Baytex Energy Corp T.BTE

Alternate Symbol(s): BTE

Energy Oil & Gas E&P

Baytex Energy Corp. is a Canada-based energy company. The Company is engaged in the acquisition, development and production of crude oil and natural gas in the Western Canadian Sedimentary Basin and in the Eagle Ford in the United States. Its crude oil and natural gas operations are organized into three main operating areas: Light Oil USA (Eagle Ford), Light Oil Canada (Pembina Duvernay / Viking) and Heavy Oil Canada (Peace River / Peavine / Lloydminster). Its Eagle Ford assets are located in the core of the liquids-rich Eagle Ford shale in South Texas. The Eagle Ford shale covers approximately 269,000 gross acres of crude oil operations. Its Viking assets are located in the Dodsland area in southwest Saskatchewan and in the Esther area of southeastern Alberta. It also holds 100% working interest land position in the East Duvernay resource play in central Alberta.

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Baytex Energy Corp > Turning point...

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Comment by dllscwbysfnon Nov 06, 2023 8:18am

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Post# 35718938

RE:RE:Turning point...

Also, every share you buyback you do not have to pay the dividend on!

uwebb429 wrote: The analysts agree that BTE is undervalued. Based on their numbers, anyone investing in BTE can expect a rate of return of approximately 34% during the next year or so.

BTE has approximately $1.6 B of term debt outstanding at interest rates of 8.50% and 8.75%. They also have another $1.1 B of revolving debt outstanding. I cannot find an exact interest rate number on the revolving debt but let's say that it is a little higher at maybe 10% or 12%.

What should Eric Greager do with any excess cash flow? Should he buy BTE shares which have an anticipated return of investment of 34% or should he pay down debt that has a return of investment of only 12%? The answer is simple. Eric Greager should be buying back shares as fast as possible and he should be buying back as many shares as possible. After the NCIB is maxed out, a SIB should be started to put any additional excess free cash flow to good use.

Page 11 of the corporate presentation shows that once the total debt level gets under $1.5 B, free cash flow going towards the base dividend and share buybacks will increase from 50% of free cash flow to 75% of free cash flow. BTE plans to do exactly what they should be doing.

https://www.baytexenergy.com/content/uploads/2023/11/23-11-November-Presentation.pdf

When a company is significantly undervalued and the projected returns are as high as they are, it also makes no sense to increase the meager dividend. The best use of excess cash flow is to continue buying back and cancelling shares.