Title: The Hated Oil Stock That's Suddenly Winning Again Show: In the Money with Amber Kanwar Guest: Chad Lundberg, President & CEO, Baytex Energy (his first interview as CEO) Date: 2026-07-14 URL: https://youtu.be/FPcD_w7Sj9o Length: ~38 min Note: YouTube auto-transcript; [music]/[clears throat] artifacts and pure fillers (um/uh/you know as interjection, tic "like") removed and stutters/false starts collapsed — wording otherwise verbatim. Sponsor reads (Raymond James ~01:02, ATB Financial ~08:00, Hamilton MIX ETF ~29:11) retained as advertisements, not commentary.
00:00 >> A year and a half ago, sat down and said, "What makes a really great company and what are investors rewarding in this space today?" >> This troubled oil and gas company has come roaring back to life. We talked to the CEO of Baytex to talk change at the company and change in the industry.
00:18 >> To have your bonafide pipeline being talked about, start dates that are concrete, definitely change from the past. >> What kind of conversations are being had from foreign investors about the Canadian energy sector? There's a lot of fund managers who believe the whole space just needs to be cleaned up and smaller players like Baytex need to be part of larger players.
00:41 What do you say to that? >> Let's stick with M&A. I normally see you as uncomfortable. I kind of like it. >> It's fine. Let's talk about it. >> When you choose a Raymond James advisor, you're getting more than independent financial management. You're getting access to complete financial guidance under one roof.
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01:55 The and guests may maintain positions in any securities discussed on the podcast. Always consult with a qualified financial advisor or professional before making any investment decisions. >> Hey everyone, welcome to a brand new episode of In the Money with Amber Kanwar. If you're watching, you can see my cowboy hat.
02:11 If you're listening, maybe you can just feel the energy of my cowboy hat. I am at the Calgary Stampede this week interviewing energy executives in what has been a very electric week for the sector. Two pipeline announcements at a time where we never thought we would see that. We got the CEO of Baytex Energy itself in the midst of a transformation.
02:35 It has been kind of a troubled energy producer with a pivoting strategy over the last couple of years. They bought assets in the US, then a couple years later they turned around and sold it. But over the last year, it's one of the best performing oil and gas companies. And we've got the new CEO, Chad Lundberg, in his first interview ever as CEO.
02:56 Let's get into it. Chad Lundberg, thank you so much for joining me on the podcast. >> You're very welcome. >> It is a great time to speak to you in the middle of Stampede where it seems both the energy sector is getting a shot in the arm and Baytex is getting a shot in the arm. So, I'm so glad to have the opportunity to talk to you about both things.
03:23 Let's start with the energy sector. And just tell me what I mean, in the last week we've had not one, two pipeline proposals across all layers of government, some contribution from industry. In all your years in the industry, what does this moment feel like to you right now? >> It feels great to put a pin in it. We've got a new federal government, a little bit of a climate change with respect to just Canada in general and the population.
03:59 All of that though is coalescing into something that looks better for our industry. And if you think about the past most recent memory, 5 to 10 years, it's been a pretty tricky spot to be in. And it's more result of the uncertainty with respect to regulatory and where it's going. And so today, to have bonafide pipeline being talked about, start dates that are concrete goals that need to be put in action now, it feels like a great spot to be in and definitely change from the past.
04:32 >> And from the peers that you talk to, you're an oil producer, does that change your mentality about how you want to grow? And I ask that because I think there's a lot we can still quibble with when it comes to these pipeline proposals. There really hasn't been a big private sector proponent.
04:54 and there's still complaints from producers about other things that they have to spend money on, whether it's the industrial carbon tax, whether it's carbon capture, that lead producers to question, can I actually increase production to fill these pipelines? >> I think so. So, one of as we get into it, one of the interesting projects in our portfolio today as a Canadian focused entity, clean balance sheet, is this notion of small-scale SAGD operations.
05:25 And so that would be an example of potentially easing regulatory conditions. Or I wouldn't even say that. I would say maybe more of the rules of engagement are defined. It's really hard to operate a business when there's uncertainty as to the rules of the game. And today it does feel like those are becoming a little bit more defined so that we actually know the boundaries that we have to work within.
