Document

The following disclosures have been prepared by Baytex Energy Corp. (“Baytex” or the “Company”) in accordance with Accounting Standards Codification 932 “Extractive Activities - Oil & Gas” (“ASC 932”) issued by the Financial Accounting Standards Board. The standard requires the use of a 12 month average price to estimate proved reserves calculated as the unweighted arithmetic average of first-day-of-the-month prices within the 12 month period prior to the end of the reporting period.

Users of this information should be aware that the process of estimating quantities of "proved developed" and "proved undeveloped" crude oil, natural gas liquids, bitumen and natural gas is very complex, requiring significant subjective decisions in the evaluation of all available geological, engineering and economic data for each reservoir. The data for a given reservoir may change substantially over time as a result of numerous factors including, but not limited to, additional development activity, evolving production history, and continual reassessment of the viability of production under varying economic conditions. Consequently, material revisions to existing reserve estimates occur from time to time. Although every reasonable effort is made to ensure that reserve estimates reported represent the most accurate assessments possible, the significance of the subjective decisions required and variances in available data for reservoirs make these estimates generally less precise than other estimates presented in connection with financial statement disclosures. Future fluctuations in prices and costs, production rates, or changes in political or regulatory environments could cause the Company's reserves to be materially different from that presented.

Proved petroleum and natural gas reserves are the estimated quantities of crude oil, natural gas and natural gas liquids (“NGL”) that geological and engineering data demonstrate with reasonable certainty to be recoverable in future years from known reservoirs under existing economic and operating conditions.

Proved reserves and production volumes are presented net of royalties. Such royalties are subject to change by legislation or regulation and can also vary depending on production rates, selling prices and timing of initial production. Figures reported as natural gas reserves and production volumes do not include flared gas, injected gas or gas consumed in operations. All natural gas reserves and production volumes presented are sales volumes. Undrilled locations underlying the estimates of our proved undeveloped reserves as of December 31, 2021 and 2022 are included in a development plan that was adopted by Baytex for the applicable year as a result of our annual long-range planning process and associated corporate financial model and all such locations were scheduled to be drilled within five years of the initial development plan adoption date.


	Canada				United States
	Crude Oil	NGL	Bitumen	Natural Gas	Crude Oil	NGL	Bitumen	Natural Gas
	(mbbl)	(mbbl)	(mbbl)	(mmcf)	(mbbl)	(mbbl)	(mbbl)	(mmcf)
Net proved reserves
December 31, 2020	35,639	2,044	4,883	54,367	35,127	48,393	—	154,589
Revisions of previous estimates	28,031	729	175	31,805	1,393	250	—	5,583
Improved recovery	—	—	—	—	—	—	—	—
Purchases of minerals in place	57	—	—	—	—	—	—	—
Extensions and discoveries	37,694	3,223	—	42,652	2,128	2,799	—	10,180
Production	(11,977)	(580)	(568)	(16,973)	(3,819)	(2,736)	—	(10,187)
Sales of minerals in place	(12)	(17)	—	(486)	(14)	(5)	—	(25)
December 31, 2021	89,431	5,400	4,490	111,364	34,814	48,701	—	160,140
Revisions of previous estimates	3,663	1,189	552	11,699	(334)	(320)	—	(15,019)
Improved recovery	—	—	—	—	—	—	—	—
Purchases of minerals in place	—	—	—	—	—	—	—	—
Extensions and discoveries	11,765	1,246	—	14,540	280	286	—	733
Production	(12,848)	(614)	(577)	(15,818)	(3,752)	(2,350)	—	(8,914)
Sales of minerals in place	(1)	(643)	—	(22,996)	—	—	—	—
December 31, 2022	92,009	6,579	4,465	98,790	31,008	46,317	—	136,940

Net proved developed reserves
End of year 2020	20,749	1,616	808	37,858	15,809	21,277	—	67,187
End of year 2021	41,918	2,184	592	68,498	18,750	22,334	—	72,257
End of year 2022	46,815	2,436	898	63,494	19,681	20,725	—	60,453


