EARNINGS / Baytex Energy - 1998 Fourth Quarter Asset Disposition
Program Update
TSE, ASE SYMBOL: BTE.A
FEBRUARY 4, 1999
CALGARY, ALBERTA--Baytex Energy Ltd. (BTE.A - TSE, ASE) of Calgary
is pleased to announce that its 1998 fourth quarter asset
disposition program has generated proceeds totaling $85 million
which successfully reduces the Company's indebtedness to the level
required to ensure operating flexibility in a low oil price
environment. Aggregate production from the disposed properties was
20.8 million cubic feet of gas per day and 570 barrels of oil and
liquids per day, yielding a disposition value of $31,945 per
producing BOE. Proved reserves disposed were 75 billion cubic feet
(119 proved plus probable) of natural gas and 2.1 million barrels
(3.1 proved plus probable) of oil and liquids, representing a
disposition price of $8.85 per BOE of proved reserves ($5.67
proved plus probable).
Total debt as at December 31, 1998, pro forma the proceeds from
the above disposition program, would be approximately $119 million
compared to the $203 million as at September 30, 1998. This pro
forma debt is comprised of $87 million (US$57 million) of 7.23
percent senior secured term notes due November 2004 and $32
million of bank loans and working capital. This represents 2.9
times annualized cash flow based on current production levels
utilizing US$13.50 WTI oil and $2.40 wellhead gas pricing
assumptions.
Baytex has successfully grown its production throughout 1998.
Fourth quarter oil and gas production is estimated to average
18,100 BOE per day, which is 9 percent higher than the 16,686 BOE
per day in the third quarter and 17 percent higher than the 15,486
BOE per day in the second quarter this year. Current production,
after giving effect to the asset disposition, is approximately
15,000 BOE per day consisting of 5,100 barrels of light oil and
liquids, 4,300 barrels of heavy oil and 56 million cubic feet of
gas. The first quarter development drilling program should
increase gas production by up to 8 million cubic feet per day by
the end of this quarter. Owing to low oil prices, Baytex has not
planned for any significant capital expenditures for its oil
properties during the first quarter and this spending curtailment
has resulted in the current shut-in of approximately 400 barrels
per day of heavy oil production requiring workover expenses.
The low oil price environment has caused Baytex to defer
approximately one-third of its original 1999 capital budget that
was allocated to exploitation drilling of the Company's heavy oil
properties, thereby postponing the plan to increase heavy oil
production by approximately 3,000 barrels per day during 1999. The
remaining capital budget of $31 million is dedicated to
development drilling for gas this winter in the Company's
northwest Alberta areas, as well as an exploration program for gas
in the same northern region. Baytex intends to manage its spending
to commensurate with oil price recovery and may re-institute the
spending on heavy oil should WTI price exceed the US $13.50 level.
Furthermore, in order to ensure a threshold level of cash flow to
fund its core programs, the Company has hedged 4,000 barrels of
oil per day in 1999 at an average fixed price of C$20.51 for WTI
postings on NYMEX.
Baytex is pleased to announce the appointment of Mr. Deric S.
Orton to the position of Vice-President, Land. Mr. Orton brings 19
years of experience to the Company and, most recently, served in a
similar capacity for an intermediate exploration and production
company. Over the past few months, Baytex has significantly
strengthened its management team and technical groups to better
position the Company for continued growth through focused
exploration and development in its selected core areas to be
augmented by opportunistic asset acquisitions and rationalization.
Baytex is also pleased to announce that it has filed a separate
Mutual Release and Partial Discontinuance of Action with Rio Alto
Exploration Ltd. and with FirstEnergy Capital Corp. pertaining to
an action filed in May 1998 in the Court of Queen's Bench of
Alberta.
Baytex Energy Ltd. is a Canadian company engaged in exploration,
development and production of natural gas and crude oil. The
Company's Class A shares are listed on The Toronto Stock Exchange
and The Alberta Stock Exchange under the trading symbol "BTE.A".
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