第99.1展示文本
Baytex能源公司。
簡明綜合資產負債表（以美元千計）
（加拿大元，千元）（未經審計）
| 下面包括了開多期債務和總債務的對比: | |||||||||||
| 票據 | 2024年9月30日 | 2023年12月31日 | |||||||||
| 資產 | |||||||||||
| 流動資產 | |||||||||||
| 現金 | $ | 21,311 | $ | 55,815 | |||||||
| 應收賬款 | 13, 17 | 375,942 | 339,405 | ||||||||
| 預付款和其他資產 | 21,632 | 21,530 | |||||||||
| 金融衍生品 | 17 | 24,310 | 23,274 | ||||||||
| 443,195 | 440,024 | ||||||||||
| 非流動資產 | |||||||||||
| 勘探和評估資產 | 5 | 122,124 | 90,919 | ||||||||
| 油氣性質 | 6 | 6,776,336 | 6,619,033 | ||||||||
| 其他工廠和設備 | 8,621 | 7,936 | |||||||||
| 租賃資產 | 21,174 | 28,145 | |||||||||
| 預付款和其他資產 | 14 | 56,795 | 61,729 | ||||||||
| 遞延所得稅資產 | 14 | 185,912 | 213,145 | ||||||||
| $ | 7,614,157 | $ | 7,460,931 | ||||||||
| 負債 | |||||||||||
| 流動負債 | |||||||||||
| 交易應付賬款 | 17 | $ | 584,696 | $ | 477,295 | ||||||
| 基於股份的報酬負債 | 11 | 18,340 | 28,508 | ||||||||
| 分紅派息應付款 | 10, 17 | 17,732 | 18,381 | ||||||||
| 租賃負債 | 7,536 | 13,391 | |||||||||
| 資產養老責任 | 9 | 17,512 | 20,448 | ||||||||
| 645,816 | 558,023 | ||||||||||
| 非流動負債 | |||||||||||
| 其他長期負債 | 19,582 | 19,147 | |||||||||
| 基於股份的報酬負債 | 11 | 5,622 | 7,224 | ||||||||
| 貸款額度 | 7 | 449,116 | 848,749 | ||||||||
| 長期票據 | 8 | 1,810,701 | 1,562,361 | ||||||||
| 租賃負債 | 16,117 | 16,056 | |||||||||
| 資產養老責任 | 9 | 626,339 | 602,951 | ||||||||
| 遞延所得稅負債 | 14 | 61,449 | 21,333 | ||||||||
| 3,634,742 | 3,635,844 | ||||||||||
| 股東權益 | |||||||||||
| 股東資本 | 10 | 6,248,284 | 6,527,289 | ||||||||
| 實繳資本 | 304,781 | 193,077 | |||||||||
| 累計其他綜合收益 | 791,859 | 690,917 | |||||||||
| 赤字 | (3,365,509) | (3,586,196) | |||||||||
| 3,979,415 | 3,825,087 | ||||||||||
| $ | 7,614,157 | $ | 7,460,931 | ||||||||
隨後事件（附註10和17）
請參閱簡明綜合中期財務報表附註。
1
Baytex能源公司。
綜合收益及綜合收益的簡明綜合收入表
(以加元計，除每股普通股金額和加權平均普通股數外)（未經審核）
| 截至2019年9月30日三個月的收入 | 截至9月30日的前9個月 | ||||||||||||||||
| 票據 | 2024 | 2023 | 2024 | 2023 | |||||||||||||
| 淨利潤，扣除版稅 | |||||||||||||||||
| 石油股和天然氣銷售 | 13 | $ | 1,074,623 | $ | 1,163,010 | $ | 3,191,938 | $ | 2,317,106 | ||||||||
| 特許權使用費 | (223,800) | (240,049) | (673,411) | (441,222) | |||||||||||||
| 850,823 | 922,961 | 2,518,527 | 1,875,884 | ||||||||||||||
| 費用 | |||||||||||||||||
| 操作 | 167,119 | 174,119 | 508,259 | 405,965 | |||||||||||||
| 運輸 | 36,883 | 27,983 | 100,032 | 59,562 | |||||||||||||
| 混合和其他 | 51,902 | 49,830 | 183,795 | 162,506 | |||||||||||||
| ZSCALER, INC. | 17,895 | 20,536 | 61,313 | 47,510 | |||||||||||||
| 交易成本 | — | 2,263 | 1,539 | 43,966 | |||||||||||||
| 勘探與評估 | 5 | 82 | 409 | 749 | 941 | ||||||||||||
| 減值和折舊 | 356,384 | 319,731 | 1,053,622 | 661,874 | |||||||||||||
| 股權酬金 | 11 | 2,305 | 14,699 | 17,393 | 41,440 | ||||||||||||
| 融資和利息 | 15 | 58,700 | 68,065 | 211,584 | 126,287 | ||||||||||||
| 金融衍生品(盈利)損失 | 17 | (22,927) | 28,641 | (4,598) | 17,054 | ||||||||||||
| 匯率期貨（獲利）損失 | 16 | (24,552) | 42,682 | 35,440 | 30,680 | ||||||||||||
| 處置和財產互換損失(盈利) | 1,091 | (875) | 4,741 | (539) | |||||||||||||
| 其他收入 | (9,107) | (1,367) | (7,011) | (2,284) | |||||||||||||
| 635,775 | 746,716 | 2,166,858 | 1,594,962 | ||||||||||||||
| 所得稅前淨利潤 | 215,048 | 176,245 | 351,669 | 280,922 | |||||||||||||
| 所得稅費用 | 14 | ||||||||||||||||
| 當期所得稅(收回)費用 | (3,748) | 808 | 4,407 | 3,278 | |||||||||||||
| 遞延所得稅費用（收回） | 33,577 | 48,007 | 72,188 | (114,830) | |||||||||||||
| 29,829 | 48,815 | 76,595 | (111,552) | ||||||||||||||
| 淨收入 | $ | 185,219 | $ | 127,430 | $ | 275,074 | $ | 392,474 | |||||||||
| 其他綜合（損失）收益 | |||||||||||||||||
| 外幣翻譯調整 | (61,640) | 111,981 | 100,942 | 64,976 | |||||||||||||
| 綜合收益 | $ | 123,579 | $ | 239,411 | $ | 376,016 | $ | 457,450 | |||||||||
| 每股普通股淨收益 | 12 | ||||||||||||||||
| 基本 | $ | 0.23 | $ | 0.15 | $ | 0.34 | $ | 0.59 | |||||||||
| 稀釋的 | $ | 0.23 | $ | 0.15 | $ | 0.34 | $ | 0.59 | |||||||||
加權平均普通股份（000） | 12 | ||||||||||||||||
| 基本 | 796,064 | 855,300 | 810,589 | 662,379 | |||||||||||||
| 稀釋的 | 800,217 | 860,572 | 814,351 | 666,194 | |||||||||||||
請參閱簡明綜合中期財務報表附註。
2
Baytex能源公司。
簡明合併變動權益表
（以加拿大元計）（未經審計）
| 票據 | 股東的 資本 | 貢獻 盈餘 | 累計其他綜合收益 | $ | 股東權益總計 | |||||||||||||||
| 2022年12月31日結存餘額 | $ | 5,499,664 | $ | 89,879 | $ | 756,195 | $ | (3,315,321) | $ | 3,030,417 | ||||||||||
| 企業收購發行 | 1,326,435 | 21,316 | — | — | 1,347,751 | |||||||||||||||
| 分配股權獎勵 | 26,229 | (37,462) | — | — | (11,233) | |||||||||||||||
| 股權補償計劃 | — | 16,237 | — | — | 16,237 | |||||||||||||||
| 回購普通股並註銷 | (134,695) | 45,429 | — | — | (89,266) | |||||||||||||||
| 3,341,700 | — | — | — | (19,138) | (19,138) | |||||||||||||||
| 綜合收益 | — | — | 64,976 | 392,474 | 457,450 | |||||||||||||||
| 2023年9月30日結餘 | $ | 6,717,633 | $ | 135,399 | $ | 821,171 | $ | (2,941,985) | $ | 4,732,218 | ||||||||||
| 2023年12月31日結餘爲 | $ | 6,527,289 | $ | 193,077 | $ | 690,917 | $ | (3,586,196) | $ | 3,825,087 | ||||||||||
| 股票獎勵的分階段釋放 | 10 | 1,167 | — | — | — | 1,167 | ||||||||||||||
| 回購普通股以取消 | 10 | (280,172) | 111,704 | — | — | (168,468) | ||||||||||||||
| 3,341,700 | 10 | — | — | — | (54,387) | (54,387) | ||||||||||||||
| 綜合收益 | — | — | 100,942 | 275,074 | 376,016 | |||||||||||||||
| 2024年9月30日的餘額 | $ | 6,248,284 | $ | 304,781 | $ | 791,859 | $ | (3,365,509) | $ | 3,979,415 | ||||||||||
請參閱簡明綜合中期財務報表附註。
3
Baytex能源公司。
精簡合併中期現金流量表
（以加拿大元計）（未經審計）
| 截至2019年9月30日三個月的收入 | 截至9月30日的前9個月 | ||||||||||||||||
| 票據 | 2024 | 2023 | 2024 | 2023 | |||||||||||||
| 現金提供（使用）： | |||||||||||||||||
| 經營活動 | |||||||||||||||||
| 淨收入 | $ | 185,219 | $ | 127,430 | $ | 275,074 | $ | 392,474 | |||||||||
| 調整原因： | |||||||||||||||||
| 非現金股份獎勵 | 11 | — | — | — | 16,237 | ||||||||||||
| 未實現的外匯匯率（損）益 | 16 | (24,401) | 42,392 | 33,506 | 29,299 | ||||||||||||
| 勘探與評估 | 5 | 82 | 409 | 749 | 941 | ||||||||||||
| 減值和折舊 | 356,384 | 319,731 | 1,053,622 | 661,874 | |||||||||||||
| 非現金融資和利息 | 15 | 8,591 | 11,570 | 54,249 | 23,162 | ||||||||||||
| 非現金其他收入 | 9 | — | — | — | (1,271) | ||||||||||||
| 未實現金融衍生工具（收益）損失 | 17 | (22,596) | 30,696 | (1,036) | 40,889 | ||||||||||||
| 衍生品現金溢價 | — | — | — | (2,263) | |||||||||||||
| 處置和財產互換損失(盈利) | 1,091 | (875) | 4,741 | (539) | |||||||||||||
| 遞延所得稅費用（收回） | 14 | 33,577 | 48,007 | 72,188 | (114,830) | ||||||||||||
| 已處理的資產退役義務 | 9 | (8,718) | (9,252) | (22,344) | (18,770) | ||||||||||||
| 非現金工作資本的變化 | 20,813 | (126,075) | (31,350) | (205,924) | |||||||||||||
| 經營活動現金流 | 550,042 | 444,033 | 1,439,399 | 821,279 | |||||||||||||
| 籌資活動 | |||||||||||||||||
| 信貸工具減少或增加 | (157,104) | 46,602 | (404,620) | 648,581 | |||||||||||||
| 收購信貸工具減少 | 3 | — | — | — | (373,608) | ||||||||||||
| 債務發行成本 | — | (198) | (25,023) | (40,123) | |||||||||||||
| 租賃義務支付 | (2,738) | (4,740) | (13,088) | (7,076) | |||||||||||||
| 長期債券發行的淨收益 | 8 | — | — | 780,936 | 1,046,197 | ||||||||||||
| 償還長期債券 | 8 | — | — | (580,913) | — | ||||||||||||
| 償還已收購的長期債券 | 3 | — | — | — | (569,256) | ||||||||||||
| 3 | 10 | (84,573) | (89,266) | (168,468) | (89,266) | ||||||||||||
| 3,341,700 | 10 | (17,732) | (19,138) | (54,387) | (19,138) | ||||||||||||
| 非現金工作資本的變化 | 6,570 | (25,734) | 4,470 | (25,734) | |||||||||||||
| 籌資活動產生的現金流量淨額 | (255,577) | (92,474) | (461,093) | 570,577 | |||||||||||||
| 投資活動 | |||||||||||||||||
| Non-IFRS Financial Measures | 5 | — | (40) | — | (1,271) | ||||||||||||
| 石油和天然氣產權的增加 | 6 | (306,332) | (409,151) | (1,058,456) | (812,250) | ||||||||||||
| 其他工廠和設備的增加 | (744) | (1,279) | (4,280) | (2,300) | |||||||||||||
| 公司收購，淨現金收購淨額 | 3 | — | — | — | (662,579) | ||||||||||||