	Canada				United States
	Crude Oil	NGL	Bitumen	Natural Gas	Crude Oil	NGL	Bitumen	Natural Gas
	(mbbl)	(mbbl)	(mbbl)	(mmcf)	(mbbl)	(mbbl)	(mbbl)	(mmcf)
Net proved undeveloped reserves
End of year 2020	14,889	428	4,075	16,508	19,318	27,116	—	87,402
End of year 2021	47,513	3,216	3,898	42,866	16,064	26,368	—	87,882
End of year 2022	45,194	4,143	3,567	35,295	11,327	25,592	—	76,487


	Total
	Crude Oil	NGL	Bitumen	Natural Gas	Total
	(mbbl)	(mbbl)	(mbbl)	(mmcf)	(mboe)
Net proved reserves
December 31, 2020	70,766	50,437	4,883	208,956	160,912
Revisions of previous estimates	29,423	980	175	37,387	36,809
Improved recovery	—	—	—	—	—
Purchases of minerals in place	57	—	—	—	57
Extensions and discoveries	39,822	6,022	—	52,832	54,649
Production	(15,797)	(3,316)	(568)	(27,160)	(24,208)
Sales of minerals in place	(26)	(22)	—	(511)	(133)
December 31, 2021	124,245	54,101	4,490	271,504	228,087
Revisions of previous estimates	3,329	869	552	(3,320)	4,196
Improved recovery	—	—	—	—	—
Purchases of minerals in place	—	—	—	—	—
Extensions and discoveries	12,045	1,532	—	15,273	16,122
Production	(16,600)	(2,964)	(577)	(24,732)	(24,262)
Sales of minerals in place	(1)	(643)	—	(22,996)	(4,476)
December 31, 2022	123,017	52,895	4,465	235,729	219,666

Net proved developed reserves
End of year 2020	36,559	22,894	808	105,045	77,768
End of year 2021	60,668	24,518	592	140,755	109,237
End of year 2022	66,496	23,160	898	123,947	111,213

Net proved undeveloped reserves
End of year 2020	34,207	27,544	4,075	103,910	83,144
End of year 2021	63,578	29,584	3,898	130,749	118,851
End of year 2022	56,521	29,735	3,567	111,782	108,453

In 2021, the Company realized total proved revisions of 36,809 mboe. These revisions consisted of: (i) positive revisions of 29,574 mboe in Canada and 3,182 mboe in the United States ("U.S.") due to an increase in YE 2021 constant pricing as compared to YE 2020 (WTI increased to US$66.55/bbl from US$39.54/bbl), (ii) positive revisions of 7,576 mboe in our Heavy oil assets and 344 mboe in our Duvernay assets as a result of improved performance as compared to previous forecasts, (iii) negative revisions of 2,417 mboe in our Viking assets and 609 mboe in our Eagle Ford assets due to lower performance as compared to previous forecasts, and (iv) negative revisions of 841 mboe due to capital plan changes in our Conventional assets.

In 2022, the Company realized total net proved revisions of 4,196 mboe. These revisions consisted of: (i) positive revisions of 10,904 mboe, of which 8,840 mboe was in Canada and 2,064 mboe was in the U.S., due to an increase in YE 2022 constant pricing as compared to YE 2021 (WTI increased to US$94.14/bbl from US$66.55/bbl), (ii) net negative revisions of 6,709 mboe, of which net negative 5,221 mboe have been realized in our U.S. assets (negative 15,019 mmcf in shale gas) and net negative 1,488 mboe in Canada (negative 6,085 mboe in our Viking asset) due to higher field operating costs resulting from inflationary impacts truncating end of life forecasts and variation in actual performance and forecasted performance.

In 2022, the Company added net proved reserves of 16,122 mboe. In Canada, 15,434 mboe net proved reserves were added as a result of our 2022 drilling activity, of which 8,635 mboe are attributed to our heavy oil assets (7,040 mboe in Peace River and 1,595 mboe in our Lloydminster areas). In the U.S., the Company added 688 mboe net proved reserves due to 2022 drilling.

