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Gold/Mining/Energy : Oil Sands and Related Stocks
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From: Taikun9/30/2005 9:50:31 AM
  Read Replies (1) of 25575
 
RJ on the BTE.UN acquisition and first SAGD operation:

BTE: Baytex Acquires 3,500 boe/d and Updates Guidance; Increasing Target Price
to $22.50

Yesterday, Baytex announced a 3,500 boe/d acquisition in the trust's core
western Saskatchewan area for $73.0 million. The assets purchased are long life
(14.2 years proved plus probable RLI) and composed mainly of heavy oil (96%) and
natural gas (4%). At $20,900/boe/d for production and $4.05/boe for reserves on
a proved plus probable basis, the acquisition is far below the average for
recent transactions in our universe ($51,000/boe/d and $15.75/boe) but
reasonable for heavy oil. Baytex has identified over 100 drilling and
recompletion locations on the properties and has acquired 1,750 boe/d of SAGD
production that represents the trust's first SAGD operation. With the
acquisition and a revised capital budget for next year of $105 million, the
trust expects production to average 37,000 boe/d next year. Using a US$60.00
WTI and $8.50 natural gas wellhead price, Baytex expects next year's cash flow
to be approximately $315 million. Our revised 2006 forecasts are for production
of 35,750 boe/d and cash flow (under the Raymond James price deck) of
approximately $333 million. Our CFPU estimate for 2006 increases from $4.35 to
$4.64 due to the cash nature of the deal while our 2006E debt to cash flow ratio
rises from 1.0 to 1.1 times (our 2005 debt to cash flow ratio increases from 1.7
to 1.9 times due to the timing of the deal). Our estimates of 2005 and 2006 net
asset value increase significantly due to the low cost of adding heavy oil
reserves. We are reiterating our STRONG BUY rating and increasing our target on
Baytex from $21.50 to $22.50.
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