| 房地產收購 | (1,042) | (4,277) | (39,794) | (4,721) | |||||||||||||
| 處置所得 | 1,436 | 226 | 4,156 | 511 | |||||||||||||
| 非現金工作資本的變化 | (2,359) | 67,224 | 85,564 | 109,189 | |||||||||||||
| 投資活動產生的現金流量淨額 | (309,041) | (347,297) | (1,012,810) | (1,373,421) | |||||||||||||
| 現金流量變動 | (14,576) | 4,262 | (34,504) | 18,435 | |||||||||||||
| 期初現金 | 35,887 | 19,637 | 55,815 | 5,464 | |||||||||||||
| 期末現金 | $ | 21,311 | $ | 23,899 | $ | 21,311 | $ | 23,899 | |||||||||
| 補充信息 | |||||||||||||||||
| 支付的利息 | $ | 38,581 | $ | 45,941 | $ | 143,597 | $ | 83,945 | |||||||||
| 所得稅已付款項 | $ | 1,730 | $ | — | $ | 18,151 | $ | 3,603 | |||||||||
See accompanying notes to the condensed consolidated interim financial statements.
4
Baytex Energy Corp.
Notes to the Condensed Consolidated Interim Financial Statements
For the periods ended September 30, 2024 and 2023
(all tabular amounts in thousands of Canadian dollars, except per common share amounts) (unaudited)
1. REPORTING ENTITY
Baytex Energy Corp. (the “Company” or “Baytex”) is an energy company engaged in the acquisition, development and production of oil and natural gas in the Western Canadian Sedimentary Basin and in Texas, United States. The Company’s common shares are traded on the Toronto Stock Exchange and the New York Stock Exchange under the symbol BTE. The Company’s head and principal office is located at 2800, 520 – 3rd Avenue S.W., Calgary, Alberta, T2P 0R3, and its registered office is located at 2400, 525 – 8th Avenue S.W., Calgary, Alberta, T2P 1G1.
2. BASIS OF PREPARATION
The condensed consolidated interim financial statements ("consolidated financial statements") have been prepared in accordance with International Accounting Standards 34, Interim Financial Reporting, under International Financial Reporting Standards ("IFRS") as issued by the International Accounting Standards Board (the "IASB"). These consolidated financial statements do not include all the necessary annual disclosures as prescribed by IFRS and should be read in conjunction with the annual consolidated financial statements as at and for the year ended December 31, 2023 ("2023 annual consolidated financial statements").
The consolidated financial statements were approved by the Board of Directors of Baytex on October 31, 2024.
The consolidated financial statements have been prepared on a historical cost basis, with the exception of derivative financial instruments which have been measured at fair value. The consolidated financial statements are presented in Canadian dollars which is the functional currency of the Company. References to “US$” are to United States ("U.S.") dollars. All financial information is rounded to the nearest thousand, except per share amounts or when otherwise indicated.
The audited 2023 annual consolidated financial statements of the Company are available through its filings on SEDAR+ at www.sedarplus.ca and through the U.S. Securities and Exchange Commission at www.sec.gov.
Estimation Uncertainty
Management makes judgments and assumptions about the future in deriving estimates used in preparation of these consolidated financial statements in accordance with IFRS. Sources of estimation uncertainty include estimates used to determine economically recoverable oil, natural gas, and natural gas liquids reserves, the recoverable amount of long-lived assets or cash generating units, the fair value of financial derivatives, the provision for asset retirement obligations and the provision for income taxes and the related deferred tax assets and liabilities.
Environmental Reporting Regulations
Environmental reporting for public enterprises continues to evolve and the Company may be subject to additional future disclosure requirements. The International Sustainability Standards Board ("ISSB") has issued an IFRS Sustainability Disclosure Standard with the objective to develop a global framework for environmental sustainability disclosure. The Canadian Sustainability Standards Board has released proposed standards that are aligned with the ISSB release and include suggestions for Canadian-specific modifications. The Canadian Securities Administrators have also issued a proposed National Instrument 51-107 Disclosure of Climate-related Matters which sets forth additional reporting requirements for Canadian Public Companies. Baytex continues to monitor developments on these reporting requirements and has not yet quantified the cost to comply with these regulations.
Material Accounting Policies
Except as described below, the accounting policies, critical accounting judgments and significant estimates used in these consolidated financial statements are consistent with those used in the preparation of the 2023 annual consolidated financial statements.
New Accounting Standards Adopted
Effective January 1, 2024, Baytex adopted amendments to IAS 1 Presentation of Financial Statements which was issued by the IASB in January 2020. The amendments further clarify the requirements for the presentation of liabilities as current or non-current in the consolidated statements of financial position.
These amendments have not had a material impact on our consolidated financial statements.
5
3. BUSINESS COMBINATION
On June 20, 2023, Baytex closed the acquisition of Ranger Oil Corporation (“Ranger”), a publicly traded oil and gas exploration and production company with operations in the Eagle Ford. Baytex acquired all of the issued and outstanding common shares of Ranger and is treated as the acquirer for accounting purposes. The acquisition increases Baytex's Eagle Ford scale and provides an operating platform to effectively allocate capital across the Western Canadian Sedimentary Basin and the Eagle Ford.
The acquisition was accounted for as a business combination with the net assets and liabilities recorded at fair value at the acquisition date. The total consideration of US$1.6 billion ($2.1 billion) consisted of $732.8 million of cash consideration and 311.4 million Baytex common shares valued at approximately $1.3 billion (based on the closing price of Baytex’s common shares of $4.26 per share on the Toronto Stock Exchange on June 20, 2023). Under the terms of the agreement, Ranger shareholders received 7.49 Baytex shares plus US$13.31 cash for each share of Ranger common stock.
The fair value of oil and gas properties acquired was primarily based on estimated cash flows associated with proved and probable oil and gas reserves acquired and the discount rate. Factors that impact these reserves cash flows include forecasted production volumes, royalty obligations, operating and capital costs, taxes and commodity prices. The estimation of reserves cash flows involves the expertise of the independent qualified reserve evaluators. Any changes to these estimates and assumptions could impact the calculation of the recoverable amount and the carrying value of assets. The fair value of the acquired oil and gas properties were determined using a discount rate of 12.2%.
Asset retirement obligations were determined using internal estimates of the timing and estimated costs associated with the abandonment and reclamation of the wells and facilities acquired using a market rate of interest of 9.0%.
