Calgary-based Baytex Energy Corp. plans to spend about 70% of its 2017 capital budget in the Eagle Ford Shale while it also resumes drilling in Canada, the company said Monday.
The company has set a budget of $300 million to $350 million, which is expected to generate production of 66,000-70,000 boe/d.
"We have three high-quality resource plays in our portfolio and believe 2017 will be a year that builds operational momentum for Baytex," said CEO James Bowzer. "In Canada, after a drilling hiatus, we are excited to get back to work with an active first quarter drilling program. In the Eagle Ford, we expect to maintain a consistent pace of development on our lands throughout 2017. We have designed our 2017 budget to be flexible should we continue to experience a volatile commodity price environment."
In early 2014 Baytex bought out Eagle Ford Shale player Aurora Oil & Gas Ltd. of Perth, Australia in a cash and debt deal worth C$2.6 billion (US$2.36 billion).
"Our expected exit production rates for 2016 and 2017 reflect an organic growth rate of approximately 3-4%," Bowzer said. "For the full year, approximately 70% of our planned capital expenditures will be directed to our Eagle Ford operations. The balance of the spending will be in Canada, largely toward our heavy oil assets at Peace River and Lloydminster. Our 2017 capital budget will be heavily weighted to drilling and completion activities (approximately 89%) with the balance for facilities (approximately 10%) and land and seismic (approximately 1%)."
In the Eagle Ford, the company expects to have four to five drilling rigs and two completion crews working, up from two to three rigs in the third quarter of 2016. At this pace of development, Baytex said it expects to bring about 34 net wells on production in 2017. "Our costs in the Eagle Ford continue to decrease with wells now being drilled, completed and equipped for approximately US$5 million," Bowzer said.
In Canada Baytex said it expects to "stabilize production" from its year-end 2016 exit rate as it positions for growth. "At Peace River, our capital budget includes drilling 11 net multi-lateral horizontal wells and eight net stratigraphic wells," Bowzer said. "At Lloydminster, we plan to drill 52 net wells, of which approximately 55% will be horizontal wells. At Pembina, we expect to drill two net natural gas wells."
Production is expected to be split evenly between Canada and the Eagle Ford and is forecast to be about 78% liquids (35% heavy oil, 31% light oil and condensate and 12% natural gas liquids) and 22% natural gas, based on a 6:1 natural gas-to-oil equivalency.
"Similar to 2016, we are targeting our 2017 capital expenditures to approximate funds from operations in order to minimize additional bank borrowings and will remain flexible," Bowzer said.
Baytex also announced that Ed LaFehr, president, will succeed Bowzer as CEO in May.