Baytex Energy Corp. EnerCom Denver – The Energy Investment Conference

Thank you. I think I don't need that. Yeah. Okay. Thanks for having us down in Denver. A good portion of my career I spent with Crescent Point Energy, and we were based in Denver. To some extent, it's a bit of an old stomping ground. I made many trips down into this basin. Newly appointed to CEO of the company, please bear with me. I'm not sure they elected me for my presentation skills. I hope and would like to say it's more for the ability to extract oil and gas, and in some senses, lead teams. But by the end of this presentation, I would expect that I've delivered enough information to maybe just whet the appetite a bit to continue your research with our story, because we're pretty excited about it.

We're certainly happy to talk more about it and get into the details as you would request. I'm just going to go over some housekeeping. I'm going to get into the vision for the company. That's going to intertwine with some of the historical context. Baytex has been around for precisely 33 years, so it's not new. There's been different iterations of it, and so this iteration is purely Canadian-focused. Part of the historical context I'll give would talk about our movement into the Eagle Ford for more than a decade, and in a bigger way, three years ago, and then out again to become focused in Canada. Just first off, we are traded on the TSX and New York Stock Exchange. One of the benefits with the company is the liquidity.

We do trade 3%-4% of our float on a daily basis, CAD 150 million between both exchanges. We're squarely a mid-sized company, so 71,000 barrels a day, 89% oil. We think that's a unique advantage is the oil position, and that is part of the vision forward. We do not intend to dilute down with more natural gas. We are a market cap of about CAD 4.4 billion and we spend annually about CAD 625 million on our capital programs. Modest dividend, and I'll get into our total return framework as top line for the vision of a percent and a half or CAD 0.09 per share. Okay. I'm going to spend a bit of time here. Here's where I can intertwine some of the historical context. Baytex, in December of 2025, we sold out of our Eagle Ford position.

Eagle Ford was about 60% of the company and became squarely focused in Canada as a 71,000 BOE a day entity. We are in some core key areas, cold flow, conventional heavy oil. That was the advent of the company 33 years ago. We have some remnants of the team, but most importantly, the institutional knowledge that we've learned along the way. Duvernay came to us in 2017. We started to assemble the position at Raging River Exploration. I came from Raging River, that's now Headwater, when Baytex bought it in August of 2018. It really started greenfield. We've been putting the team together to make it one of our core areas today. We produce about 10,000 BOE a day in the Duvernay light oil. We produce 45,000 BOE a day across our heavy oil fairway, of which about 20,000 of that is in the Peavine.

Peavine is the akin rock to the Clearwater Formation in Alberta. Then another 10,000 BOE a day out in the Viking in Saskatchewan. We have some conventional gasier stuff in the deep basin that would make up the balance of the company. When we sat down and exited the Eagle Ford, it was really for four reasons. One, to liberate ourselves from this cross-border entity. It was a bit confusing, and we certainly heard that from investors to be on both sides of the border. Two, was to rid the company of debt. In fact, we ended 2025 at CAD 800 million of cash, and if you read our Q2 release, CAD 600 million of net cash today as we exit Q2 of this year. Thirdly, though, is we had a large non-operated position. It was primarily be developed by Marathon. That became ConocoPhillips in the late years.

Great operator, but big cash flows. That's very important to the story when I talk about flexibility and allocation of capital forward. We don't have that hanging over our heads. I think lastly, though, is we really sat down and looked at what makes a really good company, competitive company. In the Eagle Ford, as strong as it was, it was some of the lower returning projects in our project stack when you compare it with the Duvernay play at the spot it's at today and our conventional cold flow heavy. There were multiple reasons that we did what we did, and we're very pleased to come out the other side of the transaction today. Culture, we talk about, bullet point two. It's important to focus here.