The following information has been developed utilizing procedures prescribed by ASC 932 and based on crude oil, NGL and natural gas reserves and production volumes estimated by Baytex's independent reserves evaluator, McDaniel & Associates Consultants Ltd. The methodology used in calculating our price assumptions for the standardized measure of discounted future net cash flows for reserves estimation is based upon the average first-day-of-the-month prices during the year.

Future production and development costs are based on forecast price assumptions and assume the continuation of existing economic, operating and regulatory conditions. Future income taxes are calculated by applying statutory income tax rates to future pre-tax cash flows after providing for the tax cost of the petroleum and natural gas properties based upon existing laws and regulations. A 10% discount factor was applied to the future net cash flows.

The information contained in the following table should not be considered as representative of realistic assessments of future cash flows, nor should the standardized measure of discounted future net cash flows be viewed as representative of the fair market value of Baytex's petroleum and natural gas properties. Management does not rely upon the following information in making investment and operating decisions. Such decisions are based upon a wide range of factors, including estimates of probable as well as proved reserves, and varying price and cost assumptions considered more representative of a range of possible economic conditions that may be anticipated. The prescribed discount rate of 10% may not appropriately reflect interest rates.


	Commodity Pricing
	2022		2021
WTI crude (US$/bbl)	$	94.14	$	66.55
Edmonton Light crude (Cdn$/bbl)	$	119.13	$	78.15
Western Canadian Select crude (WCS) (1) (Cdn$/bbl)	$	97.68	$	66.43
AECO spot (Cdn$/mmbtu)	$	5.62	$	3.57
Henry Hub (US$/mmbtu)	$	6.25	$	3.64
Exchange rate (US$/Cdn$)	0.7710		0.7980


	Canada				United States				Total (2)
(thousands of Canadian dollars)	2022		2021		2022		2021		2022		2021
Future cash inflows	$	10,216,200	$	6,585,366	$	8,202,831	$	5,864,021	$	18,419,030	$	12,449,387
Future production costs	(3,259,376)		(2,467,626)		(2,074,525)		(1,597,747)		(5,333,901)		(4,065,373)
Future development costs (1)	(1,978,527)		(1,828,635)		(953,024)		(824,991)		(2,931,551)		(2,653,627)
Future income taxes	(810,870)		(102,932)		(901,361)		(477,746)		(1,712,231)		(580,678)
Future net cash flows (2)	4,167,427		2,186,172		4,273,921		2,963,538		8,441,348		5,149,710
Deduct: 10% annual discount factor	(1,269,964)		(632,248)		(1,949,809)		(1,315,108)		(3,219,773)		(1,947,356)
Standardized measure (2)	$	2,897,463	$	1,553,924	$	2,324,112	$	1,648,430	$	5,221,575	$	3,202,354

(1)Our estimated future costs to settle asset retirement obligations includes both: (i) estimated costs associated with future undrilled proved locations, and (ii) estimated costs associated with producing reserves. These costs are included in the “Future development costs” line.


As at December 31, 2022 (thousands of Canadian dollars)	Canada		United States		Total (1)
Balance, beginning of year	$	1,553,924	$	1,648,430	$	3,202,354
Sales, net of production costs	(1,131,785)		(582,176)		(1,713,961)
Net change in prices and production costs related to future production	1,933,064		1,337,782		3,270,846
Changes in previously estimated future development costs incurred during the period	(444,451)		(277,658)		(722,109)
Development costs incurred during the period	374,443		140,740		515,183
Extensions, discoveries and improved recovery, net of related costs	462,066		26,732		488,798
Revisions of previous quantity estimates	493,498		73,356		566,854
Sales of reserves in place	(22,955)		—		(22,955)
Purchases of reserves in place	—		—		—
Accretion of discount	161,174		183,719		344,893
Net change in income taxes	(481,515)		(226,813)		(708,328)
Balance, end of year (1)	$	2,897,463	$	2,324,112	$	5,221,575


