EARNINGS / Baytex Energy Announces Financial And Operating Results
Quarter Ended March 31, 1998
TSE, ASE SYMBOL: BTE.A
JUNE 1, 1998
CALGARY, ALBERTA--Baytex Energy Ltd. (BTE.A--TSE, ASE) of Calgary,
announced today financial and operating results for the quarter
ended March 31, 1998.
We are pleased to provide Baytex's 1998 First Quarter results on
the Corporation's operating and financial results for the quarter
ended March 31, 1998. The drilling of a record 84 wells in the
first quarter of 1998 has resulted in the Corporation having
approximately 6,300 boe/d to place on production.
Highlighting the first quarter was a major new discovery of an
estimated 78 million-barrel oil pool in Saskatchewan.
Three-dimensional seismic has been acquired and nine wells have
been drilled to delineate this pool. Current production is 730
bopd from five producing wells with an additional 35 drilling
locations having been identified. The Corporation has plans to
lock in a floor oil price of between $16.16 U.S. and $16.42 U.S.
with a $6.60 U.S. differential for the last quarter of 1998. This
arrangement would allow the Corporation to protect the downside in
oil prices and retain most of the upside should oil prices
recover. At these prices the North Hoosier project would have a
greater than a three recycle ratio. Full-scale development of
this project is underway with production estimated to be
approximately 5,200 bopd when the project is completed.
The Corporation also had a significant discovery of natural gas
and condensate in west central Alberta. The initial well in this
pool is capable of producing over 12 mmcf/d of natural gas and 480
bbl/d of ngl. Production from this well is currently facility
constrained and is producing 6.0 mmcf/d and 240 bbl/d of ngl.
There are a minimum two follow-up wells to be drilled offsetting
this discovery. At Gold Creek Alberta, Baytex has five
gas/condensate wells drilled awaiting tie-in. The results of
these wells are being held confidential pending negotiations in
the area. At Leahurst, Baytex had a first quarter discovery that
is expected to produce at 6 mmcf/d starting in June 1998.
Baytex participated in the drilling of 84 (76.4 net) wells in the
first three months of 1998, a record quarter for the Corporation.
This activity resulted in 33 (29.5 net) oil wells, 27 (25.37 net)
gas wells, and 24 (21.56 net) dry and abandoned wells. This
represents a 71 percent success ratio. Average working interest
in the first quarter of 1998 was 91 percent compared to 98 percent
for the same period in 1997.
Petroleum and natural gas sales increased to $24.2 million in the
first quarter of 1998, a 132 percent increase from Baytex's $10.4
million in the first quarter of 1997. Oil and ngl revenue
increased by 151 percent to $10.8 million on daily production of
8,774 bbl/d. Natural gas revenue increased by 120 percent to
$13.4 million on daily production of 75.0 mmcf/d. Oil and ngl
prices were 47 percent lower averaging $14.00 per bbl compared to
Baytex's $26.61 in 1997 and natural gas prices averaged $2.00 per
mcf up marginally from $1.97 in the first quarter of 1997.
Baytex's operating and financial performance for the first quarter
was significantly impaired by the sharp decline in commodity
prices. As a result of this decrease in commodity prices,
revenue, cash flow and earnings were negatively impacted. Low oil
prices and Alberta Energy and Utilities Board restrictions
resulted in 3,900 bopd being shut-in. Growth in natural gas
production was delayed as the Corporation started its winter gas
drilling program in the last week of December 1997.
Outlook
Baytex is now in a position to increase oil production
significantly as a result of its first quarter discovery in
Saskatchewan. Full-scale development of this pool will take
approximately four months to complete, with anticipated production
of approximately 5,200 bopd.
In West Central Alberta, further development of the Corporation's
first quarter gas/condensate discovery is expected to add
deliverability of 250 boe per well. At Westerose, Alberta, the
Corporation will continue its aggressive development program on
the Basal Belly River pool with 12 wells planned. A water flood
is underway in order to increase recoverability and achieve higher
production allowables, which are currently being restricted by
approximately 1,200 bopd.
When oil prices recover and differentials narrow, Baytex is poised
to develop the Carruthers heavy oil pool. Up to 420 wells can be
drilled on this property. The initial 120 wells planned for the
first quarter of 1998 were estimated to add approximately 8,100
bbl/d of oil production. The capital expenditure program for this
project was deferred and was redirected to natural gas projects,
light oil projects and acquisitions.
On the exploration front Baytex has several exciting prospects to
drill by the end of the summer 1998. The Corporation is currently
drilling a Swan Hills formation test in West Central Alberta,
targeting gas condensate with reserve potential of 68 bcf. At
Ferrier, Alberta, Baytex will drill a Mississippian Formation
exploration test, with gas and condensate potential of 25 bcf. At
Airdrie, just North of Calgary, the Corporation will drill an
Elkton Formation test targeting gas and condensate with 30 bcf
potential.
With the decline in commodity prices the Corporation has $100
million in its budget set aside for strategic acquisitions. As an
ongoing business strategy Baytex continues to evaluate strategic
acquisitions in order to optimize shareholder value. The
Corporation expects to execute one or more of these transactions
in the near term.
Baytex will continue to weather low commodity prices by
redirecting spending to natural gas projects at Gold Creek, Alder
Flats and Leahurst and economic oil development projects. We look
forward to reporting the progress of Baytex's new production
coming on stream, current development projects, acquisitions and
several high-impact exploration tests.
/T/
Production Funds Funds
( boe Revenue Earnings Earning flow flow
Year per day) (000's) (000's) s/share (000's) /share
------------------------------------------------------------
1998-Q1 16,100 $24,157 $ 957 $0.03 $10,932 $0.32
1997-Q1 5,260 $10,430 $2,156 $0.14 $ 6,459 $0.42
1996-Q1 2,267 $ 3,848 $ 908 $0.09 $ 2,419 $0.24
/T/
Note: In October 1997, Baytex completed a business combination
that saw it merge with Dorset Exploration Ltd. This combination
has been accounted for as a "pooling of interests" since a clear
acquirer could not be identified in the transaction. As a result,
information contained in the Corporation's financial statements
has been presented combining both Corporations' historic results.
The Information presented above is presented comparing the
combined Corporation's results to the Baytex results as the
information was presented in Baytex's 1997 first quarter report.
Baytex is an intermediate, oil and gas exploration company whose
shares are traded on The Toronto Stock Exchange and The Alberta
Stock Exchange under the trading symbol "BTE.A".
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