2024-05-10 16:42:47 ET
Summary
- Baytex Energy posted a slight loss for Q1 due to non-cash issues, but cash flow grew at a healthy pace.
- Operational improvements are a priority for management to improve the situation.
- The large cash flow increase bodes well for debt repayment and potentially larger dividends.
- This company has changed from a Canadian heavy oil producer to an Eagle Ford (United States) producer with heavy oil production.
- The company now also controls most of its Eagle Ford production.
Baytex Energy ( BTE ) posted a slight loss for the first quarter due to some non-cash issues. However, cash flow grew at a healthy pace. While an investor might have expected a better earnings response from an Eagle Ford acquisition, it's clear that management has set out to improve the situation. In listening to the conference call this morning, goals were set, and operational improvements are an important agenda item. In the meantime, it's not that unusual for a fair number of one-time acquisition items to obscure the benefits of an acquisition for about a year or so. The benefits of the latest acquisition should become more apparent as the fiscal year unfolds.
As was noted in the last article, the large cash flow increase bodes well for debt repayment and potentially larger dividends. Any operational improvements will only make this scenario even better, and management discussed both these in the corporate presentatio n, the e arnings release, and the conference call. Therefore, the strong buy is still in place. But sometimes the actual execution of the plan involves some patience for all the benefits to unfold....
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Baytex Energy: Some Patience Needed