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Oil and Gas Properties | 12 Months Ended
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Dec. 31, 2021
Property, plant and equipment [abstract] |
Oil and gas properties | OIL AND GAS PROPERTIES
| Cost | Accumulated depletion | Net book value
Balance, December 31, 2019 | $ | 11,128,297 |  | $ | (5,740,408) |  | $ | 5,387,889 |
Capital expenditures | 275,850 |  | — |  | 275,850 |
Transfers from exploration and evaluation assets (note 5) | 8,585 |  | — |  | 8,585 |
Change in asset retirement obligations (note 9) | 94,994 |  | — |  | 94,994 |
Property swaps | (1,190) |  | 178 |  | (1,012) |
Impairment | — |  | (2,247,162) |  | (2,247,162) |
Foreign currency translation | (82,860) |  | 120,123 |  | 37,263 |
Depletion | — |  | (478,859) |  | (478,859) |
Balance, December 31, 2020 | $ | 11,423,676 |  | $ | (8,346,128) |  | $ | 3,077,548 |
Capital expenditures | 310,005 |  | — |  | 310,005 |
Property acquisitions | 274 |  | — |  | 274 |
Divestitures | (37,835) |  | 32,844 |  | (4,991) |
Property swaps | (26,131) |  | 25,900 |  | (231) |
Transfers from exploration and evaluation assets (note 5) | 7,727 |  | — |  | 7,727 |
Change in asset retirement obligations (note 9) | (12,222) |  | — |  | (12,222) |
Impairment reversal | — |  | 1,542,414 |  | 1,542,414 |
Foreign currency translation | (31,977) |  | 34,765 |  | 2,788 |
Depletion | — |  | (458,941) |  | (458,941) |
Balance, December 31, 2021 | $ | 11,633,517 |  | $ | (7,169,146) |  | $ | 4,464,371 |
Baytex recorded total impairment reversals related to oil and gas properties of $1.5 billion for the year ended December 31, 2021 and impairment losses related to oil and gas properties of $2.2 billion for the year ended December 31, 2020. 2021 Impairment Reversals At December 31, 2021, we identified indicators of impairment reversal for oil and gas properties in five CGUs due to the increase in forecasted commodity prices in addition to changes in proved plus probable reserves. The recoverable amount for three CGUs exceeded their carrying amounts which resulted in an impairment reversal of $416 million recorded at December 31, 2021. The recoverable amount for each CGU was based on its FVLCD which was estimated using a discounted cash flow model of proved plus probable cash flows from an independent reserve report prepared as at December 31, 2021. The after-tax discount rates applied to the cash flows were between 12% and 19%. At December 31, 2021, the recoverable amount of the five CGUs tested were calculated using the following benchmark reference prices for the years 2022 to 2031 adjusted for commodity differentials specific to the CGU. The prices and costs subsequent to 2031 have been adjusted for inflation at an annual rate of 2.0%.
| 2022 | 2023 | 2024 | 2025 | 2026 | 2027 | 2028 | 2029 | 2030 | 2031
WTI crude oil (US$/bbl) | 72.83 |  | 68.78 |  | 66.76 |  | 68.09 |  | 69.45 |  | 70.84 |  | 72.26 |  | 73.70 |  | 75.18 |  | 76.68 |
WCS heavy oil ($/bbl) | 74.42 |  | 69.17 |  | 66.54 |  | 67.87 |  | 69.23 |  | 70.61 |  | 72.02 |  | 73.46 |  | 74.69 |  | 76.19 |
LLS crude oil (US$/bbl) | 74.33 |  | 70.28 |  | 68.27 |  | 69.62 |  | 71.01 |  | 72.41 |  | 73.85 |  | 75.32 |  | 76.82 |  | 78.35 |
Edmonton par oil ($/bbl) | 86.82 |  | 80.73 |  | 78.01 |  | 79.57 |  | 81.16 |  | 82.78 |  | 84.44 |  | 86.13 |  | 87.85 |  | 89.61 |
Henry Hub gas (US$/mmbtu) | 3.85 |  | 3.44 |  | 3.17 |  | 3.24 |  | 3.30 |  | 3.37 |  | 3.44 |  | 3.50 |  | 3.58 |  | 3.65 |
AECO gas ($/mmbtu) | 3.56 |  | 3.21 |  | 3.05 |  | 3.11 |  | 3.17 |  | 3.23 |  | 3.30 |  | 3.36 |  | 3.43 |  | 3.50 |
Exchange rate (CAD/USD) | 1.26 |  | 1.26 |  | 1.26 |  | 1.26 |  | 1.26 |  | 1.26 |  | 1.26 |  | 1.26 |  | 1.26 |  | 1.26 |
The following table summarizes the recoverable amount and impairment reversal at December 31, 2021 and demonstrates the sensitivity of the estimated recoverable amount of the five CGUs with respect to reasonably possible changes in key assumptions inherent in the estimate.
