Ring Energy, Inc. press release

Baytex Delivers Solid Second Quarter 2025 Results with Record Pembina Duvernay Well Performance and Continued Debt Reduction

2025-07-31

NYSE - New York Stock Exchange · Oil · Natural Gas · Natural Gas Liquids · United States · Corporate Finance

Calgary, Alberta--(Newsfile Corp. - July 31, 2025) - Baytex Energy Corp. (TSX: BTE) (NYSE: BTE) ("Baytex" or the "Company") reports its operating and financial results for the three and six months ended June 30, 2025 (all amounts are in Canadian dollars unless otherwise noted).

"Baytex delivered solid operational and financial results in the second quarter, with top-performing wells in the Pembina Duvernay, setting the highest average 30-day peak oil rates in the West Shale Basin," said Eric T. Greager, President and Chief Executive Officer. "Combined with strong results across heavy oil operations and the Eagle Ford, including continued success with refracs, these results demonstrate the resource potential and value creation opportunities within our portfolio. We remain focused on disciplined capital allocation, prioritizing free cash flow and debt reduction while capitalizing on the most compelling opportunities from our high-quality assets."

Second Quarter 2025 Highlights

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Achieved record Pembina Duvernay well performance with the first pad (3 wells) delivering average peak 30-day initial rates of 1,865 boe/d per well (89% oil and NGL).

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Successfully completed two Lower Eagle Ford refracs, extending inventory duration and improving capital efficiencies.

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Delivered production of 148,095 boe/d (84% oil and NGL), which represents a 2% increase in production per basic share compared to Q2/2024.

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Increased heavy oil production 7% over Q1/2025, driven by strong Peavine, Peace River and Lloydminster performance.

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Reported cash flows from operating activities of $354 million ($0.46 per basic share).

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Generated net income of $152 million ($0.20 per basic share).

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Delivered adjusted funds flow(1)of $367 million ($0.48 per basic share).

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Repurchased and cancelled US$41 million principal amount of 8.5% long-term notes.

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Reduced net debt(1)by 4% ($96 million) and maintained balance sheet strength with a total debt(2)to Bank EBITDA(2)ratio of 1.1x.

2025 Outlook

In light of the current commodity price environment, we are targeting annual production of approximately 148,000 boe/d with full-year exploration and development expenditures of approximately $1.2 billion. Production is expected to average approximately 150,000 boe/d in the second half of 2025.

Based on forward strip pricing(3), we expect to generate approximately $400 million of free cash flow(4)in 2025, with the majority weighted to the second half of the year given our production and capital spending profile. We plan to allocate 100% of free cash flow to debt repayment after funding quarterly dividend payments, targeting net debt of approximately $2 billion by year-end.

We remain committed to disciplined capital allocation, prioritizing free cash flow and strengthening our balance sheet. We will continue to monitor market conditions and execute a prudent approach to shareholder returns, which has historically included a combination of share buybacks and quarterly dividend payments.

(1) Capital management measure. Refer to the Specified Financial Measures section in this press release for further information. (2) Ratio is calculated as total debt on June 30, 2025 divided by EBITDA for the twelve months ended June 30, 2025. Total debt and EBITDA are calculated in accordance with our amended credit facilities agreement which is available on SEDAR+ at www.sedarplus.ca. (3) 2025 full-year pricing assumptions: WTI - US$67.75/bbl; WCS differential - US$11.50/bbl; NYMEX Gas - US$3.60/MMbtu; Exchange Rate (CAD/USD) - 1.39. (4) Specified financial measure that does not have any standardized meaning prescribed by International Financial Reporting Standards ("IFRS") and may not be comparable with the calculation of similar measures presented by other entities. Refer to the Specified Financial Measures section in this press release for further information.

