BAYTEX ENERGY CORP.

Baytex reported that it completed the Ranger Oil acquisition on June 20, 2023, resolving the merger agreed on Feb 27, 2023. Ranger holders received 7.49 Baytex shares plus US$13.31 cash per Ranger Class A share, in total 311,369,607 Baytex shares and about US$553 million cash, for about US$2.2 billion (C$2.9 billion) including assumed net debt. Ranger's shares were delisted from Nasdaq the same day. Ranger became a wholly owned subsidiary and was then merged into another Baytex subsidiary. The issue of about 311 million new shares is a large addition to the roughly 548 million shares outstanding at Sep 30, 2022, so existing holders' ownership share is diluted (inference from the figures). The filing also notes that a joinder agreement dated May 3, 2023 added Merger Sub, and that James R. Maclean is now Chief Legal Officer and Corporate Secretary.

business combination

Baytex filed the legal contract (indenture) for a new issue of 8.500% Senior Notes due 2030, dated April 27, 2023, with Computershare Trust Company, N.A. as trustee. The text seen is the table of contents and definitions; it gives no amount raised, use of proceeds or purchasers. The contents list a special mandatory redemption section and an escrow article, which suggests (inference) the notes are linked to the pending Ranger merger financing, but the filing text provided does not say so.

debt financing

On February 27, 2023, Baytex agreed to merge with Ranger Oil Corporation (a Virginia company, Eagle Ford operator). Each Ranger Class A share would receive 7.49 Baytex common shares plus US$13.31 in cash, as the filing states the cash in dollars (currency inferred as US because Ranger is US-based). It needs both companies' shareholder approvals, U.S. antitrust clearance and NYSE/TSX listing of the new shares, and either side can end it if it is not complete by October 15, 2023. Termination fees are $100 million payable by Baytex or $60 million payable by Ranger in specified circumstances. This is a new major deal; issuing shares to Ranger holders would dilute existing Baytex shareholders (inference), and Ranger's Class B holders must exchange into Class A before closing.

business combination

Baytex's Q3 2022 report shows production of 83,194 boe/d (84% oil and NGL), adjusted funds flow of $284 million and free cash flow of $112 million, with net debt of $1.1 billion (0.9x trailing EBITDA), down 21% from $1.4 billion at year-end 2021. It bought back 21.6 million shares year to date (3.8% of shares) at an average $6.53, and sold non-core west central Alberta gas assets for net proceeds of $26 million. Eric Greager became President and CEO on November 4, 2022, succeeding Ed LaFehr, who left the board. Baytex plans to hit $800 million net debt by mid-2023 and then raise shareholder returns to 50% of free cash flow, with an ultimate $400 million target. Clearwater production at Peavine reached about 10,000 bbl/d in October. 2022 capital spending guidance rose to about $515 million.

drilling result

Baytex's Q3 2018 report (press release headline: strong results and a significant Duvernay light oil discovery) shows Q3 net income of $27.4 million versus a $9.2 million loss a year earlier, and a nine-month net loss of $94.1 million. Oil and gas properties rose to $5.89 billion from $3.96 billion at the end of 2017, and shares issued on the corporate acquisition added $1.24 billion to equity, consistent with the Raging River deal. Weighted average basic shares were 375.4 million in Q3 versus 235.5 million a year earlier. Bank loan was $488.8 million and long-term notes $1,514.5 million. Q3 included $13.1 million of transaction costs. The text seen does not include the Duvernay well details.

drilling result

Baytex filed the Alberta articles of arrangement (dated August 22, 2018) completing the amalgamation of 2099011 Alberta Ltd., a subsidiary of Raging River Exploration, into Baytex. The subsidiary's separate legal existence ends and Baytex survives; the court order approving it is dated July 3, 2018. The filing names the continuing directors (LaFehr, Chan, Bly, Curran, Dargan, Melchin) and refers to four Raging River nominees joining the board. This is the corporate step of the Raging River combination (arrangement agreement dated June 17, 2018); the filing gives no price, share exchange ratio or asset figures.

business combination

Baytex's second quarter 2014 report shows production of 66,934 boe/d (87% oil and NGL), up 12% from Q1 and 15% from a year earlier, including about twenty days of the newly acquired Aurora Eagle Ford assets. Funds from operations were $165.5 million ($1.22 per basic share), net income $36.8 million, and total monetary debt rose to $2.46 billion from $832 million in Q1 after the Aurora purchase. The summary also reports US$800 million of senior notes issued, the monthly dividend raised 9% to $0.24, and, after the quarter, an announced sale of its North Dakota assets for gross proceeds of about $357 million (US$330.5 million). This confirms the Aurora close and dividend increase promised in February, and adds a new thread: the North Dakota sale, which reverses the retained Bakken position described earlier. The report also mentions an asset portfolio review including possible further sales. Common shares outstanding were 165.4 million at June 30.

