Baytex Energy Corp. Playbook

About

Baytex Energy Corp. Canada oil companies is an oil and gas corporation based in Calgary, Alberta. The company 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 United States. Approximately 83% of Baytex’s production is weighted toward crude oil and natural gas liquids. Baytex’s common shares are traded on the Toronto Stock Exchange and the New York Stock Exchange under the symbol BTE.

Wells Drills Last 2 Years Western Canada

Baytex Western Canada Facility List

Baytex Energy Map

2021 Guidance

In 2021, we are benefiting from our diversified oil weighted portfolio and our commitment to allocate capital effectively. Based on the forward strip⁽¹⁾, we expect to generate over $350 million of free cash flow in 2021.

As a result of our strong operating performance through the first half of 2021, we are increasing our production guidance to 79,000 to 80,000 boe/d, up from 77,000 to 79,000 boe/d, previously. We continue to forecast 2021 exploration and development expenditures of $285 to $315 million.

Our interest expense guidance is 3% lower due to reduced net debt and the repurchase and cancellation of US$106 million principal amount of 5.625% long-term notes.

Operating Areas

Eagle Ford

Production in the Eagle Ford averaged 33,957 boe/d (80% oil and NGL) during Q2/2021, as compared to 26,741 boe/d in Q1/2021. The higher volumes reflect an increased pace of completions and continued strong operating performance. During the second quarter we commenced production from 38 (10.2 net) wells, up from 24 (7.0 net) wells in Q1/2021. In Q2/2021, we invested $31 million on exploration and development in the Eagle Ford and generated an operating netback of $112 million. We expect to bring approximately 22 net wells on production in the Eagle Ford in 2021.

Viking Light Oil

Production in the Viking averaged 16,301 boe/d (88% oil and NGL) during Q2/2021, as compared to 19,403 boe/d in Q1/2021. Our capital program in the second quarter included the seasonal slowdown, which resulted in the completion of 14 (14.0 net) wells, as compared to 44 (43.2 net) wells during the first quarter. In Q2/2021, we invested $17 million on exploration and development in the Viking and generated an operating netback of $72 million. We expect to bring approximately 120 net wells on production in the Viking during 2021.

Heavy Oil

Our heavy oil assets at Peace River and Lloydminster produced a combined 23,304 boe/d (91% oil and NGL) during the Q2/2021, as compared to 24,395 boe/d in Q1/2021. We scheduled minimal heavy oil development for the first half of 2021. Our heavy oil program kicked off in June with approximately 35 net wells planned for the year, including up to seven net wells in our Spirit River (Clearwater equivalent) play.

Peace River Clearwater

Across all of our core assets, inventory enhancement continues to be a priority. We are also committed to building and maintaining respectful relationships with Indigenous communities and creating opportunities for meaningful economic participation and inclusion. In early 2020, we executed a strategic agreement with the Peavine Métis settlement in the Peace River area that covers 60 sections of land directly to the south of our existing Seal operations. At the time, we identified significant potential for this early stage exploratory play targeting the Spirit River formation, a Clearwater formation equivalent.

Pembina Area Duvernay Light Oil

Production in the Pembina Duvernay averaged 1,698 boe/d (80% oil and NGL) during Q2/2021, as compared to 2,138 boe/d in Q1/2021. We now have nine producing wells in the Pembina area and have significantly de-risked our approximately 38-kilometre long acreage fairway, where we hold 232 sections (100% working interest) of Duvernay land. We expect to bring two additional 100% working interest wells on production during the third quarter.

2022 Guidance

Our 2022 guidance remains unchanged as we target production of 80,000 to 83,000 boe/d with exploration and development expenditures of $400 to $450 million. Based on the forward strip(1), we expect to generate over $550 million of free cash low(2) in 2022.

• 2022 Guidance – Exploration and development expenditures $400 – $450 million
• Production (boe/d) 80,000 – 83,000

Operating Results
Eagle Ford and Viking Light Oil Production in the Eagle Ford averaged 30,428 boe/d (82% oil and NGL) during Q4/2021 and 30,731 boe/d for the full-year 2021. In 2021, we invested $105 million on exploration and development in the Eagle Ford and generated an operating netback(1) of $437 million. During 2021, we participated in the drilling of 67 (15.5 net) wells and brought 93 (23.1 net) wells onstream. We expect to bring approximately 14 net wells onstream in 2022.

Production in the Viking averaged 16,313 boe/d (88% oil and NGL) during Q4/2021 and 17,278 boe/d for the full-year 2021. In 2021, we invested $116 million on exploration and development in the Viking and generated an operating netback(1) of $327 million. During 2021, we participated in the drilling of 123 (121.2 net) wells and brought 116 (114.2 net) wells onstream. We expect to bring approximately 145 net wells onstream in 2022.

Heavy Oil
Our heavy oil assets at Peace River and Lloydminster (excluding our Clearwater development) produced a combined 24,217 boe/d (91% oil and NGL) during Q4/2021 and 23,579 boe/d for the full-year 2021. Our 2021 drilling program was heavily weighted to H2/2021 and included three net Bluesky wells at Peace River and 21.5 net wells at Lloydminster. In 2021, we invested $38 million on exploration and development in Peace River and Lloydminster and generated an operating netback(1) of $231 million. In 2022, we will drill approximately nine net Bluesky wells at Peace River and 37 net wells at Lloydminster.

Peace River Clearwater
We are committed to building and maintaining respectful relationships with Indigenous communities and creating opportunities for meaningful economic participation and inclusion. We have executed two strategic agreements with the Peavine Métis Settlement in the Peace River area that cover 80 sections of land directly to the south of our existing Seal operations. At the time, we identified potential for an early stage exploratory play targeting the Spirit River formation, a Clearwater formation equivalent. When combined with our legacy acreage position in northwest Alberta, we estimate that over 125 sections are highly prospective for Clearwater development.

Our 2021 appraisal program yielded exceptional results with production increasing from zero at the beginning of 2021 to over 3,000 bbl/d in January 2022. Our two eight-lateral wells (6-31 and 14-31) drilled during the fourth quarter and offsetting our highest initial rate well (11-31) generated 30-day initial production rates of 921 bbl/d and 815 bbl/d, respectively. With the performance of these two wells, our Peavine development has now yielded four of the top five initial rate Clearwater wells drilled-to date across the entire play. In addition, our eight lateral appraisal well (14-11) drilled on our northern acreage generated a very economic initial production rate (through its first twenty-five days of production) of approximately 120 bbl/d, consistent with our expectations. On our Seal legacy lands, we drilled a successful exploration well in late 2021 with a 30-day initial production rate of 147 bbl/d and we have a follow-up well scheduled for H2/2022.

Our first quarter 2022 drilling program is underway with two rigs that will see ten wells drilled on our Peavine lands. Importantly, we have successfully executed our first three extended reach horizontal multi-lateral wells at Peavine, which are utilized to provide appropriate set-backs to residents and environmentally sensitive areas. In aggregate, we expect to bring 18 wells onstream this year. To-date, we have de-risked 20 sections of land and pending further success, the play holds the potential for greater than 200 locations. The Clearwater generates strong economics with the ability to grow organically while enhancing our free cash flow profile.

Pembina Area Duvernay Light Oil
Production in the Pembina Duvernay averaged 2,668 boe/d (83% oil and NGL) during Q4/2021 and 2,008 boe/d for the full-year The increased volumes during the fourth quarter reflect two wells brought onstream in October 2021. As a follow-up to our 2021 program, we are currently drilling a three-well pad which is expected to be onstream in Q3/2022.