Baytex Energy Q3 2026 Earnings Call Transcript

Baytex Energy (TSX:BTE) reported third-quarter financial results on Friday. The transcript from the company’s third-quarter earnings call has been provided below.

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Summary

Baytex Energy reported a strong Q3 2026 financial performance, with production averaging 71,600 boe per day, a 5% increase from the previous year, and generating $139 million in free cash flow.

The company plans to increase its 2026 capital program, driven by efficiency gains, to support a higher growth plan for 2027-2029. This includes advancing Duvernay commercialization and heavy oil projects.

For 2027, Baytex Energy projects production of 76,000 to 79,000 boe per day, with capital expenditures between $775 to $850 million, and aims for a 7-11% annual growth in production.

The company returned $165 million to shareholders in Q3 2026 through share repurchases and dividends, maintaining a net cash position of $522 million.

Strategic updates include plans for enhanced oil recovery projects and potential expansion in the Duvernay to 25,000 boe per day by 2028, alongside the development of the Gemini modular SAGD project.

Management emphasized capital discipline and operating efficiency, reflected in reduced operating costs and improved capital efficiency, with a sustaining capital breakeven of $50 per barrel projected for 2027.

Baytex Energy’s three-year outlook targets 8-10% annual production growth with a capital expenditure average of $800 million, maintaining a net cash position and consistent shareholder returns.

Full Transcript

OPERATOR

Thank you for standing by. This is the conference operator. Welcome to the Baytex Energy third quarter 2026 financial and operating results conference call. As a reminder, all participants are in listen-only mode and the conference is being recorded. After today’s presentation, there will be an opportunity for analysts to ask questions. To join the question queue, you may press star then one on your telephone keypad. You may also submit questions in writing at any time using the form in the lower section of the webcast frame.

Should you need assistance during the conference call, you may signal an operator by pressing then zero. I would now like to turn the conference over to Chris Lessaway, Vice President, Finance and Treasurer. Please go ahead.

Chris Lessaway (Vice President, Finance and Treasurer)

Thank you, operator. Good morning and welcome to Baytex’s third quarter 2026 results conference call. Joining me today are Chad Lundberg, our President and Chief Executive Officer, Kendall Arthur, our Chief Operating Officer, and Chad Kalmakoff, our Chief Financial Officer. Please note that our discussion today contains forward-looking statements within the meaning of applicable securities laws. I refer you to the advisories regarding forward-looking statements, oil and gas information and non-GAAP financial and capital management measures in yesterday’s press release. All dollar amounts referenced in our remarks are in Canadian dollars unless otherwise specified. We will open the call for questions after our prepared remarks.

Webcast participants are able to submit questions online. With that, let me turn the call over to Chad Lundberg.

Chad Lundberg (President and Chief Executive Officer)

Good morning. We continue to execute our strategy with strong performance across our portfolio, unlocking an opportunity-rich set of growth options driving long-term value for shareholders in 2026. We have improved capital efficiency, reduced operating costs and lowered our decline rate and breakevens. Most importantly, safety performance has been strong. I want to thank our teams across the operations for their continued commitment to safety. The improvements we’ve made have translated into an accelerated growth plan. Improved capital efficiency, lower costs and execution across the Duvernay and heavy oil portfolio enable an increase to the 2026 capital program and are the foundation of a higher growth plan for 2027 through 2029. This acceleration is driven by efficiency gains, not a change in our commitment to capital discipline.

Execution of our strategy once again illustrated by our Q3 results. Production averaged 71,600 boe per day, up 5% from third quarter 2025 and in line with our full-year plan. We delivered record Duvernay production of 12,800 boe per day, continued to perform across the heavy oil portfolio and generated $139 million of free cash flow. We also returned $165 million to shareholders during the quarter through share repurchases and our base dividend while exiting with a net cash position of $522 million.

For 2027 we expect production of 76 to 79,000 boe per day representing 7 to 11% annual growth with exploration and development expenditures of $775 to $850 million. This is the first year of full Duvernay commercialization which drives Q4 to Q4 growth of 15%. This program achieves a sustaining capital breakeven of $50 per barrel in 2027, down from $52 in 2026, which allows us to continue returning capital to shareholders. Our updated three-year outlook has improved and now targets 8 to 10% annual production growth supported by capital expenditures of approximately $800 million.

