EX-99.12 13 a2016asc9329912.htm EXHIBIT 99.12 Exhibit
Baytex Energy Corp.                                            
Supplemental Disclosures about Extractive Activities - Oil and Gas (unaudited)
December 31, 2016




The following disclosures have been prepared by Baytex Energy Corp. (“Baytex” or the “Company”) in accordance with Accounting Standards Codification 932 “Extractive Activities - Oil & Gas” (“ASC 932”) issued by the Financial Accounting Standards Board.

Petroleum and Natural Gas Reserves Information

Proved petroleum and natural gas reserves are the estimated quantities of crude oil, natural gas and natural gas liquids (“NGL”) that geological and engineering data demonstrate with reasonable certainty to be recoverable in future years from known reservoirs under existing economic and operating conditions.

Proved developed petroleum and natural gas reserves are reserves that can be expected to be recovered through existing wells with existing equipment and operating methods, which may require future expenditures.

Proved undeveloped petroleum and natural gas reserves are reserves that are expected to be recovered from known accumulations where a future expenditure is required.

Reserves are estimated quantities of crude oil, NGL and natural gas anticipated from geological and engineering data to be recoverable from known accumulations, from a given date forward, by known technology, under existing operating conditions and considered to be economic at average commodity prices based upon the prior 12-month period. Estimates of petroleum and natural gas reserves are subject to uncertainty and will change as additional information regarding the producing fields and technology becomes available and as future economic conditions change. Net reserves presented in this section represent the Company's working interest and overriding royalty share of the gross remaining reserves, after deduction of any crown, freehold and overriding royalties. Such royalties are subject to change by legislation or regulation and can also vary depending on production rates, selling prices and timing of initial production.

The changes in Baytex's net proved crude oil and NGL and natural gas reserves under constant prices and costs for the two-year period ended December 31, 2016 were as follows:

 
Canada
United States
Total
 
Crude Oil & NGL

Bitumen

Natural
Gas

Crude Oil & NGL

Bitumen

Natural
Gas

Crude Oil & NGL

Bitumen

Natural
Gas

 
(mbbl)

(mbbl)

(mmcf)

(mbbl)

(mbbl)

(mmcf)

(mbbl)

(mbbl)

(mmcf)

Net proved reserves
 
 
 
 
 
 
 
 
 
December 31, 2014
65,709

14,995

69,362

94,869

—

173,339

160,578

14,995

242,701

Revisions of previous estimates
(17,060
)
(2,128
)
(3,611
)
(7,005
)
—

(8,028
)
(24,065
)
(2,128
)
(11,639
)
Improved recovery
549

—

12

—

—

—

549

—

12

Purchases
788

—

—

—

—

—

788

—

—

Extensions and discoveries
628

—

2,460

12,620

—

24,457

13,248

—

26,917

Production
(10,419
)
(811
)
(12,640
)
(8,471
)
—

(13,701
)
(18,890
)
(811
)
(26,341
)
Sales of minerals in place
(920
)
—

—

—

—

—

(920
)
—

—

December 31, 2015
39,275

12,056

55,583

92,013

—

176,067

131,288

12,056

231,650

Revisions of previous estimates
(14,723
)
(5,743
)
31,357

(13,650
)
—

(36,237
)
(28,373
)
(5,743
)
(4,880
)
Improved recovery
198

—

1

—

—

—

198

—

1

Purchases
22

—

—

—

—

—

22

—

—

Extensions and discoveries
33

—

53

14,727

—

27,018

14,760

—

27,071

Production
(7,453
)
(555
)
(13,070
)
(7,553
)
—

(13,810
)
(15,006
)
(555
)
(26,880
)
Sales of minerals in place
(670
)
—

(1,850
)
(313
)
—

(224
)
(983
)
—

(2,074
)
December 31, 2016
16,682

5,758

72,074

85,224

—

152,814

101,906

5,758

224,888

Net proved developed reserves
 
 
 
 
 
 
 
 
 
End of year 2014
40,931

8,157

48,321

32,227

—

50,768

73,158

8,157

99,089

End of year 2015
26,449

7,422

37,264

31,790

—

58,498

58,239

7,422

95,762

End of year 2016
15,103

880

33,120

31,374

—

60,009

46,477

880

93,129



1
Baytex Energy Corp.                                            
Supplemental Disclosures about Extractive Activities - Oil and Gas (unaudited)
December 31, 2016




Standardized Measure of Discounted Future Net Cash Flows Relating to Proved Petroleum and Natural Gas Reserves

The following information has been developed utilizing procedures prescribed by ASC 932, as updated by Accounting Standards Update 2010-03 “Oil and Gas Reserve Estimation and Disclosures”, and based on crude oil, NGL and natural gas reserves and production volumes estimated by Baytex's independent reserves evaluators, Sproule Unconventional Limited and Ryder Scott Company, L.P. The methodology used in calculating our price and cost assumptions for the standardized measure of discounted future net cash flows for reserves estimation is based upon the average first-day-of-the-month prices during the year.

