Baytex Energy Corp. (NYSE:BTE) Q2 2020 Earnings Conference Call - Final Transcript

Jul 30, 2020 • 11:00 am ET

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Baytex Energy Corp. (NYSE:BTE) Q2 2020 Earnings Conference Call - Final Transcript

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Presentation
Operator
Operator

Thank you for standing by. This is the conference operator. Welcome to the Baytex Energy Corp Second Quarter 2020 Results Conference Call. [Operator Instructions] After the presentation, there will be an opportunity to ask questions. [Operator Instructions]

I would now like to turn the conference over to Brian Ector, the Vice President, Capital Markets. Please, go ahead.

Executive
Brian Ector

Thanks, Jeff. Good morning, ladies and gentlemen, and thank you for joining us today to discuss our second quarter 2020 financial and operating results. With the COVID-19 situation, still front and center, we continue to prioritize the health and safety of our employees. And with that in mind, today, I am joined remotely by our executive team; Ed LaFehr, our President and Chief Executive Officer; Rod Gray, Executive VP and Chief Financial Officer; Kendall Arthur, Vice President, Heavy Oil; Chad Kalmakoff, our Vice President, Finance; Chad Lundberg, Vice President, Light Oil; and Scott Lovett, our Vice President of Corporate Development.

While listening, please keep in mind that some of our remarks will contain forward-looking statements within the meaning of applicable securities laws. I would refer you to the advisories regarding forward-looking statements, oil, and gas information, and non-GAAP financial, and capital management measures contained in yesterday press release. All dollar amounts referenced in our remarks are in Canadian dollars unless otherwise specified.

And with that, I would now like to turn the call over to Ed.

Executive
Edward D. LaFehr

Great. Thanks, Brian, and good morning, everyone. Welcome to our second quarter 2020 conference call. During the second quarter, we took decisive steps to adjust our business plan in the face of extremely volatile crude oil markets. We moved aggressively to shift our operating and capital activities to maintain financial liquidity, minimize capital outlays and emphasize cost reductions across all facets of our business to retain long-term value.

We shut in some production. We suspended drilling operations in Canada, and we moderated our pace of activity in the Eagle Ford. I'm very pleased to say that we are now starting to benefit from the actions we have taken as we generated positive free cash flow during the quarter and maintained approximately CAD300 million of financial liquidity. As you will recall, we previously announced voluntary production shut-ins of approximately 25,000 BOEs per day. These volumes remained offline for April and May. As operating netbacks improved in June, we initiated plans to bring approximately 80% of these volumes back online.

The quarterly impact of voluntary shut-ins was approximately 20,000 BOEs per day. As a result, production during the second quarter averaged 72,500 BOEs per day. Consistent with our previously announced guidance, production was -- in Canada averaged 37,700 BOEs per day, while production in the Eagle Ford averaged 34,800 BOEs per day. We generated an operating netback of CAD6 per BOE during the second quarter or CAD8 per BOE, inclusive of realized financial derivative gains.

We delivered adjusted funds flow of CAD18 million, and our exploration and development spending totaled a modest CAD10 million. So despite this being one of