Some confusion here.....It seems that some people on this board have the impression that Baytex had a "choice" in re-financing a portion of their debt AND that it's a "good thing" to have swapped a lower interest rate with a shorter term for a higher rate and longer term. Not sure what PLANET some folks are on or if they've been living under a rock for some years BUT times have drastically in the Canadian oil patch and the good ole days are long gone.
For starters, if you really "believe" that Baytex had many option when they tried to refinance some of the debt or a "choice" ......then some of you are living in la la land. They basically had two options keep the current debt as is OR take the best available. Since the basic main goal of ANY competent, logical and pragmatic person or business looking to refinance is to LOWER interest payments/interest rate not increase it. So WTF happened? Easy......nobody in thier right mind, banker or financier was going to give them a rate lower than 51/4 in the current evironment the Canadian oil patch is in.....no one.
Looking at the situation and thinking what COULD be done to improve (in their minds) with the debt coming due in 2021 they went to plan B......try to extend the pending doom as far out as possible with the best available rate currently on the table......and hoping the O&G situation improves before then. And voila, you get what resulted in the news release.
Was this a good move? Well, to answer that on a personal level you have to put yourself in their shoes as everyone all have a different perspective. Put this way, if you had a mortgage to refinance with the same terms they had, would you do it? Probably not....for most people. Did they have other options besides refinancing? Yes, imo they could have put some Canadian assets on the block. Even if the prices being offered for those assets were lowballed, better that than doing what they did. But "in their minds" they probably thought or are thinking the sector will most likely recover in 5 years time.
In the end, i disagree somewhat with that move, i believe the situation wil get a lot worse and all current Canadian assets will be devalued a lot more in the next 24 months AND it will probably take at least decade before the sector even "begins" a recovery. Even converting some debt into equity would have been a better move than tihs. Yes, it would have pi$$ed many s/h but is your main goal to please s/h or ensure at least some hope for survival for your company? With the current state of the O&G sector right now and if current trends continue in 2020 with both oil and gas pricing, meaning an average $50-60 for WTI and for gas many knowledgeable folks are saying gas low as $1.50--1.75....things are looking grim. If that prediction holds, i wouldn't be surprised to see Baytex hit an all time low of $1 this year.
Who's right? Who knows, but it seems in the short-term we both agree things arent going to be good for anyomne in the Canadian oil patch.
Goodluck to all......