05:49 So, a project like that is absolutely on the table now for something we can explore and look at to become part of the capital stock in the future. >> In a way that it wasn't >> In a way that it wasn't before. Just the uncertainty maybe had it stymied among other things, but that's definitely one factor that maybe shelved it for a period of time.
06:11 And so, yeah, we're optimistic that there's different mechanisms that we can go after now. >> What else needs to be done? If we're talking about a country that needs to get its act together, that needs to start building and expanding not just the energy sector, but across all industries.
06:30 But, we're talking to you about the energy sector. What does the energy sector need to fulfill its full potential and start spending and investing again? >> Mhm. Well, you hit on it. We're talking macro right now. It's just more certainty to the rules. I think you touched on carbon tax, just where is that going? We had the notion of a $170 a ton that it would peak at by as early as 2030.
06:58 And now that's been or it's being talked about pushed back to 2040 and a lower cap overall. That's an example of just definition. So, the more of that we can do the better. Pipelines, that's been a big one. We get asked about it while we're on the road with the investing community cuz it certainly has been thematic in the past.
07:17 Today we sit in an okay spot. It feels reasonably comfortable with respect to egress out of the country. But, pair that with the growth and or growth plans that could be into the future, where does the excess capacity come from? So, I think all of these things start to stack up and compound to give us just an overall better climate.
07:40 And then the excitement. I think the one thing that's hard to handicap is the cultural walls of these companies. And don't underestimate the power of our staff. The staff that are in a positive and exciting mindset mind frame because of the macro conditions surrounding them.
08:00 And the ingenuity that's been proven in the past where that goes into the future. So it's just that positive energy that we're starting to feel as well. >> Thank you to our partners at ATB Financial. With over 100 billion in assets, ATB Financial is powering possibilities for more than 843,000 financial services clients.
08:20 ATB Corporate Markets is a leading North American investment firm providing holistic corporate and capital markets advice and full service financial solutions. Visit atb.com/inthemoney for more information. And do you feel that kind of enthusiasm and positive energy coming from investors? Especially foreign investors.
08:42 I don't know, are you in a position to tell me what kind of conversations are being had from foreign investors about the Canadian energy sector and maybe how that's different from the last couple of years. >> Mhm. I think yes is the answer on two fronts. One is the macro conditions, no doubt are changing. Part of that is just the price of oil is elevated from where it's been in more recent history and where we sit today in the high 60s or 70s is a good spot for the industry.
09:14 The second though is just Baytex and the change that we've undertaken as of late, notably the Eagle Ford sale that closed in December of 2025. Both of those things combined to be an overall better investor sentiment. To the second part of your question, what are they asking us? What kind of conversations are we having? Some of it is on the macro, what's happening with the pipelines, what's happening with the federal government, what's happening internally in Alberta, and then more
09:45 specifically Western Canada. But then also the company, what's the vision for the company? How are we thinking long-term? We're Canadian focused today where we used to be cross-border. Tell us more. Tell us why. Tell us about this new great entity that you have that you call Baytex. >> And don't worry, I'm going to ask those questions, too.
10:07 I want to stick high-level for just one more second because you mentioned the oil price. And in addition to the regulatory framework maybe getting a little bit clearer and a little bit more supportive, you have to contend with the energy price. And we've had you enjoyed a very nice spike in those crude oil prices.
10:28 And that's pretty much evaporated. And I'm curious how you think about that. How did the energy market absorb such a severe shock so quickly? Reprice basically, price it out completely. And what does that say about sentiment towards crude oil right now? >> Mhm. Yeah, the first I would start with this.
10:56 One, I don't know where oil prices are going and I don't think anybody does. So that's for first point. The second is we are at an elevated floor. So as much as we've dropped from the extreme highs, peaking at $115, spending a good bit of time in the $90 range, we are today $5 to $10 higher than where we were triangulating around in the past.
11:21 And that's very significant for running these oil companies. When you think about the price spike and how I think we've dropped to the $70 world that we're at today. I think there's multiple things that have happened. One, in the Strait of Hormuz, yes, it was 15, maybe 15 million barrels plus of world supply.
