Baytex to sell U.S. Eagle Ford assets for $2.3B (U.S.)

Executive Summary

• Baytex Energy Corp. has entered into a definitive agreement to sell its entire U.S. Eagle Ford asset portfolio to an undisclosed buyer for $2.305 billion (U.S.) in cash.
• The transaction is designed to refocus Baytex as a high-return Canadian energy producer, strengthening its balance sheet to a net cash position and enabling accelerated shareholder returns, including the resumption of normal course issuer bids and maintenance of the current dividend.
• The deal is expected to close in late 2025 or early 2026, subject to regulatory approvals, including Hart-Scott-Rodino (HSR) clearance.

Key Details

• Transaction Value: $2.305 billion (U.S.) (approximately $3.25 billion Canadian) in cash.
• Assets Divested: All of Baytex's U.S. business, specifically the Eagle Ford assets.
• Closing Conditions: Expected to close in late 2025 or early 2026; subject to customary closing conditions and regulatory approvals, including the Hart-Scott-Rodino (HSR) Antitrust Improvements Act.
• Deposit: The buyer has provided a $200 million (U.S.) deposit, which may be forfeited to Baytex under certain circumstances outlined in the agreement.
• Purchase Price Adjustments: Subject to adjustments based on an effective date of September 1, 2025.
• Post-Transaction Financial Position:
  • Baytex intends to have a net cash position initially.
  • Proceeds will be used to repay outstanding credit facilities and 2030 senior notes.
  • Corporate sustaining break-even improves by $8 (U.S.) per barrel to $52 (U.S.) per barrel.
• Shareholder Returns:
  • Baytex intends to resume purchases under its normal course issuer bid.
  • Committed to returning a significant portion of proceeds to shareholders post-closing, potentially including a substantial issuer bid.
  • Maintains current dividend of nine cents per share (annualized).
• Strategic Focus:
  • Refocus on Canadian core assets: heavy oil operations at Peavine, Peace River, and Lloydminster; Pembina Duvernay; and Viking light oil.
  • Canadian portfolio delivered 65,000 boe/d in the first nine months of 2025 (5% growth vs. 2024, excluding non-core divestitures).
  • Heavy oil assets comprise 750,000 net acres and 1,100 drilling locations (~10 years of development at current pace).
  • Pembina Duvernay: 91,500 net acres, ~212 drilling locations; targeting 18-20 wells/year over next two years, aiming for 20,000-25,000 boe/d by 2029-2030.
  • Target annual production growth of 3-5% at $60-$65 (U.S.) per barrel WTI.
  • 2026 preliminary capital spending estimated at $550 million to $625 million.
• Eagle Ford Asset Metrics (as of Dec 31, 2024 / Q3 2025):
  • Reserves: 401 million boe (277 million proved; 124 million probable).
  • Q3 2025 Average Production: 82,765 boe/d (52,330 bbl/d light oil/condensate, 15,582 bbl/d NGLs, 89.1 MMcf/d natural gas).
• Advisers:
  • Financial Adviser: RBC Capital Markets.
  • Strategic Adviser: Goldman Sachs Canada Inc.
  • Legal Counsel: Vinson & Elkins LLP and Burnet, Duckworth & Palmer LLP.
  • Fairness Opinion: Bank of Nova Scotia confirmed the consideration is fair from a financial point of view.

Notable Quotes

• "This transaction positions Baytex as a focused, high-return Canadian energy producer... Monetizing our U.S. Eagle Ford assets strengthens our balance sheet, supports capital allocation to our highest-return opportunities and positions us to deliver meaningful shareholder returns." — Eric T. Greager, President and CEO
• "This transaction provides Baytex with the financial strength and flexibility to pursue our strategic priorities... By sharpening our focus on core Canadian assets, we have a solid foundation to drive disciplined growth, capitalize on new opportunities and deliver long-term value for our shareholders." — Mark Bly, Chair of the Board of Directors