EX-99.10 11 a9910-2020asc932.htm EX-99.10
Baytex Energy Corp.
Supplemental Disclosures about Extractive Activities - Oil and Gas (unaudited)
December 31, 2020
Exhibit 99.10
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. The standard requires the use of a 12 month average price to estimate proved reserves calculated as the unweighted arithmetic average of first-day-of-the-month prices within the 12 month period prior to the end of the reporting period.
Petroleum and Natural Gas Reserves Information
Users of this information should be aware that the process of estimating quantities of "proved developed" and "proved undeveloped" crude oil, natural gas liquids, bitumen and natural gas is very complex, requiring significant subjective decisions in the evaluation of all available geological, engineering and economic data for each reservoir. The data for a given reservoir may change substantially over time as a result of numerous factors including, but not limited to, additional development activity, evolving production history, and continual reassessment of the viability of production under varying economic conditions. Consequently, material revisions to existing reserve estimates occur from time to time. Although every reasonable effort is made to ensure that reserve estimates reported represent the most accurate assessments possible, the significance of the subjective decisions required and variances in available data for reservoirs make these estimates generally less precise than other estimates presented in connection with financial statement disclosures. Future fluctuations in prices and costs, production rates, or changes in political or regulatory environments could cause the Company's reserves to be materially different from that presented.
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.
Proved reserves and production volumes are presented net of 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. Figures reported as natural gas reserves and production volumes do not include flared gas, injected gas or gas consumed in operations. All natural gas reserves and production volumes presented are sales volumes. Undrilled locations underlying the estimates of our proved undeveloped reserves as of December 31, 2019 and 2020 are included in a development plan that was adopted by Baytex for the applicable year as a result of our annual long-range planning process and associated corporate financial model and all such locations were scheduled to be drilled within five years of the initial development plan adoption date.
The changes in Baytex's net proved crude oil, NGL, bitumen and natural gas reserves under constant prices and costs for the two-year period ended December 31, 2020 were as follows:

| Canada | United States
| Crude Oil | NGL | Bitumen | Natural Gas | Crude Oil | NGL | Bitumen | Natural Gas
| (mbbl) | (mbbl) | (mbbl) | (mmcf) | (mbbl) | (mbbl) | (mbbl) | (mmcf)
Net proved reserves |  |  |  |  |  |  |  |
December 31, 2018 | 96,289 |  | 1,224 |  | 11,435 |  | 54,978 |  | 37,161 |  | 52,705 |  | — |  | 151,136 |
Revisions of previous estimates | (2,324) |  | 694 |  | 429 |  | 13,188 |  | 91 |  | (97) |  | — |  | 11,900 |
Improved recovery | — |  | — |  | — |  | — |  | — |  | — |  | — |  | — |
Purchases of minerals in place | 1,209 |  | 1 |  | — |  | 85 |  | — |  | — |  | — |  | — |
Extensions and discoveries | 18,990 |  | 1,321 |  | — |  | 18,392 |  | 4,158 |  | 5,426 |  | — |  | 16,813 |
Production | (14,995) |  | (436) |  | (727) |  | (16,372) |  | (3,725) |  | (4,359) |  | — |  | (14,485) |
Sales of minerals in place | (2,289) |  | — |  | — |  | (83) |  | — |  | — |  | — |  | — |
December 31, 2019 | 96,879 |  | 2,804 |  | 11,136 |  | 70,188 |  | 37,685 |  | 53,675 |  | — |  | 165,363 |
Revisions of previous estimates | (49,515) |  | (892) |  | (8,251) |  | (11,898) |  | 449 |  | (2,736) |  | — |  | (794) |
Improved recovery | — |  | — |  | — |  | — |  | — |  | — |  | — |  | — |
Purchases of minerals in place | 7 |  | — |  | — |  | 8 |  | — |  | — |  | — |  | — |
Extensions and discoveries | 1,092 |  | 516 |  | 2,824 |  | 10,364 |  | 486 |  | 446 |  | — |  | 1,550 |
Production | (12,812) |  | (384) |  | (825) |  | (14,271) |  | (3,493) |  | (2,992) |  | — |  | (11,530) |
Sales of minerals in place | (13) |  | — |  | — |  | (23) |  | — |  | — |  | — |  | — |
December 31, 2020 | 35,639 |  | 2,044 |  | 4,883 |  | 54,367 |  | 35,127 |  | 48,393 |  | — |  | 154,589 |
Net proved developed reserves |  |  |  |  |  |  |  |
End of year 2018 | 46,557 |  | 772 |  | 8,616 |  | 39,222 |  | 13,466 |  | 23,432 |  | — |  | 68,273 |
End of year 2019 | 47,577 |  | 1,179 |  | 9,286 |  | 44,537 |  | 16,119 |  | 23,906 |  | — |  | 71,748 |
End of year 2020 | 20,749 |  | 1,616 |  | 808 |  | 37,858 |  | 15,809 |  | 21,277 |  | — |  | 67,187 |

