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Baytex Energy (BTE.TO)(BTE) shares climbed on Friday as the Canadian oil and gas producer reported a more than 45 per cent jump in net income and shrinking debt.
Toronto-listed shares of Calgary-based Baytex increased as much as 7.9 per cent on Friday, before closing four per cent higher at $4.09.
Baytex reported third-quarter financial results before the opening bell, booking net income of $185 million, up from $127 million in the same period last year. The company generated $537.9 million in adjusted cash flow, down from $581.6 million in the third quarter of 2023.
It says production in the quarter increased three per cent year-over-year to 154,468 barrels of oil equivalent per day (boe/d).
“Our third-quarter results demonstrate continued solid operational performance as well as our commitment to generating meaningful free cash flow, and the delivery of strong shareholder returns,” Baytex chief executive officer Eric Greager stated in a news release on Friday.
“We are committed to prioritizing free cash flow, and in the current commodity price environment, this means moderating our growth profile and delivering stable crude oil production.”
Baytex says it expects full-year 2024 production of approximately 153,000 boe/d.
The company also announced progress on its net debt target of $1.5 billion, lowering its leverage by five per cent in the quarter, to $2.5 billion. Once this target is met, management says it intends to direct 75 per cent of free cash flow to shareholder returns. The company divides this evenly between stock buybacks and dividends.
“What we saw this quarter was meaningful free cash flow generation and net debt reduction, something we’ve been patiently awaiting,” RBC Capital Markets analyst Greg Pardy wrote in a research note. “Baytex Energy delivered solid third-quarter results.”
Pardy maintains a $5.50 per share price target on the stock, with an “outperform” rating.
Jeff Lagerquist is a senior reporter at Yahoo Finance Canada. Follow him on Twitter @jefflagerquist.
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