business combination

In a required report on the deal, Baytex confirmed it completed the Aurora acquisition on June 10, 2014 under the Australian scheme of arrangement. The price was A$4.20 per share (up from the A$4.10 announced in February), for a total estimated $2.8 billion including about $0.9 billion of assumed debt, versus the ~$2.6 billion first announced. The subscription receipts converted into shares plus $0.88 cash each for four dividends declared. Baytex also released the proceeds of a US$800 million senior notes placement from escrow and used about US$745.5 million to buy back most of Aurora's two note issues (97.84% of the 9.875% notes and 97.87% of the 7.50% notes). Its old credit facilities were replaced by a $1.0 billion revolver, a $200 million term loan and a US$200 million Aurora USA revolver. This resolves the pending Aurora thread. Aurora's Q1 2014 gross production was 28,671 boe/d (81% oil and NGL). The report says there are no plans for material changes in Baytex's business as a result. The filing is signed by a new CFO, Rodney D. Gray.

business combination

Baytex closed the subscription receipt offering with the over-allotment option fully exercised: 38,433,000 receipts at $38.90, about $1.5 billion gross, up from the $1.3 billion first announced. The money is held in escrow and released to complete the Aurora acquisition. Each receipt becomes one common share when Aurora closes, with holders also getting an amount equal to dividends declared in the meantime. If the deal fails to close by June 30, 2014 (or is terminated), purchasers are refunded with interest. This completes the financing step expected around Feb 24 and means about 38.4 million new shares will be issued on closing, diluting existing holders.

capital raising announcement

Baytex filed the formal term sheet and investor presentation for its subscription receipt offering that funds part of the Aurora purchase: 33,420,000 receipts at $38.90 (about $1.3 billion), plus an option for 5,013,000 more. Each receipt converts into one Baytex common share (plus any dividends declared meanwhile) when the Aurora deal closes, expected about May 24, 2014. If it has not closed by June 30, 2014, or is terminated, buyers get their money back with interest. Underwriters' commission is 4.00%, and closing of the offering is expected about February 24, 2014. This puts specific terms on the $1.3 billion financing flagged on Feb 6; the new shares will dilute existing holders.

capital raising announcement

Baytex agreed to buy 100% of Aurora Oil & Gas, an Eagle Ford (South Texas) producer, for AU$4.10 cash per share, about $1.8 billion in consideration plus about $744 million of assumed debt, for a total value of about $2.6 billion (Canadian dollars). It is funded by a $1.3 billion bought-deal subscription receipt equity offering (expected to close around Feb 24, 2014) plus draws on credit facilities, which will be raised from $850 million to $1.0 billion with a new $200 million term loan. Aurora's main asset is 22,200 net acres in the Sugarkane Field, with Q4 2013 gross production of 24,678 boe/d (82% liquids), mostly operated by a Marathon Oil subsidiary. Baytex expects combined production of about 85,000 boe/d and has committed to raise the monthly dividend 9% to $0.24 from $0.22 on completion, likely for the dividend payable around July 15, 2014. Closing is expected mid/late May 2014, subject to a 75% Aurora shareholder vote, Australian court, Australian FIRB and U.S. antitrust approval. This is a major change from the Canadian heavy-oil focus, adding a new US shale oil area to the Bakken position retained in North Dakota; the large share issue will also dilute existing sharehold

business combination

Baytex's first quarter 2013 report shows production of 51,957 boe/d (87% oil and NGL), down from 53,433 boe/d a year earlier and 55,046 boe/d in Q4 2012; the company attributes this to Peace River drilling timing, the Kerrobert SAGD suspension for an infill well, and the Viking rights sale. Funds from operations were $101.8 million ($0.83 per share), down from $141.7 million a year earlier, and net income was $10.1 million versus $43.0 million. Total monetary debt was $686.2 million (up from $599.8 million at Dec 31, 2012). Full-year guidance is unchanged at 56,000-58,000 boe/d with about $520 million of exploration and development spending, and current production is about 56,000 boe/d. The sale of non-core Viking rights in the Kerrobert area closed for net proceeds of $42 million, and the second Peace River thermal module received regulatory approval. Quarterly dividends declared ($0.66 per share) were unchanged. The filing also lists a plan to amend the credit facilities to increase their amount and term.