11:44 So, 15% of world supply that was taken offline. Some of that was filled with strategic petroleum reserve releases, certainly from the OECD countries. >> Mhm. >> Some was filled with alternative egress routes. So, pipelines that had been reactivated to get to different parts of the world and then on a ship. Some was through shadow fleets that were just still operating through Hormuz.
12:11 And then also just on the demand side, I think the big one was China where you saw in June alone 5 million barrels a day offline or demand that was shorter from where it had been in the past. So, I think all of those factors combined to bring us back to maybe a world where we're in today. And the question still remain things like how fast will we refill the SPRs cuz world inventories are at very low levels.
12:39 What will Chinese demand do to come back to the market? Will they come back with the 5 million barrels a day? It's hard to think about a country that size that just turns off the light switch to energy as we know it today. And so, yeah, I think that's what investors are trying to handicap is where do we go? In the meantime, a $70 world is a great spot to be for oil producers. Yes, we love the spikes.
13:06 More than ever though, we like sustained pricing. >> able to capture when you get a spike like that? >> Well, most of it. Realistically, if we could have grown production, perfectly timed the spike when it happens, then we could optimize the capture. That's maybe not realistic, when we think about our planning cycles, they span months and then years.
13:31 And they're very systematic to maximize the efficiency of our capital programs. And so, it's tricky to time the market. But once we're producing, we can absolutely participate in the spikes. We do sell commodity on a daily basis. >> Okay, so we've talked a lot about the transformation that's happening with the mood around Canadian energy and global prices.
13:54 Now, I want to talk about the transformation at Baytex. And when you came in as CEO in May, you laid out kind of a 3-year forward-looking strategy. But before we talk about that, I want to reflect on the previous 3 years, 3 to 5 years. Which was a little messier. There was, as you mentioned, that big acquisition in the United States, and then just as abruptly divesting those assets. I think it was 2 years later.
14:25 Talk to us, cuz you were still with the company, right? You've been with Baytex since 2018. Talk to us about what was going on there. Help us make sense of going into Eagle Ford and then coming out. >> Mhm. Sure. So, first and foremost, it was a different time and a different period that we're looking at.
14:44 At the time, we had already been in the Eagle Ford. I don't know if that's fully appreciated, but in 2014, we had bought a position. It was a non-operated position, and it was actually a sizable part of the company pre the acquisition that you're talking about. So, we had experience. We were in the Eagle Ford.
15:05 We were exposed to Gulf Coast pricing and the programs down there. As I said, it was a different time, and the call was size and scale would lead to the strategy that we were employing. Yes, the ride was maybe a little rockier than what we had hoped. And today we're clearly a renewed refocused Canadian entity.
15:31 We're rebranding the company. You talked about the vision, the long-term plan, the three-year plans to go forward with from this point. And that's squarely focused in Canada today. >> And talk to me about why what changed to make that again, just 2 years later, right? The same people who were around the table, I imagine, who made the decision are also the same people around the table who made the decision to leave.
15:58 >> Mhm. >> so what changed? And what was the incentive to become a more focused Canadian-only producer? >> Yeah. No, it was 3 years, not two. Not that it matters. It was still short-term. Yes, I get the point and we get it. you various things. So we really just get my time frame right, a year and a half ago sat down and said, "What makes a really great company and what are investors rewarding in this space today?" And at the time, it became very apparent that a cross-border company was a little
16:36 bit confusing for the investment community. So I'm going to lay out a few factors. So i.e. USA investors that maybe didn't know as much about Canada, the cold flow conventional space. Canadian investors that didn't know as much about the unconventional space. And a lot of what they were hearing is it's maybe longer in the tooth, maybe a little bit tired. So that was one.
16:59 This separates and clearly distinguishes us from the two. The second is the non-operated position that I spoke to that had been a part of the company since 2014. And it really moved the capital programs around. What do I mean by that? Is when we were cash called from the USA. And so it was Marathon was the operator that subsequently became Conoco.