It's not nothing to have a strong debt position that we had in the past, to have the non-op position that we had. By that, I mean when you take assets in Canada, or anywhere, but in our particular instance in Canada, and a team that's accustomed to maybe getting projects pulled away from them, not being able to dream as much as they could dream ultimately about what they could do, or even just the large cash calls from a non-operative position. It does take us time now to refocus the culture on, I call it multiple degrees of freedom. Net cash is affording us the ability, and we can get into it, to capitalize on some of the projects that have been collecting dust on the shelf for, in some instances, more than a decade.

There is a real cultural shift with our teams offering that flexibility. We have also gone through some layoffs, compressing fixed costs at board of management. Most recently, we embarked on a bit of a board refresh where we added two new members to the board. Lastly, this gets into ultimately our plan. The plan today, and you will see it in coming slides, offers the 7% growth, which is midpoint of guidance this year, which we then raised to 8% for the year, but midpoint in our multi-year plan. It is really underpinned by growth in the Duvernay and the heavy oil assets.

There are assets above and beyond that, whether it be our small scale SAGD thermal properties that we are dusting off, refreshing, that are not part of the base plan, our water floods in the Clearwater that are not part of the base plan, but we do have pilots injecting today, or exploration projects like our Pekisko land base, where we have another 109 sections of land, 3D seismic shot through Q1. Those would all be additive to ultimately the story and base plan. Really, though, the Duvernay is the lion's share of the growth. Produced 8,000 BOE a day in 2025. That grows to 25,000 BOE in 2030. This year is our last year or our last stepping stone year to ultimately get to full scale commercial development pace. Full scale is one rig program. That gets us to that growth point.

Heavy oil, as we step through the asset at an opportunity set inside heavy, it really underpins the cash flows and the company and delivers a lot of that cash to the Duvernay to be able to grow. I think that is important as our plan is free cash positive throughout the entirety at a mid-cycle price that we would define just for purpose of debate in the CAD 70 range. I just want to talk about, this will be the final point I make on the Eagle Ford sale. We did end in a net cash position. We have been very clear that that is going to be allocated in 2026, three quarters of CAD 867 million net cash to shareholders by way of buyback through NCIB. At the end of Q2, we had taken out approximately 9% of our shares outstanding, spending CAD 369 million. We are still spending CAD 2.5 million a day.

It is very much a dollar cost average through the NCIB, not trying to time the market, just being in the market on a daily basis to exhaust three quarters of that funding. The other quarter is earmarked for what we would call long-term sustainability initiatives or small scale tuck-in acquisition style activity. Small scale in nature, cored up to our main assets, whether it be the Duvernay or cold flow heavy oil fairways. This speaks to our guidance this year and our capital breakdown. Maybe just a little bit on the assets. As you can see on the bottom right-hand side, we have had two guidance increases on the year. That is not necessarily a function of oil price, but it is underpinned by outperformance on the assets themselves.

We had some stronger wells that we drilled in the heavy oil fairway specific to Peavine that allowed us to increase guidance. Our Duvernay wells, as I show the map, we drilled our first wells on our most southern acreage that we've been assembling and amassing. They outperformed expectations on an initial production basis. Obviously, we're looking longer term to see what they do from a decline perspective and fitting into a tape curve, but they did afford the ability to increase guidance ultimately. So CAD 71,000 barrels a day, which is approximately 8% growth, CAD 625 million of capital. We started the year, again, in a $60 world, CAD 585 million of capital. Modest capital bump, rather large production bump underpinned by base performance and asset performance. This slide is a little bit busy.

Look, the whole intent of this, when we look at our job as a management team, my job as an incoming CEO of the company, it's to be a strong steward of your money, shareholders' capital, as well as mine being a shareholder in the entity. This just speaks to how we think about capital allocation. If you look on the left-hand side, it just has various oil prices, and then across the bottom, it's the different buckets that we would think about. On the very far left, it just is maintenance capital, second to it being dividend. Maintenance capital, CAD 435 million would maintain our production streams on an annualized basis. That gets us to about a $52 break even, West Texas. On the maintenance capital, you layer in the dividend at CAD 60 million, and you're into a $55 break even.