Baytex Energy is trimming its 2017 capital spending range to $310-$330 million from the previous target of $325-$350 million while lifting its guidance for production rates.
In the second quarter Baytex earned a $9.3 million profit, compared with an $86.9 million net loss in the same time last year.
Strong operating results in the first half of the year prompted management to lift the lower end of its 2017 production expectation to 69,000-70,000 boe/d from 68,000-70,000 boe/d.
Ed LaFehr, Baytex’s president and CEO, acknowledged the company’s production guidance is conservative, given that Q2 output averaged 72,812 boe/d.
“I think we’re being prudent in the volatile world that we’re in, where we may have to pare back at the edges—you know, a couple of wells in Peace River and some things in Lloyd,” LaFehr told analysts.
LaFehr added that capital efficiencies across the company’s portfolio were responsible for the company’s strong production. He noted that some of the strongest well results came from Baytex’s Eagle Ford play in Texas as well as an efficient startup of its Canadian development program.
“Our team is pushing to reposition the business for success at these low commodity prices,” he said.
In Q2, Baytex directed 76 per cent of its exploration and development spending toward its Eagle Ford assets, where production rose seven per cent in the second quarter over the first quarter to average 38,528 boe/d (77 per cent liquids).
Baytex participated in the drilling of 38 (9.4 net) wells in the Eagle Ford during Q2.
In the Peace River region in northwest Alberta, Baytex said it continues to generate some of the strongest capital efficiencies in the industry through its multilateral horizontal drilling and production techniques.
Production rose by eight per cent during Q2 to average 18,300 boe/d (93 per cent heavy oil), compared to 17,000 boe/d in Q1.
The company drilled four wells in Q2 and seven wells in the first six months of 2017.
Six of the wells have been producing for more than 30 days and have established an average 30-day initial production rate of about 400 bbls/d per well. Two of these wells ranked among the top oil wells drilled in Alberta during this period.