Baytex Energy Corp.

Thank you for standing by. This is the conference operator. Welcome to the Baytex Energy Corporation fourth quarter and full year 2020 financial and operating results conference call. As a reminder, all participants are in listen-only mode and the conference is being recorded. After the presentation, there will be an opportunity to ask questions. To join the question queue, you may press star, then 1 on your telephone keypad. Should you need assistance during the conference call, you may signal an operator by pressing star and zero. I would now like to turn the conference over to Brian Echter, Vice President, Capital Markets. Please go ahead.

Thank you, Sharice. Good morning, ladies and gentlemen, and thank you for joining us to discuss our fourth quarter and full year 2020 financial and operating results. Today I am joined by our executive team, Ed LaFerre, our President and Chief Executive Officer, Rod Gray, our Executive VP and Chief Financial Officer, Kendall Arthur, Vice President Heavy Oil, Chad Kalmakoff, 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 refer you to the advisories regarding forward-looking statements, oil and gas information, and non-GAAP financial and capital management measures in yesterday's press release. On the call today, we will also be discussing the evaluation of our reserves at year-end 2020. These evaluations have been prepared in accordance with Canadian disclosure standards, which are not comparable in all respects to United States or other foreign disclosure standards. Our remarks regarding reserves are also forward-looking statements. 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.

Thanks, Brian, and good morning, everyone. I'd like to welcome everybody to our year-end 2020 conference call. I am pleased that in one of the most challenging years experienced by our industry, we delivered on our commitment to preserve financial liquidity, capture cost savings, exceed our GHG emissions intensity reduction target, and generate free cash flow. The COVID-19 pandemic required a dynamic response to the oil price collapse, and our team delivered. In 2020, we reset our business in the face of extremely volatile crude oil markets and intensified efforts to improve all aspects of our cost structure and capital efficiencies while protecting the health and safety of our personnel. We are now benefiting from these actions as we are poised to generate meaningful free cash flow in 2021 and continue our deleveraging strategy. Based on the forward strip, we expect to generate over $250 million of free cash flow or 45 cents per share in 2021 and increase our financial liquidity to over $550 million. Before discussing our year-end results, I'd like to take a moment to comment on the most important asset in our organization, our people. Not only have our field and office teams prevented a COVID-19 outbreak anywhere in our business, they delivered volumes to market in a safe and efficient manner and flawlessly executed our programs. At times this winter, our teams faced unprecedented weather conditions in Alberta and Saskatchewan, with temperatures dropping to the minus 40 to minus 50 degree Celsius range. And as operating activity has ramped up over the past couple of months, we are grateful to all of our employees for their commitment and perseverance to operating safely and reliably through these challenging conditions. The health and safety of our employees and contractors has been and always will be our number one priority. Let's now talk about our results. In 2020, we reduced our capital budget by 50 percent and achieved cost savings of approximately $100 million. We produced 80,000 BOEs per day, 82 percent liquids, with capital expenditures of $280 million in line with our annual guidance. And we hit all of our cost targets with operating expenses averaging $11.35 per BOE, transportation expenses of 97 cents per BOE, and general and administrative expenses coming in under $1.20 per VOE. We generated free cash flow of $18 million and reduced net debt by $24 million. We also negotiated a bank credit facility extension and refinanced our long-term notes, both important measures undertaken to ensure our financial liquidity. Rod will elaborate on this in a few minutes. Our 2P reserves at year end total 462 million barrels of oil equivalent, and we maintain a strong reserves life index of 17.9 years. Our 2020 reserves report does reflect the impact of a materially lower commodity price forecast being utilized by our reserves evaluator, which has WTI down 20 percent from one year ago and not reflective of current spot oil prices. Consistent with the impairment we recorded in 2020, we removed 29 million barrels approved reserves, 65% heavy oil and bitumen, and 41 million barrels approved plus probable reserves, 80% heavy oil and bitumen, which were deemed uneconomic using the reserves evaluator December 2020 commodity price forecasting. At the same time, our future development costs have been reduced by $464 million on a 1P basis and $709 million on a 2P basis, partially due to the reserves being removed, but also due to improved capital efficiencies across our asset base with a significant improvement in the Eagle firm. As part of our core values, we are driven to safely and responsibly develop energy resources while reducing our environmental impact. In 2019, we established a target to reduce our corporate GHG emission intensity by 30% by 2021 relative to our 2018 baseline. We are pleased to announce that we have exceeded this target one year early, achieving a 46% reduction in our GHG emissions intensity through year-end 2020. This is an annual reduction of 1.6 million tons of CO2 equivalent and represents taking 340,000 cars off the road annually. Another key part of our culture is to continue to set the bar higher. We are now announcing a new target to reduce our corporate GHG emission intensity by a further 33% from current levels by 2025. This equates to an approximate 65 percent reduction by 2025 relative to our 2018 baseline. The entire organization is proud of our emissions reduction strategy, which includes gas conservation and combustion, reusing associated gas as fuel for activities, reducing emissions from storage tanks, along with monitoring and preventing fugitive emissions. We look forward to publishing our fifth corporate sustainability report later this year as we remain committed to progressing the environmental and social aspects of our business. I will now turn the call over to Rod to discuss our balance sheet and risk management.