Mr. Eric Greager reports

BAYTEX ANNOUNCES SECOND QUARTER 2023 RESULTS

Baytex Energy Corp. has released its operating and financial results for the three and six months ended June 30, 2023 (all amounts are in Canadian dollars unless otherwise noted).

"We continue to execute on our base business, and following the Ranger transaction, have emerged as a well-capitalized and diversified North American exploration and production company. We have a strong portfolio of high-quality oil-weighted assets in Western Canada and the Eagle Ford shale in Texas and we are poised to deliver a powerful combination of free cash flow and increased shareholder returns on a per-share basis. We have initiated our share buyback program (repurchased 4.7 million shares to date in July) and declared a quarterly dividend of 2.25 cents per share (nine cents per share annualized). We are committed to operational excellence and delivering long-term value and enhanced shareholder returns," commented Eric T. Greager, president and chief executive officer.

Highlights

• Completed the acquisition of Ranger Oil Corp. on June 20, 2023;
• Generated production of 89,71 boe/d (barrels of oil equivalent per day) (86 per cent oil and NGLs (natural gas liquids)) in Q2 2023;
• Reported cash flows from operating activities of $192-million (33 cents per basic share) in Q2 2023;
• Delivered adjusted funds flow of $274-million (47 cents per basic share) in Q2 2023;
• Generated free cash flow of $96-million (17 cents per basic share) in Q2 2023;
• Exploration and development expenditures totalled $171-million in Q2 2023, consistent with the company's full-year plan;
• Completed six-well Duvernay program with wells on stream in Q3 2023;
• New heavy oil exploration success in Waseca near Cold Lake, Alta.

On June 20, 2023, Baytex closed the acquisition of Ranger, adding quality scale in the Eagle Ford and reinforcing a resilient and sustainable business. The total consideration paid by Baytex, including assumption of net debt, was $2.4-billion (U.S.) ($3.2-billion). Under the terms of the agreement, Ranger shareholders received 7.49 Baytex shares plus $13.3 (U.S.) cash for each share of Ranger common stock. The company's second quarter results include 11 days of operations from Ranger.

In conjunction with closing of the acquisition, the company increased its direct shareholder returns to 50 per cent of free cash flow which will allows it to increase the value of its share buyback program and introduce a dividend. The remainder of the company's free cash flow continues to be allocated to debt reduction.

On June 23, 2023, Baytex renewed its normal course issuer bid with the Toronto Stock Exchange for a share buyback program for up to 10 per cent of its public float. Through July 26, 2023, the company repurchased 4.7 million common shares at an average price of $4.59 per share.

The board of directors has declared a quarterly cash dividend of 2.25 cents per share to be paid on Oct. 2, 2023, for shareholders of record on Sept. 15, 2023.

2023 outlook

Following the Ranger transaction, Baytex has emerged as a well-capitalized, diversified oil-weighted North American E&P (exploration and production) company with a strong free cash flow profile. Based on the forward strip, the company expects to generate over $400-million of free cash flow in the second half of 2023, and approximately $500-million of free cash flow for the full-year 2023.

For 2023, Baytex continues to forecast exploration and development expenditures of $1,005-million to $1,045-million, which are expected to generate an average production rate of 120,500 to 122,500 boe/d (barrels of oil equivalent per day). For the second half of 2023, the company expects production to average 153,000 to 157,000 boe/d. Baytex's production mix for the second half of 2023 is forecast to be 84 per cent oil and NGLs (50 per cent light oil, 22 per cent heavy oil and 12 per cent NGLs) and 16 per cent natural gas.

The attached table summarizes the company's 2023 guidance for production and exploration and development expenditures.

Baytex has updated its full year 2023 cost assumptions to reflect the Ranger acquisition. Guidance for unit operating expenses decreased by 13 per cent to reflect the lower cost structure of the Ranger asset base, while unit general and administrative expenses increased by 10 per cent to reflect costs associated with Ranger personnel, and interest expense is higher due to the incremental debt associated with the Ranger acquisition as well as higher interest rates on the credit facility due to the rising interest rate environment.

The attached table summarizes the company's 2023 guidance for expenses, leasing expenditures and asset retirement obligations.

Q2 2023 results

Baytex continues to execute on its base business. Production in Q2 2023 was 89,761 boe/d (86 per cent oil and NGLs), which includes production from Ranger for the 11 days following closing of the acquisition. Production exceeded the high end of the company's Q2 2023 guidance range of 88,500 to 89,000 boe/d due to the timing of operated Eagle Ford wells brought on stream late in the second quarter.

Production in Q2 2023 was reduced by approximately 4,500 boe/d due to the temporary curtailment of production caused by wildfires in Alberta. For the month of July, the company expects production to be curtailed by approximately 2,000 boe/d. Wildfires continue to burn in northwest Alberta and the company could see further interruptions through the summer and into the fall. Baytex is incredibly proud of how its personnel have responded with sound, safety-focused decision making.

Baytex delivered adjusted funds flow of $274-million (47 cents per basic share) and net income of $214-million (37 cents per basic share) in Q2 2023. Exploration and development expenditures totalled $171-million in Q2 2023 and the company brought 43 (34.9 net) wells on stream. During the second quarter, Baytex generated free cash flow of $96-million (17 cents per basic share).