1

Baytex Energy Corp.
Supplemental Disclosures about Extractive Activities - Oil and Gas (unaudited)
December 31, 2020

| Canada | United States
| Crude Oil | NGL | Bitumen | Natural Gas | Crude Oil | NGL | Bitumen | Natural Gas
| (mbbl) | (mbbl) | (mbbl) | (mmcf) | (mbbl) | (mbbl) | (mbbl) | (mmcf)
Net proved undeveloped reserves |  |  |  |  |  |  |  |
End of year 2018 | 49,732 |  | 452 |  | 2,819 |  | 15,756 |  | 23,696 |  | 29,272 |  | — |  | 82,863 |
End of year 2019 | 49,302 |  | 1,625 |  | 1,850 |  | 25,651 |  | 21,566 |  | 29,769 |  | — |  | 93,615 |
End of year 2020 | 14,889 |  | 428 |  | 4,075 |  | 16,508 |  | 19,318 |  | 27,116 |  | — |  | 87,402 |

| Total
| Crude Oil | NGL | Bitumen | Natural Gas | Total
| (mbbl) | (mbbl) | (mbbl) | (mmcf) | (mboe)
Net proved reserves |  |  |  |  |
December 31, 2018 | 133,450 |  | 53,929 |  | 11,435 |  | 206,114 |  | 233,165 |
Revisions of previous estimates | (2,233) |  | 597 |  | 429 |  | 25,088 |  | 2,974 |
Improved recovery | — |  | — |  | — |  | — |  | — |
Purchases of minerals in place | 1,209 |  | 1 |  | — |  | 85 |  | 1,224 |
Extensions and discoveries | 23,148 |  | 6,748 |  | — |  | 35,205 |  | 35,763 |
Production | (18,720) |  | (4,795) |  | (727) |  | (30,857) |  | (29,385) |
Sales of minerals in place | (2,289) |  | — |  | — |  | (83) |  | (2,303) |
December 31, 2019 | 134,564 |  | 56,479 |  | 11,136 |  | 235,551 |  | 241,438 |
Revisions of previous estimates | (49,066) |  | (3,628) |  | (8,251) |  | (12,693) |  | (63,060) |
Improved recovery | — |  | — |  | — |  | — |  | — |
Purchases of minerals in place | 7 |  | — |  | — |  | 8 |  | 8 |
Extensions and discoveries | 1,578 |  | 962 |  | 2,824 |  | 11,914 |  | 7,349 |
Production | (16,305) |  | (3,376) |  | (825) |  | (25,802) |  | (24,806) |
Sales of minerals in place | (13) |  | — |  | — |  | (23) |  | (17) |
December 31, 2020 | 70,766 |  | 50,437 |  | 4,883 |  | 208,956 |  | 160,912 |
Net proved developed reserves |  |  |  |  |
End of year 2018 | 60,022 |  | 24,204 |  | 8,616 |  | 107,495 |  | 110,758 |
End of year 2019 | 63,696 |  | 25,085 |  | 9,286 |  | 116,285 |  | 117,447 |
End of year 2020 | 36,559 |  | 22,894 |  | 808 |  | 105,045 |  | 77,768 |
Net proved undeveloped reserves |  |  |  |  |
End of year 2018 | 73,428 |  | 29,724 |  | 2,819 |  | 98,619 |  | 122,407 |
End of year 2019 | 70,869 |  | 31,395 |  | 1,850 |  | 119,266 |  | 123,991 |
End of year 2020 | 34,207 |  | 27,544 |  | 4,075 |  | 103,910 |  | 83,144 |

Revisions of previous estimates
In 2020, the Company realized total proved revisions of -63,060 mboe. These revisions are primarily due to changes in the constant pricing from YE 2019 (the average first day-of-the-month price for WTI decreased from $55.85/bbl in 2019 to $39.54/bbl in 2020). The Company realized a 65,780 mboe loss in Canada and a 3,901 mboe loss in the US due to pricing changes. The Company also realized positive revisions in both Canada and the US. In Canada positive revisions of 5,139 mboe were realized due to the result of performance versus previous forecasts. In the U.S. positive revisions of 1,482 mboe are also the result of performance versus previous forecasts.
Extensions and Discovery
In 2019, the Company added 35,763 mboe of net proved reserves. 23,376 mboe were added in Canada as a result of our 2019 drilling program
and 12,387 mboe were added in our Eagle Ford acreage due to improved well performance.
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Baytex Energy Corp.
Supplemental Disclosures about Extractive Activities - Oil and Gas (unaudited)
December 31, 2020
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 and based on crude oil, NGL and natural gas reserves and production volumes estimated by Baytex's independent reserves evaluator, McDaniel & Associates Consultants Ltd. The methodology used in calculating our price 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 providing 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 2020 and 2019.