This plan is built to deliver. Having exceeded our 15% total shareholder return target through the third quarter of 2026, we expect to achieve it again in 2027 at a mid-cycle WTI price of $70 per barrel. We expect to maintain a net cash financial position throughout the three-year plan, funding production growth, continued share repurchases and the base dividend. Kendall will take you through the operating performance. Chad Kalmakoff will cover off our financial position and capital allocation in more detail. Kendall, over to you.

Kendall Arthur (Chief Operating Officer)

Thanks, Chad. Third quarter production averaged 71,606 boe per day and exploration and development expenditures were $186 million, both in line with our full-year plan. Beginning with the Duvernay, our second pad of 2026, a five-well pad on our northern Pembina acreage, was brought on stream in late August. The wells generated average 30-day initial production rates of 1,489 boe per day per well, including 973 barrels per day of oil. Drilling and completion performance continues to improve. Full-length 2026 wells achieved drilling and completion costs of $930 per foot of completed lateral, better than budget and 11% lower than 2025. The shorter cycle times allow us to add two drills in the fourth quarter, taking the 2026 program to 19 wells drilled. Thirteen wells are expected on stream in 2026 with the remaining six brought on stream in 2027. Our third Duvernay pad of 2026, a four-well pad in northern Pembina, is completed and now on stream.

Tuck-in acquisitions completed during the year increased our Duvernay land position by 16% to 106,000 net acres. With efficiency gains and expanded inventory, we can now grow the Duvernay to 25,000 boe per day one and a half years faster than our previous plan and retain over 15 years of hold-flat inventory at that level. Turning to heavy oil, five rigs were active during the third quarter across Peavine, Peace River, Lloydminster and Morinville. With strong well performance and efficiency gains realized in 2026, we now expect to bring approximately 109 heavy oil wells on stream in 2026, including five additional Clearwater wells at Peavine and four additional wells at Peace River. We are also advancing enhanced oil recovery. The expanded fourth quarter program includes $13 million for additional polymer flood development at Lloydminster, with production expected in the second quarter of 2027.

Looking to 2027, our operating plan advances each of the core businesses. Roughly 40% of our 2027 capital investment goes to the Duvernay, with the balance directed to heavy oil and Viking. In the Duvernay, we plan to bring 21 wells on stream and grow average production to approximately 18,000 boe per day, targeting a fourth quarter exit rate of 22 to 23,000 boe per day. The Viking will run an efficient one-rig drilling program with plans to bring 66 net wells on stream in 2027.

In heavy oil, we plan to bring approximately 130 wells on stream, including 32 at Peavine, 78 in Lloydminster and approximately 20 at Peace River. We expect heavy oil production to grow modestly to approximately 48,000 boe per day. Our updated three-year outlook maintains this pace of development. Annual growth at 8 to 10% takes corporate production to approximately 92,000 boe per day by 2029. Annual capital expenditures are expected to average $800 million through the plan. Production in the Duvernay will grow approximately 35% per year through this plan, achieving the targeted 25,000 boe per day level in the second half of 2028. We are targeting further improvements in drilling and completion costs to further improve free cash flow generation from the Duvernay.

Heavy oil production is expected to grow modestly while contributing significant free cash flow through the plan. Our deep inventory of primary development opportunities, supported by continued delineation in Northeast Alberta and expanded enhanced oil recovery, provides a strong foundation for the business. Notably, this plan could be enhanced with waterflood and Clearwater and Gemini modular SAGD redevelopment at Peavine 5. Waterflood patterns are currently injecting at expected rates, with six expected to begin in the fourth quarter.

We expect to see a response on these pilots by mid-2027. We have also completed drilling a Rex waterflood pilot at Morinville with injection scheduled to begin in the fourth quarter. In 2027 we are advancing technical characterization, engineering and design for the Gemini modular SAGD project with a target FID in the second half of the year. Gemini has approximately 300 million barrels of oil in place, a successful pilot completed in 2014 and regulatory approval for a 5,000 barrel per day first phase. Waterflood and thermal development can strengthen our business by increasing recovery from our existing resource base while adding sustainable production and free cash flow generation.