The total consideration paid and estimates of the fair value of the assets and liabilities acquired as at the date of the acquisition are set forth in the table below. The purchase price equation was based on management's best estimate of the assets acquired and liabilities assumed. There were no measurement period adjustments recorded during the three and nine months ended September 30, 2024 and the purchase price is considered final.
| USD | CAD (1) | |||||||
| Consideration | ||||||||
| Cash | $ | 553,150 | $ | 732,840 | ||||
| Common shares issued | 1,001,196 | 1,326,435 | ||||||
Share-based compensation (2) | 20,107 | 26,638 | ||||||
| Total consideration | $ | 1,574,453 | $ | 2,085,913 | ||||
| Fair value of net assets acquired | ||||||||
| Oil and gas properties | $ | 2,337,173 | $ | 3,096,404 | ||||
Working capital deficiency excluding bank debt and financial derivatives (3) | (120,565) | (159,731) | ||||||
| Financial derivatives | 17,030 | 22,562 | ||||||
| Lease assets | 15,708 | 20,811 | ||||||
| Lease obligations | (15,708) | (20,811) | ||||||
| Credit facilities | (282,000) | (373,608) | ||||||
| Long-term notes | (429,676) | (569,256) | ||||||
| Asset retirement obligations | (23,632) | (31,310) | ||||||
| Deferred income tax asset | 76,123 | 100,852 | ||||||
| Net assets acquired | $ | 1,574,453 | $ | 2,085,913 | ||||
(1)Exchange rate used to translate the U.S. denominated values above is the rate as at the closing date being CAD/USD 1.32485.
(2)Following closing of the transaction, holders of awards outstanding under Ranger's share based compensation plans are entitled to Baytex common shares rather than Ranger common shares with adjustment to the quantity outstanding based on the exchange ratio for Ranger shares. The fair value of share awards allocated to consideration was based on the service period that had occurred prior to the acquisition date while the remaining fair value of the share awards assumed by Baytex is being recognized over the remaining future service periods (note 11). Included in this balance is $21.3 million (US$16.1 million) of awards that were fully vested at close of the Ranger acquisition and $5.3 million (US$4.0 million) of cash-based awards included in share-based compensation liability.
(3)Includes $70.3 million (US$53.0 million) of cash. Trade receivables acquired is net of a provision for expected credit losses of approximately $0.3 million.
6
4. SEGMENTED FINANCIAL INFORMATION
Baytex's reportable segments are determined based on the geographic location and nature of the underlying operations:
•Canada includes the exploration for, and the development and production of, crude oil and natural gas in Western Canada;
•U.S. includes the exploration for, and the development and production of, crude oil and natural gas in the Eagle Ford in Texas; and
•Corporate includes corporate activities and items not allocated between operating segments.
| Canada | U.S. | Corporate | Consolidated | |||||||||||||||||||||||
| Three Months Ended September 30 | 2024 | 2023 | 2024 | 2023 | 2024 | 2023 | 2024 | 2023 | ||||||||||||||||||
| Revenue, net of royalties | ||||||||||||||||||||||||||
| Petroleum and natural gas sales | $ | 482,467 | $ | 515,218 | $ | 592,156 | $ | 647,792 | $ | — | $ | — | $ | 1,074,623 | $ | 1,163,010 | ||||||||||
| Royalties | (71,351) | (64,238) | (152,449) | (175,811) | — | — | (223,800) | (240,049) | ||||||||||||||||||
| 411,116 | 450,980 | 439,707 | 471,981 | — | — | 850,823 | 922,961 | |||||||||||||||||||
| Expenses | ||||||||||||||||||||||||||
| Operating | 87,373 | 93,065 | 79,746 | 81,054 | — | — | 167,119 | 174,119 | ||||||||||||||||||
| Transportation | 24,837 | 16,075 | 12,046 | 11,908 | — | — | 36,883 | 27,983 | ||||||||||||||||||
| Blending and other | 51,902 | 49,830 | — | — | — | — | 51,902 | 49,830 | ||||||||||||||||||
| General and administrative | — | — | — | — | 17,895 | 20,536 | 17,895 | 20,536 | ||||||||||||||||||
| Transaction costs | — | — | — | — | — | 2,263 | — | 2,263 | ||||||||||||||||||
| Exploration and evaluation | 82 | 409 | — | — | — | — | 82 | 409 | ||||||||||||||||||
| Depletion and depreciation | 123,742 | 124,214 | 229,003 | 193,334 | 3,639 | 2,183 | 356,384 | 319,731 | ||||||||||||||||||
| Share-based compensation | — | — | — | — | 2,305 | 14,699 | 2,305 | 14,699 | ||||||||||||||||||
| Financing and interest | — | — | — | — | 58,700 | 68,065 | 58,700 | 68,065 | ||||||||||||||||||
| Financial derivatives (gain) loss | — | — | — | — | (22,927) | 28,641 | (22,927) | 28,641 | ||||||||||||||||||
| Foreign exchange (gain) loss | — | — | — | — | (24,552) | 42,682 | (24,552) | 42,682 | ||||||||||||||||||
| Loss (gain) on dispositions and property swaps | — | (875) | 1,091 | — | — | — | 1,091 | (875) | ||||||||||||||||||
| Other income | — | — | — | — | (9,107) | (1,367) | (9,107) | (1,367) | ||||||||||||||||||
| 287,936 | 282,718 | 321,886 | 286,296 | 25,953 | 177,702 | 635,775 | 746,716 | |||||||||||||||||||
| Net income (loss) before income taxes | 123,180 | 168,262 | 117,821 | 185,685 | (25,953) | (177,702) | 215,048 | 176,245 | ||||||||||||||||||
| Income tax expense (recovery) | ||||||||||||||||||||||||||
| Current income tax (recovery) expense | (3,748) | 808 | ||||||||||||||||||||||||
| Deferred income tax expense | 33,577 | 48,007 | ||||||||||||||||||||||||
| 29,829 | 48,815 | |||||||||||||||||||||||||
| Net income (loss) | $ | 123,180 | $ | 168,262 | $ | 117,821 | $ | 185,685 | $ | (25,953) | $ | (177,702) | $ | 185,219 | $ | 127,430 | ||||||||||
| Additions to exploration and evaluation assets | — | 40 | — | — | — | — | — | 40 | ||||||||||||||||||
| Additions to oil and gas properties | 120,473 | 107,013 | 185,859 | 302,138 | — | — | 306,332 | 409,151 | ||||||||||||||||||
| Property acquisitions | 507 | 4,277 | 535 | — | — | — | 1,042 | 4,277 | ||||||||||||||||||
| Proceeds from dispositions | 236 | (226) | (1,672) | — | — | — | (1,436) | (226) | ||||||||||||||||||
7
| Canada | U.S. | Corporate | Consolidated | |||||||||||||||||||||||
| Nine Months Ended September 30 | 2024 | 2023 | 2024 | 2023 | 2024 | 2023 | 2024 | 2023 | ||||||||||||||||||
| Revenue, net of royalties | ||||||||||||||||||||||||||
| Petroleum and natural gas sales | $ | 1,407,340 | $ | 1,291,131 | $ | 1,784,598 | $ | 1,025,975 | $ | — | $ | — | $ | 3,191,938 | $ | 2,317,106 | ||||||||||
| Royalties | (200,809) | (155,402) | (472,602) | (285,820) | — | — | (673,411) | (441,222) | ||||||||||||||||||
| 1,206,531 | 1,135,729 | 1,311,996 | 740,155 | — | — | 2,518,527 | 1,875,884 | |||||||||||||||||||
| Expenses | ||||||||||||||||||||||||||
| Operating | 257,191 | 275,599 | 251,068 | 130,366 | — | — | 508,259 | 405,965 | ||||||||||||||||||
| Transportation | 62,616 | 46,320 | 37,416 | 13,242 | — | — | 100,032 | 59,562 | ||||||||||||||||||
| Blending and other | 183,795 | 162,506 | — | — | — | — | 183,795 | 162,506 | ||||||||||||||||||
| General and administrative | — | — | — | — | 61,313 | 47,510 | 61,313 | 47,510 | ||||||||||||||||||
| Transaction costs | — | — | — | — | 1,539 | 43,966 | 1,539 | 43,966 | ||||||||||||||||||
| Exploration and evaluation | 749 | 941 | — | — | — | — | 749 | 941 | ||||||||||||||||||
| Depletion and depreciation | 358,603 | 355,947 | 685,295 | 300,509 | 9,724 | 5,418 | 1,053,622 | 661,874 | ||||||||||||||||||
| Share-based compensation | — | — | — | — | 17,393 | 41,440 | 17,393 | 41,440 | ||||||||||||||||||
| Financing and interest | — | — | — | — | 211,584 | 126,287 | 211,584 | 126,287 | ||||||||||||||||||
| Financial derivatives (gain) loss | — | — | — | — | (4,598) | 17,054 | (4,598) | 17,054 | ||||||||||||||||||
| Foreign exchange loss | — | — | — | — | 35,440 | 30,680 | 35,440 | 30,680 | ||||||||||||||||||
| (Gain) loss on dispositions and property swaps | (1,055) | (539) | 5,796 | — | — | — | 4,741 | (539) | ||||||||||||||||||
| Other income | — | (1,271) | — | — | (7,011) | (1,013) | (7,011) | (2,284) | ||||||||||||||||||
| 861,899 | 839,503 | 979,575 | 444,117 | 325,384 | 311,342 | 2,166,858 | 1,594,962 | |||||||||||||||||||
| Net income (loss) before income taxes | 344,632 | 296,226 | 332,421 | 296,038 | (325,384) | (311,342) | 351,669 | 280,922 | ||||||||||||||||||
| Income tax expense (recovery) | ||||||||||||||||||||||||||
| Current income tax expense | 4,407 | 3,278 | ||||||||||||||||||||||||
| Deferred income tax expense (recovery) | 72,188 | (114,830) | ||||||||||||||||||||||||
| 76,595 | (111,552) | |||||||||||||||||||||||||
| Net income (loss) | $ | 344,632 | $ | 296,226 | $ | 332,421 | $ | 296,038 | $ | (325,384) | $ | (311,342) | $ | 275,074 | $ | 392,474 | ||||||||||
| Additions to exploration and evaluation assets | — | 1,271 | — | — | — | — | — | 1,271 | ||||||||||||||||||
| Additions to oil and gas properties | 380,515 | 386,791 | 677,941 | 425,459 | — | — | 1,058,456 | 812,250 | ||||||||||||||||||
| Corporate acquisition, net of cash acquired | — | — | — | 662,579 | — | — | — | 662,579 | ||||||||||||||||||
| Property acquisitions | 36,584 | 4,721 | 3,210 | — | — | — | 39,794 | 4,721 | ||||||||||||||||||
| Proceeds from dispositions | 368 | (511) | (4,524) | — | — | — | (4,156) | (511) | ||||||||||||||||||
| September 30, 2024 | December 31, 2023 | |||||||
| Canadian assets | $ | 2,404,850 | $ | 2,289,083 | ||||
| U.S. assets | 5,155,202 | 5,112,493 | ||||||
| Corporate assets | 54,105 | 59,355 | ||||||
| Total consolidated assets | $ | 7,614,157 | $ | 7,460,931 | ||||
8
5. EXPLORATION AND EVALUATION ASSETS
| September 30, 2024 | December 31, 2023 | |||||||
| Balance, beginning of period | $ | 90,919 | $ | 168,684 | ||||
| Property acquisitions | 35,887 | 18,486 | ||||||
| Divestitures | (1,173) | (2,965) | ||||||
| Property swaps | (68) | 1,000 | ||||||
| Exploration and evaluation expense | (749) | (8,896) | ||||||
Transfer to oil and gas properties (note 6) | (2,692) | (83,530) | ||||||
| Foreign currency translation | — | (1,860) | ||||||
| Balance, end of period | $ | 122,124 | $ | 90,919 | ||||
At September 30, 2024 and December 31, 2023, there were no indicators of impairment or impairment reversal for exploration and evaluation assets in any of the Company's cash generating units ("CGUs").