| | | Three Months Ended | | | Six Months Ended | | | | | | | | | | | | | | June 30, 2025 | | | March 31, 2025 | | | June 30, 2024 | | | June 30, 2025 | | | June 30, 2024 | | | FINANCIAL (thousands of Canadian dollars, except per common share amounts) | | | | | | | | | | | | | | | | | Petroleum and natural gas sales | $ | 886,579 | | $ | 999,130 | | $ | 1,133,123 | | $ | 1,885,709 | | $ | 2,117,315 | | | Adjusted funds flow(1) | | 366,919 | | | 463,870 | | | 532,839 | | | 830,789 | | | 956,685 | | | Per share - basic | | 0.48 | | | 0.60 | | | 0.65 | | | 1.08 | | | 1.17 | | | Per share - diluted | | 0.48 | | | 0.60 | | | 0.65 | | | 1.07 | | | 1.16 | | | Free cash flow (2) | | 3,188 | | | 52,529 | | | 180,673 | | | 55,717 | | | 180,585 | | | Per share - basic | | - | | | 0.07 | | | 0.22 | | | 0.07 | | | 0.22 | | | Per share - diluted | | - | | | 0.07 | | | 0.22 | | | 0.07 | | | 0.22 | | | Cash flows from operating activities | | 354,312 | | | 431,317 | | | 505,584 | | | 785,629 | | | 889,357 | | | Per share - basic | | 0.46 | | | 0.56 | | | 0.62 | | | 1.02 | | | 1.09 | | | Per share - diluted | | 0.46 | | | 0.56 | | | 0.62 | | | 1.02 | | | 1.08 | | | Net income | | 151,549 | | | 69,591 | | | 103,898 | | | 221,140 | | | 89,855 | | | Per share - basic | | 0.20 | | | 0.09 | | | 0.13 | | | 0.29 | | | 0.11 | | | Per share - diluted | | 0.20 | | | 0.09 | | | 0.13 | | | 0.29 | | | 0.11 | | | Dividends declared | | 17,304 | | | 17,334 | | | 18,161 | | | 34,593 | | | 36,655 | | | Per share | | 0.0225 | | | 0.0225 | | | 0.0225 | | | 0.0450 | | | 0.0450 | | | | | | | | | | | | | | | | | | | | Capital Expenditures | | | | | | | | | | | | | | | | | Exploration and development expenditures | $ | 356,532 | | $ | 405,097 | | $ | 339,573 | | $ | 761,629 | | $ | 752,124 | | | Acquisitions and divestitures | | 468 | | | (1,009 | ) | | 654 | | | (541 | ) | | 36,032 | | | Total oil and natural gas capital expenditures | $ | 357,000 | | $ | 404,088 | | $ | 340,227 | | $ | 761,088 | | $ | 788,156 | | | | | | | | | | | | | | | | | | | | Net Debt | | | | | | | | | | | | | | | | | Credit facilities | $ | 333,516 | | $ | 250,284 | | $ | 625,976 | | $ | 333,516 | | $ | 625,976 | | | Long-term notes | | 1,817,707 | | | 1,977,044 | | | 1,881,894 | | | 1,817,707 | | | 1,881,894 | | | Total debt (3) | | 2,151,223 | | | 2,227,328 | | | 2,507,870 | | | 2,151,223 | | | 2,507,870 | | | Working capital deficiency (2) | | 142,717 | | | 162,922 | | | 131,144 | | | 142,717 | | | 131,144 | | | Net debt(1) | $ | 2,293,940 | | $ | 2,390,250 | | $ | 2,639,014 | | $ | 2,293,940 | | $ | 2,639,014 | | | | | | | | | | | | | | | | | | | | Shares Outstanding - basic(thousands) | | | | | | | | | | | | | | | | | Weighted average | | 768,717 | | | 771,443 | | | 814,151 | | | 770,072 | | | 817,931 | | | End of period | | 768,317 | | | 770,039 | | | 804,977 | | | 768,317 | | | 804,977 | | | | | | | | | | | | | | | | | | | | BENCHMARK PRICES | | | | | | | | | | | | | | | | | Crude oil | | | | | | | | | | | | | | | | | WTI (US$/bbl) | $ | 63.74 | | $ | 71.42 | | $ | 80.57 | | $ | 67.58 | | $ | 78.77 | | | MEH oil (US$/bbl) | | 65.56 | | | 73.37 | | | 83.10 | | | 69.47 | | | 81.03 | | | MEH oil differential to WTI (US$/bbl) | | 1.82 | | | 1.95 | | | 2.53 | | | 1.89 | | | 2.26 | | | Edmonton par ($/bbl) | | 84.15 | | | 95.27 | | | 105.30 | | | 89.71 | | | 98.73 | | | Edmonton par differential to WTI (US$/bbl) | | (2.94 | ) | | (5.03 | ) | | (3.62 | ) | | (3.93 | ) | | (6.10 | ) | | WCS heavy oil ($/bbl) | | 74.10 | | | 84.33 | | | 91.72 | | | 79.15 | | | 84.68 | | | WCS differential to WTI (US$/bbl) | | (10.20 | ) | | (12.65 | ) | | (13.55 | ) | | (11.43 | ) | | (16.44 | ) | | Natural gas | | | | | | | | | | | | | | | | | NYMEX (US$/MMbtu) | $ | 3.44 | | $ | 3.65 | | $ | 1.89 | | $ | 3.55 | | $ | 2.07 | | | AECO ($/Mcf) | | 2.07 | | | 2.02 | | | 1.44 | | | 2.05 | | | 1.74 | | | | | | | | | | | | | | | | | | | | CAD/USD average exchange rate | | 1.3840 | | | 1.4350 | | | 1.3684 | | | 1.4095 | | | 1.3586 | |

