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by Stockwatch Business Reporter

West Texas Intermediate crude for March delivery lost $1.85 to $30.34 on the New York Merc, while Brent for March lost $1.68 to $30.50 (all figures in this para U.S.). Western Canadian Select traded at a discount of $14.25 to WTI ($16.09), down from a discount of $14.00. Natural gas for February added 1.9 cents to $2.158. The TSX energy index lost 7.53 points to close at 141.01.

Baytex Energy Corp. (BTE) lost 35 cents to $2.41 on 11.1 million shares, giving back some of the 82 cents it added over the previous two trading days, as enthusiasm over oil prices faded and investors continued to digest last week's remarks by president and CEO Jim Bowzer. Presenting at the CIBC Whistler Institutional Investor Conference in British Columbia, Mr. Bowzer all but guaranteed that Baytex will soon reduce its budget and possibly breach its debt covenants. The company has total debt of about $1.9-billion (as of Sept. 30) and set a budget of $325-million to $400-million on Dec. 10. Given the drop in oil prices since then, if Baytex wants to stick to its plan of balancing cash inflow with cash outflow, it will have to cut spending. Mr. Bowzer said the budget is "likely to be on the low end if not below" the Dec. 10 version. He pointed out that roughly $80-million worth of spending is associated with Baytex's properties in Western Canada, and will not be spent if oil prices remain at current levels. Eliminating that would take the budget to about $325-million. Then, if Baytex cuts costs and drills fewer wells at its higher-priority Eagle Ford assets in Texas, "we could see that number maybe approaching a $250-million spend for the year," said Mr. Bowzer. He then gave Baytex some wiggle room on its goal of generating the entire budget from cash flow. Most of Baytex's debt does not start coming due until 2019 and the company still has $850-million of room on a $1-billion credit line, "so we think that even if we do have to borrow a little bit this year and next ... we should be able to truck through that quite nicely," said Mr. Bowzer. Investors may not like the sound of that, particularly in light of what Mr. Bowzer said later: If oil prices stay at around $30 (U.S.) for a quarter or two, Baytex could breach its debt-to-EBITDA (earnings before interest, taxes, depreciation and amortization) covenant by the end of the third quarter, or perhaps even sooner.

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