CALGARY, ALBERTA–(Marketwired – Dec. 13, 2013) – Baytex Energy Corp. (TSX:BTE)(NYSE:BTE) (“Baytex”) is pleased to announce that its Board of Directors has approved a 2014 capital budget of $485 million for exploration and development activities. This capital budget is designed to generate an average production rate of 60,000 to 62,000 boe/d.
Commenting on the 2014 budget, James Bowzer, President and Chief Executive Officer, said: “This budget continues our focus on oil weighted production growth. Based on the mid-point of the production guidance ranges for 2013 and 2014, our 2014 plan reflects a production growth rate of 6% for oil equivalent volumes.”
2014 Capital Budget Highlights
- Our 2014 capital budget includes the drilling of 201 net wells, of which 156 will target crude oil, three will target natural gas and 42 will be stratigraphic and service wells. Our 2014 stratigraphic and service well program will support multi-lateral drilling programs in future years and further delineate our lands for thermal development.
- Our 2014 production mix is forecast to be approximately 89% liquids (75% heavy oil and 14% light oil and natural gas liquids) and 11% natural gas, based on a 6:1 natural gas-to-oil equivalency.
- Approximately 70% of our 2014 capital budget will be invested in our heavy oil operations at Peace River and Lloydminster.
- At Peace River, our capital budget includes the drilling of 36 horizontal multi-lateral wells and 28 stratigraphic and service wells.
- At Lloydminster, we plan to drill 101 development wells (approximately 73% of which will be horizontal) and 14 stratigraphic and service wells.
- Expenditures on thermal enhanced oil recovery projects represent approximately 5% of the 2014 capital budget.
- The balance of our capital program will be directed primarily towards light oil development, with the single largest project being the Bakken/Three Forks in North Dakota. Our 2014 development plan in North Dakota represents approximately 17% of our 2014 capital budget, and will include the drilling of approximately 15 gross (9.6 net) wells.
Baytex expects to finance its 2014 capital budget and dividends with funds from operations and its existing credit capacity. Baytex is well positioned with a strong balance sheet and significant available credit capacity. At the end of the third quarter of 2013, Baytex had $605 million in undrawn credit facilities and no long-term debt maturities until 2021.
2014 Capital Budget and Wells Drilled by Area
| Amount | Wells Drilled | ||
| Operating Area | ($ millions) | (net) | |
| Peace River | |||
| Conventional | 178 | 36 | |
| Stratigraphic and Service | 14 | 28 | |
| Thermal | 10 | — | |
| Total Peace River | 202 | 64 | |
| Lloydminster | |||
| Conventional | 133 | 101 | |
| Stratigraphic and Service | 5 | 14 | |
| Thermal | 10 | 2 | |
| Total Lloydminster | 148 | 117 | |
| North Dakota | 82 | 10 | |
| Other – oil | 35 | 7 | |
| Other – gas | 18 | 3 | |
| 53 | 10 | ||
| Total Capital / Wells Drilled | 485 | 201 | |
2014 Capital Budget by Expenditure Type
| Amount | |
| ($ millions) | |
| Development | 388 |
| Facilities | 50 |
| Thermal | 20 |
| Stratigraphic and Service | 19 |
| Land and Seismic | 8 |
| Total Capital | 485 |
Corporate Taxation
Our cash income tax liability is dependent upon many factors, including the prices at which we sell our production, available income tax deductions and the legislative environment in place during the taxation year. Based upon the current forward commodity price outlook, projected production and capital spending and currently enacted tax laws in Canada and the United States, Baytex does not expect to pay cash income taxes in 2014.
Advisory Regarding Oil and Gas Information and Non-GAAP Financial Measures
Baytex has adopted the standard of 6 Mcf:1 BOE when converting natural gas to barrels of oil equivalent (“BOEs”). BOEs may be misleading, particularly if used in isolation. A BOE conversion ratio of 6 Mcf:1 BOE is based on an energy equivalency conversion method primarily applicable at the burner tip and does not represent a value equivalency at the wellhead.
In this press release we refer to funds from operations, which does not have any standardized meaning prescribed by generally accepted accounting principles in Canada (“GAAP”). We define funds from operations as cash flow from operating activities adjusted for financing costs, changes in non-cash operating working capital and other operating items. We believe that this measure assists in providing a more complete understanding of certain aspects of our results of operations and financial performance, including our ability to generate the cash flow necessary to fund future dividends to shareholders and capital investments. However, funds from operations should not be construed as an alternative to traditional performance measures determined in accordance with GAAP, such as cash flow from operating activities and netincome. Please refer