Operating results

Light oil -- United States

The company's light oil assets in the United States are located in the liquids-rich Eagle Ford formation, in the Texas Gulf Coast basin. The Ranger acquisition materially increased the scale of Baytex's Eagle Ford operations, adding 162,000 net acres in the crude oil window and on trend with the company's non-operated position in the Karnes trough. The transaction increased Baytex's exposure to premium U.S. Gulf Coast pricing and included substantial infrastructure in place with low operating and transportation costs.

Production in the Eagle Ford averaged 33,887 boe/d (82 per cent oil and NGLs) during Q2 2023, and includes 11 days of production from the Ranger assets. During the second quarter, Baytex brought 13 (4.9 net) wells on stream, including two (2.0 net) operated wells. Baytex expects to bring approximately 24 net operated wells and eight net non-operated wells to sales in H2 2023.

Light oil -- Canada

Baytex's light oil production and development in Canada occurs from the Viking formation in west-central Saskatchewan and east-central Alberta, and the Duvernay formation in the Pembina area of central Alberta. The Viking is a shallow and highly repeatable light oil resource play with some of the highest operating netbacks in North America. Baytex's Pembina Duvernay light oil assets are in the demon stration stage of commerciality and offer high operating netbacks, with the potential for strong economics and organic growth.

The company's light oil production in Canada averaged 17,029 boe/d (86 per cent oil and NGLs) during Q2 2023. In the Viking, Baytex brought 28 (28.0 net) wells on stream in Q2 2023 and expects to bring another 46 net wells on stream in H2 2023. In the Pembina Duvernay, the company commenced completion activities for the six wells (two-three well pads) drilled this year. The company's completions and facility execution tracked ahead of plan, which allowed for an acceleration of the on-streaming of wells. Four of the six wells are in the early stages of flow back and are tracking to type curve initial rate expectations. The remaining two wells are expected to be on stream by mid-August.

Heavy oil -- Canada

Baytex's heavy oil production and development in Canada occurs within the Bluesky and Spirit River (Clearwater) formations in the Peace River area of northwest Alberta and the Mannville group of formations in the greater Lloydminster region of east-central Alberta and west-central Saskatchewan. The company's heavy oil business includes the use of innovative multilateral horizontal drilling with strong capital efficiencies. The core of the company's Clearwater play is located on the Peavine Metis settlement.

Baytex's heavy oil assets produced a combined 34,955 boe/d (94 per cent oil and NGLs) during Q2 2023. The company brought on stream two net wells during the second quarter, which typically has lower activity due to spring breakup. Baytex's heavy oil development program has ramped up in the third quarter with four rigs running, two at Peavine, one at Peace River and one at Lloydminster. In H2 2023, the company expects to bring 40 net heavy oil wells on stream, 19 at Peavine, 18 at Lloydminster and three at Peace River.

In Q1 2023 the company successfully drilled a six-leg Upper Waseca multilateral horizontal exploration well at Cold Lake, Alta. The well was brought on stream in April and achieved a 30-day initial production rate of 165 bbl/d of 12.5 degrees API crude oil. The Waseca formation is analogous to Clearwater reservoirs across the fairway and is highly amenable to open-hole development which drives strong returns and capital efficiencies. The company is encouraged by this initial test result and are planning three follow-up wells in the second half of 2023, including a Lower Waseca test. The company holds 20 prospective sections across the play. In addition, the company will follow up its successful Q4 2022 Clearwater test well at Morinville, Alta., with two additional wells in the second half of 2023.

Financial liquidity

Baytex is well capitalized and has significant liquidity on its credit facilities. The company has a $1.1-billion (U.S.) revolving credit facility with a maturity date of April 1, 2026, and a $150-million (U.S.) two-year term loan.

The company's total debt, which includes its two series of long-term notes, is $2.6-billion as at June 30, 2023, and Baytex maintais sstrong liquidity with approximately 40-per-cent undrawn capacity on its revolving credit facility.

Risk management

The company employs a hedge program to help mitigate the volatility in revenue due to changes in commodity prices.

For Q3 2023 and Q4 2023, the company has entered into hedges on approximately 40 per cent and 35 per cent of its net crude oil exposure, respectively, utilizing a combination of two-way collars with a floor price of $60 (U.S.)/bbl and a ceiling price of $100 (U.S.)/bbl and a 5,000 bbl/d purchased put at $60 (U.S.)/bbl. For the first half of 2024, the company has entered into hedges on approximately 22 per cent of the company's net crude oil exposure utilizing two-way collars with a floor price of $60 (U.S.)/bbl and a ceiling price of $99 (U.S.)/bbl.

Additional information

The company's condensed consolidated interim unaudited financial statements for the three and six months ended June 30, 2023, and the related management's discussion and analysis of the operating and financial results can be accessed on the company's website and will be available shortly through SEDAR and EDGAR.

Calculated in accordance with the amended credit facilities agreement which is available on SEDAR.

Conference call tomorrow

9 a.m. MT (11 a.m. ET)

Baytex will host a conference call tomorrow, July 28, 2023, starting at 9 a.m. MT (11 a.m. ET). To participate, please dial toll-free in North America 1-800-319-4610 or international 1-416-915-3239. Alternatively, you can listen on-line. An archived recording of the conference call will be available shortly after the event. The conference call will also be archived on the Baytex website.

About Baytex Energy Corp.

Baytex Energy is an energy company with headquarters based in Calgary, Alta., and offices in Houston, Tex. The company is engaged in the acquisition, development and production of crude oil and natural gas in the Western Canadian sedimentary basin and in the Eagle Ford in the United States. Baytex's common shares trade on the Toronto Stock Exchange and the New York Stock Exchange under the symbol BTE.

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