Baytex Energy (BTE) Q4 Results - Feb 29
Posted: Thu Feb 29, 2024 3:46 pm
Except for the big non-cash write off ("impairment") everything else beat my forecast and looks great.
2023 Highlights
> Completed the acquisition of Ranger Oil Corporation ("Ranger") on June 20, 2023.
> Reported cash flows from operating activities of $474 million ($0.57 per basic share) in Q4/2023 and $1,296 million
($1.84 per basic share) for 2023.
> Delivered adjusted funds flow of $502 million ($0.60 per basic share) in Q4/2023 and $1,594 million ($2.26 per basic
share) for 2023. < Beat my forecast of $454.3 million Adjusted Operating Cash Flow for Q4
> Generated free cash flow of $291 million ($0.35 per basic share) in Q4/2023 and $544 million ($0.77 per basic share)
for 2023.
> Increased direct shareholder returns to 50% of free cash flow and returned $260 million to shareholders. Repurchased
40.5 million common shares for $222 million, representing 4.7% of our shares outstanding, and declared two quarterly
dividends of $0.0225 per share, totaling $38 million in 2023.
> Increased production per basic share by 16% in 2023, compared to 2022. Production for the full-year 2023 averaged
122,154 boe/d (85% oil and NGL), compared to 83,519 boe/d in 2022 (84% oil and NGL).
> Production in Q4/2023 averaged 160,373 boe/d (83% oil and NGL), exceeding guidance of 158,000 to 160,000 boe/d,
and up 6% from Q3/2023 on exploration and development expenditures of $199 million, 10% below guidance. < Q4 production beat my forecast, but it was more "gassy" than I expected.
> Divested of our Viking assets at Forgan and Plato in southwest Saskatchewan (production of approximately 4,000 boe/d)
for proceeds of $160 million, including closing adjustments.
> Improved our cash cost structure (operating, transportation, and general & administrative expenses) inQ4/2023 by 12%
on a boe basis, as compared to Q4/2022.
> Maintained balance sheet strength with a total debt to EBITDA ratio of 1.1x. During the fourth quarter we reduced our
net debt by 10% ($290 million).
> Reduced our GHG emissions intensity in 2023 by 9% from 2022 levels and achieved our 65% reduction target, relative to
our 2018 baseline, two years early.
> Proved developed producing reserves increased by 49%, from 124 MMboe to 185 MMboe
> Proved reserves increased by 55%, from 264 MMboe to 410 MMboe
> Proved plus probable reserves increased by 51%, from 438 MMboe to 663 MMboe
> At year-end 2023, the present value of our 2P reserves, discounted at 10% before tax, is estimated to be $7.8 billion < over $9.00Cdn per share ($5.9 billion at year-end 2022).
Everything looked great until this last paragraph:
We recorded a non-cash impairment of $834 million on our legacy non-operated Eagle Ford and retained Viking assets as the
carrying value of our oil and gas properties exceeded their recoverable amounts. This resulted in a net loss of $626 million
($0.75 per basic share) inQ4/2023 and $233 million ($0.33 per basic share) in 2023.
MY TAKE: These big non-cash impairment losses look bad, but it is just like taking a lot of DD&A expense at once. My valuations are based on operating cash flow per share, free cash flow, high-quality "Running Room" and the ability to pay dividends and fund stock buybacks. BTE has the "Good Stuff".
2023 Highlights
> Completed the acquisition of Ranger Oil Corporation ("Ranger") on June 20, 2023.
> Reported cash flows from operating activities of $474 million ($0.57 per basic share) in Q4/2023 and $1,296 million
($1.84 per basic share) for 2023.
> Delivered adjusted funds flow of $502 million ($0.60 per basic share) in Q4/2023 and $1,594 million ($2.26 per basic
share) for 2023. < Beat my forecast of $454.3 million Adjusted Operating Cash Flow for Q4
> Generated free cash flow of $291 million ($0.35 per basic share) in Q4/2023 and $544 million ($0.77 per basic share)
for 2023.
> Increased direct shareholder returns to 50% of free cash flow and returned $260 million to shareholders. Repurchased
40.5 million common shares for $222 million, representing 4.7% of our shares outstanding, and declared two quarterly
dividends of $0.0225 per share, totaling $38 million in 2023.
> Increased production per basic share by 16% in 2023, compared to 2022. Production for the full-year 2023 averaged
122,154 boe/d (85% oil and NGL), compared to 83,519 boe/d in 2022 (84% oil and NGL).
> Production in Q4/2023 averaged 160,373 boe/d (83% oil and NGL), exceeding guidance of 158,000 to 160,000 boe/d,
and up 6% from Q3/2023 on exploration and development expenditures of $199 million, 10% below guidance. < Q4 production beat my forecast, but it was more "gassy" than I expected.
> Divested of our Viking assets at Forgan and Plato in southwest Saskatchewan (production of approximately 4,000 boe/d)
for proceeds of $160 million, including closing adjustments.
> Improved our cash cost structure (operating, transportation, and general & administrative expenses) inQ4/2023 by 12%
on a boe basis, as compared to Q4/2022.
> Maintained balance sheet strength with a total debt to EBITDA ratio of 1.1x. During the fourth quarter we reduced our
net debt by 10% ($290 million).
> Reduced our GHG emissions intensity in 2023 by 9% from 2022 levels and achieved our 65% reduction target, relative to
our 2018 baseline, two years early.
> Proved developed producing reserves increased by 49%, from 124 MMboe to 185 MMboe
> Proved reserves increased by 55%, from 264 MMboe to 410 MMboe
> Proved plus probable reserves increased by 51%, from 438 MMboe to 663 MMboe
> At year-end 2023, the present value of our 2P reserves, discounted at 10% before tax, is estimated to be $7.8 billion < over $9.00Cdn per share ($5.9 billion at year-end 2022).
Everything looked great until this last paragraph:
We recorded a non-cash impairment of $834 million on our legacy non-operated Eagle Ford and retained Viking assets as the
carrying value of our oil and gas properties exceeded their recoverable amounts. This resulted in a net loss of $626 million
($0.75 per basic share) inQ4/2023 and $233 million ($0.33 per basic share) in 2023.
MY TAKE: These big non-cash impairment losses look bad, but it is just like taking a lot of DD&A expense at once. My valuations are based on operating cash flow per share, free cash flow, high-quality "Running Room" and the ability to pay dividends and fund stock buybacks. BTE has the "Good Stuff".