2023-04-11 12:57:34 ET
Baytex Energy ( NYSE: BTE ) +4.6% in Tuesday's trading after RBC Capital upgraded the stock to Outperform from Sector Perform with a $9 price target, saying the planned $2.5B acquisition of Ranger Oil "shifts the company out of second gear and is aimed squarely at building quality scale over time."
"The Ranger deal represents good value in our eyes, establishes a solid operating platform for Baytex in the United States, and opens the door to other accretive acquisition opportunities," RBC analyst Greg Pardy wrote.
The acquisition "materially increases" Baytex's ( BTE ) scale in the Eagle Ford, and enhances the company's return of capital framework, according to Pardy.
Baytex's ( BTE ) balance sheet deleveraging will remain in sharp focus following the completion of the Ranger deal, Pardy said, with a newly established net debt target of $1.5B; upon achieving this target, the company plans to increase direct shareholder returns to 75% of free cash flow.
Baytex Energy's ( BTE ) Clearwater development "appears to lower the heavy oil breakeven cost a good C$10/bbl of oil over legacy acreage," Long Player writes in an analysis published recently on Seeking Alpha .
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Baytex Energy bounces as RBC upgrades on 'good value' Ranger deal