Baytex Energy Corp. Q1 FY2026 earnings call

Q1 was a strong start, production above guidance high end. Exited Q1 with net cash and repurchased shares. Raised 2026 production and capital expenditure guidance, updated three-year outlook. Heavy oil and Duvernay operational results, safe and efficient quarter, thanked field teams.

Q1 production averaged 69,500 BOE per day, above the high end of guidance, driven by heavy oil portfolio outperformance. Exited Q1 with net cash of $591 million and repurchased 35 million shares for $174 million. Raising 2026 production guidance to 69,000 - 71,000 BOE per day (7% annual growth at midpoint, up from 3% - 5% previously). Capital expenditures moving to high end of guidance at $625 million. Updating three-year outlook to target 6% - 8% annual production growth through 2028 while maintaining net cash position. In heavy oil: Peavine first six wells had 30-day IP rates of 680 bbl/day; Lloydminster used 3 rigs, brought 16.7 net wells on stream; Peace River brought 3 wells on stream, acquired 40 sections, completed 21 sq mile seismic shoot. In Duvernay: drilled 4 wells, first wells expected on stream in June, 13 wells on stream in 2026, and 4-well pad to be completed in early 2027.

Raised 2026 production guidance to 69,000 - 71,000 BOE per day, 7% annual growth at midpoint. Capital expenditures at $625 million high end. Three-year outlook targets 6% - 8% annual production growth through 2028. 35 million shares repurchased for $174 million in Q1, 75% of Eagle Ford sale proceeds to be deployed in 2026 via buyback program.

Q: About new 15% total shareholder return target and buyback math, A: Chad E. Lundberg explained 15% return includes production growth, dividend, buyback, 75% of Eagle Ford sale proceeds for 2026 buyback.

Q: Incremental CapEx spend factor in service cost inflation, A: Maybe minor cost inflation, seeing diesel cost, not all baked in.

Q: Next steps for Gemini, A: Gemini has 300 million bbls resource, Phase 1 regulatory approved, relooking at commercial, technical, cost outlook, aiming for FID in early 2027.

Q: Balance sheet philosophy and 2027 growth considerations, A: Strong balance sheet paramount, debt as potential tool but threshold at $70 oil, growth comes from bottoms-up team build, Duvernay to 18 - 20 wells in 2027, heavy oil to keep 4 rigs running.

Q: Duvernay cost structure, Peavine waterflood, heavy oil opportunity set, A: Duvernay costs moving to $900 per foot or better, Peavine waterflood pilots looking at base decline moderation, heavy oil has 8 discrete development horizons with large inventory in Northeast Alberta.