6. OIL AND GAS PROPERTIES
| Cost | Accumulated depletion | Net book value | |||||||||
| Balance, December 31, 2022 | $ | 12,042,216 | $ | (7,421,450) | $ | 4,620,766 | |||||
| Capital expenditures | 1,012,787 | — | 1,012,787 | ||||||||
Corporate acquisition (note 3) | 3,096,404 | — | 3,096,404 | ||||||||
| Property acquisitions | 20,263 | — | 20,263 | ||||||||
Transfers from exploration and evaluation assets (note 5) | 83,530 | — | 83,530 | ||||||||
| Transfers from lease assets | 7,611 | — | 7,611 | ||||||||
Change in asset retirement obligations (note 9) | 54,166 | — | 54,166 | ||||||||
| Divestitures | (660,920) | 317,651 | (343,269) | ||||||||
| Property swaps | (2,975) | 3,756 | 781 | ||||||||
| Impairment loss | — | (833,662) | (833,662) | ||||||||
| Foreign currency translation | (127,065) | 66,501 | (60,564) | ||||||||
| Depletion | — | (1,039,780) | (1,039,780) | ||||||||
| Balance, December 31, 2023 | $ | 15,526,017 | $ | (8,906,984) | $ | 6,619,033 | |||||
| Capital expenditures | 1,058,456 | — | 1,058,456 | ||||||||
| Property acquisitions | 4,185 | — | 4,185 | ||||||||
Transfers from exploration and evaluation assets (note 5) | 2,692 | — | 2,692 | ||||||||
| Transfers from lease assets | 8,210 | — | 8,210 | ||||||||
Change in asset retirement obligations (note 9) | 27,343 | — | 27,343 | ||||||||
| Divestitures | (7,052) | 1,313 | (5,739) | ||||||||
| Property swaps | 997 | 682 | 1,679 | ||||||||
| Foreign currency translation | 183,473 | (79,098) | 104,375 | ||||||||
| Depletion | — | (1,043,898) | (1,043,898) | ||||||||
| Balance, September 30, 2024 | $ | 16,804,321 | $ | (10,027,985) | $ | 6,776,336 | |||||
At September 30, 2024, there were no indicators of impairment or impairment reversal for oil and gas properties in any of the Company's CGUs.
At December 31, 2023, the Company identified indicators of impairment for oil and gas properties in the legacy non-operated Eagle Ford CGU due to changes in reserves and in the Viking CGU due to changes in reserves and a loss recorded on disposition of an asset. The recoverable amounts for the two CGUs were not sufficient to support their carrying values which resulted in an impairment loss of $833.7 million recorded at December 31, 2023. The recoverable amount for each CGU is based on estimated cash flows associated with proved and probable oil and gas reserves from an independent reserve report prepared as at December 31, 2023 utilizing a discount rate based on Baytex's corporate weighted average cost of capital adjusted for asset specific factors. The after-tax discount rates applied to the cash flows were between 12% and 14%.
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7. CREDIT FACILITIES
| September 30, 2024 | December 31, 2023 | |||||||
Credit facilities - U.S. dollar denominated (1) | $ | 107,673 | $ | 311,980 | ||||
| Credit facilities - Canadian dollar denominated | 358,435 | 552,756 | ||||||
Credit facilities - principal (2) | $ | 466,108 | $ | 864,736 | ||||
| Unamortized debt issuance costs | (16,992) | (15,987) | ||||||
| Credit facilities | $ | 449,116 | $ | 848,749 | ||||
(1)U.S. dollar denominated credit facilities balance was US$79.7 million as at September 30, 2024 (December 31, 2023 - US$236.3 million).
(2)The decrease in the principal amount of the credit facilities outstanding from December 31, 2023 to September 30, 2024 is the result of net repayments of $404.6 million, partially offset by an increase in the reported amount of U.S. denominated debt of $6.0 million due to foreign exchange.
On May 9, 2024, Baytex extended the maturity of the US$1.1 billion revolving credit facilities (the "Credit Facilities") from April 1, 2026 to May 9, 2028. There are no changes to the loan balances or financial covenants as a result of the amendment. Following the amendment, borrowings in Canadian funds previously based on the banker's acceptance rate have been replaced with borrowings based on the Canadian Overnight Repo Rate Average ("CORRA").
At September 30, 2024, Baytex had US$1.1 billion ($1.5 billion) of revolving credit facilities that mature on May 9, 2028. The Credit Facilities are secured and are comprised of a US$50 million operating loan and a US$750 million syndicated revolving loan for Baytex and a US$45 million operating loan and a US$255 million syndicated revolving loan for Baytex's wholly-owned subsidiary, Baytex Energy USA, Inc.
The Credit Facilities contain standard commercial covenants in addition to the financial covenants detailed below. Advances under the Baytex Credit Facilities can be drawn in either Canadian or U.S. funds and bear interest at the bank’s prime lending rate, CORRA rates or secured overnight financing rates ("SOFR"), plus applicable margins. Advances under the Baytex Energy USA, Inc. Credit Facilities can be drawn in U.S. funds and bear interest at the bank's prime lending rate or SOFR, plus applicable margins.
The weighted average interest rate on the Credit Facilities was 7.9% for the nine months ended September 30, 2024 (7.3% for nine months ended September 30, 2023).
The following table summarizes the financial covenants applicable to the Credit Facilities and our compliance therewith at September 30, 2024.
Covenant Description | Position as at September 30, 2024 | Covenant | ||||||
Senior Secured Debt (1) to Bank EBITDA (2) (Maximum Ratio) | 0.2:1.0 | 3.5:1.0 | ||||||
Interest Coverage (3) (Minimum Ratio) | 10.5:1.0 | 3.5:1.0 | ||||||
Total Debt (4) to Bank EBITDA (2) (Maximum Ratio) | 1.0:1.0 | 4:0:1.0 | ||||||
(1)"Senior Secured Debt" is calculated in accordance with the credit facility agreement and is defined as the principal amount of the Credit Facilities and other secured obligations identified in the credit facility agreement. As at September 30, 2024, the Company's Senior Secured Debt totaled $470.8 million.
(2)"Bank EBITDA" is calculated based on terms and definitions set out in the credit facility agreement which adjusts net income or loss for financing and interest expenses, income tax, non-recurring losses, certain specific unrealized and non-cash transactions and is calculated based on a trailing twelve-month basis including the impact of material acquisitions as if they had occurred at the beginning of the twelve month period. Bank EBITDA for the twelve months ended September 30, 2024 was $2.2 billion.
(3)"Interest coverage" is calculated in accordance with the credit facility agreement and is computed as the ratio of Bank EBITDA to financing and interest expense, excluding certain non-cash transactions, and is calculated on a trailing twelve-month basis including the impact of material acquisitions as if they had occurred at the beginning of the twelve month period. Financing and interest expense for the twelve months ended September 30, 2024 was $212.4 million.
