(I don't own BTE but could not help noticing the similarities to PWE...not sure how well BTE is hedged but coming down from $50 a year ago seems a whole lot worse than what we have in pwe yet RBC just lowered share price prediction to $24 while Scotia lowered to $18. Hard to believe the huge difference in share price evaluations while metrics seem to be so similar....sigh):
Ray Chan's Baytex Energy Corp. (BTE) lost 70 cents to $5.93 on 14.2 million shares, after announcing last night that it would suspend its dividend and move its budget and production guidance to the low ends of their ranges. The monthly dividend had previously been cut to 10 cents from 24 cents in December. Investors cheered the move at the time, sending Baytex's stock up 44 cents to $16.90 on Dec. 9 -- still a long way down from the previous summer's high of $50.16. As it turned out, the stock was not done falling. Yesterday it closed at $6.63 and yielded 18.1 per cent. Baytex says it had no choice but to eliminate the dividend, despite setting itself a goal nearly 12 years ago of always having a "meaningful" payout. It has promised to reintroduce the dividend once oil prices recover to an unspecified level. It has also lowered its 2015 budget to $500-million (from a range of $500-million to $575-million) and its production guidance to a range of 84,000 to 86,000 barrels of oil equivalent a day (down from a range of 84,000 to 88,000). The bulk of Baytex's budget is going to its shale assets in the Texas Eagle Ford, the only ones that can make money at today's oil prices. (The company's website estimates that they break even at $35 (U.S.) a barrel, compared with $44 (U.S.) to $47 (U.S.) for its heavy oil assets in Canada. Each country contributes roughly half of total production.)
Although the Eagle Ford assets are undoubtedly economic, they are also a big reason why Baytex is in such trouble now. It acquired them at the height of the market in June, 2014, by buying Aurora Oil for $2.8-billion. This tripled its total debt to nearly $2.3-billion at year-end 2014 from $760-million at the beginning of 2014. In April of this year, Baytex raised $632.5-million through a bought deal (done at $17.35 -- ouch) and this got its debt down to $1.8-billion as of June 30, but that still makes the company one of the most heavily indebted in Canada.