Baytex Energy Corp.'s Q3 Results Show Progress Where It Matters Most

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Heading into 2016, Baytex Energy (NYSE: BTE) outlined three strategic objectives to help get it through the downturn in the oil market: deploy capital efficiently, cut costs, and maintain strong liquidity. Each quarter the company has taken noticeable steps forward on each objective, which was certainly the case again during the third quarter.

Squeezing more out of every dollar

One of Baytex Energy's aims was to get the most out of each capital dollar spent. Initially, the company planned to spend $325 million to $400 million, which was enough money to produce 74,000 to 78,000 barrels of oil equivalent per day (BOE/D). While that would result in its production declining from last year's average daily rate of 84,648 BOE/D, Baytex needed to cut investment spending to meet its liquidity goal. That is why the company cut spending again early in 2016 when oil prices plunged to start the year, bringing it down to a range of $225 million to $265 million. However, while that was a 33% cut in spending, it would only cause production to be 5% below its initial guidance, reflecting its ability to deploy capital in the most efficient manner. Meanwhile, a few months later, the company cut spending once again, this time to a range of $200 million to $225 million. While that was a 13% cut, it only impacted production by 1%, again showing that the company was stretching its capital dollars.

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