Baytex Energy Corp., a Canadian crude producer expanding in the Eagle Ford shale in Texas, plans more purchases after paying $1.8 billion for Aurora Oil & Gas Ltd. to gain a foothold in the formation.
Before making another large acquisition, Calgary-based Baytex will focus on asset swap opportunities in the Eagle Ford similar to its deal with Husky Energy Inc. in western Canada, Chief Executive Officer James Bowzer said in an interview. Should the opportunity arise, it will consider spending as much as $1 billion on larger assets in North America producing as much as 20,000 barrels a day to replace output declines.
“In any of our key three plays -- Peace River, Lloydminster, Eagle Ford -- we’re always looking for those bolt-ons that fit our efficiencies and our skill sets,” Bowzer, 54, said Aug. 29 at his office. “For the right deal, the investment community is willing to provide the capital.”
Advances in drilling technology have let producers unlock vast stores of oil and natural gas from shale across North America in recent years including in the Eagle Ford, which helped drive Texas’s oil output to the highest in more than 40 years in April.
Baytex “has competition out there” as other Canadian producers are likely to consider acquisitions in areas including the Eagle Ford, Phil Skolnick, an analyst at Canaccord Genuity Corp. in New York, wrote in a note today.
Baytex shares fell 0.2 percent to C$47.84 at the close in Toronto, paring an earlier gain of 0.5 percent, while the Standard & Poors/TSX Energy Index rose 0.2 percent.
Baytex agreed to buy Aurora in February and in March agreed to buy about 1,000 barrels a day of heavy crude from Husky in the Peace River in Alberta in exchange for 1,150 barrels in the Lloydminster region straddling Alberta and Saskatchewan.
The company has also put assets for sale. In July, it agreed to sell its North Dakota properties for $330 million after a company-wide asset review spurred by the Aurora takeover. It may still dispose of other small properties in Canada, Bowzer said.
After the North Dakota sale, Baytex will be close to reaching a target of lowering its debt to two times cash flow, he said.
Bowzer, a Nebraska native, was an executive at Marathon Oil Corp. before joining Baytex two years ago.