Baytex Energy Corp. TSX:BTU.UN NYSE:BTU is a Calgary based oil and natural gas producer, developer and explorer. The company has a balanced product mix with most of its projects developing light oil assets but heavy oil (bitumen) making up most of its resource and natural gas reserves being maintained through acquisitions; that reduces risks because although lower prices for Western Canadian Intermediate heavy oil with respect to west texas conventional oil would affect heavy oil revenues it would be buffered by the subsequent price increases in conventional oil and natural gas. Though 2P reserves are 229 million boe (2010/2011, 16% higher than the 200 million boe in 2009), 70% of which is heavy oil, it has a much larger resource base due to exposure to Alberta's oil sands and the rest of the Western Canadian Sedimentary Basin. With a debt to cash ratio 75% lower in 2009 than 2004 Baytex has siginificantly improved capital efficiencies. Total proved reserves are 140 million boe 8% higher than in 2009.[1]

Although it had a lot of success as a trust (more than doubled market capitalization between september 2009 and september 2010 (2.30958 billion to over 5 billion).[2] it plans to renounce that status by 2011 due to a change in trust legislation.

Due to changes in tax incentives/tax structure implemented in 2010 by the government of Canada the company intends to convert to a corporation by early 2011 (unitholders approved of the change on December 10, 2010, Baytex announced its intention in its 2010 third quarter report released in October).[3] Vermilion Energy (similar in size to Baytex, produces 30-35,000 bbls/d (3qfy10)) also responded to the tax changes by renouncing its status as a trust.

Although acquisitions played a key role most recent growth (the acquisition of Burmis Energy (11% its size) in early 2008 for $181 million gave it the 50 million barrel resource at Seal Lake, Alberta (part of the Peace River Oil Sands Project) then later in 2009 and 2010 the purchase of significant heavy oil and gas assets in Kerrobert and other locations in Alberta and Saskatchewan in 2 separate deals with True Energy Trust and Petrobank Energy and Resources (cost it a total of US$94.9 million but the true cost was reduced by a royalty on production that was also obtained);[4] Organic growth has also picked up (Temple Flags (operated since 2000) is ranked next to Seal as the largest producer of heavy oil, other conventional oil projects that the company has invested heavily in are nearing or begining the operational phase of development (Cold Lake, Divide, North Dakota where light oil production more than doubled in 2009).[5]

In January 2010 Baytex used a credit facility to finance the $156.5 million acquisition of heavy oil assets in Saskatchewan (Seal & Lloydminster areas). 95,600 acres in the Seal area (2011 production from there is estimated to be over 1690 bbls/d). The deal raises 2P reserves by 10.5 million boe and costs Baytex $14.9/(2P boe). Prior to the deal the company had $325 million in capital expenditure set aside intended to boost production up to 47-48,000 barrels of oil equivalent per day.[6]

Company Overview

Reserves (2011) are 73% heavy oil, 18% light oil and 9% natural gas. 53% of production comes from Alberta, 40% Saskatchewan, 4% British Columbia and 3% USA. In 2010 total production was 67% heavy oil, 16% light oil and 16% natural gas.[7] Average production reached a record high 45,015 boe/d in the fourth quarter of 2010 (44,799 boe/d in the third quarter of 2010, 8.16% higher year on yea) up 5% from a year before). For the 2010 fiscal year production totalled 44,341 boe/d 7.15% higher than fiscal 2009 (44,113 boe/d first nine months of 2010 (64-65% heavy oil). Average 2009 natural gas production was about 8,526 boe/d representing about 57% of the contribution from the Canadian Light Oil and Gas division. In total there are in excess of 10 core properties spanning the Western Canadian Sedimentary Basin and NE North Dakota. For fiscal 2010 heavy oil production was 28,585 boe/d (representing 64.5% of total production up from 59.6% in 2009 and 58.5% in 2008). For 2010 light oil & natural gas liquids represented 14.75% of total production (6,539 boe/d) down from 16.76% (6,937 boe/d) in 2009 and 18.87% (7,595 boe/d) in 2008. Natural gas represented 9,217 boe/d (or 55.3 MMcf/d) 20.79% of total production in 2010 down from 23.6% (9,767 boe/d) in 2009 and 22.65% (9,114 boe/d) in 2008.[7]

Even though heavy oil has high production costs (oil prices need to be relatively high to make it profitable for company to produce) exploration and development costs are low compared to conventional oil (for example long term leases connected to half of the Kerrobert project purchased from Petrobank gave it access to a resource base of 1.7 billion barrels of oil at a cost of less than $15 million).[8][9]

