BTE — Baytex Energy Corp.

Baytex Energy Corp. Q1 2026 Earnings Call Summary

1. Key Financial Results and Metrics

• Production: Averaged 69,500 BOE per day, exceeding guidance.
• Adjusted Funds Flow: $152 million, equating to $0.20 per basic share.
• Operating Netback: Improved to $35.36 per BOE from $29.30 in Q4 2025.
• Net Cash Position: Ended the quarter with $591 million.
• Share Repurchase: 35 million shares (4.6% of outstanding shares) repurchased for $174 million.
• Capital Expenditures: Increased to $625 million, reflecting higher activity levels.
• Dividend: Remains unchanged at $0.0225 per share.

2. Strategic Updates and Business Highlights

• Leadership Changes: Chad E. Lundberg appointed CEO, Kendall Arthur as COO.
• Production Guidance: Raised for 2026 to 69,000-71,000 BOE per day, targeting 6%-8% annual growth through 2028.
• Duvernay Development: First four wells drilled, with completions underway; 13 wells expected online in 2026.
• Heavy Oil Portfolio: Strong results from Peavine and Lloydminster; ongoing exploration and development with significant drilling inventory.
• Gemini Thermal Project: Regulatory approval obtained; potential for increased production beyond initial 5,000 barrels per day target.

3. Forward Guidance and Outlook

• Production Growth: Targeting 6%-8% annual growth through 2028, with a focus on maintaining net cash position.
• Total Shareholder Return: Aiming for 15% annual return at a mid-cycle oil price of $70, through growth, dividends, and share buybacks.
• Free Cash Flow Expectations: Anticipated to be around $250 million for 2026, contingent on WTI price movements.

4. Bad News, Challenges, or Points of Concern

• Hedging Losses: Realized $29 million in hedging losses; exposure to WTI prices will increase as hedges roll off.
• Service Cost Inflation: Some minor cost inflation noted, particularly in diesel; potential impact on future capital expenditures.
• Market Volatility: The ongoing geopolitical situation and its impact on oil prices could affect financial performance.

5. Notable Q&A Insights

• Total Shareholder Return: Clarified that the 15% target includes production growth, dividends, and share buybacks; significant buyback activity expected in 2026.
• Gemini Project: Potential to increase production capacity beyond the initial target; ongoing assessment of technical and commercial aspects.
• Balance Sheet Philosophy: Emphasis on maintaining a strong balance sheet; cautious approach to leverage, with a threshold for debt considered only under favorable conditions.
• Cost Structure in Duvernay: Targeting further cost reductions as operations scale; potential for improved efficiencies with increased rig activity.

This summary encapsulates the key financial metrics, strategic initiatives, and future outlook for Baytex Energy Corp. while also addressing potential challenges and insights from the Q&A session.