17:20 >> Mhm. >> Some of our projects and teams were conditioned in Canada to moving capital programs and maybe in some cases completely taking them away. Third is the debt position we were in so more than $2 billion. Today happy to report we exited Q1 at $600 million net cash and at transaction we completely cleared out the debt.
17:44 And so world-class pristine balance sheet as it sits right now. The last though and I think it's very important to understand as you really look for value in the company is just where we deploy the capital to in our capital programs in the capital stack that we analyze every day. The Eagle Ford had the size had the scale to it but it was one of the lower on the capital stack.
18:12 Certainly when we compare it to the portfolio that we're left with in the Canadian company now. And so those four things we were able to study have a really good honest conversation about and it led us to the conclusion we needed to >> Was that an internal >> Eagle Ford. >> Was there shareholder pressure? >> Yeah, I think it's kind of both.
18:35 Public companies you have these capital sponsors that own the company and no doubt you have to listen and think about what they're saying and then marry it with what you know about the company as you steward it and certainly from this spot steward it forward. >> From one of the portfolio managers actually a few that we spoke to about Baytex over the year they kind of liked the strategic shift but then there was that other overhang of the fact that you had a large shareholder as a result of the US acquisition that wasn't interested in sticking around and
19:09 so their constant selling was an overhang. do you have a sense of when that's done? >> Well, I think it's done today. And so, yes, no doubt when we bought the Eagle Ford, they were majority shareholder of the company we purchased. As such, they became a large shareholder of Baytex. Today though, as we sit, they have sold down and it's all through the filings to the USA.
19:37 They've sold down to the 5% mark and are no longer our largest shareholder. I would say that I communicate with them monthly. They're great shareholders. They're very supportive of the story and I don't know their long-term plans, but would love to continue with the relationship because I think it's a great voice in the industry. >> as I said, you came in in May and I think you knew, you understood, you had to hit the ground running because of the messy history of the last couple of years.
20:12 And so, you lay out this 3-year plan promising 15% returns. Is it every year for the next 3 years? >> Yeah, so that is the target again. >> That's the target. >> Well, I want to be very clear. We're not there yet. So, when you look and that was set the strict we had $70 oil. For $70 oil, we're closer to an 11 to 12% return.
20:35 But yes, aspirationally, we are moving continually to 15%. And so, that means more work within the portfolio, within the company to continue to optimize and make that base 3-year plan that you described stronger as we go forward. We've headlined that with the reduction in break-evens. So, as I spoke to the sale of the Eagle Ford, we moved break-evens from the low 60s to $52.
21:03 And we have targets to move that to sub 50. >> oil prices >> are above that level, you make money. >> Well, it means that above that level our capital programs are intact. We can fund basically the capital programs that we have on and when I say that I should be very clear, maintenance capital.
21:23 So, maintaining the cash flow streams and production levels as they sit today. We stack on top of it incremental capital. To forward the sustainability of the company through exploration, growth within the company and our three-year plan is 6 to 8% growth. So, it's very meaningful growth forward. But, that's what it means.
21:44 >> production >> Maintenance capital to hold production flat. >> And then on top of those production targets to get to that 15% return, you'll do things like dividends and buybacks. Is that right? >> Well, yeah. So, let me outline the 15% first. So, that's a compilation of the dividend plus growth plus buyback.
22:06 So, all shareholder-friendly initiatives. Right now, our dividend sits at a percent and a half to 2% depending on where we trade. The midpoint of our production guidance is 7%. So, the combination of both of those get you to 9%. On top of that would be result of the free cash that we generate from the business on an annualized basis.
22:30 So, yes, the intent is to drive 15% annually. We view that as a proxy for just good business. And we view 15% as a threshold that we need to be at and aspire to attract good investment and maybe more investment forward. >> These are kind of the softer things that nobody talks about, but when you have been with the company for a while and then you become the CEO, do you set that target knowing the culture and knowing, yes, this is something that can be achieved with the culture that we have? Or are you also embarking on a little
23:03 bit of a culture change? >> So, I think it's a little bit of both. one of the big things that I have been focusing on next to the 15% return is culture. And waking up in January with 55% of the company changing and having been sold commands a little bit different approach to how we go about the business in combination with not just me as the new CEO, but a new team.