| Recoverable amount | Impairment reversal | Change in discount rate of 1% | Change in oil price of $2.50/bbl | Change in gas price of $0.25/mcf
Conventional CGU | $ | 77,846 |  | $ | 19,000 |  | $ | — |  | $ | 3,000 |  | $ | 8,000 |
Peace River CGU | 489,274 |  | 251,000 |  | 8,500 |  | 53,000 |  | 3,500 |
Lloydminster CGU | 479,411 |  | 146,000 |  | 12,500 |  | 52,000 |  | — |
Viking CGU | 1,320,094 |  | — |  | 38,000 |  | 85,500 |  | 4,500 |
Eagle Ford CGU | 2,008,478 |  | — |  | 97,200 |  | 138,800 |  | 31,300 |
| $ | 4,375,103 |  | $ | 416,000 |  | $ | 156,200 |  | $ | 332,300 |  | $ | 47,300 |
At June 30, 2021, we identified indicators of impairment reversal for oil and gas properties in each of our six CGUs due to the increase in forecasted commodity prices. The recoverable amount for each of our six CGUs exceeded their carrying amounts which resulted in an impairment reversal of $1.1 billion recorded at June 30, 2021. The recoverable amount for each CGU was based on its FVLCD which was estimated using a discounted cash flow model of proved plus probable cash flows from an independent reserve report prepared as at December 31, 2020 and was adjusted by management for operations between December 31, 2020 and June 30, 2021. The after-tax discount rates applied to the cash flows were between 10% and 16%. At June 30, 2021, the recoverable amount of the Company's CGUs were calculated using the following benchmark reference prices for the years 2021 to 2030 adjusted for commodity differentials specific to the Company. The prices and costs subsequent to 2030 have been adjusted for inflation at an annual rate of 2.0%.
| 2021 | 2022 | 2023 | 2024 | 2025 | 2026 | 2027 | 2028 | 2029 | 2030
WTI crude oil (US$/bbl) | 71.33 |  | 67.20 |  | 63.95 |  | 63.23 |  | 64.50 |  | 65.79 |  | 67.10 |  | 68.44 |  | 69.81 |  | 71.21 |
WCS heavy oil ($/bbl) | 72.22 |  | 66.84 |  | 61.73 |  | 60.70 |  | 61.91 |  | 63.15 |  | 64.42 |  | 65.70 |  | 67.02 |  | 68.36 |
LLS crude oil (US$/bbl) | 72.17 |  | 68.53 |  | 65.80 |  | 65.10 |  | 66.39 |  | 67.71 |  | 69.05 |  | 70.42 |  | 71.82 |  | 73.26 |
Edmonton par oil ($/bbl) | 83.20 |  | 78.27 |  | 74.06 |  | 73.05 |  | 74.51 |  | 76.00 |  | 77.52 |  | 79.07 |  | 80.66 |  | 82.27 |
Henry Hub gas (US$/mmbtu) | 3.42 |  | 3.19 |  | 2.92 |  | 2.96 |  | 3.02 |  | 3.08 |  | 3.14 |  | 3.21 |  | 3.27 |  | 3.34 |
AECO gas ($/mmbtu) | 3.46 |  | 3.13 |  | 2.72 |  | 2.71 |  | 2.76 |  | 2.82 |  | 2.88 |  | 2.94 |  | 2.99 |  | 3.05 |
Exchange rate (CAD/USD) | 1.24 |  | 1.25 |  | 1.25 |  | 1.25 |  | 1.25 |  | 1.25 |  | 1.25 |  | 1.25 |  | 1.25 |  | 1.25 |
The following table summarizes the recoverable amount and impairment reversal at June 30, 2021 and demonstrates the sensitivity of the estimated recoverable amount of the Company's CGUs comprising oil and gas properties to reasonably possible changes in key assumptions inherent in the estimate.
