Baytex Energy (BTE.TO) Q1 Results - May 6

[dan_s]

On May 5 Baytex Energy (BTE.TO) reported its operating and financial results for the three months ended March 31, 2025 (all amounts are in Canadian dollars unless otherwise noted).

"Baytex efficiently executed its exploration and development program and delivered first quarter results consistent with our full-year plan," said Eric T. Greager, President and Chief Executive Officer. "In a challenging operating environment marked by macroeconomic uncertainty and a volatile commodity price, we are pleased to have delivered free cash flow and returns to shareholders. As these headwinds persist, we remain focused on disciplined capital allocation and managing factors within our control to ensure financial resilience."

First Quarter 2025 Highlights

Reported cash flows from operating activities of $431 million ($0.56 per basic share).

Generated net income of $70 million ($0.09 per basic share). < Slightly less than my forecast of $71.5 million.

Delivered adjusted funds flow of $464 million ($0.60 per basic share). < Beat my forecast of $400.8 million Adjusted Operating Cash Flow.

Achieved production of 144,194 boe/d (84% oil and NGL), a 2% increase in production per basic share, compared to Q1/2024. < Slightly above my forecast.

Generated free cash flow of $53 million ($0.07 per basic share) and returned $30 million to shareholders.

Repurchased 3.7 million common shares for $13 million, at an average price of $3.49 per share.

Paid a quarterly cash dividend of $17 million ($0.0225 per share) on April 1, 2025.

Executed a $405 million exploration and development program, which at its peak, had 13 rigs running.

Maintained balance sheet strength with a total debt to Bank EBITDA ratio of 1.0x. < This is good.

2025 Outlook

Global crude oil markets remain under pressure due to broad economic uncertainty driven by concerns related to U.S. tariffs, global trade tensions, and OPEC's recent decision to increase crude oil supply. The benchmark WTI price has recently been trading in the US$55 to US$60/bbl range, down from a peak of US$80/bbl in early January.

Against this global economic backdrop, we continue to prioritize free cash flow, while taking a disciplined approach to capital allocation and our balance sheet. Our 2025 exploration and development budget is set at $1.2 to $1.3 billion and supports annual production of 148,000 to 152,000 boe/d. In light of the current commodity price environment, we anticipate full-year capital expenditures and production to trend toward the low end of these ranges. < My forecast will now be based on full-year production of 148,000 Boepd.

Given these adjustments to our 2025 plan, at US$60/bbl WTI for the balance of the year, we expect to generate approximately $200 million of free cash flow this year. < This should cover the dividends.

In this pricing environment, we benefit from our disciplined hedging program, which helps mitigate the volatility in revenue due to changes in commodity prices. For the balance of 2025, we have hedges on approximately 45% of our net crude oil exposure using two-way collars with an average floor price of US$60/bbl.

To further strengthen our balance sheet, in the near-term we intend to allocate 100% of our free cash flow to debt repayment after funding the quarterly dividend payment. We will continue to monitor market conditions and execute a prudent approach to shareholder returns, which has historically included a combination of share buybacks and quarterly dividend payments.

[dan_s]

My updated forecast/valuation model for BTE has been posted to the EPG website.

The Canadian companies are getting zero love these days.
BTE is now trading at slightly above 1X my operating cash flow forecast for 2025 of $2.02Cdn per share.

Q1 Adjusted Operating Cash Flow per share was $0.60Cdn and the stock closed today at $2.09Cdn.

Baytex is free cash flow positive. The balance sheet is in good shape. It pays a small dividend. A conservative valuation multiple is 3X CFPS.

Dan Payne a 5-Star analyst at National Bank of Canada submitted an updated report to TipRanks today with a price target of $5.00Cdn.