Baytex Energy Corp.

Thank you for standing by. This is the conference operator. Welcome to the Baytex Energy Corp second quarter 2022 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 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 Hector, Vice President, Capital Markets. Please go ahead.

Thank you, Sachi. Good morning, ladies and gentlemen, and thank you for joining us to discuss our second quarter 2020-22 financial and operating results. Today, I'm joined by Ed LaFerra, President and Chief Executive Officer, Rod Gray, Executive VP and Chief Financial Officer, and Chad Lundberg, our Chief Operating and Sustainability Officer. 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.

Great. Thanks, Brian. And good morning, everyone. I'd like to welcome everybody to our second quarter 2022 conference call. As everyone is aware, yesterday we announced that I will be retiring in January of 2023. I'll save my comments on the retirement to the end because I really want to focus on the business at hand and the momentum we continue to build both operationally and from a shareholder return perspective. It's business as usual, and we have an exciting story unfolding. During the second quarter, we remained focused on capital discipline, generating free cash flow, and reducing debt. We delivered strong operating and financial results with production of over 83,000 BOEs per day, record quarterly free cash flow of $245 million, and a further 12% reduction in our net debt to $1.1 billion. We continue to execute our 2022 plan with production guidance unchanged at 83,000 to 85,000 BOEs per day, and we expect to exit 2022 producing approximately 87,000 to 88,000 BOEs per day. Our 2022 exploration and development expenditure guidance is unchanged at $450 to $500 million. Like everyone in the industry, we continue to experience inflationary pressures in our business and in our case, particularly in the Eagleford. As a result, we anticipate full-year capital expenditures will be toward the high end of our guidance range. We have also fine-tuned several of our cost assumptions to reflect increased royalties due to higher commodity prices and further inflationary pressures on operating and transportation expenses related to labor, fuel, electricity, and hauling. This should come as no surprise, but as an organization, we remain intensely focused on capital discipline and maximizing free cash flow. Based on the forward strip, we expect to generate approximately $700 million, or $1.25 per basic share, of free cash flow this year. What is most exciting is that our improved financial position has enabled us to implement the first phase of our enhanced shareholder return framework. We are now allocating 25% of our annual free cash flow to a share buyback program. During the second quarter, we repurchased 9.1 million common shares, representing 1.6% of our outstanding shares at an average price of $6.88 per share, and we have remained active here in July. The remainder of our free cash flow continues to be allocated to debt reductions. As our deleveraging continues at a rapid pace, we are pleased to announce the second phase of our shareholder return framework. Upon achieving a net debt level of $800 million in late 2022 or early 2023, we anticipate increasing direct shareholder returns to 50% of our free cash flow and accelerating our share buyback program. We continue to view our shares as undervalued in relation to our current operations. We have also established an ultimate net debt target for the company of $400 million, which represents an expected net debt to EBITDA ratio of one times at a $45 US WTI price. We feel this level of net debt will provide us with full flexibility to run our business through the commodity price cycles and generate meaningful returns to our shareholders. At current prices, we expect to achieve this net debt level by the end of 2023 or early 2024, at which point we will consider steps to further enhance shareholder returns. Operationally, the highlight of our business continues to be our Clearwater development at Peavine. This is an asset that at current commodity prices generates among the strongest economics within our portfolio with payouts of less than three months and has the ability to grow organically while enhancing our free cash flow profile. During the second quarter, our clear water production averaged 7,300 barrels per day, up from 3,200 barrels per day in Q1. Production during the second quarter was curtailed by approximately 650 barrels per day due to spring breakup and road maintenance that took the 425 pad offline for two weeks in May. Production in June averaged 9,100 barrels per day from our 18 producing wells. In Q2, The remaining four wells from our 10-well first quarter drilling program were brought on stream, and the 10 wells have now established an average 30-day initial production rate of 772 barrels per day per well, and four wells generated 30-day IPs of over 1,000 barrels per day per well. Initial well performance continues to outperform tight curve assumptions, and we now hold nine of the top ten initial rate wells drilled to date across the play. To date, we have de-risked 50 sections of land of our 80-section Peavine land base and believe the lands hold the potential for more than 200 locations. When combined with our legacy acreage position in northwest Alberta, we estimate that over 125 sections of our lands are highly prospective for clear water development. Our second half drilling program kicked off in July, and we expect to drill 14 additional clear water wells, including 13 wells at Peavine and one well at Seal that follows up a successful exploration well from 2021. The first two wells from the second half drilling program are scheduled to be on stream by mid-August. Maintaining a consistent one rig program and level loading activity in the second half of 2022 will drive further efficiencies and set the stage for continued strong operating momentum heading into 2023. While we are confident that Clearwater production will increase to approximately 10,000 barrels per day during the five-year plan, we believe the play ultimately holds the potential for over 200 drilling locations that could support production increasing to over 15,000 barrels per day. Our current five-year cumulative free cash flow forecast for the asset is $400 million. With a strong outlook for 2022 unfolding, I want to now turn the call over to Rod, who will provide a brief update on our liquidity and capital structure.