Baytex Energy: Taking Advantage Of A Good Deal

Summary

  • Baytex Energy's acquisition of Ranger Oil was an excellent bargain. Rising oil prices increase the value of this bargain.
  • The other non-operated Eagle Ford acreage could be more highly valued now that there is operating acreage to go with it. That is now a far more typical setup.
  • Light Oil is a premium product with a more reliable cash flow in a downturn.
  • Baytex is now mostly a light oil producer even though it began as a heavy oil producer.
  • The company is now materially different from the company that reported second-quarter results.
  • 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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Baytex Energy (NYSE:BTE) has acquired Ranger Oil (ROCC). The deal cost $2.4 billion (roughly) for about 162K acres. This comes out to be roughly $15K an acre. Meanwhile, there are competitors out there paying $50K or more for decent Eagle Ford acreage while extolling all the infrastructure

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.

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.

Analyst’s Disclosure:I/we have a beneficial long position in the shares of BTE either through stock ownership, options, or other derivatives. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.

Disclaimer: I am not an investment advisor, and this article is not meant to be a recommendation of the purchase or sale of stock. Investors are advised to review all company documents and press releases to see if the company fits their own investment qualification.

Seeking Alpha's Disclosure: Past performance is no guarantee of future results. No recommendation or advice is being given as to whether any investment is suitable for a particular investor. Any views or opinions expressed above may not reflect those of Seeking Alpha as a whole. Seeking Alpha is not a licensed securities dealer, broker or US investment adviser or investment bank. Our analysts are third party authors that include both professional investors and individual investors who may not be licensed or certified by any institute or regulatory body.

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