Our three-year outlook is about building a stronger, more profitable business. Disciplined capital allocation directs investment towards opportunities that improve returns and strengthen free cash flow. Advancing enhanced oil recovery and thermal is expected to moderate declines and reduce sustaining capital requirements, while continued delineation of our existing land base can deepen our development inventory. These priorities position us to create lasting value from the assets we already own.

The operating organization continues to execute safely and efficiently. I want to thank our field and office teams and our service partners for their focus and performance. With that, over to Chad Kalmakoff to discuss the financial results and capital allocation.

Chad Kalmakoff (Chief Financial Officer)

Thanks, Kendall. Strong operating performance and commodity prices supported another solid financial quarter. We generated adjusted funds flow of $332 million, or $0.48 per basic share. Free cash flow was $139 million, or $0.20 per basic share. After exploration and development expenditures of $186 million during the quarter, we returned $165 million to shareholders. We repurchased 24 million common shares for $149 million and paid a quarterly dividend of 2 1/4 cents per share.

Our balance sheet remains a significant strength and we exited the quarter with net cash of $522 million. This financial position supports the accelerated development Kendall outlined and provides resilience across commodity price cycles. Improved efficiencies and shorter cycle times have allowed us to accelerate the Duvernay, heavy oil and advanced enhanced oil recovery development. As a result, our 2026 exploration and development expenditures are now expected to be $665 million, up from $625 million previously. Higher benchmark prices have also increased our royalty rate guidance to approximately 16%. Operating costs are now expected to be approximately $13.30 per boe, improved from our previous guidance range of $13.75 to $14.25 per boe.

Transportation costs are expected to be approximately $3.75 per boe, up from $3.40 to $3.60 per boe previously. For 2027, we’ve initially allocated $150 million to share repurchases under the normal course issuer bid, with flexibility to adjust depending on market conditions. We expect to maintain the quarterly dividend at 2 1/4 cents per share. At a mid-cycle WTI price of US$70 per barrel, we expect to maintain a net cash position through the three-year plan. Sustaining capital is also expected to decline, reflecting our improved capital efficiency.

That financial strength gives us the capacity to fund continued production growth, share repurchases and the base dividend, allowing us to keep growing value for our shareholders on a per-share basis as we grow the business. With that, I’ll turn the call back to Chad Lundberg.

Chad Lundberg (President and Chief Executive Officer)

Baytex is delivering on its strategy. Consistent execution is accelerating our growth plan while our discipline remains unchanged. What has changed is the pace. Stronger operating performance, improved capital efficiency and lower costs give us the opportunity to accelerate development. We now expect the Duvernay to reach 25,000 boe per day in the second half of 2028, one and a half years earlier than our previous plan with the option to generate further growth or hold flat with an improved 15 years of inventory.

From that point, heavy oil continues to provide the foundation of the company with a deep inventory and enhanced oil recovery projects that extend the value of the resource. We are investing in high return organic opportunities, advancing long term projects in a measured way and continuing to return capital to shareholders. The result is a business that is growing faster and generating more free cash flow. We exceeded our 15% total shareholder return target in 2026 and expect to achieve it again in 2027 while maintaining balance sheet strength to deliver through the cycle. I would like to thank our employees and service providers for their continued focus and safe execution.

With that, we are ready for questions.

OPERATOR

We will now begin the analyst question and answer session. To join the question queue you may press star then 1 on your telephone keypad. You will hear a tone acknowledging your request. To submit your question in writing, please use the form in the lower right section of the webcast frame. If you are using a speakerphone, please pick up your handset before pressing any keys. To withdraw your question, please press star then 2. We will pause momentarily as callers join the queue.

The first question comes from Meno Holshoff with TD Securities. Please go ahead.