| Recoverable amount | Impairment reversal | Change in discount rate of 1% | Change in oil price of $2.50/bbl | Change in gas price of $0.25/mcf
Conventional CGU | $ | 57,891 |  | $ | 15,000 |  | $ | 1,000 |  | $ | 1,000 |  | $ | 8,000 |
Peace River CGU | 238,714 |  | 154,000 |  | 4,000 |  | 40,000 |  | 2,500 |
Lloydminster CGU | 340,730 |  | 154,000 |  | 12,500 |  | 52,000 |  | — |
Duvernay CGU(1) | 115,157 |  | 5,000 |  | 45,000 |  | 44,500 |  | 44,500 |
Viking CGU | 1,338,985 |  | 356,000 |  | 47,000 |  | 89,500 |  | 4,500 |
Eagle Ford CGU | 2,015,118 |  | 442,415 |  | 109,400 |  | 103,900 |  | 24,400 |
| $ | 4,106,595 |  | $ | 1,126,415 |  | $ | 218,900 |  | $ | 330,900 |  | $ | 83,900 |
(1) The impairment reversal for the Duvernay CGU was limited to total accumulated impairments less subsequent depletion of $5.0 million. 2020 Impairments At December 31, 2020, the Company estimated the recoverable amount of each of its six CGUs due to the volatility in commodity prices during the year and a reduction in future development costs per well for the Viking and Eagle Ford CGUs. The recoverable amount supported the carrying amount for the Conventional, Peace River, Lloydminster, and Duvernay CGUs and no impairment or impairment reversal was recorded. The recoverable amount for the Viking and Eagle Ford CGUs exceeded their carrying amounts which resulted in an impairment reversal of $341.3 million recorded at December 31, 2020. The recoverable amount for each CGU was based on its FVLCD which was estimated using a discounted cash flow model of proved plus probable cash flows from an independent reserve report prepared as at December 31, 2020. The after-tax discount rates applied to the cash flows were between 10% and 17%. At December 31, 2020, the recoverable amount of the Company's CGUs were calculated using the following benchmark reference prices for the years 2021 to 2030 adjusted for commodity differentials specific to the Company. The prices and costs subsequent to 2030 have been adjusted for inflation at an annual rate of 2%.
| 2021 | 2022 | 2023 | 2024 | 2025 | 2026 | 2027 | 2028 | 2029 | 2030
WTI crude oil (US$/bbl) | 47.17 |  | 50.17 |  | 53.17 |  | 54.97 |  | 56.07 |  | 57.19 |  | 58.34 |  | 59.50 |  | 60.69 |  | 61.91 |
WCS heavy oil ($/bbl) | 44.63 |  | 48.18 |  | 52.10 |  | 54.10 |  | 55.19 |  | 56.29 |  | 57.42 |  | 58.57 |  | 59.74 |  | 60.93 |
LLS crude oil (US$/bbl) | 49.50 |  | 52.85 |  | 55.87 |  | 57.69 |  | 58.82 |  | 59.97 |  | 61.15 |  | 62.34 |  | 63.56 |  | 64.83 |
Edmonton par oil ($/bbl) | 55.76 |  | 59.89 |  | 63.48 |  | 65.76 |  | 67.13 |  | 68.53 |  | 69.95 |  | 71.40 |  | 72.88 |  | 74.34 |
Henry Hub gas (US$/mmbtu) | 2.83 |  | 2.87 |  | 2.90 |  | 2.96 |  | 3.02 |  | 3.08 |  | 3.14 |  | 3.20 |  | 3.26 |  | 3.33 |
AECO gas ($/mmbtu) | 2.78 |  | 2.70 |  | 2.61 |  | 2.65 |  | 2.70 |  | 2.76 |  | 2.81 |  | 2.87 |  | 2.92 |  | 2.98 |
Exchange rate (CAD/USD) | 1.30 |  | 1.31 |  | 1.31 |  | 1.31 |  | 1.31 |  | 1.31 |  | 1.31 |  | 1.31 |  | 1.31 |  | 1.31 |
The following table demonstrates the sensitivity of the estimated recoverable amount of the Company's CGUs to reasonably possible changes in key assumptions inherent in the estimate.