production update

Baytex agreed to buy a 100% working interest in about 46 sections of undeveloped oil sands leases in the Cold Lake area of northeast Alberta for $120 million (before closing adjustments and costs), funded by drawing on its revolving credit facility, with closing expected in early October. The leases carry regulatory approval for a two-stage SAGD (steam-based) project, with a pilot planned for 2013, a commercial 5,000 bbl/d project starting construction in 2014 on success of the pilot, and first production in 2016. Reserves tied to the project are about 43.7 million barrels proved plus probable (Sproule, effective August 31, 2012). The release quotes James Bowzer as President and CEO, which resolves the interim CEO question from earlier in the year (the filing does not discuss when he was appointed). The purchase adds to the thermal projects at Seal and Kerrobert and is paid for with added bank debt.

business combination

Baytex completed the sale of its non-operated North Dakota interests to a Magnum Hunter Resources subsidiary for cash proceeds of US$312 million, net of adjustments (announced April 18 at US$311 million). The proceeds will be redeployed into other oil and gas assets or used to reduce net debt, so the debt-versus-reinvestment choice is still open. Average working interest in the remaining North Dakota lands rises from 39% to 45%, with about 130 net drilling locations, and the plan to drill 20-25 gross (about 10 net) Bakken/Three Forks wells in 2012 is unchanged.

asset acquisition disposition

Baytex agreed to sell its non-operated North Dakota interests (about 950 boe/d of Bakken light oil, 50,400 net acres, 45% of its North Dakota net acreage) to Bakken Hunter, LLC, a Magnum Hunter Resources subsidiary, for US$311 million, with closing expected in May 2012. Proceeds may reduce debt or be redeployed; if all go to debt, pro forma debt would be about $340 million (0.6 times funds from operations). Baytex lowered 2012 production guidance by 500 boe/d to 53,500-54,500 boe/d, kept the $400 million capital budget, and said its Bakken/Three Forks drilling plans in North Dakota are unchanged. This is a partial exit from the Bakken play it has been developing, while it keeps its operated North Dakota lands.

asset acquisition disposition

Baytex set a 2012 capital budget of $400 million (versus $355 million in 2011) aimed at 54,000-55,000 boe/d of production, against current 2011 guidance of 50,000-50,500 boe/d. It raised the monthly dividend 10% to $0.22 from $0.20 starting with the December 2011 dividend payable January 17, 2012, cut the discount on treasury shares issued under the dividend reinvestment plan to 3% from 5%, and reported that the Dodsland, Saskatchewan sale (13,200 net hectares, about 60 bbls/day, $36 million) closed November 24, 2011 with proceeds used to reduce bank debt.

dividend declaration

Baytex set a 2011 capital budget of $325 million (up from $235 million in 2010) aiming for 47,000-48,000 boe/d production, and raised the monthly payout to $0.20 from $0.18 (11% increase), also applying to the final trust distribution for December 2010 payable January 17, 2011. Credit facilities rise to $625 million from $550 million (about $250 million currently available), and an independent evaluator (Sproule) estimated contingent resources (not reserves) on three plays at 551 million to 1.08 billion barrels, best estimate 713 million. The release confirms the planned conversion from trust to corporation (Baytex Energy Corp.) is expected to complete December 31, 2010, subject to a unitholder vote on December 9, 2010 and court and regulatory approvals.

dividend declaration

Baytex agreed to buy the shares of a private company with heavy oil assets near Lloydminster in southwest Saskatchewan for about $40.9 million cash (net of working capital), to be funded from its revolving credit facility. The assets produce about 900 barrels of oil per day and include roughly 32,100 net acres of undeveloped land; closing is expected in late May 2010, subject to shareholder, regulatory and court approvals. Baytex estimates it adds 2% to funds from operations and production per unit, and its 2010 capital budget stays at $235 million.

business combination

Baytex closed the bought deal announced in March, issuing 7,935,000 trust units at $14.50 for gross proceeds of $115,057,500, including the full 1,035,000-unit over-allotment option. Proceeds will first go to general working capital and may later fund capital spending or repay debt; this completes the financing and increases the unit count.

capital raising announcement

Baytex agreed to sell 6,900,000 trust units at $14.50 each to a group of underwriters led by TD Securities, for gross proceeds of $100,050,000 (up to $115,057,500 if the underwriters' extra 1,035,000-unit option is used). Proceeds are for general corporate purposes; closing is expected around April 14, 2009. Issuing new units dilutes existing unitholders.

capital raising announcement

Baytex agreed to buy Burmis Energy Inc., a west central Alberta producer, by issuing 0.1525 Baytex trust unit for each Burmis share, valuing the deal at about $181 million (8% premium for Burmis holders at the 10-day average prices). Closing is expected in June 2008, subject to Burmis shareholder, court and regulatory approvals; Baytex estimates it adds 4% to cash flow per unit and 3% to production per unit. Existing Baytex unitholders are diluted by the new units issued.

business combination