Future production and development costs are based on forecast price assumptions and assume the continuation of existing economic, operating and regulatory conditions. Future income taxes are calculated by applying statutory income tax rates to future pre-tax cash flows after provision for the tax cost of the petroleum and natural gas properties based upon existing laws and regulations. A 10% discount factor was applied to the future net cash flows.

The information contained in the following table should not be considered as representative of realistic assessments of future cash flows, nor should the standardized measure of discounted future net cash flows be viewed as representative of the fair market value of Baytex's petroleum and natural gas properties. Management does not rely upon the following information in making investment and operating decisions. Such decisions are based upon a wide range of factors, including estimates of probable as well as proved reserves, and varying price and cost assumptions considered more representative of a range of possible economic conditions that may be anticipated. The prescribed discount rate of 10% may not appropriately reflect interest rates.

The computation of the standardized measure of discounted future net cash flows relating to proved oil and natural gas reserves was based on an unweighted arithmetic average of the first-day-of-the-month price for each month in 2016 and 2015.

 
Commodity Pricing
 
2016

2015

WTI crude (US$/bbl)
$
42.75

$
50.28

Canadian Light Sweet (Cdn$/bbl)
$
52.08

$
58.81

Western Canadian Select (WCS)(1) (Cdn$/bbl)
$
38.13

$
46.83

AECO-C spot price (Cdn$/mmbtu)
$
2.17

$
2.68

Henry Hub (US$/mmbtu)
$
2.55

$
2.59

Exchange rate (US$/Cdn$)
0.7350

0.7870

(1) Price used in the preparation of heavy oil and bitumen reserves in Canada.


The standardized measure of discounted future net cash flows relating to net proved petroleum and natural gas reserves are as follows:

 
             Canada
        United States
Total
(thousands of Canadian dollars)
2016

2015

2016

2015

2016

2015

Future cash inflows
$
625,763

$
1,764,415

$
3,823,293

$
4,534,031

$
4,449,056

$
6,298,446

Future production costs
(356,876
)
(949,459
)
(1,444,893
)
(1,495,597
)
(1,801,769
)
(2,445,056
)
Future development costs
(119,549
)
(275,877
)
(1,250,620
)
(1,400,851
)
(1,370,169
)
(1,676,728
)
Future income taxes
—

—

(17,018
)
(12,147
)
(17,018
)
(12,147
)
Future net cash flows
149,338

539,079

1,110,762

1,625,436

1,260,100

2,164,515

Deduct:
10% annual discount factor
(35,103
)
(142,292
)
(558,359
)
(770,705
)
(593,462
)
(912,997
)
Standardized measure
$
114,235

$
396,787

$
552,403

$
854,731

$
666,638

$
1,251,518



2
Baytex Energy Corp.                                            
Supplemental Disclosures about Extractive Activities - Oil and Gas (unaudited)
December 31, 2016




Reconciliation of Changes in Standardized Measure of Future Net Cash Flows Discounted at 10% per Year Relating to Net Proved Petroleum and Natural Gas Reserves

As at December 31, 2016
(thousands of Canadian dollars)
Canada

United States

Total

Balance, beginning of year
$
396,787

$
854,731

$
1,251,518

Sales, net of production costs
(110,048
)
(241,604
)
(351,652
)
Net change in prices and production costs related to future production
(175,100
)
(269,064
)
(444,164
)
Changes in previously estimated production costs incurred during the period
105,521

126,736

232,257

Development costs incurred during the period
21,184

198,912

220,096

Extensions, discoveries and improved recovery, net of related costs
1,260

63,327

64,587

Revisions of previous quantity estimates
(139,081
)
(248,444
)
(387,525
)
Sales of reserves in place
(13,501
)
(3,445
)
(16,946
)
Purchases of reserves in place
263