| Recoverable amount | Impairment reversal | Change in discount rate of 1% | Change in oil price of $2.50/bbl | Change in gas price of $0.25/mcf
Conventional CGU | $ | 54,265 |  | $ | — |  | $ | 1,000 |  | $ | 3,000 |  | $ | 9,000 |
Peace River CGU | 104,225 |  | — |  | 1,000 |  | 49,500 |  | 3,000 |
Lloydminster CGU | 212,979 |  | — |  | 7,000 |  | 57,500 |  | 500 |
Duvernay CGU | 70,491 |  | — |  | 5,500 |  | 12,000 |  | 1,500 |
Viking CGU | 1,026,026 |  | 116,000 |  | 34,500 |  | 106,500 |  | 5,000 |
Eagle Ford CGU | 1,609,562 |  | 225,326 |  | 91,600 |  | 157,500 |  | 38,400 |
| $ | 3,077,548 |  | $ | 341,326 |  | $ | 140,600 |  | $ | 386,000 |  | $ | 57,400 |
At March 31, 2020, the Company identified indicators of impairment for each of its six CGUs due to a significant decline in forecasted commodity prices. The recoverable amount was not sufficient to support the carrying amount which resulted in an impairment of $2.6 billion recorded at March 31, 2020. The recoverable amount of each CGU was based on its FVLCD which was estimated using a discounted cash flow model of proved plus probable cash flows from an independent reserve report prepared as at December 31, 2019 and was adjusted for operations between December 31, 2019 and March 31, 2020. The after-tax discount rates applied to the cash flows were between 8% and 14%. At March 31, 2020, the recoverable amount of the Company's CGUs were calculated using the following benchmark reference prices for the years 2020 to 2029 adjusted for commodity differentials specific to the Company. The prices and costs subsequent to 2029 have been adjusted for inflation at an annual rate of 2%.
| 2020 | 2021 | 2022 | 2023 | 2024 | 2025 | 2026 | 2027 | 2028 | 2029
WTI crude oil (US$/bbl) | 29.17 |  | 40.45 |  | 49.17 |  | 53.28 |  | 55.66 |  | 56.87 |  | 58.01 |  | 59.17 |  | 60.35 |  | 61.56 |
WCS heavy oil ($/bbl) | 19.21 |  | 34.65 |  | 46.34 |  | 51.25 |  | 54.28 |  | 55.72 |  | 56.96 |  | 58.22 |  | 59.51 |  | 60.82 |
LLS crude oil (US$/bbl) | 32.17 |  | 43.80 |  | 52.55 |  | 56.68 |  | 59.10 |  | 60.35 |  | 61.52 |  | 62.72 |  | 63.94 |  | 65.19 |
Edmonton par oil ($/bbl) | 29.22 |  | 46.85 |  | 59.27 |  | 65.02 |  | 68.43 |  | 69.81 |  | 71.24 |  | 72.70 |  | 74.19 |  | 75.71 |
Henry Hub gas (US$/mmbtu) | 2.10 |  | 2.58 |  | 2.79 |  | 2.86 |  | 2.93 |  | 3.00 |  | 3.07 |  | 3.13 |  | 3.19 |  | 3.25 |
AECO gas ($/mmbtu) | 1.74 |  | 2.20 |  | 2.38 |  | 2.45 |  | 2.53 |  | 2.60 |  | 2.66 |  | 2.72 |  | 2.79 |  | 2.85 |
Exchange rate (CAD/USD) | 1.41 |  | 1.37 |  | 1.34 |  | 1.34 |  | 1.34 |  | 1.33 |  | 1.33 |  | 1.33 |  | 1.33 |  | 1.33 |
The following table demonstrates the sensitivity of the estimated recoverable amount of the Company's CGUs to reasonably possible changes in key assumptions inherent in the estimate.
| Recoverable amount | Impairment | Change in discount rate of 1% | Change in oil price of $2.50/bbl | Change in gas price of $0.25/mcf
Conventional CGU | $ | 37,444 |  | $ | 41,000 |  | $ | 3,000 |  | $ | 3,500 |  | $ | 8,500 |
Peace River CGU | 109,631 |  | 345,000 |  | 9,500 |  | 53,500 |  | 3,000 |
Lloydminster CGU | 227,967 |  | 470,000 |  | 25,000 |  | 69,500 |  | — |
Duvernay CGU | 61,197 |  | 5,000 |  | 5,500 |  | 9,500 |  | 1,500 |
Viking CGU | 962,134 |  | 915,000 |  | 57,000 |  | 123,000 |  | 4,000 |
Eagle Ford CGU | 1,576,423 |  | 812,488 |  | 120,750 |  | 141,500 |  | 32,000 |
| $ | 2,974,796 |  | $ | 2,588,488 |  | $ | 220,750 |  | $ | 400,500 |  | $ | 49,000 |

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