(4)"Total Debt" is calculated in accordance with the credit facility agreement and is defined as all obligations, liabilities, and indebtedness of Baytex excluding trade payables, share-based compensation liability, dividends payable, asset retirement obligations, leases, deferred income tax liabilities, other long-term liabilities and financial derivative liabilities. As at September 30, 2024, the Company's Total Debt totaled $2.3 billion of principal amounts outstanding.
At September 30, 2024, Baytex had $5.7 million of outstanding letters of credit (December 31, 2023 - $5.6 million outstanding) under the Credit Facilities.
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8. LONG-TERM NOTES
| September 30, 2024 | December 31, 2023 | |||||||
8.75% notes due April 1, 2027 (1) | $ | — | $ | 541,114 | ||||
8.50% notes due April 30, 2030 (2) | 1,080,360 | 1,056,361 | ||||||
7.375% notes due March 15, 2032 (3) | 776,509 | — | ||||||
Total long-term notes - principal (4) | $ | 1,856,869 | $ | 1,597,475 | ||||
| Unamortized debt issuance costs | (46,168) | (35,114) | ||||||
| Total long-term notes - net of unamortized debt issuance costs | $ | 1,810,701 | $ | 1,562,361 | ||||
(1)The 8.75% notes were fully repaid on April 1, 2024. The U.S. dollar denominated principal outstanding of the 8.75% notes was US$409.8 million as at December 31, 2023.
(2)The U.S. dollar denominated principal outstanding of the 8.50% notes was US$800.0 million as at September 30, 2024 (December 31, 2023 - US$800.0 million).
(3)The U.S. dollar denominated principal outstanding of the 7.375% notes was US$575.0 million as at September 30, 2024 (December 31, 2023 - nil).
(4)The increase in the principal amount of long-term notes outstanding from December 31, 2023 to September 30, 2024 is the result of the issuance of the 7.375% notes for $780.9 million and changes in the reported amount of U.S. denominated debt of $35.0 million due to changes in the CAD/USD exchange rate used to translate the U.S. denominated amount of long-term notes outstanding. This was partially offset by the repayment of the 8.75% notes for $556.6 million.
On April 1, 2024, Baytex closed a private offering of the US$575 million aggregate principal amount of senior unsecured notes due 2032 ("7.375% Senior Notes"). The 7.375% Senior Notes were priced at 99.266% of par to yield 7.500% per annum, bear interest at a rate of 7.375% per annum and mature on March 15, 2032. The 7.375% Senior Notes are redeemable at our option, in whole or in part, at specified redemption prices on or after March 15, 2027 and will be redeemable at par from March 15, 2029 to maturity. Proceeds from the 7.375% Senior Notes were used to redeem the remaining US$409.8 million aggregate principal amount of the outstanding 8.75% Senior Notes at 104.375% of par value, pay the related fees and expenses associated with the offering, and repay a portion of the debt outstanding on our Credit Facilities. During Q2 2024, Baytex recorded early redemption expense of $24.4 million which is the call premium paid on the redemption of the 8.75% Senior Notes.
The long-term notes do not contain any significant financial maintenance covenants but do contain standard commercial covenants for debt incurrence and restricted payments.
11
9. ASSET RETIREMENT OBLIGATIONS
| September 30, 2024 | December 31, 2023 | |||||||
| Balance, beginning of period | $ | 623,399 | $ | 588,923 | ||||
Liabilities incurred (1) | 20,340 | 24,185 | ||||||
| Liabilities settled | (22,344) | (26,416) | ||||||
| Liabilities assumed from corporate acquisition (note 3) | — | 31,310 | ||||||
| Liabilities acquired from property acquisitions | 310 | 11 | ||||||
| Liabilities divested | (2,098) | (43,153) | ||||||
| Property swaps | (728) | 76 | ||||||
Accretion (note 15) | 15,910 | 20,406 | ||||||
Government grants (2) | — | (1,271) | ||||||
Change in estimate (1) | 12,421 | 17,067 | ||||||
Changes in discount and inflation rates (1)(3) | (5,418) | 12,914 | ||||||
| Foreign currency translation | 2,059 | (653) | ||||||
| Balance, end of period | $ | 643,851 | $ | 623,399 | ||||
| Less current portion of asset retirement obligations | 17,512 | 20,448 | ||||||
| Non-current portion of asset retirement obligations | $ | 626,339 | $ | 602,951 | ||||
(1)The total of these items reflects the total change in asset retirement obligations of $27.3 million per Note 6 - Oil and Gas Properties ($54.2 million increase in 2023).
(2)Certain government grants were provided by the Government of Alberta and the Government of Saskatchewan under programs that were completed during the year ended December 31, 2023. During the nine months ended September 30, 2024, no amounts have been recognized under these programs ($1.3 million for the year ended December 31, 2023).
(3)The discount and inflation rates used to calculate the liability for our Canadian operations at September 30, 2024 were 3.1% and 1.6% respectively (December 31, 2023 - 3.0% and 1.6%). The discount and inflation rates used to calculate the liability for our U.S. operations at September 30, 2024 were 4.1% and 2.2%, respectively (December 31, 2023 - 4.0% and 2.1%).
10. SHAREHOLDERS' CAPITAL
The authorized capital of Baytex consists of an unlimited number of common shares without nominal or par value and 10.0 million preferred shares without nominal or par value, issuable in series. Baytex establishes the rights and terms of the preferred shares upon issuance. As at September 30, 2024, no preferred shares have been issued by the Company and all common shares issued were fully paid. The holders of common shares may receive dividends as declared from time to time and are entitled to one vote per share at any meeting of the holders of common shares. All common shares rank equally with regard to the Company's net assets in the event the Company is wound-up or terminated.
Number of Common Shares (000s) | Amount | |||||||
| Balance, December 31, 2022 | 544,930 | $ | 5,499,664 | |||||
| Issued on corporate acquisition | 311,370 | 1,326,435 | ||||||
| Vesting of share awards | 5,892 | 26,229 | ||||||
| Common shares repurchased and cancelled | (40,511) | (325,039) | ||||||
| Balance, December 31, 2023 | 821,681 | $ | 6,527,289 | |||||
| Vesting of share awards | 272 | 1,167 | ||||||
| Common shares repurchased and cancelled | (34,625) | (280,172) | ||||||
| Balance, September 30, 2024 | 787,328 | $ | 6,248,284 | |||||
Normal Course Issuer Bid ("NCIB") Share Repurchases
On June 26, 2024, Baytex announced that the Toronto Stock Exchange ("TSX") accepted the renewal of the NCIB under which Baytex is permitted to purchase for cancellation up to 70.1 million common shares over the 12-month period commencing July 2, 2024. The number of shares authorized for repurchase represented 10% of the Company's public float, as defined by the TSX, as at June 18, 2024. On June 18, 2024 Baytex had 808.0 million common shares outstanding.
During the nine months ended September 30, 2024, Baytex recorded $168.5 million related to common share repurchases, which includes $165.2 million of consideration paid for the repurchase and cancellation of common shares as well as $3.3 million of federal tax levied on equity repurchases.
12
Purchases are made on the open market at prices prevailing at the time of the transaction. During the nine months ended September 30, 2024, Baytex repurchased and cancelled 34.6 million common shares at an average price of $4.77 per share for total consideration of $165.2 million. During 2023, Baytex repurchased and cancelled 40.5 million common shares at an average price of $5.48 per share for total consideration of $221.9 million. The total consideration paid includes the commissions and fees paid as part of the transaction and is recorded as a reduction to shareholders' equity. The shares repurchased and cancelled are accounted for as a reduction in shareholders' capital at historical cost, with any discount paid recorded to contributed surplus and any premium paid recorded to retained earnings.
Effective January 1, 2024, the Government of Canada introduced a 2% federal tax on equity repurchases. During the nine months ended September 30, 2024, Baytex recorded a $3.3 million liability, charged to shareholders’ capital, related to the federal tax on equity repurchases.
Dividends
The following dividends were declared by Baytex during the nine months ended September 30, 2024.
| Record Date | Payable Date | Per Share Amount | Dividend Amount | ||||||||
| March 15, 2024 | April 1, 2024 | $ | 0.0225 | $ | 18,494 | ||||||
| June 14, 2024 | July 2, 2024 | 0.0225 | 18,161 | ||||||||
| September 16, 2024 | October 1, 2024 | 0.0225 | 17,732 | ||||||||
| Total dividends declared | $ | 54,387 | |||||||||
On October 31, 2024, the Company's Board of Directors declared a quarterly cash dividend of $0.0225 per share to be paid on January 2, 2025 for shareholders of record on December 13, 2024.
11. SHARE-BASED COMPENSATION PLAN
For the three and nine months ended September 30, 2024 the Company recorded share-based compensation expense of $2.3 million and $17.4 million respectively ($14.7 million and $41.4 million for the three and nine months ended September 30, 2023) which is related to cash-settled awards.
The Company's closing share price on the Toronto Stock Exchange on September 30, 2024 was $4.04 (December 31, 2023 - $4.38 and September 30, 2023 - $5.99).