| Commodity Pricing
| 2020 | 2019
WTI crude (US$/bbl) | $ | 39.54 |  | $ | 55.85 |
Edmonton Light crude (Cdn$/bbl) | $ | 45.56 |  | $ | 66.73 |
Western Canadian Select crude (WCS) (1) (Cdn$/bbl) | $ | 36.90 |  | $ | 56.10 |
AECO spot (Cdn$/mmbtu) | $ | 2.23 |  | $ | 1.76 |
Henry Hub (US$/mmbtu) | $ | 2.00 |  | $ | 2.58 |
Exchange rate (US$/Cdn$) | 0.7440 |  | 0.7500 |

(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) | 2020 | 2019 | 2020 | 2019 | 2020 | 2019
Future cash inflows | $ | 1,664,979 |  | $ | 5,636,229 |  | $ | 3,743,041 |  | $ | 5,504,339 |  | $ | 5,408,020 |  | $ | 11,140,569 |
Future production costs | (759,574) |  | (2,301,149) |  | (1,622,638) |  | (1,790,853) |  | (2,382,212) |  | (4,092,002) |
Future development costs (1) | (643,571) |  | (1,520,834) |  | (826,413) |  | (1,131,768) |  | (1,469,984) |  | (2,652,602) |
Future income taxes | — |  | — |  | (18,752) |  | (213,922) |  | (18,752) |  | (213,922) |
Future net cash flows | 261,834 |  | 1,814,246 |  | 1,275,238 |  | 2,367,796 |  | 1,537,072 |  | 4,182,043 |
Deduct: 10% annual discount factor | 31,709 |  | (550,900) |  | (566,538) |  | (1,081,329) |  | (534,829) |  | (1,632,229) |
Standardized measure | $ | 293,543 |  | $ | 1,263,346 |  | $ | 708,701 |  | $ | 1,286,467 |  | $ | 1,002,243 |  | $ | 2,549,814 |

(1)Our estimated future costs to settle asset retirement obligations includes both: (i) estimated costs associated with future undrilled proved locations, and (ii) estimated costs associated with producing reserves. These costs are included in the “Future development costs” line.
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Baytex Energy Corp.
Supplemental Disclosures about Extractive Activities - Oil and Gas (unaudited)
December 31, 2020
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, 2020 (thousands of Canadian dollars) | Canada | United States | Total
Balance, beginning of year | $ | 1,263,346 |  | $ | 1,286,467 |  | $ | 2,549,814 |
Sales, net of production costs | (230,246) |  | (201,770) |  | (432,016) |
Net change in prices and production costs related to future production | (777,611) |  | (773,203) |  | (1,550,814) |
Changes in previously estimated production costs incurred during the period | 607,008 |  | 134,253 |  | 741,260 |
Development costs incurred during the period | 170,462 |  | 105,388 |  | 275,850 |
Extensions, discoveries and improved recovery, net of related costs | 22,234 |  | 9,246 |  | 31,480 |
Revisions of previous quantity estimates | (887,803) |  | (39,120) |  | (926,923) |
Sales of reserves in place | (206) |  | — |  | (206) |
Purchases of reserves in place | 24 |  | — |  | 24 |
Accretion of discount | 126,335 |  | 134,536 |  | 260,870 |
Net change in income taxes | — |  | 52,904 |  | 52,904 |
Balance, end of year | $ | 293,543 |  | $ | 708,701 |  | $ | 1,002,243 |

As at December 31, 2019 (thousands of Canadian dollars) | Canada | United States | Total
Balance, beginning of year | $ | 1,452,372 |  | $ | 1,518,587 |  | $ | 2,970,959 |
Sales, net of production costs | (603,159) |  | (416,008) |  | (1,019,167) |
Net change in prices and production costs related to future production | (22,899) |  | (411,465) |  | (434,364) |
Changes in previously estimated production costs incurred during the period | (236,918) |  | (23,926) |  | (260,844) |
Development costs incurred during the period | 371,415 |  | 177,928 |  | 549,343 |
Extensions, discoveries and improved recovery, net of related costs | 177,952 |  | 127,763 |  | 305,715 |
Revisions of previous quantity estimates | 8,532 |  | 98,307 |  | 106,839 |
Sales of reserves in place | (31,147) |  | — |  | (31,147) |
Purchases of reserves in place | 1,961 |  | — |  | 1,961 |
Accretion of discount | 145,237 |  | 163,151 |  | 308,388 |
Net change in income taxes | — |  | 52,130 |  | 52,130 |
Balance, end of year | $ | 1,263,346 |  | $ | 1,286,467 |  | $ | 2,549,814 |