—

263

Accretion of discount
27,039

71,191

98,230

Net change in income taxes
—

63

63

Balance, end of year
$
114,324

$
552,403

$
666,727


As at December 31, 2015
(thousands of Canadian dollars)
Canada

United States

Total

Balance, beginning of year
$
1,917,817

$
2,195,351

$
4,113,168

Sales, net of production costs
(215,008
)
(316,975
)
(531,983
)
Net change in prices and production costs related to future production
(1,301,100
)
(2,643,661
)
(3,944,761
)
Changes in previously estimated production costs incurred during the period
350,453

339,085

689,538

Development costs incurred during the period
66,888

449,789

516,677

Extensions, discoveries and improved recovery, net of related costs
12,799

156,004

168,803

Revisions of previous quantity estimates
(882,249
)
144,663

(737,586
)
Sales of reserves in place
(12,765
)
—

(12,765
)
Purchases of reserves in place
2,701

—

2,701

Accretion of discount
167,972

218,267

386,239

Net change in income taxes
289,278

312,209

601,487

Balance, end of year
$
396,786

$
854,732

$
1,251,518


Capitalized Costs Relating to Petroleum and Natural Gas Producing Activities

As at December 31, 2016
(thousands of Canadian dollars)
Canada

United States

Total

Proved properties
$
3,446,133

$
4,317,904

$
7,764,037

Unproved properties
118,224

190,238

308,462

Total capital costs
3,564,357

4,508,142

8,072,499

Accumulated depletion and depreciation
(1,991,842
)
(1,620,026
)
(3,611,868
)
Net capitalized costs
$
1,572,515

$
2,888,116

$
4,460,631


As at December 31, 2015
(thousands of Canadian dollars)
Canada

United States

Total

Proved properties
$
3,436,374

$
4,147,907

$
7,584,281

Unproved properties
119,520

459,449

578,969

Total capital costs
3,555,894

4,607,356

8,163,250

Accumulated depletion and depreciation
(1,564,255
)
(1,345,851
)
(2,910,106
)
Net capitalized costs
$
1,991,639

$
3,261,505

$
5,253,144



3
Baytex Energy Corp.                                            
Supplemental Disclosures about Extractive Activities - Oil and Gas (unaudited)
December 31, 2016




Costs Incurred in Petroleum and Natural Gas Property Acquisition, Exploration and Development Activities

For year ended December 31, 2016
(thousands of Canadian dollars)
Canada

United States

Total

Property acquisition costs
 
 
 
Proved properties
$
54

$
—

$
54

Unproved properties
102

—

102

Property dispositions
(9,039
)
(54,237
)
(63,276
)
Development costs(1)
21,184

198,910

220,094

Exploration costs (2)
4,689

—

4,689

Total
$
16,990

$
144,673

$
161,663


For year ended December 31, 2015
(thousands of Canadian dollars)
Canada

United States

Total

Property acquisition costs
 
 
 
Proved properties
$
420

$
132

$
552

Unproved properties
1,813

—

1,813

Property dispositions
(592
)
(125
)
(717
)
Development costs(1)
66,888

449,789

516,677

Exploration costs (2)
4,362

—

4,362

Total
$
72,891

$
449,796

$
522,687

(1) Development and facilities capital expenditures.
(2) Cost of geological and geophysical capital expenditures and drilling costs for exploratory wells.


Results of Operations for Producing Activities

For year ended December 31, 2016
(thousands of Canadian dollars except per boe amounts)
Canada

United States

Total

Petroleum and natural gas revenues, net of royalties
$
261,912

$
340,067

$
601,979

Less:
 
 
 
Operating costs, production and mineral taxes
142,242

98,463

240,705

Transportation and blending expense
37,879

—

37,879

Depreciation and depletion
214,747

293,562

508,309

Operating income
(132,956
)
(51,958
)
(184,914
)
Income taxes
(6,886
)
(1,156
)
(8,042
)
Results of operations (1)
$
(126,070
)
$
(50,802
)
$
(176,872
)
Depletion rate per net boe
21.08

29.79

25.36


For year ended December 31, 2015
(thousands of Canadian dollars except per boe amounts)
Canada

United States

Total

Petroleum and natural gas revenues, net of royalties
$
453,781

$
426,218

$
879,999

Less:
 
 
 
Operating costs, production and mineral taxes
210,945

109,242

320,187

Transportation and blending expense
80,957

—

80,957

Depreciation and depletion
284,011

377,847

661,858

Operating income
(122,132
)
(60,871
)
(183,003
)
Income taxes
6,961

1,946

8,907

Results of operations (1)
$
(129,093
)
$
(62,817
)
$
(191,910
)
Depletion rate per net boe
21.30

35.13

27.47

(1) Excludes corporate overhead and interest costs.


4