The three producing blocks in British Columbia (1) and Alberta (2) that constitute the Light Oil and Gas division produced 36.4% of the company total in 2009 (the fraction has been lowered slightly since, light oil was down to under 15% in the third quarter of 2010 compared to nearly 19% in 2008). The largest of them is Pembina (about half of the division's total production).[10]

Of the 9 heavy oil properties in operation 3 produce under 500 bbls/d (early production) and 6 produce oil and natural gas. The two largest, Templeflags and Seal combined to produce 10,000 boe/d in 2009 (and even higher by the third quarter of 2010 when heavy oil made up 64.6% of total production up from 57% in 2009).[11]


Baytex Energy is 67% owned by institutional investors (51% of them being in Canada), 32% retail investors (17% in Canada, 15% in the USA) and 1% insiders. 67% of company stock is owned by Canadians, 28% Americans, 3% Europeans and 1% insiders.[7]

Corporate structure/wholly owned subsidiaries (100%)

3 (Baytex Energy Ltd., Baytex Energy Partnership, Baytex Oil & Gas Ltd.) are based in Calgary, 1 (Baytex Energy USA Ltd. which oversees North Dakota operations) is based in Colorado and another 1 (BEL Liquidity Management LLC) is based in Hungary.[12]

Business and Financials (revenue, earnings, assets)

Capital Expenditures (CAPEX) totalled 224.498 million Canadian dollars in the first nine months of 2010 up 8.16% when compared to the corresponding period in 2009. Though debt increased 15% in the third quarter of 2010 (June to September) net income rose 101.35% causing the total monetary debt to income ratio to drop from 7.82 (3qfy09) to 4.47 (3qfy10).[13]

Financial Statement key data Balance Sheet

(000,000 $ Canadian)

2007 2008[14] 2009[14] 9M09[13] 9M10[13] change 2010[1]

(000,000 $ Canadian)

2007 2008[14] 2009[14] 9M09[13] 9M10[13] change 2010
net revenue 608.60 1,012.012 685.113 na 623.36 na 852.74 current assets 122.7 173.561 179.539 169.23 157.39 7% 173.00
gross revenue 1,159.718 789.820 551.781 741.639 34.41% total assets 1,407.15 1,812.333 1,884.005 1,862.26 2,052.28 10.20% 2,047.21
royalties 207.522 130.715 na na na bank loan 208.482 265.088 272.918 314.567 15.26%
expenses 514.26 723.200 616.626 440.996 519.82 17.87% 698.66 long term debt 190.00 217.273 150.000 150.000 150.000 0 453.77
EBIT 94.33 288.812 68.487 40.807 87.81 115.18% 154.08 shareholders equity 601.22 1,129.909 1,295.131 1,008.49 1,013.36 4.83% 1,029.03
operating cash flow 471.237 303.162 change in cash 0 10.177
net income 132.86 259.894 87.574 59.618 120.042 101.35% 177.63
depreciation,depl,acc 189.51 223.900 237.216 170.216 202.62 19.04%


In Dodsland, Saskatchewan, Crescent Point Energy.

Trends & Forces

Saskatchewan (27% of conventional) and Alberta (98% of conventional & unconventional) anchor Canada's petroleum industry

Virtually tied in second place with Newfoundland, Saskatchewan is home to about 69% as much conventional oil (2P reserves) as Alberta. In contrast, when conventional sources are included Alberta's share of reserves increases to 98%.[15] The oil sands (unconventional oil) are on track to account for 88% of Alberta's oil production by 2017, up from 64% in 2007.


  1. 1.0 1.1 Baytex Energy Q4 & Reserves Year End (2011-03-08).
  2. Baytex Energy Trust (BTE) Divident History (2009-09-09).
  3. Baytex Energy Trust gets unitholder approval to convert into a corporation (2010-12-10).
  4. Petrobank Energy buys out partners in two heavy oil projects (2010-10-19).
  5. United States Business Unit. Retrieved on 2010-12-21.
  7. 7.0 7.1 7.2 Baytex Energy April 1, 2011 Corporate Handout (2011-04-01).
  8. Petrobank receives regulatory approval for Dawson THAI (2010-11-30).
  9. Baytex Energy Trust:Stock of the day (October 2009).
  10. Canadian Light Oil & Gas Business Unit. Retrieved on 2010-12-21.
  11. Baytex Third Quarter 2010 Report (2010-11-10).
  12. Baytex Energy Trust 2009 Annual Report (2010-03-26).
  13. 13.0 13.1 13.2 13.3 13.4 Baytex Energy Trust 2010 Third Quarter Results (2010-11-10).
  14. 14.0 14.1 14.2 14.3 2009 Annual 40K SEC Report (March 2010).
  15. NEB Canadian Energy Overview 2007 (2007).
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