23:34 There were ultimately promotions from within the ranks that compile our team today. And so, culture is a big part of it. What do I mean by culture? So, flexibility for the capital programs today. A culture that as I described that had maybe been somewhat muted by a big non-op position, at the outset we talked about the regulatory and macro framework just federally and in the country.
23:59 and then just the debt position that Baytex had. Today, we sit in the spot where we can be a lot more flexible and a lot more opportunistic with the projects that we embark on. And the employees get to really bring those forward and now go and execute on them if they meet. >> Let's talk about that point you brought up about being opportunistic.
24:24 are you happy with the assets that you currently have Viking and Duvernay and I think with an emphasis on Duvernay. Baytex trades at a discount to other peers. And when I pulled the street and I ask what's going on, the asset quality comes up. What do you think about that? What do you think can be done about that? >> Sure.
24:52 So, first I would let's just frame it out. We are a Duvernay company and a heavy oil company when we also have our Viking lighter position so lighter oil heavy oil. When I think about the assets they drive strong three-year plan. That plan extends beyond that. I think one of the exciting parts as being a debt-free focused resetting the culture company is the optionality that we have inside the company beyond what we call baseline today.
25:25 And it's a lot of the I guess thematic stuff in the industry that's really driving value. It's not just thematic for the sake of but it's actually driving true value and so water flood in the Clearwater. >> Mhm. >> There's several companies having tremendous success in that position. We have pilots going to try to capitalize on as such and a big Clearwater position.
25:48 >> And water flooding for those who don't know is just literally flooding an area and scraping the oil off of a hard to I'm not an engineer >> That's a great explanation but essentially you put water into the reservoir that you're producing oil out of and the water helps to push more of the oil out of the tank ultimately.
26:11 >> Okay and the pilots are going well? >> in the Clearwater have pilots going and it's too early to tell what they're doing. We do though 10% of our current heavy oil production which is about 45,000 barrels on 70 is the midpoint of where we're targeting in 2026 is supported by water flood or polymer flood. So it's not new to us.
26:37 Other opportunities like small scale SAGD and you might hear this word Gemini come up. We have it in our portfolio. We've had it for a long period of time for the various reasons that we've described it just hasn't been capitalized today. That's what we're trying to figure out and how does it ultimately also stack into the company? >> What's the potential of Gemini? >> So Gemini, I would frame it this way.
27:02 There's 300 million barrels of what we think is extractable oil. At a 50% recovery, which is a rule of thumb recovery with SAGD operations, it would point to 150 million barrels. We have regulatory approval on three phases, the first of which is the largest approval, not the largest necessarily project.
27:25 It's just how the approval has been put in place for 5,000 barrels a day. At 5,000 barrels a day to harvest 150 million barrels would take 75 years. And so when you think about that, the goal would be to accelerate beyond. >> Mhm. >> And so does ultimately become 10,000 or even a little bit better than 10,000 within the company in the future? So it's sizable on top of 70 that we would average this year.
27:51 >> But not within your current three-year plan, but in kind of an option going forward. Do you need capital for that? And I'll just come out and say it, would a larger player who just scooped up Baytex be able to well capitalize you and get that done a lot sooner? >> I don't think so.
28:10 we still have net cash on the balance sheet. And when you think about phase one, we think about the 40,000 plus capital efficiency, so that would require 200 million plus. As I said it earlier, we had $600 million on the balance sheet ending Q1. And free cash through Q2. So we're still in a great cash position and can absolutely capitalize on it ourselves.
28:38 The trick becomes really refreshing the technical, refreshing the economics, the commerciality of it, >> Mhm. and then refreshing in a little bit more definition on the macro front regulatory to then look to sanction it. We've been out very publicly in our last quarterly update saying our intent is to reach FID by half to 2027, which would mean first oil on Gemini, which would mean first oil 2029. Yeah, sorry. Final.
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31:11 com or visit the link in the show notes. >> Let's stick with M&A. I know I make CEOs uncomfortable. I kind of like it. >> It's fine. Let's talk about it. >> because, we just went through that huge public battle for Mega Energy and there's a lot of fund managers who believe the whole space just needs to be cleaned up and smaller players like Baytex need to be part of larger players.
