Baytex Energy Corp T.BTE

Perspective

[masfortuna]

I think it's important to keep perspective o what the next few quarters may bring. 

1. According to the model provided by BTE, at $75 oil they will bring in about $250 million per quarter. These funds will go to pay the divy, debt and buyback shares. Debt does not have to go to "0" butreach a state that is manageable and derisked. With the old BTE, 800 million was the key metric based on cash flow numbers. Now that Ranger production has been added, I believe 1.6 billion is the new target. Assuming that they will put 500 miilion towards debt repayment, it will take 10 quarters to reach at $75 oil.  

2. Sharebuybacks are occurring on a regular basis but we still have over 850 million o/s. Assuming they buyback 20-30 million shares per quarter. It will take a couple of years before we can see 750 million o/s.

3.  The price of oil is trading above $75, but there is no guarantee that this price will remain at these levels. If it goes too high, we may see demand destruction and oo low will reduce timeframes for targets. Ideally " CONSISTENT" price between $80-$90  would be outstanding. 

In other words, BTE has a lot of potential but it will require a few years. For those that are projecting a much higher sp after the Q, they may be disappointed and may cause some downward pressure on the sp. This is a long game but for those that are patient, I believe you will be rewarded handsomely.
Gl!

[1234bmth]

How do you know people will be disappointed after Q3 results? Future performance certainly depends on oil price that no one knows where oil will be headed, at $80 plus oil I don't see any disappointment reason unless the management misses up things.

[dllscwbysfn]

I agree with Mas as a lot of people are looking for this great Q3 numbers. I think the numbers will be good but you really need time on your side. We grind away everyday which is great but it takes time to get the debt and share count down to more reasonable levels. Yes $80 plus wti really helps a lot and if the price stays in this range for a few quarters or even better years then you speed up

[Retiredgeo]

You are assuming that Baytex and the other mid-tier Canadian oil producers are going to remain underappreciated.  Q3 earnings season could fire up the whole group.  I'm expecting this week to be a very good week for BTE and next week to be even better.  We might bust that $7 ceiling sooner than you think.  We shall see.

[dllscwbysfn]

I assume nothing. I am just tempering people's expectations. I hope the SP goes through the roof!

[Retiredgeo]

If the truth be told I'm here for explosive share growth (according to Eric maybe $20/share by the end of 2024!!).  I'm not here for modest expectations.  There are too many other investment opportunities out there. I bought in at $5.51 CAD mid September.  I'm up $0.69/share in a little over a month.  Keep it going baby!

[Kelvin]

Yeah agree retiredgeo. Shale plays are fast cycle cash to cash. Spend a few million to drill and put a well online earning cash in 20 days delivering impressive ROI. Why do people think that Exxon spent $60 billion to buy Pioneer? 

[jack4567]

I agree.  Even if BTE's Q3 results are modest, Q4 guidance will be strong--and credible, given the progress of other Canadian oil producers that are managing cash flows similarly.

[HeavyBanana]

To preface things on "demand destruction" and prices going too low (presumably meaning below $75) equating to a much longer time frame for debt reduction and share buyback sounds logical but it has a built in assumption that demand destruction caused by a tipping point high price per barrel would create a price shock to the downside that goes significantly below $75 before the company

[masfortuna]

  Last July oil was at $120. This July oil was at $63. It might not go down in a straight line but it was pretty darn close.

[HeavyBanana]

Masfortuna, what were the reasons for the decline in price you cite? Was demand destruction one of them?

[masfortuna]

 No it wasn't. the main reason was the release of the spr combined with the FED calling for higher interest rates and a possible recession (which has yet to materialize).  Throw in the media as per this headline for oilprice. com from today, and yet get a 50% drop. FYI the article states that the banks see an end SOON to the energy boon cycle and are not sure why people should invest

[JohnnyDoe]

According to mgmt figures, debt is 2.6, the debt target is 1.5. They produce 1b fcf at 75 wti. At 75 wti and 50% shareholder returns, it will take 9 quarters to reach the debt target.  It's 20m a quarter to pay the existing dividend. That 180M. So there's roughly 800M to buybacks. The float will be around 750M when they hit the debt target.  They're are also planning

[masfortuna]

End of 2024 is in 4 quarters. You mean end of 2025 which is what I forecasted.

[HeavyBanana]

Masfortuna, you didn't answer the question if it was demand destruction that caused oil to go from $120 to $63 Interestingly, the SPR  held 588,317,000 barrels in January 2022 and at July of this year held 347,454,000 barrels. I think the FED was active raising rates to (causing panic),no? Don't think the SPR draw down supports demand destruction at $120 being the driver for oil to

[masfortuna]

 i agree that $70-90 will be the range. Demand destruction will no happen unless we hit high oil prices for an extended period of time. What "high" actually means is different for everyone but I am thinking $120-$140 range. 

