Issue link: http://resourceworld.uberflip.com/i/685011
J U N E / J U L Y 2 0 1 6 www.resourceworld.com 57 Baytex Energy Corp. [BTE-TSX, NYSE] is achieving success despite the energy sec- tor downturn. An oil and gas company based in Calgary, Baytex is engaged in the acquisition, development and production of crude oil and natural gas in the Western Canadian Sedimentary Basin and in the Eagle Ford in the US. Their first quarter profit hit CDN $607,000, recovering from the nearly $176 million loss registered in Q1 2015. "We continue to meet the challenges brought on by this low oil price environ- ment head on," said President and CEO, James Bowzer, in a news release. He said that, during the first quarter, Baytex announced amendments to their bank credit facilities for increased finan- cial flexibility, and shut-in low or negative margin heavy oil production. To generate the highest netback and rate of return, they focused capital expenditures on the Eagle Ford, where operating results were strong with production up 2% over Q4/2015 and well costs continuing to decline. "We remain well positioned to ben- efit from an oil price recovery as our three core plays provide some of the strongest capital efficiencies in North America," said Bowzer. The first quarter of 2016 saw the global oversupply of crude continuing to weigh on the market, with prices hitting a low of US $26/bbl in February. The sharp price reduction had a significant impact on Baytex's funds from operations, which totaled $45.6 million ($0.22 per share) in Q1/2016, compared to $93.1 million ($0.44 per share) in Q4/2015. Operating results for the first quarter were consistent with expectations and reflected a reduced pace of drilling activity in response to the low crude price environment, the release says. Baytex shut-in approximately 7,500 boe/d of low or negative margin heavy oil production to optimize the value of their resource base and maximize funds from operations, continuing to focus in the first quarter on cost reduction initiatives. In Canada, operating expenses decreased 19% on a per boe basis from 2015, despite the impact of fixed costs on lower produc- tion volumes. Transportation expenses dropped 40% on a per boe basis, due to ongoing optimization in the trucking divi- sion and decreased fuel costs. Canadian production averaged 34,709 boe/d (80% oil and NGL) during Q1/2016, compared to 40,826 boe/d in Q4/2015. The reduced volumes reflect the impact of production shut-ins and that there has been no heavy oil drilling since Q3/2015. Capital expenditures for Canadian assets in Q1/2016 totaled $4.8 million, down from $8.8 million in Q4/2015. General and administrative expenses were $14.2 million in Q1/2016, compared to $17.1 million in 2015, thanks to staff reductions coinciding with lower activ- ity levels and a reduction in discretionary spending. All full-time employee sala- ries and annual directors' retainers were reduced 10% effective March 1. "Should netbacks improve, we have the ability to restart these wells within one month," the release says. Their 2016 pro- duction target remains at 68,000-72,000 boe/d, with budgeted exploration and development expenditures of $225 mil- lion-$265 million. "Our 2016 program will remain flexible and allows for adjustments to spending based on changes in the commodity price environment. In addition, we may contem- plate minor non-core asset sales." n BayTEX EnErGy posts profit on less revenue by Bruce Lantz Oil & g a s