Meno Holshoff (Analyst)

Thanks and good morning everyone. I’ll start with Peavine waterflood. It’s a bigger question, but can you just remind us of what you need to see to scale up activity and if you decide to move forward with commercial development, how quickly could that occur and how would it fit into the three year plan? Or I guess the other option is that it displaces activity that is already in the plan. How are you thinking about that?

Chad Lundberg (President and Chief Executive Officer)

I mean, I think similar to messaging in the past, it takes time to understand waterflood performance. What are the key measures we’re looking for? One, just injectability check. We’ve got that. Two is we should see GOR suppression. Three is offsetting production response through decline as we type these wells out. I think we expect to see it by mid-2027. I mean, we’re going to see markers and tells ahead of that time. So it does take a little bit of time, but it’s coming soon.

Just in terms of the broader build out, we are developing the acreage today, leaving gaps for future waterflood injectors. If we saw the tells and indicators that we are expecting to see, we could layer in additional capital H2 2027. We think that would be in the $20 to $30 million range. Again, that would be a first step to start backfilling some of the gaps we left with the injectors. So I don’t know if that gives you the snapshot you’re after, but that’s how we’re thinking about it near term.

Just in terms of longer term and how does it fit into the three year plan, if it works, we should start to see it pick up production performance inside the three years. How much is yet to be determined. I’ll leave it at that.

Meno Holshoff (Analyst)

Great. Thanks for that, Chad. And then maybe just a second question. On land acquisitions, how competitive was the process to secure the additional 15,000 acres in the Duvernay and are you seeing opportunities to do more? Is it now fairly picked over? And then I guess on the other side of the ledger, what is the sort of the latest messaging on keeping versus monetizing the Viking? Thank you.

Chad Lundberg (President and Chief Executive Officer)

Well, I think the simple answer is it’s very competitive. I mean, look what we’re doing with the asset as we’ve held it since 2018, worked it through a delineation phase and just really learning and developing what we call this ecosystem of developing an unconventional, improving the characterization, reducing capital costs, bringing the stakeholders along with us, building out the infrastructure position to be able to handle these growth targets that we’re ultimately achieving.

And now here we are excited to step into first year of full commercialization, hitting our production ramps a year and a half early, seeing the reduction in capital costs to $930 a foot. It’s ultimately flowing right through to top line breakeven reductions. I mean to say it’s not competitive with what I just rattled off, I would be remiss. It’s extremely competitive. It’s great land. We hold a great position, and you know, we’re going to try for more of it.

I think the message is sections, not townships from this point forward. It is largely held. On the Viking, it’s a similar message. It’s not part of the business. At the right time, we would look to try to potentially monetize the asset. The right time would be just how we think through the commodity cycle and acting contra-cyclically, which would point us into higher prices ultimately triggering us into potentially looking at it. Nothing further other than that though, Menno.

Meno Holshoff (Analyst)

Great. Thanks to you. Thanks to you both. I’ll turn it back.

OPERATOR

The next question comes from Greg Partey with RBC Capital Markets. Please go ahead.

Greg Partey (Analyst)

Yeah, thanks. Good morning. Thanks for the rundown. So you’ve got a huge land position, a lot of legacy stuff, Peace River Arch, etc. Is there another Gemini in there somewhere?

Chad Lundberg (President and Chief Executive Officer)

We do have a large land position, 750,000 acres across basically the entirety of central to northern Alberta. I mean, what’s in the plan, and we revealed a little bit more in our IR pack, is 1,100 of what we call risked locations. We’ve expanded that to now include the full inventory set of 2,300 un-risked locations so that those inventory wells are in the plan today. Second is we have the Gemini position, which sits on top of basically our northeast Alberta acreage that you touched on.

Do we have further to go in terms of modular SAGD properties inside that 750,000 acres? Look, it’s what we’re doing. It’s what our heavy teams are scouring every day is just looking for opportunities. Part of the exploration programs is not only de-risking and advancing that 1,100 risked well set to try and improve the 2,300 un-risked, but it is looking for other opportunity within that set of land.

