RE:Ramping up Clearwater drilling.Good afternoon Freddie,
Baytex in their February presentation show 18 Clearwater wells in 2022.
Q: What would it take to double that to 36 wells or triple to 54 wells?
A: Well from a FCF spend perspective that is relatively easy
36 Wells = $25M additional (I believe $1.4M/well)
54 Wells = $50M additional (I believe $1.4M/well)
Q: How would it be funded
A:
At $90 FCF is $2.2M/day FCF
At $80 FCF is $1.7M/day FCF
At $70 FCF is $1.1M/day FCF
So assume you take the windfall FCF from $70 -> $90 that banks $1.1M per day
Based on this say Jan excess FCF "could" fund a double / Jan-Feb excess "could" fund a triple
HOWEVER...the next challenges would be securing the equipment and crew to be able to do this.
This is why I am very interested in the Q4/YE update and of course conference call!
After today 9 trading days left to hopefully get those answers on where the FCF is going to go.
I still think 50% needs to go to debt and I would say some FCF to drill to ensure they are in the 80-85K range....the rest shareholder returns would be my vote....with buybacks first...
Reference:
https://www.baytexenergy.com/files/pdf/corporate-handouts/2022/2022-02%20February%20Presentation.pdf FreddieSanford wrote: Could management potentially double or triple the currently planned drill program this year for the Clearwater prospect based on strengthening confidence in the play with drills to date?
Any opinion on the likelihood of such a move and the market reaction to it?