As at December 31, 2021 (thousands of Canadian dollars)	Canada		United States		Total (1)
Balance, beginning of year	$	293,543	$	708,701	$	1,002,243
Sales, net of production costs	(663,484)		(436,864)		(1,100,348)
Net change in prices and production costs related to future production	992,488		1,166,873		2,159,360
Changes in previously estimated future development costs incurred during the period	(284,411)		(42,131)		(326,542)
Development costs incurred during the period	204,912		105,093		310,005
Extensions, discoveries and improved recovery, net of related costs	497,990		77,229		575,219
Revisions of previous quantity estimates	542,259		183,285		725,544
Sales of reserves in place	(1,553)		(429)		(1,982)
Purchases of reserves in place	90		—		90
Accretion of discount	29,354		71,450		100,804
Net change in income taxes	(57,264)		(184,776)		(242,040)
Balance, end of year (1)	$	1,553,924	$	1,648,430	$	3,202,354


As at December 31, 2022 (thousands of Canadian dollars)	Canada		United States		Total
Proved properties	$	6,698,047	$	5,344,169	$	12,042,216
Unproved properties	85,981		82,703		168,684
Total capital costs	6,784,028		5,426,872		12,210,900
Accumulated depletion and impairment	(4,179,986)		(3,241,464)		(7,421,450)
Net capitalized costs	$	2,604,042	$	2,185,408	$	4,789,450


As at December 31, 2021 (thousands of Canadian dollars)	Canada		United States		Total
Proved properties	$	6,713,666	$	4,919,851	$	11,633,517
Unproved properties	88,406		84,418		172,824
Total capital costs	6,802,072		5,004,269		11,806,341
Accumulated depletion and impairment	(4,257,833)		(2,911,313)		(7,169,146)
Net capitalized costs	$	2,544,239	$	2,092,956	$	4,637,195


As at December 31, 2022 (thousands of Canadian dollars)	Canada		United States		Total
Property acquisition costs
Proved properties	$	551	$	—	$	551
Unproved properties	801		—		801
Development costs (1)	374,443		140,740		515,183
Exploration costs (2)	6,359		—		6,359
Total	$	382,154	$	140,740	$	522,894


As at December 31, 2021 (thousands of Canadian dollars)	Canada		United States		Total
Property acquisition costs
Proved properties	$	60	$	—	$	60
Unproved properties	1,497		—		1,497
Development costs (1)	204,912		105,093		310,005
Exploration costs (2)	3,298		—		3,298
Total	$	209,767	$	105,093	$	314,860


For year ended December 31, 2022 (thousands of Canadian dollars except per boe amounts)	Canada		United States		Total
Petroleum and natural gas revenues, net of royalties	$	1,649,133	$	676,948	$	2,326,081
Less:
Operating costs, production and mineral taxes	327,894		94,772		422,666
Transportation and blending expense	238,015		—		238,015
Exploration and evaluation	30,239		—		30,239
Depletion and impairment reversal	141,542		171,747		313,289
Operating income	911,443		410,429		1,321,872
Income tax expense	—		—		3,594
Results of operations (1)	$	911,443	$	410,429	$	1,318,278


For year ended December 31, 2021 (thousands of Canadian dollars except per boe amounts)	Canada		United States		Total
Petroleum and natural gas revenues, net of royalties	$	1,006,831	$	522,208	$	1,529,039
Less:
Operating costs, production and mineral taxes	257,658		85,344		343,002
Transportation and blending expense	117,950		—		117,950
Exploration and evaluation	15,212		—		15,212
Depletion and impairment reversal	(796,865)		(286,608)		(1,083,473)
Operating income	1,412,876		723,472		2,136,348
Income tax expense	—		—		1,272
Results of operations (1)	$	1,412,876	$	723,472	$	2,135,076