The number of awards outstanding is detailed below:
| (000s) | Restricted awards | Performance awards | Incentive awards | Director Share Units | Total | ||||||||||||
Total, December 31, 2022 | 762 | 4,796 | 5,109 | 967 | 11,634 | ||||||||||||
| Granted | 41 | 2,641 | 2,607 | 278 | 5,567 | ||||||||||||
Assumed on corporate acquisition (1) | 10,789 | — | — | — | 10,789 | ||||||||||||
| Vested | (9,302) | (3,767) | (2,715) | — | (15,784) | ||||||||||||
| Forfeited | (11) | (315) | (518) | — | (844) | ||||||||||||
Total, December 31, 2023 | 2,279 | 3,355 | 4,483 | 1,245 | 11,362 | ||||||||||||
| Granted | 8 | 2,343 | 3,561 | 245 | 6,157 | ||||||||||||
| Added by performance factor | — | 524 | — | — | 524 | ||||||||||||
| Vested | (1,457) | (2,443) | (2,541) | (162) | (6,603) | ||||||||||||
| Forfeited | — | (20) | (106) | — | (126) | ||||||||||||
Total, September 30, 2024 | 830 | 3,759 | 5,397 | 1,328 | 11,314 | ||||||||||||
(1)Following the closing of the transaction, holders of awards outstanding under Ranger's Share Award Plan were entitled to Baytex common shares rather than Ranger common shares with an adjustment to the quantity outstanding based on the exchange ratio for Ranger shares. The fair value of share awards allocated to consideration was based on the service period that had occurred prior to the acquisition date (note 3) while the remaining fair value of the share awards assumed by Baytex is recognized over the remaining future service periods.
13
Share Award Incentive Plan
Baytex has a Share Award Incentive Plan pursuant to which it issues restricted and performance awards. A restricted award entitles the holder of each award to receive one common share of Baytex or the equivalent cash value at the time of vesting. A performance award entitles the holder of each award to receive between zero and two common shares or the cash equivalent value on vesting; the number of common shares issued is determined by a performance multiplier. The multiplier can range between zero and two and is calculated based on a number of factors determined and approved by the Board of Directors on an annual basis. The Share Awards vest in equal tranches on the first, second and third anniversaries of the grant date. The cumulative expense is recognized at fair value at each period end and is included in share-based compensation liability.
In 2023, Baytex became the successor to Ranger's Share Award Plan (note 3). Awards outstanding as at the closing day of the acquisition were converted to restricted awards that will be settled in shares of Baytex or with cash, with the quantity outstanding adjusted based on the exchange ratio for the business combination with Ranger.
The weighted average fair value of share awards granted during the nine months ended September 30, 2024 was $4.28 per restricted and performance award ($5.44 for the nine months ended September 30, 2023).
Incentive Award Plan
Baytex has an Incentive Award Plan whereby the participants of the plan are entitled to receive a cash payment equal to the value of one Baytex common share per incentive award at the time of vesting. The incentive awards vest in equal tranches on the first, second and third anniversaries of the grant date. The cumulative expense is recognized at fair value at each period end and is included in share-based compensation liability.
The weighted average fair value of share awards granted during the nine months ended September 30, 2024 was $4.29 per incentive award ($5.41 for the nine months ended September 30, 2023).
Deferred Share Unit Plan ("DSU Plan")
Baytex has a DSU Plan whereby each independent director of Baytex is entitled to receive a cash payment equal to the value of one Baytex common share per DSU award on the date at which they cease to be a member of the Board. The awards vest immediately upon being granted and are expensed in full on the grant date. The units are recognized at fair value at each period end and are included in share-based compensation liability.
The weighted average fair value of share awards granted during the nine months ended September 30, 2024 was $4.57 per DSU award ($5.15 for the nine months ended September 30, 2023).
12. NET INCOME PER SHARE
Baytex calculates basic income or loss per share based on the net income or loss attributable to shareholders using the weighted average number of shares outstanding during the period. Diluted income per share amounts reflect the potential dilution that could occur if share awards were converted to common shares. The treasury stock method is used to determine the dilutive effect of share awards whereby the potential conversion of share awards and the amount of compensation expense, if any, attributed to future services are assumed to be used to purchase common shares at the average market price during the period.
14
| Three Months Ended September 30 | ||||||||||||||||||||
| 2024 | 2023 | |||||||||||||||||||
| Net income | Weighted average common shares (000s) | Net income per share | Net income | Weighted average common shares (000s) | Net income per share | |||||||||||||||
| Net income - basic | $ | 185,219 | 796,064 | $ | 0.23 | $ | 127,430 | 855,300 | $ | 0.15 | ||||||||||
| Dilutive effect of share awards | — | 4,153 | — | — | 5,272 | — | ||||||||||||||
| Net income - diluted | $ | 185,219 | 800,217 | $ | 0.23 | $ | 127,430 | 860,572 | $ | 0.15 | ||||||||||
| Nine Months Ended September 30 | ||||||||||||||||||||
| 2024 | 2023 | |||||||||||||||||||
| Net income | Weighted average common shares (000s) | Net income per share | Net income | Weighted average common shares (000s) | Net income per share | |||||||||||||||
| Net income - basic | $ | 275,074 | 810,589 | $ | 0.34 | $ | 392,474 | 662,379 | $ | 0.59 | ||||||||||
| Dilutive effect of share awards | — | 3,762 | — | — | 3,815 | — | ||||||||||||||
| Net income - diluted | $ | 275,074 | 814,351 | $ | 0.34 | $ | 392,474 | 666,194 | $ | 0.59 | ||||||||||
For the three and nine months ended September 30, 2024 and September 30, 2023, no share awards were excluded from the calculation of diluted income per share as their effect was dilutive.
13. PETROLEUM AND NATURAL GAS SALES
Petroleum and natural gas sales from contracts with customers for the Company's Canadian and U.S. operating segments is set forth in the following table.
| Three Months Ended September 30 | ||||||||||||||||||||
| 2024 | 2023 | |||||||||||||||||||
| Canada | U.S. | Total | Canada | U.S. | Total | |||||||||||||||
| Light oil and condensate | $ | 122,452 | $ | 525,135 | $ | 647,587 | $ | 173,475 | $ | 583,304 | $ | 756,779 | ||||||||
| Heavy oil | 350,859 | — | 350,859 | 323,272 | — | 323,272 | ||||||||||||||
| NGL | 6,067 | 44,034 | 50,101 | 5,945 | 41,027 | 46,972 | ||||||||||||||
| Natural gas sales | 3,089 | 22,987 | 26,076 | 12,526 | 23,461 | 35,987 | ||||||||||||||
| Total petroleum and natural gas sales | $ | 482,467 | $ | 592,156 | $ | 1,074,623 | $ | 515,218 | $ | 647,792 | $ | 1,163,010 | ||||||||
| Nine Months Ended September 30 | ||||||||||||||||||||
| 2024 | 2023 | |||||||||||||||||||
| Canada | U.S. | Total | Canada | U.S. | Total | |||||||||||||||
| Light oil and condensate | $ | 321,704 | $ | 1,589,648 | $ | 1,911,352 | $ | 444,894 | $ | 909,159 | $ | 1,354,053 | ||||||||
| Heavy oil | 1,050,743 | — | 1,050,743 | 791,806 | — | 791,806 | ||||||||||||||
| NGL | 17,579 | 127,963 | 145,542 | 15,777 | 73,192 | 88,969 | ||||||||||||||
| Natural gas sales | 17,314 | 66,987 | 84,301 | 38,654 | 43,624 | 82,278 | ||||||||||||||
| Total petroleum and natural gas sales | $ | 1,407,340 | $ | 1,784,598 | $ | 3,191,938 | $ | 1,291,131 | $ | 1,025,975 | $ | 2,317,106 | ||||||||
Included in accounts receivable at September 30, 2024 is $311.7 million of accrued receivables related to delivered volumes (December 31, 2023 - $271.1 million).
15
14. INCOME TAXES
The provision for income taxes has been computed as follows:
| Nine Months Ended September 30 | ||||||||
| 2024 | 2023 | |||||||
| Net income before income taxes | $ | 351,669 | $ | 280,922 | ||||
Expected income taxes at the statutory rate of 24.38% (2023 – 24.64%) (1) | 85,737 | 69,219 | ||||||
| Change in income taxes resulting from: | ||||||||
| Effect of foreign exchange | 4,269 | 2,817 | ||||||
| Effect of change in income tax rates | — | (427) | ||||||
| Effect of rate adjustments for foreign jurisdictions | (6,333) | (7,230) | ||||||
Effect of change in deferred tax benefit not recognized (2) | (22,087) | 3,213 | ||||||
Effect of internal debt restructuring (3) | — | (186,319) | ||||||
| Repatriation and related taxes | 10,863 | 2,682 | ||||||
| Adjustments, assessments and other | 4,146 | 4,493 | ||||||
| Income tax expense (recovery) | $ | 76,595 | $ | (111,552) | ||||
(1)The expected income tax rate decreased from 2023 due to changes in the provincial apportionment of Canadian income.
(2)A deferred tax asset of $16.4 million remains unrecognized due to uncertainty surrounding future commodity prices and future capital gains (December 31, 2023 - $40.4 million). These deferred income tax assets relate to capital losses of $137.0 million and non-capital losses of $1.3 million.
(3)A deferred income tax asset was recognized in the nine months ended September 30, 2023 after the closing of the Ranger acquisition due to effects of the transaction structuring.