Notes:

(1) Capital management measure. Refer to the Specified Financial Measures section in this press release for further information. (2) Specified financial measure that does not have any standardized meaning prescribed by IFRS and may not be comparable with the calculation of similar measures presented by other entities. Refer to the Specified Financial Measures section in this press release for further information. (3) Calculated in accordance with our amended credit facilities agreement which is available on SEDAR+ at www.sedarplus.ca.

| | | Three Months Ended | | | Six Months Ended | | | | | | | | | | | | | | June 30, 2025 | | | March 31, 2025 | | | June 30, 2024 | | | June 30, 2025 | | | June 30, 2024 | | | OPERATING | | | | | | | | | | | | | | | | | Daily Production | | | | | | | | | | | | | | | | | Light oil and condensate (bbl/d) | | 62,108 | | | 62,335 | | | 67,031 | | | 62,221 | | | 66,534 | | | Heavy oil (bbl/d) | | 42,959 | | | 40,192 | | | 43,703 | | | 41,583 | | | 42,131 | | | NGL (bbl/d) | | 19,948 | | | 19,046 | | | 20,167 | | | 19,499 | | | 19,733 | | | Total liquids (bbl/d) | | 125,015 | | | 121,573 | | | 130,901 | | | 123,303 | | | 128,398 | | | Natural gas (Mcf/d) | | 138,482 | | | 135,731 | | | 139,764 | | | 137,114 | | | 144,059 | | | Oil equivalent (boe/d @ 6:1) (1) | | 148,095 | | | 144,194 | | | 154,194 | | | 146,156 | | | 152,407 | | | | | | | | | | | | | | | | | | | | Adjusted Funds Flow (thousands of Canadian dollars) | | | | | | | | | | | | | | | | | Total sales, net of blending and other expense (2) | $ | 824,198 | | $ | 926,310 | | $ | 1,065,438 | | $ | 1,750,508 | | $ | 1,985,422 | | | Royalties | | (177,390 | ) | | (207,937 | ) | | (240,440 | ) | | (385,327 | ) | | (449,611 | ) | | Operating expense | | (161,020 | ) | | (147,703 | ) | | (167,705 | ) | | (308,723 | ) | | (341,140 | ) | | Transportation expense | | (32,907 | ) | | (30,512 | ) | | (33,314 | ) | | (63,419 | ) | | (63,149 | ) | | Operating netback(2) | $ | 452,881 | | $ | 540,158 | | $ | 623,979 | | $ | 993,039 | | $ | 1,131,522 | | | General and administrative expense | | (22,220 | ) | | (25,606 | ) | | (21,006 | ) | | (47,826 | ) | | (43,418 | ) | | Cash interest | | (44,875 | ) | | (46,787 | ) | | (53,946 | ) | | (91,662 | ) | | (107,226 | ) | | Realized financial derivatives (loss) gain | | (11,874 | ) | | (194 | ) | | (2,257 | ) | | (12,068 | ) | | 3,231 | | | Other (3) | | (6,993 | ) | | (3,701 | ) | | (13,931 | ) | | (10,694 | ) | | (27,424 | ) | | Adjusted funds flow (4) | $ | 366,919 | | $ | 463,870 | | $ | 532,839 | | $ | 830,789 | | $ | 956,685 | | | | | | | | | | | | | | | | | | | | Adjusted Funds Flow (per boe) | | | | | | | | | | | | | | | | | Total sales, net of blending and other expense (2) | $ | 61.16 | | $ | 71.38 | | $ | 75.93 | | $ | 66.17 | | $ | 71.58 | | | Royalties (5) | | (13.16 | ) | | (16.02 | ) | | (17.14 | ) | | (14.57 | ) | | (16.21 | ) | | Operating expense (5) | | (11.95 | ) | | (11.38 | ) | | (11.95 | ) | | (11.67 | ) | | (12.30 | ) | | Transportation expense (5) | | (2.44 | ) | | (2.35 | ) | | (2.37 | ) | | (2.40 | ) | | (2.28 | ) | | Operating netback (2) | $ | 33.61 | | $ | 41.63 | | $ | 44.47 | | $ | 37.53 | | $ | 40.79 | | | General and administrative expense (5) | | (1.65 | ) | | (1.97 | ) | | (1.50 | ) | | (1.81 | ) | | (1.57 | ) | | Cash interest (5) | | (3.33 | ) | | (3.61 | ) | | (3.84 | ) | | (3.46 | ) | | (3.87 | ) | | Realized financial derivatives (loss) gain (5) | | (0.88 | ) | | (0.01 | ) | | (0.16 | ) | | (0.46 | ) | | 0.12 | | | Other (3)(5) | | (0.52 | ) | | (0.30 | ) | | (1.00 | ) | | (0.40 | ) | | (0.98 | ) | | Adjusted funds flow | $ | 27.23 | | $ | 35.74 | | $ | 37.97 | | $ | 31.40 | | $ | 34.49 | |

