Canada's Baytex Energy Corp., an oil and gas producer, is pondering divestment of its Eagle Ford shale assets in south Texas to hone its emphasis on domestic properties, according to individuals close to the matter.
Baytex, which vastly increased its presence in the basin just two years ago by acquiring Ranger Oil, is bringing in advisers to shop the business, which could sell for some $3 billion, said the people, who asked not to be named because the details are private. The company has not made a final decision and Baytex could keep the assets.
Baytex dropped 3.9% to $2.46 at 11:45 a.m. in New York trading Thursday and has fallen 22% over the last year. The company has around $1.6 billion of debt as well. The company's market value is approximately $1.9 billion.
The planned sale would be a sea change for Baytex, which marketed the Ranger deal at the time as a means of doubling free cash flow and having at least a dozen years' worth of oil-skewed drilling opportunities. The Alberta company, which already has some production in the Eagle Ford, has operated in west Canada for many years. Today, the Eagle Ford accounts for the majority of its production, putting it at an estimated 82,000 barrels of oil per day in 2025, according to a presentation this month to investors. The Eagle Ford is potentially more sensitive to oil prices than the larger Permian of West Texas and New Mexico, because it's an older, shallower reservoir.
That leaves all the best spots already worked over and wells there deplete much more quickly. So Eagle Ford producers must depend on constant drilling to maintain production, which can become prohibitive when oil prices drop. The Eagle Ford will account for around 57% of Baytex's C$1.2 billion projected exploration and development capital this year, the presentation indicates. Oil prices at the lower-to-mid $60 per barrel level has compelled shale drillers to optimize inventory as much as possible.
Ovintiv Inc. completed asset sale transactions in the last year to divest volumes in the Uinta basin while expanding its presence in the oil-proven Montney basin in Canada.