In June 2016, certain indirect subsidiary entities received reassessments from the Canada Revenue Agency ("CRA") that deny non-capital loss deductions relevant to the calculation of income taxes for the years 2011 through 2015. Following objections and submissions, in November 2023 the CRA issued notices of confirmation regarding their prior reassessments. In February 2024, Baytex filed notices of appeal with the Tax Court of Canada and we estimate it could take between two and three years to receive a judgment. The reassessments do not require us to pay any amounts in order to participate in the appeals process. Should we be unsuccessful at the Tax Court of Canada, additional appeals are available; a process that we estimate could take another two years and potentially longer.
We remain confident that the tax filings of the affected entities are correct and will defend our tax filing positions. During Q4/2023, we purchased $272.5 million of insurance coverage for a premium of $50.3 million which will help manage the litigation risk associated with this matter. The most recent reassessments issued by the CRA assert taxes owing by the trusts of $244.8 million, late payment interest of $208.6 million as at the date of reassessments and a late filing penalty in respect of the 2011 tax year of $4.1 million.
By way of background, we acquired several privately held commercial trusts in 2010 with accumulated non-capital losses of $591.0 million (the "Losses"). The Losses were subsequently deducted in computing the taxable income of those trusts. The reassessments, as confirmed in November 2023, disallow the deduction of the Losses for two reasons. First, the reassessments allege that the trusts were resettled and the resulting successor trusts were not able to access the losses of the predecessor trusts. Second, the reassessments allege that the general anti-avoidance rule of the Income Tax Act (Canada) operates to deny the deduction of the losses. If, after exhausting available appeals, the deduction of Losses continues to be disallowed, either the trusts or their corporate beneficiary will owe cash taxes, late payment interest and potential penalties. The amount of cash taxes owing, late payment interest and potential penalties are dependent upon the taxpayer(s) ultimately liable (the trusts or their corporate beneficiary) and the amount of unused tax shelter available to the taxpayer(s) to offset the reassessed income, including tax shelter from subsequent years that may be carried back and applied to prior years.
16
15. FINANCING AND INTEREST
| Three Months Ended September 30 | Nine Months Ended September 30 | |||||||||||||
| 2024 | 2023 | 2024 | 2023 | |||||||||||
| Interest on Credit Facilities | $ | 12,343 | $ | 21,671 | $ | 46,271 | $ | 35,422 | ||||||
| Interest on long-term notes | 37,426 | 34,664 | 109,760 | 67,323 | ||||||||||
| Interest on lease obligations | 340 | 160 | 1,304 | 380 | ||||||||||
| Cash interest | $ | 50,109 | $ | 56,495 | $ | 157,335 | $ | 103,125 | ||||||
| Amortization of debt issue costs | 3,067 | 6,539 | 13,989 | 8,910 | ||||||||||
Accretion on asset retirement obligations (note 9) | 5,524 | 5,031 | 15,910 | 14,252 | ||||||||||
Early redemption expense (note 8) | — | — | 24,350 | — | ||||||||||
| Financing and interest | $ | 58,700 | $ | 68,065 | $ | 211,584 | $ | 126,287 | ||||||
16. FOREIGN EXCHANGE
| Three Months Ended September 30 | Nine Months Ended September 30 | |||||||||||||
| 2024 | 2023 | 2024 | 2023 | |||||||||||
| Unrealized foreign exchange (gain) loss | $ | (24,401) | $ | 42,392 | $ | 33,506 | $ | 29,299 | ||||||
| Realized foreign exchange (gain) loss | (151) | 290 | 1,934 | 1,381 | ||||||||||
| Foreign exchange (gain) loss | $ | (24,552) | $ | 42,682 | $ | 35,440 | $ | 30,680 | ||||||
17
17. FINANCIAL INSTRUMENTS AND RISK MANAGEMENT
The Company's financial assets and liabilities are comprised of cash, trade receivables, trade payables, dividends payable, financial derivatives, Credit Facilities and long-term notes. The fair value of trade receivables and trade payables approximates carrying value due to the short term to maturity. The fair value of the Credit Facilities is equal to the principal amount outstanding as the Credit Facilities bear interest at floating rates and credit spreads that are indicative of market rates. The fair value of the long-term notes is determined based on market prices.
The carrying value and fair value of the Company's financial instruments carried on the condensed consolidated statements of financial position are classified into the following categories:
| September 30, 2024 | December 31, 2023 | ||||||||||||||||
| Carrying value | Fair value | Carrying value | Fair value | Fair Value Measurement Hierarchy | |||||||||||||
| Financial Assets | |||||||||||||||||
| Fair value through profit and loss | |||||||||||||||||
| Financial derivatives | $ | 24,310 | $ | 24,310 | $ | 23,274 | $ | 23,274 | Level 2 | ||||||||
| Total | $ | 24,310 | $ | 24,310 | $ | 23,274 | $ | 23,274 | |||||||||
| Amortized cost | |||||||||||||||||
| Cash | $ | 21,311 | $ | 21,311 | $ | 55,815 | $ | 55,815 | — | ||||||||
| Trade receivables | 375,942 | 375,942 | 339,405 | 339,405 | — | ||||||||||||
| Total | $ | 397,253 | $ | 397,253 | $ | 395,220 | $ | 395,220 | |||||||||
| Financial Liabilities | |||||||||||||||||
| Amortized cost | |||||||||||||||||
| Trade payables | $ | (584,696) | $ | (584,696) | $ | (477,295) | $ | (477,295) | — | ||||||||
| Dividends payable | (17,732) | (17,732) | (18,381) | (18,381) | — | ||||||||||||
Credit Facilities (1) | (449,116) | (466,108) | (848,749) | (864,736) | — | ||||||||||||
| Long-term notes | (1,810,701) | (1,896,351) | (1,562,361) | (1,653,118) | Level 1 | ||||||||||||
| Total | $ | (2,862,245) | $ | (2,964,887) | $ | (2,906,786) | $ | (3,013,530) | |||||||||
(1) The difference in the carrying value and fair value of the credit facilities is due to unamortized debt issuance costs. Refer to Note 7.
There were no transfers between Level 1 and Level 2 during the nine months ended September 30, 2024 and 2023.
Foreign Currency Risk
The carrying amounts of the Company’s U.S. dollar denominated monetary assets and liabilities recorded in entities with a Canadian dollar functional currency at the reporting date are as follows:
| Assets | Liabilities | |||||||||||||
| September 30, 2024 | December 31, 2023 | September 30, 2024 | December 31, 2023 | |||||||||||
| U.S. dollar denominated | US$22,356 | US$17,923 | US$1,405,247 | US$1,249,725 | ||||||||||
18
Commodity Price Risk
Financial Derivative Contracts
As at October 31, 2024, Baytex had the following commodity financial derivative contracts.
| Remaining Period | Volume | Price/Unit (1) | Index | |||||||||||
| Oil | ||||||||||||||
| Basis differential | Oct 2024 to Dec 2024 | 15,000 bbl/d | Baytex pays: WCS differential at Hardisty Baytex receives: WCS differential at Houston less US$8.31/bbl | WCS | ||||||||||
| Basis differential | Oct 2024 to Dec 2024 | 6,000 bbl/d | WTI less US$13.58/bbl | WCS | ||||||||||
| Basis differential | Oct 2024 to Dec 2024 | 6,250 bbl/d | WTI less US$2.87/bbl | MSW | ||||||||||
| Basis differential | Jan 2025 to Dec 2025 | 2,000 bbl/d | WTI less US$2.75/bbl | MSW | ||||||||||
| Basis differential | Jan 2025 to Jun 2025 | 3,000 bbl/d | WTI less US$13.50/bbl | WCS | ||||||||||
Basis differential (2) | Jul 2025 to Dec 2025 | 2,500 bbl/d | WTI less US$13.50/bbl | WCS | ||||||||||
Basis differential (2) | Jan 2025 to Dec 2025 | 9,500 bbl/d | WTI less US$13.18/bbl | WCS | ||||||||||
| Collar | Oct 2024 to Dec 2024 | 12,500 bbl/d | US$60.00/US$100.00 | WTI | ||||||||||
| Collar | Oct 2024 to Dec 2024 | 2,500 bbl/d | US$60.00/US$94.15 | WTI | ||||||||||
| Collar | Oct 2024 to Dec 2024 | 1,500 bbl/d | US$60.00/US$90.35 | WTI | ||||||||||
| Collar | Oct 2024 to Dec 2024 | 1,000 bbl/d | US$60.00/US$90.00 | WTI | ||||||||||
| Collar | Oct 2024 to Dec 2024 | 2,000 bbl/d | US$60.00/US$85.00 | WTI | ||||||||||
| Collar | Oct 2024 to Dec 2024 | 2,000 bbl/d | US$60.00/US$84.60 | WTI | ||||||||||
| Collar | Oct 2024 to Dec 2024 | 5,000 bbl/d | US$60.00/US$84.15 | WTI | ||||||||||
| Collar | Oct 2024 to Dec 2024 | 3,500 bbl/d | US$60.00/US$87.10 | WTI | ||||||||||
| Collar | Oct 2024 to Dec 2024 | 3,500 bbl/d | US$60.00/US$85.75 | WTI | ||||||||||
| Collar | Jan 2025 to Mar 2025 | 5,000 bbl/d | US$60.00/US$88.70 | WTI | ||||||||||
| Collar | Jan 2025 to Mar 2025 | 2,500 bbl/d | US$60.00/US$90.20 | WTI | ||||||||||
| Collar | Jan 2025 to Mar 2025 | 2,500 bbl/d | US$60.00/US$90.05 | WTI | ||||||||||
| Collar | Jan 2025 to Mar 2025 | 7,500 bbl/d | US$60.00/US$90.00 | WTI | ||||||||||
| Collar | Jan 2025 to Jun 2025 | 2,500 bbl/d | US$60.00/US$94.25 | WTI | ||||||||||
| Collar | Jan 2025 to Jun 2025 | 2,500 bbl/d | US$60.00/US$93.90 | WTI | ||||||||||
| Collar | Jan 2025 to Jun 2025 | 5,000 bbl/d | US$60.00/US$91.95 | WTI | ||||||||||
| Collar | Jan 2025 to Jun 2025 | 2,500 bbl/d | US$60.00/US$90.00 | WTI | ||||||||||
| Collar | Jan 2025 to Jun 2025 | 3,000 bbl/d | US$60.00/US$89.55 | WTI | ||||||||||
| Collar | Apr 2025 to Jun 2025 | 2,000 bbl/d | US$60.00/US$88.17 | WTI | ||||||||||
| Collar | Apr 2025 to Jun 2025 | 5,000 bbl/d | US$60.00/US$90.50 | WTI | ||||||||||
| Collar | Apr 2025 to Jun 2025 | 3,000 bbl/d | US$60.00/US$90.60 | WTI | ||||||||||
Collar (2) | Jan 2025 to Dec 2025 | 4,500 bbl/d | US$60.00/US$80.00 | WTI | ||||||||||
Collar (2) | Jul 2025 to Dec 2025 | 27,500 bbl/d | US$60.00/US$80.00 | WTI | ||||||||||
Collar (2) | Oct 2025 to Dec 2025 | 3,500 bbl/d | US$60.00/US$80.00 | WTI | ||||||||||
Collar (2) | Apr 2025 to Sep 2025 | 8,000 bbl/d | US$60.00/US$80.00 | WTI | ||||||||||
(1)Based on the weighted average price per unit for the period.