Greg Partey (Analyst)

Chad, I don’t think you want to answer my question. Okay, well,

Chad Lundberg (President and Chief Executive Officer)

Hey, I tried to answer it by saying we have lots of opportunity without being specific about that. Look, if I would. Yeah, let me just expand on that. We are always working up new initiatives and there are things we’re working on today, you know, beyond modular SAGD, beyond what we’ve outlined in detail, beyond these primary well sets that we’re just not talking about. They’re not ready to talk about for various reasons: not technically far enough along the pathway, could be competitive to Menno’s question from a land sale perspective, and tipping our hats further would put us in a compromised position strategically.

So I hesitate to go further.

Greg Partey (Analyst)

No, no, look, that’s extremely good context. Okay, completely shifting gears then. Some of the recent Duvernay wells, I mean, you know, great rates, number one. Number two is the oil/condensate component very high in those. When you achieve the 25,000 boe a day in 2028, what is the modeled product split between oil versus gas versus NGLs? And then just related to your capital program because Duvernay is a big piece, have you factored in inflation into that outlook?

And that’s it for me.

Kendall Arthur (Chief Operating Officer)

Okay. So when these wells come on, they have a higher liquids component. So 65% oil, 25% liquids, 10% gas would be a general rule of thumb. And actually, if you look at the pad that was released in Q2 and then this one that we’re talking about in Q3, I think they’re 87, 88% liquids ultimately. So that’s kind of where they come on. As we depressurize the reservoir, move through bubble point, we start to break out more gas in situ, and so that gets us to ultimately where we take these out at a 40% oil, 40% liquids, 20% gas.

In 2028, we would be, as we model it out, basically right in the middle of that. So it’s the mix of base that’s maybe drifting a little bit lower, and these new wells that are coming online that just have a little bit more pressure bottom hole. With respect to inflation, we have built, I would say, lower single digits into the plan. That’s to account for what we’re seeing on things like steel, things like diesel fuel. So we have built some into the plan. We have offset it to some extent, though, by all of the efficiency gains that we’re talking about. We profiled the Duvernay efficiency gains. We’ve achieved some gains to our heavy oil program, most notably up in Peace River with motor size, hole size, style selection of how we’re actually executing on the drills.

So we think we’ve struck the right balance of honoring what we’re seeing and kind of benching that against the efficiencies.

Greg Partey (Analyst)

Very good, very good. Thanks very much.

Kendall Arthur (Chief Operating Officer)

Thank you.

OPERATOR

The next question comes from Amir Arif with ATB Capital. Please go ahead.

Amir Arif (Analyst)

Thanks. Good morning, guys. Congrats on a really good update here. A couple of quick questions for you just on the operating cost improvement. I’m surprised at how much you were able to improve your operating cost structure. Is it more just driven by volume growth or is there other factors behind your operating cost improvement given the inflation that we’re seeing in the industry?

Kendall Arthur (Chief Operating Officer)

No doubt volume growth is helping us. As we put more barrels across fixed costs, we can amortize those fixed costs off against a higher volume set. That is one of the benefits of growth, Amir. Second, though, we would absolutely want to profile is just, I would call it, the proactive nature of our operating teams as they rethink and challenge each other operating in all of the different areas. So, for example, instead of taking a piece of equipment closer to failure or where it starts to break down at an increased frequency, we are really challenging, can we put incremental costs into that equipment ahead of time that ultimately nets improved run life, but then also lower operating costs ultimately through the entirety of the lifespan of that piece of equipment? So that’s one.

That proactive nature, two, is just when we look at operating these wells, again being proactive on how we’re operating them. So just with respect to maybe some of the lower producers, as an example, where we would in the past pump them at three or four strokes per minute on a continual basis, we’re electing to put them on a timer or even a poor-boy timer where we shut them down for a week, turn them on for a day, produce the same amount of oil, but we greatly reduce the runtime on that equipment and prevent it from wearing out further.

So I think we’re ultimately seeing it flow through in a much bigger way through our repair and maintenance line item in the OPEX expense part of the ledger twofold. Pretty excited about what the teams are driving.

Amir Arif (Analyst)

Got it. That’s good color. And then just a second question. You’ve improved your corporate decline rate to about 30% but under the three year outlook, if you start growing organically around 9%, where does your corporate decline sort of get to by 2029 under your modeling for your plans?