31:41 What do you say to that? >> I guess I would say why for one. And so Baytex is really good at our core assets. the company's been around for 33 years. It was classically a heavy oil company. We have a lot of institutional knowledge with respect to heavy oil. In fact, something that's been called thematic multilateral drilling.
32:03 the teams that I wasn't there, we're doing those 20 years ago, multilats into heavy oil. And so we have a lot of institutional knowledge. We've also spent equal amounts of time on the Duvernay. So I came from Raging River Exploration in 2018 with the merger into Baytex where we were assembling the Duvernay position.
32:24 And we're in a spot today where we built a team, the confidence and the technical capability and capacity to do it. The reduction of capital costs that you get as you really work assets over time to give full confidence to commercialize it at scale today. And so we're drilling 17 wells this year, turning 13 online.
32:44 Next year we hit full commercialization, which would be an 18 wells per year program. And that really fills up one rig running around the clock. That's where we hit peak efficiency. So I would say we're good at the basin. We're good at what we do. We've got great growth plans, good teams, energized teams to go and do it, and a strong balance sheet.
33:05 >> And you can do Gemini, too, then. >> happen. And we can do it in house. That's right. >> Viking you mentioned see is a non-core asset. Would you sell it? How much do you think you could get for it? And how much would it add to your cash position? >> So Viking is probably not core as it sits today.
33:27 Again, I talked about the Duvernay and also heavy oil. And at the right time we could look to monetize the Viking asset as it maybe doesn't fit like it did in the past. >> So you're not in those discussions now? >> Well, I'm not at a spot to be able to really talk about it other than to say what I did.
33:47 In terms of value, probably not wanting to go there either. other than to say look it's an older asset. It probably trades in a PDP sense with a little bit of upside. And you can look to past transactions as such to get a general idea of where it sits. It's 10,000 barrels a day.
34:12 and yeah, it could be a part of the cash as you said in the future. >> So you've gone a long way to kind of win back investor trust in the story. And I think it would be helpful for investors to understand what are your current sort of red lines when it comes to things you're willing to pursue in the pursuit of growth and things that you're not willing to pursue.
34:41 whether it comes to M&A, whether it comes to increasing the dividend. What does a clean capital allocation story look like at Baytex? What can you promise you will do? What can you promise you won't do? I imagine after this interview, I'm not going to see next week you've bought a US and oil play. >> Yeah, you won't see us having purchased anything when you wake up next week.
35:04 >> Good. Okay. >> I would point it right back to this. It is about value, about value forward. And so every decision that we make, we will be acutely focused, acutely focused on free cash flow. And just does this project generate value? And value might look different with respect to near-term value and really weighing that against longer dated value.
35:33 And so something like Gemini as an example or water flood as an example maybe foregoes a little bit of in-year value because you have to spend capital to get production streams of the future. >> Mhm. >> That's where our strong base plan and inventory position that we have today will support that and the balance sheet to ultimately build longer term value.
35:56 here's the red lines. we're not just going to go out and do things for the sake of doing things. So i.e. growth for the sake of growth or size and scale for the sake of size and scale. We're going to do things that make sense that are core to the business, that we have people and teams that are very good at and we can go and leverage that experience to build a stronger company into the future.
36:23 >> That's a great perspective on kind of how you think about growth going forward. I'm going to end with the hard-hitting question, which is tell me about the belts. I heard you won it in a rodeo. >> I did. I'm from a small farm in southern Alberta. Yeah, so very proud Albertan, very proud Canadian.
36:47 And this is such a cool spot to be a CEO of a large public company within Canada and within Alberta. still farm today. Still actively my rodeo friends are going to chuckle when I say I still actively participate cuz I'm not that good. >> Well, you won it in >> But I won this belt buckle tie-down roping >> Wow. >> several years ago.
37:10 It was kind of a bucket list thing at the time. We can get some footage of that. We don't need to see the footage of it. I assure you. >> Chad, it's been such a pleasure. Thank you so much for joining me. >> Well, thank you. It was great to be here. I really appreciate the conversation. >> It's what I told It's what I