Notes:

(1) Barrel of oil equivalent ("boe") amounts have been calculated using a conversion rate of six thousand cubic feet of natural gas to one barrel of oil. The use of boe amounts may be misleading, particularly if used in isolation. A boe conversion ratio of six thousand cubic feet of natural gas to one barrel of oil is based on an energy equivalency conversion method primarily applicable at the burner tip and does not represent a value equivalency at the wellhead. (2) Specified financial measure that does not have any standardized meaning prescribed by IFRS and may not be comparable with the calculation of similar measures presented by other entities. Refer to the Specified Financial Measures section in this press release for further information. (3) Other is comprised of realized foreign exchange gain or loss, other income or expense, current income tax expense and cash share-based compensation. Refer to the Q2/2025 MD&A for further information on these amounts. (4) Capital management measure. Refer to the Specified Financial Measures section in this press release for further information. (5) Calculated as royalties, operating expense, transportation expense, general and administrative expense, cash interest, realized financial derivatives gain or loss, or other, divided by barrels of oil equivalent production volume for the applicable period.

Financial Results

During the second quarter, we delivered operating and financial results in line with our full-year plan. Adjusted funds flow(1)was $367 million ($0.48 per basic share) and net income was $152 million ($0.20 per basic share).

We generated free cash flow(2)of $3 million and returned $21 million to shareholders through share repurchases of $4 million (1.7 million shares at an average price of $2.36) and a quarterly dividend payment of $17 million.

Net debt(1)decreased 4% ($96 million) to $2.3 billion, driven by unrealized foreign exchange gains from a strengthening Canadian dollar on our U.S. dollar-denominated debt. During the quarter, we repurchased and cancelled US$41 million principal amount of the 8.5% long-term notes below par.

We maintain strong financial flexibility with US$1.1 billion in credit facilities that mature in June 2029 and are less than 25% drawn, positioning us well across various commodity price cycles.

Operations

Production averaged 148,095 boe/d (84% oil and NGL) in the second quarter, representing a 2% increase in production per basic share compared to Q2/2024. Consistent with our full-year plan, exploration and development expenditures for Q2/2025 totaled $357 million and we brought 74 (66.5 net) wells onstream.

Inventory Extension Through Successful Eagle Ford Refracs

Eagle Ford production averaged 83,928 boe/d (81% oil and NGL), up 3% from Q1/2025. We brought onstream 14.9 net wells while realizing an approximate 11% improvement in operated drilling and completion costs per completed lateral foot compared to 2024. We also completed two successful refracs that are delivering initial rates comparable to our broader development program with improved capital efficiencies and returns.

The two refracs (Moulton A5H and Renee Unit 2H) were brought onstream in April and May with average completed lateral lengths of 1,648 meters (5,406 feet) and generated average 30-day peak production rates of 963 boe/d per well (734 bbl/d of crude oil, 124 bbl/d of NGLs, 631 Mcf/d of natural gas).

The refrac program extends inventory duration - we have identified approximately 300 refrac opportunities across our acreage and anticipate an expanded program in 2026.