Kendall Arthur (Chief Operating Officer)

I think this is one of the strengths of the three-year plan. I’m glad you asked because it’s a bit of a hidden gem. Traditionally, if you were to go and grow an unconventional position as we’re talking about it, it does ultimately have a little bit higher decline than our corporate average. But when you balance it across the entirety of our portfolio—heavy oil, Viking, Duvernay—we actually see the decline moderate. Modestly, I’ll say that we don’t see the big improvements until we get into Clearwater waterflood, or if we do get into an FID on our modular SAGD for H2 2027, that would also materially improve base decline.

The point is though it doesn’t go up; it ticks down moderately through the plan. Correct. So without the Clearwater waterflood success, I would say though you do see in this plan that we are capitalizing more of our EOR projects throughout the Lloydminster region. In this particular instance, noted that we have 400 million barrels of oil in place, resource there and projects ahead of us to go after. So that will start to pay and improve the decline through the base plan.

And we’ve been capitalizing—that’s not new. We’ve been capitalizing these style projects for quite a while. I mean we’ve got 10% of our heavy oil production that is under flood, influenced by flood. Most of that is polymer flood. This is a continuation of an investment in more of those great EOR projects in the portfolio. Yeah, so our target is H2 FID 2027. There are a couple more items that we’re just trying to get our heads around to really come to that conclusion. So characterization, I think we’ve got a really good handle on it. Capital costs we’ve come a long ways on. I think by the end of the year you’ll see us have a design selection—so size, mostly of first phase—that we would intend to execute on. We’re still waiting on royalty framework not only to be announced by the province, and then some of the auxiliary items that we need to ultimately make a facility of this size go: so water source, water disposal, and then gas supply.

So we’re working through all those measures. We have $10 million in the plan today for Gemini, $800 million total. That is for further delineation of what we would call phase three, or pods three and four of the project—so 3D seismic over, and then some stratigraphic test wells to just further define the steam chamber. If we do reach FID H2 2027, there’s another $50 million roughly that we would look to and think about adding to the plan in the back end of 2027, and then obviously that would come with a step-up on the capital expenditures through 2028 as we point to first oil in 2029.

OPERATOR

The next question comes from Sam Burwell with Jefferies. Please go ahead.

Sam Burwell (Analyst)

Hey guys, good morning. This dovetails on the last one. Curious about how you think about capex and free cash flow in late ’27 and then ’28 assuming an FID of Gemini. Do you guys feel you have enough flexibility just with regard to the net cash position and the free cash flow you should be generating? Just curious if there’s flexibility in the plan to maybe scale down if commodity prices are lower or if WCS diffs are wider or anything like that. I’m just curious how you’re thinking about flexibility with Gemini potentially on the come.

Chad Kalmakoff (Chief Financial Officer)

I mean we study this intensely as we think about capital allocation, as we think about a fortified balance sheet that continues through the three-year plan. As we sit today, we exit 2026—again, we’re in a bit of a choppy environment with respect to macro right now, to say the least—but we do expect to exit the year at close to $400 million of net cash. As we stress test the capital plan for 2027—$800 million—with the commitment for $150 million to the buyback, it would still leave us ample capacity to handle capital expenditures on Gemini in the future and still leave us with that rock solid, ironclad balance sheet.

Sam Burwell (Analyst)

Okay, awesome. And then just a little bit more of a housekeeping question. But the incremental 2027 capex versus the prior plan, how does that break down or bucket between the Duvernay, heavy oil, and then anything earmarked for EOR or Gemini?

Chad Kalmakoff (Chief Financial Officer)

So here’s how we think about that. If you take $625 million—and that’s kind of where we were yesterday before we released this press release—I’ll just build you up to $800 from there. So there’s an extra $90 million basically of Duvernay capital that’s really stepping again into this first year, full commercialization—21 wells on stream. It’s basically an extra three drills and eight completions. The second is incremental heavy activity. So that’s about $40 million to jump to that 130-well heavy oil pace from, call it, 110—so an incremental 20 drills.

