Question

Your task is to find a newspaper article about a corporation undertaking or considering a capital budgeting project.

Prompt include a brief summary of what you read, a discussion of why you chose this example, and an analysis of whether you think the company is making the right decision. In addition, please attach or provide a link to the article you have chosen for your initial post. minimum 300 words

Answer 1

About the company:

Baytex Energy Corp. is an oil and gas corporation based in Calgary, Alberta. The company is engaged in the acquisition, development and production of crude oil and natural gas in the Western Canadian Sedimentary Basin and in the Eagle Ford in the United States. Approximately 84% of Baytex’s production is weighted toward crude oil and natural gas liquids. Baytex’s common shares trade on the Toronto Stock Exchange and the New York Stock Exchange under the symbol BTE.

Baytex Energy Corp. (“Baytex”) (TSX, NYSE: BTE) has made an announcement that its Board of Directors has approved a 2020 capital budget of $500 to $575 million, has been designed to generate average annual production of 93,000 to 97,000. The Board of Directors is also pleased to announce the appointment of Mark Bly as a new Chairman of Baytex Energy Corp.

Commenting on the Budget announcement made by the Board of Directors and Ed LaFehr, President and Chief Executive Officer said. We will be continuing to deliver our 2019 plan with the projected cash flow $300 million. As according to their plan in the capital budgeting of 2020 is designed they will be delivering the stable production to maximise the cash flow so that they can strength the balance sheet. We will remain disciplined with capital allocation, focusing on our high netback light oil assets in the Viking and Eagle Ford and our capital efficient heavy oil assets.

Highlights of the 2020 Budget

• Funding of Capital Program. Capital program fully funded from adjusted funds flow at a WTI price of US$50/bbl.
  
• Sustaining Capital. Capital program includes $520 million directed to sustaining and maintenance capital, with an additional $20 million invested in our gas conservation and emission reduction initiatives.
  
• Free Cash Flow. Through the first nine months of 2019, net debt has been reduced by $294 million. Based on the forward strip⁽¹⁾, we expect to generate in excess of $100 million of free cash flow during 2020, which will support our de-leveraging strategy.
  
• Capital Efficiency. Our capital program is expected to generate strong capital efficiencies of approximately $17,000 per boe/d across the portfolio.
  
• Capital Allocation. Approximately 80% of our capital program will be directed to our high netback light oil assets in the Viking and Eagle Ford and 15% will be directed to our heavy oil assets at Peace River and Lloydminster.
  
• Risk Management. Approximately 40% of our net crude oil exposure has been hedged for 2020, largely utilizing a 3-way option structure that provides price protection at US$58.04/bbl with upside participation to US$63.27/bbl

The following table summarizes our 2020 annual guidance.

Exploration and development capital ($ millions)	$500 - $575
Production (boe/d)	93,000 - 97,000
Expenses:
Royalty rate (%)	18.0% - 18.5%
Operating ($/boe)	$11.25 - $12.00
Transportation ($/boe)	$1.20 - $1.30
General and administrative ($ millions)	$45 ($1.30/boe)
Interest ($ millions)	$112 ($3.23/boe)
Leasing expenditures ($ millions)	$7
Asset retirement obligations ($ millions)	$19

2020 Adjusted Funds Flow Sensitivities

	Excluding Hedges ($ millions)		Including Hedges ($ millions)
Change of US$1.00/bbl WTI crude oil	$29.1		$21.6
Change of US$1.00/bbl WCS heavy oil differential	$12.4		$11.2
Change of US$1.00/bbl MSW light oil differential	$9.4		$8.5
Change of US$0.25/mcf NYMEX natural gas	$8.9		$8.3
Change of $0.01 in the C$/US$ exchange rate	$9.9		$9.9

2020 Capital Budget and Wells On-Stream by Operating Area

Operating Area	Amount (1) ($ millions)		Wells On-stream (net)
Canada	$375		295
United States (2)	$165		22
Total	$540		317

2020 Capital Budget Breakdown

Classification	Amount (1) ($ millions)
Drill, complete and equip	$470
Facilities	$45
Gas conservation	$20
Land and seismic	$5
Total	$ 540

WTI	Baytex Receives
At or below US$50.40/bbl	WTI + US$7.64/bbl
Between US$50.40/bbl and US$58.04/bbl	US$58.04/bbl
Between US$58.04/bbl and US$63.27/bbl	WTI
Above US$63.27/bbl	US$63.27/bbl

According to the analysis done the Baytex Energy Corp. will be growing good in the year 2020.

This will also the shareholder of the Baytex Energy Corp. to earn the good amount of money.

Reference.

https://www.oilandgas360.com/baytex-announces-2020-budget-and-board-chair-appointment/