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Baytex Energy Management Presents At Barclays CEO Energy/Power Conference (Transcript)

We are oil focused. Virtually none of our drilling expenditures are going towards natural gas projects. So our oil and our liquids growth is accelerating faster than Boe per day growth. 46,900 barrels of oil and liquids is the oil and liquids contribution of a 54,000 Boe a day guidance. We’ve been growing our oil and liquids at an 11% cater over the same timeframe as the 8% Boe per day growth in the company as a whole.

This is quite a dizzy slide but it’s a very, very important slide to start to tell the story of our historic capital efficiencies. If you just look at the right-hand column our long-term averages for finding and development costs, including and excluding future development costs for the eight year period from 2004 to 2011, excluding FDCs we’ve added reserves at an average of $9.55 per Boe including FDCs $14.40. Those are top quartile numbers for the Western Canadian Basin and we’ve been able to add reserves at a relatively low-cost and obviously as a commodity producer that's critical when you don’t control the selling price of your goods.

Recycle ratio, if you don't use that metric, Recycle Ratio is simply operating net back per barrel divided by the finding and development costs or for every dollar you put in the ground how many dollars do you get back out, we've averaged 2.9 times over the life of the business. That’s about twice the recycle ratio for the Western Canadian Basin as a whole. So by this metric we’re about twice as profitable as the basin as a whole. The two bottom blocks of data are also important for understanding the income component of our model. Since inception we’ve spent 54% of our internally generated cash flow on E&P activity. By spending that 54% of cash flow we have replaced 173% of our production. So in other words, we have grown our reserve base spending just over half of our cash flow. If you follow the E&P space you know that’s a very, very rare achievement and I'm going to talk a little bit about why we've been able to do that.

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