Mr. Eric Greager reports

BAYTEX ANNOUNCES 2024 BUDGET AND FIVE-YEAR OUTLOOK WITH CONTINUED FOCUS ON FREE CASH FLOW GENERATION AND SHAREHOLDER RETURNS

Baytex Energy Corp.'s board of directors has approved a budget for 2024 exploration and development expenditures of $1.2-billion to $1.3-billion, which is designed to generate average annual production of 150,000 barrels of oil equivalent per day to 156,000 boe/d.

"Our 2024 budget and five-year outlook demonstrates the strength of our diversified oil-weighted portfolio in western Canada and the Eagle Ford shale in Texas. In 2024, we intend to progress the Pembina Duvernay, further delineate our Clearwater and Mannville heavy oil position, and deliver strong drilling and completion performance in the Eagle Ford. Our business is underpinned by strong drilling economics and greater than 10 years inventory across our portfolio, and our commitment to shareholder returns is expected to drive meaningful per-share growth in production and free cash flow," commented Eric T. Greager, president and chief executive officer.

Highlights of the 2024 budget:

• Free cash flow -- based on the forward strip, Baytex expects to generate approximately $530-million of free cash flow in 2024.
• Reinvestment rate -- exploration and development expenditures represent approximately 60 per cent of forecast EBITDA (earnings before interest, taxes, depreciation and amortization).
• Production growth -- the company's 2024 production guidance (at the midpoint) represents a 1-per-cent to 2-per-cent increase from forecast H2 2023 production guidance (7-per-cent increase on a per-share basis), adjusted for the previously announced sale of the company's Forgan and Plato assets in the Viking.
• Capital efficiency -- Baytex's capital program is expected to generate capital efficiencies of approximately $22,000 per boe/d across the portfolio.
• Capital allocation -- Baytex plans to direct 60 per cent to 65 per cent of its exploration and development expenditures to its Eagle Ford light oil assets in the United States, and 35 per cent to 40 per cent to the company's Canadian assets. In Canada, Baytex's capital program is expected to be equally split between light oil and heavy oil.
• Shareholder returns -- Baytex intends to allocate 50 per cent of free cash flow to share buy backs and its base dividend, and 50 per cent of free cash flow to further strengthen the balance sheet.

Tax reassessment update

On Nov. 13, 2023, Baytex provided an update with respect to certain tax reassessments received from the Canada Revenue Agency. While the company remains confident in its position, Baytex has purchased $272.5-million of insurance coverage to help manage the litigation risk associated with this matter. The policy premium (inclusive of applicable taxes) was approximately $60-million.

Two thousand twenty-four budget

The 2024 capital program is expected to be 55 per cent weighted to the first half of the year. Based on the midpoint of the company's production guidance of 153,000 boe/d, approximately 60 per cent of the company's production is in the Eagle Ford, with the remaining 40 per cent in Canada. Baytex's production mix is forecast to be 84 per cent liquids (46 per cent light oil and condensate, 25 per cent heavy oil, and 13 per cent natural gas liquids) and 16 per cent natural gas, based on a six-to-one natural gas-to-oil equivalency.

In 2024, Baytex intends to progress the Pembina Duvernay, further delineate its Clearwater and Mannville heavy oil acreage, and deliver strong drilling and completion performance in the Eagle Ford.

In the company's Canadian light oil business unit, it expects to bring on stream seven net wells in the Pembina Duvernay and 93 net wells in the Viking. In the company's Canadian heavy oil business unit, it expects to bring on stream 35 net Peavine Clearwater wells, nine net wells at Peace River, 40 net Lloydminster Mannville wells and 4.5 net wells at Morinville. Baytex's budget also includes continued exploration across its heavy oil portfolio, with up to 14 stratigraphic test wells planned. In Baytex's United States light oil business unit, it expects to bring 62 net Eagle Ford wells on stream, including 46 net operated wells. For 2024, the company is targeting an 8-per-cent improvement in its operated drilling and completion costs per completed lateral foot over 2023.

Shareholder returns

In 2023, Baytex increased direct shareholder returns to 50 per cent of free cash flow, which allowed the company to increase the value of its share buyback program and introduce a dividend. The remainder of its free cash flow continues to be allocated to the balance sheet.

Baytex's normal course issuer bid (NCIB) allows for the purchase of up to 68.4 million common shares during the 12-month period ending June 28, 2024. Through Nov. 30, 2023, Baytex repurchased 39.1 million common shares for $215-million, representing 4.5 per cent of the company's outstanding shares, at an average price of $5.49 per share. In addition, Baytex currently pays a quarterly dividend of 2.25 cents per share (nine cents per share annualized).

Five-year outlook

Baytex's updated five-year outlook (2024 to 2028) demonstrates its financial and operational sustainability, and ability to generate meaningful free cash flow. Baytex is committed to a disciplined, returns-based capital allocation philosophy that drives increased shareholder returns on a per-share basis. The company expects to generate annual production growth of 1 per cent to 4 per cent during the plan period, with production reaching approximately 170,000 boe/d in 2028.

Highlights of the company's five-year outlook, based on a constant $70 (U.S.)/barrel (bbl) WTI (West Texas Intermediate) price, include:

• 60-per-cent reinvestment rate with annual exploration and development expenditures of $1.2-billion to $1.4-billion.
• Production per share (boe/d per thousand shares) increases approximately 35 per cent from 2024 to 2028.
• Free cash flow per share increases approximately 90 per cent from 2024 to 2028.
• Free cash flow over the five-year outlook totals approximately $2.9-billion.
• Return of capital over the five-year outlook, including dividends and share repurchases, totals approximately $1.7-billion.
• Total debt declines 55 per cent to approximately $1-billion in 2028 and total debt to EBITDA ratio improves to 0.5 time.

To illustrate the company's sensitivity to changes in WTI, based on a constant $80 (U.S.)/bbl and $90 (U.S.)/bbl WTI price, over the five-year outlook, Baytex expects to generate free cash flow of $4.6-billion and $6-billion, respectively.

Risk management

Baytex employs a disciplined commodity hedging program to help mitigate the volatility in revenue due to changes in commodity prices.

For the first half of 2024, Baytex has entered into hedges on approximately 40 per cent of its net crude oil exposure, utilizing two-way collars with a floor price of $60 (U.S.)/bbl and a ceiling price of $100 (U.S.)/bbl. For the second half of 2024, the company has entered into hedges on approximately 25 per cent of its net crude oil exposure, utilizing two-way collars with a floor price of $60 (U.S.)/bbl and a ceiling price of $98 (U.S.)/bbl.

Two thousand twenty-four guidance

The associated table summarizes the company's 2024 annual guidance.

Baytex Energy Corp.

Baytex 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 on the New York Stock Exchange under the symbol BTE.

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