority is disciplined capital allocation to drive meaningful free cash flow; our expected adjusted funds flow in excess of exploration and development capital expenditures; that we are targeting debt adjusted production per share growth of approximately 10%; 2019 preliminary guidance for exploration and development capital expenditures, production, percentage of production that will be Oil and NGLs, operating netback, adjusted funds flow, adjusted funds flow by share, year-end net debt, year-end net debt to adjusted funds flow ratio; the impact of changes to the price of WTI on Baytex’s 2019 free cash flow and net debt to adjusted funds flow ratio; the operating netback and DCET costs for wells in the Eagle Ford, Peace River, Lloydminster, Viking and East Duvernay; the percentage of Baytex’s net exposure to oil prices that is hedged for 2018 and 2019; for the Eagle Ford, expectations as to Northern Austin Chalk drilling activity for 2018; for the Viking, that extended reach horizontal wells will enhance returns, that in takes 20 days from well spud to production, the estimated field netback at US $70/bbl and for individual wells: the drill, complete and equip cost, expected 30-day IP rate and the estimated ultimate recovery; for Peace River and Lloydminster, plans to optimize operations in Q4/2018 and for individual wells: the drill, complete and equip cost, expected 30-day IP rate and the estimated ultimate recovery; for the Duvernay, the resource potential per section, that the infrastructure spending will be minimal and manageable, the drilling inventory and planned well completion activity for 2018; the sensitivity of our expected 2019 adjusted funds flow to changes in WTI prices, heavy oil differentials, natural gas prices and Canada-United States foreign exchange rates; and the percentage of Baytex’s net exposure to natural gas prices that is hedged for 2018 and 2019. In addition, information and statements relating to reserves are deemed to be forward-looking statements, as they involve implied assessment, based on certain estimates and assumptions, that the reserves described exist in quantities predicted or estimated, and that they can be profitably produced in the future. These forward-looking statements are based on certain key assumptions regarding, among other things: the ability of Baytex to realize the anticipated benefits of the strategic combination with Raging River; petroleum and natural gas prices and differentials between light, medium and heavy oil prices; well production rates and reserve volumes; the ability to add production and reserves through exploration and development activities; capital expenditure levels; the ability to borrow under credit agreements; the receipt, in a timely manner, of regulatory and other required approvals for operating activities; the availability and cost of labour and other industry services; interest and foreign exchange rates; the continuance of existing and, in certain circumstances, proposed tax and royalty regimes; the ability to develop crude oil and natural gas properties in the manner currently contemplated; and current industry conditions, laws and regulations continuing in effect (or, where changes are proposed, such changes being adopted as anticipated). Readers are cautioned that such assumptions, although considered reasonable by Baytex at the time of preparation, may prove to be incorrect. Baytex has disclosed certain expected details relating to Baytex's 2019 capital program and expected guidance; however, the board of directors of Baytex has not approved a budget for 2019 and as such the details relating to the 2019 capital program and guidance are intended only to illustrate Baytex's current expectations based on information and conditions known as of the date hereof. Baytex's actual 2019 capital budget once approved may differ from the details disclosed herein for a variety of reasons including as a result of any change in conditions and information known to Baytex prior to the date the 2019 budget is approved and/or as a result of Baytex's management and board of directors allocating capital differently than currently expected. The actual 2019 capital budget will impact the 2019 guidance provided herein as well. The actual 2019 capital program and the guidance set out herein may also differ from the expectations as set out herein due to the other risk factors identified herein. 2
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