Layer in $35 million of EOR, so that’s the Lloydminster polymer projects that we’re excited about to the previous question, helping to reduce base decline and that longer-term sustainability. And then last is $10 million going to Gemini by way of 3D seismic and stratigraphic test wells. So I think that gets you to $800 million. That drives the 8% to 10% enhanced growth rate on an annualized basis, and—really important to flag—15% on a Q4-on-Q4 basis. That first-year step into Duvernay commercialization, you see the barrels come; they come later in the year. It is all, and that’s what’s driving that large Q4-on-Q4 growth rate. So I guess we would look at it this way: we’ve got some shorter-cycle capital, mid-cycle capital—so the EOR projects—and some longer-term sustainability style capital by way of Gemini.

Sam Burwell (Analyst)

All right. That math squares perfectly. Thank you, Chad.

OPERATOR

This concludes the question and answer session from the phone lines. I’d like to turn the conference back over to Chris Lessaway for any questions received online.

Chris Lessaway (Vice President, Finance and Treasurer)

Thanks, operator. A handful of questions submitted through the webcast. So, question for Chad K to start around shareholder returns. Maybe just reinforce our plans for 2027 in terms of the dividend and the share buyback and whether there’s flexibility or plans to adjust those amounts.

Chad Kalmakoff (Chief Financial Officer)

Sure. Thanks, Chris. So on the dividend to start, plans to remain the 9.9 cents per year dividend. No plans to increase that yet. I think generally when we think about that, we want to further reduce the fixed cost or further reduce the breakeven, so it’s sitting at $50 today. You know, if we can decrease that further, there could be an opportunity on the dividend, but not today. On the share buyback, we’ve initially set that at $150 million, as you’ve kind of outlined in the plans. We have an efficient capital program in hand for 2027. There are opportunities potentially within the plan to advance further projects that are very valuable to us—Peavine, waterflood, Gemini, etc. So maintaining the flexibility around that buyback opportunity to adjust that should market conditions give us that availability. So initial $150 million; we will assess that as we kind of go through the year. Kind of same conditions we always look at as kind of relative value or intrinsic value and where we sit in the commodity cycle, along with kind of capital opportunities available to us.

Chris Lessaway (Vice President, Finance and Treasurer)

Great. Thanks, Chad. This one’s for Chad L. I see some news out there about the Caribou land sale that’s forthcoming. Maybe just comment on any opportunities that we may see there.

Chad Lundberg (President and Chief Executive Officer)

A potential opportunity. No different than all of the other non-Caribou lands that we are actively pursuing, exploring, testing and ultimately, if we like the thesis, are bidding on at land sale. Caribou lands, I guess the only difference is it could stand to be a larger land sale. We don’t know yet. We’ll see in November here what the postings look like. It could be a little bit larger, and we’re working up our plans to potentially be at the sale.

Chris Lessaway (Vice President, Finance and Treasurer)

Great. Thanks, Chad. Last question here for Chad K around hedging. Maybe just describe our philosophy around hedging in general and then in terms of WCS for next year.

Chad Kalmakoff (Chief Financial Officer)

Sure. Thanks, Chris. So we always tie our hedging program to our balance sheet. We always have a fairly fortified balance sheet to live through commodity cycles, so not looking to put on WTI hedges. We do have WCS hedges here until the end of this year. Nothing on for 2027 at this point. You know, obviously in a pretty high differential environment today, not looking to add anything at these prices. If things do tighten, there could be an opportunity there on the WCS side.

Chris Lessaway (Vice President, Finance and Treasurer)

Great. Thanks, Chad. So that’s all the questions we have. So thanks again to everybody who joined the call today. For those of you who submitted questions we didn’t get to, please reach out and I will follow up directly. Thanks again for your time today and have a great day.

OPERATOR

This brings a close to today’s conference call. You may disconnect your lines. Thank you for participating and have a pleasant day.

Disclaimer: This transcript is provided for informational purposes only. While we strive for accuracy, there may be errors or omissions in this automated transcription. For official company statements and financial information, please refer to the company’s SEC filings and official press releases. Corporate participants’ and analysts’ statements reflect their views as of the date of this call and are subject to change without notice.