Baytex Energy: Clearwater Takes Over

Summary

  • The necessary balance between reliable light oil cash flow and more volatile heavy oil cash flow will change for Baytex Energy with the addition of the Clearwater play.
  • The superior Clearwater profitability also affects investment performance throughout the industry cycle.
  • The Clearwater heavy oil play is likely to cash flow during cyclical downturns whereas the legacy heavy oil production did not for Baytex a few times.
  • Baytex Energy management will likely hold the legacy acreage because technology is advancing rapidly enough that another play could begin to exhibit superior profitability.
  • In summary, Baytex common is likely to command a superior multiple compared to previous market upswings thanks to the addition of the Clearwater profitability.
  • This idea was discussed in more depth with members of my private investing community, Oil & Gas Value Research. Learn More »

Oil pump, oil industry equipment

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(Note: This article appeared in the newsletter on June 7, 2022 and has been updated as needed. Note: Baytex Energy is a Canadian company that reports in Canadian dollars unless otherwise stated)

Baytex Energy Corp. (BTEGF) sought

I analyze oil and gas companies like Baytex Energy and related companies in my service, Oil & Gas Value Research, where I look for undervalued names in the oil and gas space. I break down everything you need to know about these companies -- the balance sheet, competitive position and development prospects. This article is an example of what I do. But for Oil & Gas Value Research members, they get it first and they get analysis on some companies that is not published on the free site. Interested? Sign up here for a free two-week trial.

This article was written by

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Long Player believes oil and gas is a boom-bust, cyclical industry. It takes patience, and it certainly helps to have experience. He has been focusing on this industry for years. He is a retired CPA, and holds an MBA and MA.

He leads the investing group Oil & Gas Value Research. He looks for under-followed oil companies and out-of-favor midstream companies that offer compelling opportunities. The group includes an active chat room in which Oil & Gas investors discuss recent information and share ideas. Learn more.

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