(Bloomberg) – Baytex Energy Corp., a Canada-based oil and gas producer, is weighing an exit of its operations in the Eagle Ford shale of south Texas to refocus on its domestic assets, according to people familiar with the matter.
Baytex, which significantly extended its reach into the basin just two years ago via a takeover of Ranger Oil, is working with advisers to solicit interest in the operations, which could fetch as much as $3 billion, the people said, asking not to be identified because the details are private. No final decision has been made and Baytex could opt to hold onto the assets.
Baytex fell 3.9% to $2.46 at 11:45 a.m. in New York trading Thursday, giving the company a market value of about $1.9 billion. The company, which also has about $1.6 billion of debt, has fallen 22% in the past year.
A representative for Baytex declined to comment.
The potential sale would be a significant turnabout for Baytex, which touted the Ranger deal at the time as an opportunity to double free cash flow and deliver at least a dozen years of oil-weighted drilling opportunities. The Alberta-based company, which already had some operations in the Eagle Ford, has long operated in western Canada. Today, the Eagle Ford accounts for the majority of its production, estimated to produce 82,000 barrels of oil per day in 2025, according to an investor presentation this month.
The Eagle Ford can be more sensitive to oil price swings than the larger Permian Basin of West Texas and New Mexico, because it’s a shallower, more mature reservoir. That means all the choice spots have already been picked over and wells there decline much faster. So Eagle Ford operators have to rely on ongoing drilling to sustain output, which can become uneconomic when oil prices fall. The Eagle Ford will comprise about 57% of Baytex’s C$1.2 billion estimated exploration and development spending this year, the presentation shows.
Oil prices hovering in the lower-to-mid $60 per barrel range has put pressure on shale drillers to optimize inventory.
Last year, Ovintiv Inc. clinched deals to offload assets in the Uinta basin while bolstering its presence in the oil-rich Montney region in Canada.