Record Pembina Duvernay Well Results Demonstrate Asset Potential

Production from our Canadian light oil business averaged 16,349 boe/d (81% oil and NGL), relatively unchanged from Q1/2025. The Pembina Duvernay represents our largest growth asset and accounts for 40% of Canadian light oil production, with the remaining 60% from Viking operations.

The first Pembina Duvernay pad (07-01, 3 wells) from our 2025 program was brought onstream in May with average lateral lengths of 3,800 meters (12,500 feet) and generated average 30-day peak production rates of 1,865 boe/d per well (1,239 bbl/d of crude oil, 422 bbl/d of NGLs, 1,224 Mcf/d of natural gas). The second pad (08-08, 3 wells) came onstream through early July with similar lateral lengths, and over the last 26 days has averaged 1,264 boe/d per well (709 bbl/d of crude oil, 352 bbl/d of NGLs, 1,220 Mcf/d of natural gas. The third pad (10-31, 3 wells) is expected onstream in September.

The first two pads have exceeded initial rate expectations with the first pad delivering the highest peak oil rates to-date in the West Shale Basin. These results demonstrate our continued advancement in drilling and completion performance and facility enhancements. Strong production performance, combined with an approximate 12% improvement in drilling and completion costs per completed lateral foot compared to 2024 has significantly improved well economics.

We have assembled 140 net sections of highly prospective lands and identified approximately 200 drilling locations. As we transition to full commercialization over the next two years, we plan to implement a one-rig drilling program with 18 to 20 wells per year. At this development pace, we expect production to increase to 20,000-25,000 boe/d by 2029-2030, up from 6,665 boe/d in the second quarter.

(1) Capital management measure. Refer to the Specified Financial Measures section in this press release for further information. (2) Specified financial measure that does not have any standardized meaning prescribed by IFRS and may not be comparable with the calculation of similar measures presented by other entities. Refer to the Specified Financial Measures section in this press release for further information.

Organic Heavy Oil Growth

Heavy oil production averaged 44,895 boe/d (96% oil and NGL), up 7% from Q1/2025. Strong operating results reflect continued performance at Peavine, Peace River, and across the broader Mannville group in Lloydminster. During the quarter, we brought onstream 43 net wells: 15 Clearwater wells at Peavine, 4 wells at Peace River, and 24 wells at Lloydminster.

Our heavy oil operations deliver the strongest economic returns across the portfolio, supported by our extensive acreage position, capital-efficient development, and the continued strength in Western Canadian Select pricing.

Quarterly Dividend

The Board of Directors has declared a quarterly cash dividend of $0.0225 per share, payable October 1, 2025 to shareholders of record on September 15, 2025.

Additional Information

Our condensed consolidated interim unaudited financial statements for the three and six months ended June 30, 2025 and the related Management's Discussion and Analysis of the operating and financial results can be accessed on our website at www.baytexenergy.com and will be available shortly through SEDAR+ at www.sedarplus.ca and EDGAR at www.sec.gov/edgar.shtml.

| Conference Call Tomorrow 9:00 a.m. MT (11:00 a.m. ET) | | Baytex will host a conference call tomorrow, August 1, 2025, starting at 9:00am MT (11:00am ET). To participate, please dial toll free in North America 1-833-821-2925 or international 1-647-846-2449. Alternatively, to listen to the conference call online, please enter https://event.choruscall.com/mediaframe/webcast.html?webcastid=mLhH9WQYin your web browser. To register, visit our website at https://www.baytexenergy.com/investors/events-presentations.

An archived recording of the conference call will be available shortly after the event by accessing the webcast link above. The conference call will also be archived on the Baytex website at www.baytexenergy.com. |

Advisory Regarding Forward-Looking Statements

In the interest of providing Baytex's shareholders and potential investors with information regarding Baytex, including management's assessment of Baytex's future plans and operations, certain statements in this press release are "forward-looking statements" within the meaning of the United States Private Securities Litigation Reform Act of 1995 and "forward-looking information" within the meaning of applicable Canadian securities legislation (collectively, "forward-looking statements"). In some cases, forward-looking statements can be identified by terminology such as "believe", "continue", "estimate", "expect", "forecast", "intend", "may", "objective", "ongoing", "outlook", "potential", "project", "plan", "should", "target", "would", "will" or similar words suggesting future outcomes, events or performance. The forward-looking statements contained in this press release speak only as of the date thereof and are expressly qualified by this cautionary statement.