(2)Contract entered subsequent to September 30, 2024.
19
| Remaining Period | Volume | Price/Unit (1) | Index | |||||||||||
| Natural Gas | ||||||||||||||
| Collar | Oct 2024 to Dec 2024 | 5,000 mmbtu/d | US$3.00/US$4.185 | NYMEX | ||||||||||
| Collar | Oct 2024 to Dec 2024 | 8,500 mmbtu/d | US$3.00/US$4.15 | NYMEX | ||||||||||
| Collar | Oct 2024 to Dec 2024 | 5,000 mmbtu/d | US$3.00/US$4.10 | NYMEX | ||||||||||
| Collar | Oct 2024 to Dec 2024 | 2,500 mmbtu/d | US$3.00/US$4.09 | NYMEX | ||||||||||
| Collar | Oct 2024 to Dec 2024 | 2,500 mmbtu/d | US$3.00/US$4.06 | NYMEX | ||||||||||
| Collar | Jan 2025 to Dec 2025 | 7,000 mmbtu/d | US$3.00/US$4.01 | NYMEX | ||||||||||
| Collar | Jan 2025 to Dec 2025 | 5,000 mmbtu/d | US$3.25/US$4.03 | NYMEX | ||||||||||
| Collar | Jan 2025 to Dec 2025 | 5,000 mmbtu/d | US$3.25/US$4.08 | NYMEX | ||||||||||
| Collar | Jan 2025 to Dec 2025 | 3,000 mmbtu/d | US$3.25/US$4.135 | NYMEX | ||||||||||
| Collar | Jan 2025 to Dec 2025 | 5,500 mmbtu/d | US$3.25/US$4.14 | NYMEX | ||||||||||
| Collar | Jan 2025 to Dec 2025 | 7,000 mmbtu/d | US$3.00/US$4.32 | NYMEX | ||||||||||
| Collar | Jan 2025 to Dec 2025 | 3,000 mmbtu/d | US$3.00/US$4.85 | NYMEX | ||||||||||
| Collar | Jan 2025 to Dec 2025 | 8,000 mmbtu/d | US$3.00/US$4.855 | NYMEX | ||||||||||
| Collar | Jan 2026 to Dec 2026 | 11,000 mmbtu/d | US$3.25/US$5.02 | NYMEX | ||||||||||
| AECO basis differential | Oct 2024 to Dec 2024 | 5,000 mmbtu/d | NYMEX less US$1.23/mmbtu | NYMEX | ||||||||||
| AECO basis differential | Jan 2025 to Mar 2025 | 5,000 mmbtu/d | NYMEX less US$1.27/mmbtu | NYMEX | ||||||||||
| AECO basis differential | Apr 2025 to Jun 2025 | 5,000 mmbtu/d | NYMEX less US$1.19/mmbtu | NYMEX | ||||||||||
Collar (2) | Jan 2025 to Jun 2025 | 3,000 mmbtu/d | US$3.00/US$4.05 | NYMEX | ||||||||||
Collar (2) | Jul 2025 to Dec 2025 | 9,000 mmbtu/d | US$3.00/US$4.05 | NYMEX | ||||||||||
Collar (2) | Jan 2026 to Dec 2026 | 10,000 mmbtu/d | US$3.25/US$4.25 | NYMEX | ||||||||||
(1)Based on the weighted average price per unit for the period.
(2)Contract entered subsequent to September 30, 2024.
The following table sets forth the realized and unrealized gains and losses recorded on financial derivatives.
| Three Months Ended September 30 | Nine Months Ended September 30 | |||||||||||||
| 2024 | 2023 | 2024 | 2023 | |||||||||||
| Realized financial derivatives gain | $ | (331) | $ | (2,055) | $ | (3,562) | $ | (23,835) | ||||||
| Unrealized financial derivatives (gain) loss | (22,596) | 30,696 | (1,036) | 40,889 | ||||||||||
| Financial derivatives (gain) loss | $ | (22,927) | $ | 28,641 | $ | (4,598) | $ | 17,054 | ||||||
18. CAPITAL MANAGEMENT
The Company's capital management objective is to maintain a strong balance sheet that provides financial flexibility to execute its development programs, provide returns to shareholders and optimize its portfolio through strategic acquisitions. Baytex strives to actively manage its capital structure in response to changes in economic conditions. At September 30, 2024, the Company's capital structure was comprised of shareholders' capital, long-term notes, trade receivables, prepaids and other assets, trade payables, share-based compensation liability, dividends payable, cash and the Credit Facilities.
In order to manage its capital structure and liquidity, Baytex may from time-to-time issue equity or debt securities, enter into business transactions including the sale of assets or adjust capital spending to manage current and projected debt levels. There is no certainty that any of these additional sources of capital would be available if required.
The capital-intensive nature of Baytex's operations requires the maintenance of adequate sources of liquidity to fund ongoing exploration and development. Baytex's capital resources consist primarily of adjusted funds flow, available Credit Facilities and proceeds received from the divestiture of oil and gas properties. The following capital management measures and ratios are used to monitor current and projected sources of liquidity.
20
Net Debt
The Company uses net debt to monitor its current financial position and to evaluate existing sources of liquidity. The Company defines net debt to be the sum of our Credit Facilities and long-term notes outstanding adjusted for unamortized debt issuance costs, trade payables, dividends payable, share-based compensation liability, other long-term liabilities, cash, trade receivables and prepaids and other assets. Baytex also uses net debt projections to estimate future liquidity and whether additional sources of capital are required to fund ongoing operations.
The following table reconciles net debt to amounts disclosed in the primary financial statements.
| September 30, 2024 | December 31, 2023 | |||||||
| Credit Facilities | $ | 449,116 | $ | 848,749 | ||||
| Unamortized debt issuance costs - Credit Facilities (note 7) | 16,992 | 15,987 | ||||||
| Long-term notes | 1,810,701 | 1,562,361 | ||||||
| Unamortized debt issuance costs - Long-term notes (note 8) | 46,168 | 35,114 | ||||||
| Trade payables | 584,696 | 477,295 | ||||||
| Share-based compensation liability | 23,962 | 35,732 | ||||||
| Dividends payable | 17,732 | 18,381 | ||||||
| Other long-term liabilities | 19,582 | 19,147 | ||||||
| Cash | (21,311) | (55,815) | ||||||
| Trade receivables | (375,942) | (339,405) | ||||||
| Prepaids and other assets | (78,427) | (83,259) | ||||||
| Net Debt | $ | 2,493,269 | $ | 2,534,287 | ||||
Adjusted Funds Flow
Adjusted funds flow is used to monitor operating performance and the Company's ability to generate funds for exploration and development expenditures and settlement of abandonment obligations. Adjusted funds flow is comprised of cash flows from operating activities adjusted for changes in non-cash working capital, asset retirements obligations settled during the applicable period, transaction costs and cash premiums on derivatives.
Adjusted funds flow is reconciled to amounts disclosed in the primary financial statements in the following table.
| Three Months Ended September 30 | Nine Months Ended September 30 | |||||||||||||
| 2024 | 2023 | 2024 | 2023 | |||||||||||
| Cash flows from operating activities | $ | 550,042 | $ | 444,033 | $ | 1,439,399 | $ | 821,279 | ||||||
| Change in non-cash working capital | (20,813) | 126,075 | 31,350 | 205,924 | ||||||||||
| Asset retirement obligations settled | 8,718 | 9,252 | 22,344 | 18,770 | ||||||||||
| Transaction costs | — | 2,263 | 1,539 | 43,966 | ||||||||||
| Cash premiums on derivatives | — | — | — | 2,263 | ||||||||||
| Adjusted Funds Flow | $ | 537,947 | $ | 581,623 | $ | 1,494,632 | $ | 1,092,202 | ||||||
21