Baytex Energy Corp.

Thank you for standing by. This is the conference operator. Welcome to the Baytex Energy Corp second quarter 2021 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'll be an opportunity to ask questions. To join the question queue, you may press star then one 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.

Good morning, ladies and gentlemen, and thank you for joining us today to discuss our second quarter 2021 financial and operating results. Today, I'm joined by Ed LaFerre, our President and Chief Executive Officer, Rod Gray, Executive VP and Chief Financial Officer, Chad Lundberg, Chief Operating and Sustainability Officer, Kendall Arthur, our Vice President Heavy Oil, Chad Kalmakoff, our Vice President Finance, 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. 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 all of you to our second quarter 2021 conference call. I'm very pleased to highlight our strong operating and financial performance as we continue to build momentum following an increase in activity late last year. Our free cash flow profile continues to improve as we benefit from our diversified oil-weighted portfolio and our commitment to allocate capital effectively. And we are taking proactive measures to reduce our net debt with the repurchase and cancellation of U.S. $106 million representing approximately 25% of our outstanding long-term notes due in 2024. At current commodity prices, we now expect to deliver over $350 million of free cash flow this year, or 62 cents per basic share, which will accelerate our debt reduction efforts. During the second quarter, we delivered adjusted funds flow of $176 million, or 31 cents per basic share. This resulted in substantial free cash flow of $112 million on the quarter, which along with Canadian dollar strengthening relative to the U.S. dollar contributed to a $129 million reduction in our net debt. We realized an operating net back of $34 per BOE, which is up from $30 per BOE realized in the first quarter. Production during the second quarter averaged 81,200 BOEs per day, 81% oil and NGLs. up 3% as compared to 79,000 BOEs per day in Q1 2021. The increased production reflects the timing of completion activity in the Eagle Fork and the strong performance across our light and heavy oil assets in Canada. Exploration and development expenditures totaled $61 million and included the drilling of 19.7 net wells with a 100% success rate. As a result of our strong performance through the first half of 2021, we are increasing our production guidance to 79,000 to 80,000 BOEs per day, up from 77,000 to 79,000 BOE per day previously. At the midpoint, this represents a 2% increase. There is no change to our capital guidance. We continue to forecast exploration development expenditures of $285 million to $315 million for 2021. Last quarter, we highlighted the strategic agreement we executed in 2020 with the Peavine-Métis settlement that covered 60 sections of land directly to the south of our existing seal operations. At the time, we identified significant potential for this exploration play targeting the Spirit River Formation, a Clearwater Formation equivalent. Adding these 60 sections to our existing seal acreage, we estimate over 100 sections of our lands are prospective for clear water development. As you will recall, our initial exploration well drilled on the peavine lands during the first quarter delivered a 30-day initial production rate of 175 barrels per day from only two laterals. We have now followed up our initial success with four additional wells. The first of these follow-up appraisal wells is another two-lateral well with a lower cost drilling mud. This well has also demonstrated a 30-day initial production rate of 175 barrels per day. We have also drilled two eight-lateral wells, which are showing promising early results. These two wells were brought on stream during the month of July, so we are not yet in a position to report 30-day initial production rates. We are currently drilling the fourth follow-up well, which is also an eight-lateral appraisal well located three miles to the east. In total, we plan to drill up to seven net appraisal wells in 2021 across our Clearwater acreage, with five of these wells on our peabine lands. I am very excited to say that our appraisal program continues to yield encouraging results, and pending continued success sets the stage for an increased activity program in 2022. We also introduced our five-year outlook last quarter, which is grounded on a $55 WTI price. In our investor relations materials, we have updated year one of our five-year outlook, in other words 2021, to reflect year-to-date commodity prices and the forward strip for the balance of this year. The remaining years 2022 to 2025 continue to be based on a constant US $55 WTI price. Under the plan, we expect to generate over a billion dollars of cumulative free cash flow as we target capital expenditures at less than 70% of our adjusted funds flow, while optimizing production in the 80 to 85,000 BOE per day range. Based on the strong pricing environment and free cash flow forecast for 2021, we have accelerated our debt repayment strategy by approximately one year over the base plan presented last quarter. And for those with a more bullish outlook on oil, we provide a couple of sensitivities. Under constant US $60 a barrel and US $65 a barrel WTI pricing scenarios, we expect to generate in excess of $1.5 billion and $2 billion of cumulative free cash flow, respectively, over the planned period. In the context of our current $1.2 billion market capitalization, this is pretty extraordinary. I will now turn the call over to Rod to discuss our balance sheet and risk management.