Savanna Drilling Rig 441 has been steadily working for Baytex Energy, and recently celebrated 2,000 safe working days. Photo courtesy Savanna Drilling

CALGARY – Baytex Energy Corp. plans on spending between $400 and $450 million for capital expenditures in 2022, with a good chunk of that going to its Viking and heavy oil plays in Saskatchewan.

The company released its budget at the close of business on Dec. 1.

“Approximately 60 per cent of our capital program will be directed to our high netback light oil assets in the Viking and Eagle Ford, where we forecast stable production and strong asset level free cash flow. We expect to bring approximately 145 net wells onstream in the Viking and 14 net wells onstream in the Eagle Ford,” the news release said.

According to, Baytex had two rigs working in west central Saskatchewan on Dec. 2.

As for heavy oil, approximately 25 per cent of their capital program will be directed towards heavy oil assets at Peace River and Lloydminster. “Our 2022 activity reflects a capital efficient drilling program complemented by long life and high value polymer flood projects. In total, we will see approximately 47 net wells drilled at Lloydminster and nine net Bluesky wells drilled at Peace River,” the company said.

A further 10 per cent will be spent on the company’s Peace River Clearwater area, where they expect to bring 18 Clearwater wells onstream in 2022, with a two-rig program.

Baytex drilled two wells in the Pembina area Duvernay light oil play in the third quarter of 2021, “with very encouraging results.”

“The first well (7-8) was brought on-stream October 18 and established a 30-day initial production rate of 944 boepd (712 bpd light oil, 148 bpd NGLs and 0.5 mmcf/d of natural gas). The second well (6-8) was brought on-stream October 30 and established a 30-day initial production rate of 1,230 boepd (814 bpd light oil, 265 bpd NGLs and 0.9 mmcf/d of natural gas). We expect to drill three net wells in the Duvernay during 2022 as we follow-up on our successful 2021 program,” the company said.

Baytex intends on spending $30 million “to progress our plans to decarbonize and shrink the environmental footprint of our operations. We will invest approximately $10 million as part of our GHG mitigation program and expect to reduce our GHG emissions intensity by 10% over 2021 levels. In addition, we will embark on an active abandonment and reclamation program with approximately $20 million being directed to pipeline, wellbore and facility decommissioning along with well site reclamations.”

All of this is expected to generate average annual production of 80,000 to 83,000 boepd. The budget is fully funded from adjusted funds flow at a WTI price of US$45 per barrel. “Based on the forward strip(1) we expect to generate approximately $340 million of free cash flow in 2022. For every US$1/bbl change in WTI, our adjusted funds flow changes by approximately $24 million on an unhedged basis ($15 million including 2022 hedges),” the company said.

“The 2022 capital program is expected to be equally weighted to the first and second half of the year. Based on the mid-point of our production guidance of 81,500 boepd, approximately 65 per cent of our production is in Canada with the remaining 35 per cent in the Eagle Ford. Our production mix is forecast to be 83 per cent liquids (43 per cent light oil and condensate, 32 per cent heavy oil and 8 per cent natural gas liquids) and 17 per cent natural gas, based on a 6:1 natural gas-to-oil equivalency.”

“I am excited with the momentum we are building in our business. We expect to generate record free cash flow in 2021 and our priorities for 2022 remain much the same. Our 2022 capital program is designed to generate meaningful free cash flow with modest annual production growth driven by exploration success and scaled up development in the Clearwater. In a US$65/bbl WTI pricing environment, we expect to generate approximately $2.1 billion of cumulative free cash flow through our 2021-2025 five-year outlook,” said Ed LaFehr, president and chief executive officer.

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