Baytex Energy (BTE) Update - July 18

[dan_s]

We are going to publish a profile on Baytex this week. They closed the merger with Ranger Oil, one of my favorites in our Sweet 16, on June 20th. My 2H 2023 forecast looks very promising. Crude oil & NGL sale generate over 95% the Baytex revenues and by now you know that I am expecting oil prices to move much higher in Q4 and stay high in 2024.

I want to see Q2 actual results and updated guidance before adding it to one of our Growth Portfolios. The size of the Company (~153,000 Boepd) makes it large enough for the Sweet 16.

Based on my forecast, BTE is trading at ~2.4 X operating cash flow per share AND my CFPS forecast is lower than the current TipRanks' consensus CFPS forecast of $2.85Cdn for 2023. I am expecting WTI to average $90/bbl in 2024. If so, Baytex should generate over $2.5Cdn billion of operating cash flow next year and ~50% of it should be free cash flow.

The merger with Ranger gives Baytex a lot of high-quality "running room" in South Texas.