Breakeven Point
To calculate Baytex's unhedged breakeven point (defined as the oil price it needs to have breakeven cash flow while maintaining production levels), I've assumed production of 64,000 BOEPD. This is lower than its Q2 2016 production level, but it also sold approximately 2,250 BOEPD in production and expects its remaining production to fall during the second half of the year due to its reduced capital expenditure budget.
Baytex should reach breakeven at approximately $52 WTI oil, allowing for a $23 differential for its Canadian heavy oil and an approximately $5 differential for its light oil and condensate. At that oil price, it would generate approximately $676 million in revenue.
| | Units | $ Per Unit | $ Million |
| Heavy Oil | 7,300,000 | $29.00 | $212 |
| Light Oil and Condensate | 7,250,360 | $46.76 | $339 |
| NGLs | 3,409,5 | $11.73 | $40 |
| Natural Gas | 33,945,000 | $2.62 | $85 |
| Total | | | $676 |
Baytex mentioned that it needed $230+ million to maintain production levels, with around two-thirds of that allocated to maintaining Eagle Ford production levels and the remainder needed to maintain Canadian production levels. I've used $220 million in these calculations since Baytex's production is forecast to be at a lower level than when it last discussed maintenance capital. Baytex's breakeven point is improving slightly with the shift towards lower cost Eagle Ford production.
| | $ Million |
| Royalties | $162 |
| Operating Expenses | $167 |
| Transportation Expenses | $17 |
| General And Admin | $38 |
| Cash Interest | $75 |
| Capital Expenditures | $220 |
| Total | $679 |