Baytex Energy, Raging River Exploration announce merger valued at $5 billion

CALGARY -- Baytex Energy Corp. and Raging River Exploration Inc. have announced that their respective boards of directors have unanimously agreed to a strategic combination of the two companies. The combined organization will be a well-capitalized, oil-weighted company with an attractive growth and free cash flow profile provided by its assets across North America. The combined organization will have an enterprise value of approximately $5 billion and operate under the Baytex name.

Combined company highlights (2019 annual estimates) include:

• Average annual production of 100,000 to 105,000 boed (85% oil and NGLs) with an exploration and development capital program of $750 to $850 million, representing 5% to 10% production growth
• Debt adjusted production per share growth of approximately 13%
• Adjusted funds flow of approximately $1.0 billion
• Sustaining capital of $575 million equating to a free cash flow yield of 15%
• Net debt to adjusted funds flow of 1.9x
• Strong operating netback of approximately $30/boe across portfolio
• Combined management team and board with a track record of value creation
• Greater than 260,000 acres in the East Duvernay Shale oil play with recent exploration success validating the prospectivity of the lands

Baytex and Raging River have entered into an agreement to effect the transaction by way of a plan of arrangement of Raging River under the Business Corporations Act (Alberta). The transaction will result in holders of common shares of Raging River receiving, directly or indirectly, 1.36 common shares of Baytex for each Raging River Share owned. The exchange ratio was determined based on the market trading levels of the Baytex Shares and Raging River Shares at the time the companies entered into exclusive negotiations. The board of directors of Baytex and the board of directors of Raging River have unanimously approved the transaction and have received fairness opinions from their respective financial advisors. The transaction is subject to approval by the shareholders of both companies, the Court of Queen’s Bench of Alberta and certain regulatory and other authorities, and is subject to the satisfaction or waiver of other customary closing conditions. The Transaction is anticipated to close in August 2018.

Neil Roszell, executive chairman and CEO of Raging River, will serve as chairman and Edward LaFehr, president and CEO of Baytex, will serve as president and CEO of the combined company. The balance of the senior management of the combined company will incorporate senior individuals from both Baytex and Raging River. The board of directors of the combined company will consist of members of both the Baytex board and the Raging River board with Raymond Chan serving as lead independent director.