Capitalized Costs Relating to Petroleum and Natural Gas Producing Activities

As at December 31, 2020 (thousands of Canadian dollars) | Canada | United States | Total
Proved properties | $ | 6,580,549 |  | $ | 4,843,127 |  | $ | 11,423,676 |
Unproved properties | 99,989 |  | 91,876 |  | 191,865 |
Total capital costs | 6,680,538 |  | 4,935,003 |  | 11,615,541 |
Accumulated depletion and impairment | (5,112,622) |  | (3,233,506) |  | (8,346,128) |
Net capitalized costs | $ | 1,567,916 |  | $ | 1,701,497 |  | $ | 3,269,413 |

As at December 31, 2019 (thousands of Canadian dollars) | Canada | United States | Total
Proved properties | $ | 6,327,290 |  | $ | 4,801,007 |  | $ | 11,128,297 |
Unproved properties | 187,262 |  | 132,948 |  | 320,210 |
Total capital costs | 6,514,552 |  | 4,933,955 |  | 11,448,507 |
Accumulated depletion and impairment | (3,143,380) |  | (2,597,028) |  | (5,740,408) |
Net capitalized costs | $ | 3,371,172 |  | $ | 2,336,927 |  | $ | 5,708,099 |

4

Baytex Energy Corp.
Supplemental Disclosures about Extractive Activities - Oil and Gas (unaudited)
December 31, 2020
Costs Incurred in Petroleum and Natural Gas Property Acquisition, Exploration and Development Activities

For year ended December 31, 2020 (thousands of Canadian dollars) | Canada | United States | Total
Property acquisition costs |  |  |
Proved properties | $ | — |  | $ | — |  | $ | — |
Unproved properties | — |  | — |  | — |
Development costs (1) | 170,462 |  | 105,388 |  | 275,850 |
Exploration costs (2) | 4,490 |  | — |  | 4,490 |
Total | $ | 174,952 |  | $ | 105,388 |  | $ | 280,340 |

For year ended December 31, 2019 (thousands of Canadian dollars) | Canada | United States | Total
Property acquisition costs |  |  |
Proved properties | $ | 2,636 |  | $ | — |  | $ | 2,636 |
Unproved properties | 1,523 |  | — |  | 1,523 |
Development costs (1) | 371,415 |  | 177,928 |  | 549,343 |
Exploration costs (2) | 2,948 |  | — |  | 2,948 |
Total | $ | 378,522 |  | $ | 177,928 |  | $ | 556,450 |

(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, 2020 (thousands of Canadian dollars except per boe amounts) | Canada | United States | Total
Petroleum and natural gas revenues, net of royalties | $ | 525,677 |  | $ | 286,065 |  | $ | 811,742 |
Less: |  |  |
Operating costs, production and mineral taxes | 247,050 |  | 84,295 |  | 331,345 |
Transportation and blending expense | 76,818 |  | — |  | 76,818 |
Exploration and evaluation | 14,011 |  | — |  | 14,011 |
Depletion and impairment | 2,046,420 |  | 792,659 |  | 2,839,079 |
Operating loss | (1,858,622) |  | (590,889) |  | (2,449,511) |
Income tax expense | 469 |  | 105 |  | 574 |
Results of operations (1) | $ | (1,859,091) |  | $ | (590,994) |  | $ | (2,450,085) |

For year ended December 31, 2019 (thousands of Canadian dollars except per boe amounts) | Canada | United States | Total
Petroleum and natural gas revenues, net of royalties | $ | 970,257 |  | $ | 515,421 |  | $ | 1,485,678 |
Less: |  |  |
Operating costs, production and mineral taxes | 298,303 |  | 99,413 |  | 397,716 |
Transportation and blending expense | 112,737 |  | — |  | 112,737 |
Exploration and evaluation | 11,764 |  | — |  | 11,764 |
Depletion and impairment | 651,323 |  | 261,766 |  | 913,089 |
Operating income (loss) | (103,870) |  | 154,242 |  | 50,372 |
Income tax recovery | 101 |  | 1,992 |  | 2,093 |
Results of operations (1) | $ | (103,971) |  | $ | 152,250 |  | $ | 48,279 |

(1) Excludes corporate overhead and interest costs.
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