Investor Presentation February 2020
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: Baytex’s strategy for value creation including its vision is to be a top tier north American oil producer targeting 10-15% annual shareholder returns, that we have a self-funded business model with attractive valuation, expect to be free cash flow positive >$50/bbbl WTI, and a target of $100+ million of free cash flow in 2020; that we have high return light oil assets with heavy oil torque, 10+ year inventory in core areas, that a $540 million capital program drives stable production in 2020 and 80% of our capital is directed to high netback light oil; expectations for 2020 as to Baytex’s production by area and commodity; our 2020 outlook, including: that our capital program will deliver stable production and maximize free cash flow, the capital program is fully funded at US$50/bbl WTI, that we will continue to advance the East Duvernay light oil play, further deleveraging is a top priority and adjusted funds flow in excess of capital expenditures, lease payments and asset retirement expenditures will be allocated to debt repayment; our 2020 guidance for annual production, production mix and exploration and development capital; for 2020: our capital allocation plans by activity type and area and number of net wells we expect to bring on stream; our estimated adjusted funds flow for 2020 at certain WTI, WCS and MSW prices; that we expect our US$400 million 2021 Notes and $300 million 2022 Notes to be redeemed in Q1 2020; our net debt to adjusted funds flow target; the percentage of Baytex’s net exposure to oil prices that is hedged for Q1 and full year 2020; the sensitivity of our expected 2020 adjusted funds flow to changes in WTI prices, WCS and MSW differentials, natural gas prices and the Canada-United States foreign exchange rate; that crude by rail is an effective tool for managing differential exposure and provides greater operating netback certainty; our estimated crude oil and NGL sales portfolio for 2020 and our estimated 2020 WTI, WCS and MSW prices and Baytex price realizations; that the Eagle Ford has strong asset level free cash flow and the amount of remaining undrilled inventory; the time to payout, internal rate of return, recycle ratio and WTI break-even price for our type wells in the Eagle Ford; for the Viking that, 460 sections are highly prospective, extended reach horizontal wells are enhancing returns, we have a steady pace of development and we expect to bring 220 net wells on stream in 2020; that the Viking has strong price realizations and low cost structure, its asset level free cash flow contribution at US$55/bbl WTI and US$60/bbl WTI and the amount of remaining drilling inventory; the time to payout, internal rate of return, recycle ratio and WTI break-even price for our type wells in the Viking; in Peace River, that innovative multi-lateral horizontal drilling generates strong capital efficiencies and the number of net wells we plan to bring on-stream in 2020; In Lloydminster, that we have strong capital efficiencies and economics at current oil prices, that we are applying multi-lateral drilling at Soda Lake, and the number of net wells we plan to bring on-stream in 2020; In Peace River and Lloydminster, our capital efficiencies, asset level free cash flow expectations at US$55/bbl WTI and US$60/bbl WTI and drilling inventory; the time to payout, internal rate of return, recycle ratio and WTI break-even price for our type wells in Peace River and Lloyminster; that we have delineated a minimum of 100-125 sections; the expected drilling and completion well costs, reserves and drilling inventory for our Eagle Ford, Peace River, Lloydminster, Viking and East Duvernay assets; that we are committed to corporate sustainability; and our GHG emissions reduction target. 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. 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: 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. 2
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