[HeavyBanana]

Masfortuna, we now have a disciplined OPEC plus, a disciplined energy sector and more and more disciplined investors. Add all that up and you have $105 average  oil for the next many years and higher and higher individual stock prices with historically healthy dividends being doled out over the same next many years. Thanks for your responses. They better frame your reference of "demand

[dllscwbysfn]

I wouldn't be so sure guys about those high WTI prices. With the election next year the dems will do everything in their power to keep the price down. After the election though it might really run.  I hope I am wrong and that you guys are right!!

[Moemoney42]

As far as l'm concerned BTE needs to quit p!ssing around with the share buy backs and consolidate 1 for 2, cut the share count in half immediately, which would double the earnings per share, the divi if it stayed the same would be cut in half, so they could double it and still not spend a penny more and voila the metrics they're looking for is solved.. not to mention it would put the

[masfortuna]

The main issue is the debt load. granted that if oil stays at these levels it will correct itself BUT if oil drops significantly (back to $60???) , 2.6 billion is a lot. 

[Moemoney42]

Agreed the debt is the biggest issue.. that is why I say stop the buy backs and use those funds to pay down the debt instead. 

[Nextlegup]

Admittedly, I'm surprised by the armchair quarterback who seem to have it all figured out on what Baytex should do...and based on the comments, a significant lack of understand as to consolidations... Consolidating the the shares "DOES NOT" change the return investors receive...You consolidate shares....1 share for two...You have 1/2 the shares outstanding but double the dividend

[Moemoney42]

Talk about arm chair quarterbacks.. too bad some can't read..! I never said it "changes the return the investors receive" did I.. I said "cutting the share count in half and doubling the divi won't cost the company a penny more"..  If the share consolidation is done during a postition of strength (which I believe we'll see going forward) especially with the

[masfortuna]

 If you predit  "a position of strength", then why the  need to change anything?  I don't think the problem is unidimensional as you suggest. Regardless with anagement will do, it will take some time before we get a rewrite on what BTE is worth, IMHO

[Moemoney42]

I suggest that as many (including the company) are concerned about the high share count.. as well as, as I've mentioned in past posts, some investment houses will not invest in a company whose shares trade below $10 USD.. I thought I made that clear.?

[masfortuna]

There are many O&G companies that trade above $10 that have a p/b value (or whatever metric you choose) as low as BTE's. 

[Moemoney42]

That's not the point Mas.. I realize what you're saying.. my point is if we can attract another level of investors that will hopefully propel the stock higher as there's more demand for the stock... get it.?

[jleer42]

Stock consolitations are just not viewed positively, regardless of there being no financial impact. I would rather wait for the price to get above $10 on its own, however long that takes.

[masfortuna]

 Yes we might Moe. You are right about that, but at the end of the day I think it will be fairly limited so again I think patience is required at this point.

[downwithdotcom1]

how about you just wait a week or so until Q3 numbers out plus guidance even at $80 usd WTI . This is one of the catalysts that will set BTE on the course to $10..best part no share consolidation required....dwdc

[jdmecomber]

its going to easily get to $10 anyways,  this is a bad move

[Lina_Casa]

I agree.  With the election coming up next year, I see the dems doing everything possible to hold the price of oil down.  Your going to see articles about China slowing down every week and I think they will make the OPEC people their best friends and buy their votes.  Fundamentals will be surpressed and politics will ramp up full steam in 2024.  Oil and gas prices is way too

[HeavyBanana]

Ummm, we're currently starting to see articles about the Dem's being under pressure to start refilling the SPR into at least mid 2024. Gasoline prices are projected to keep falling through to year end 2023 regardless of oil prices going higher. We shall see if Biden has an argument to be made based on those two seemingly opposing factors.

[masfortuna]

   I am talking about hitting $20 NOT $7 Retired. I am not in this to make 10%.

[1234bmth]

What a prediction you made at $88 WTI till end of year, BTE  will reach $7 ? If oil holds $88 until year end BTE will be at or closer to double digit. 2 factors will keep BTE price low. 1- if oil goes down from here and falls below $80 and 2- if a significant overall market crash happens, if market goes higher or stays flat and WTI $88, then BTE will certainly be in double digit by Q4 report.

[dllscwbysfn]

I hope you are right. But stocks usually do not go up 75% in 4 months. But I still hope you are right.I would love to be wrong

[jleer42]

BTE took a big drop after the Ranger acquisition. I think it still has another 20% upside to get to the level of its peers. The whole O&G industry should be re-rated adding more upside for BTE. I think we may get a SP bump with Q3 results, but the big bump will be Q4, if oil stays over $80 until the results are released. This doesn't consider Clearwater, the potential of the two new plays

[masfortuna]

Well you, for one, have been complaining regularly on how disappointed you are lol!

[1234bmth]

Yes, I was complaining and still admit that BTE has performed poorly compared to its peers, and I blame the management on that. If you read my post carefully I still mentioned "unless the management misses up things", but here my point is at $88 WTI until year end BTE will be way above $7 except if oil drops or a market crash happens, and management has changed and I'll comment on