Following Baytex Energy Corp. closing of its acquisition of Ranger Oil Corp., the company’s top executive said the combined entity will perform better than either of them alone. 

On Tuesday, Baytex Energy said it closed a deal to acquire U.S.-based Ranger Oil Corp. in a $2.9 billion transaction that was initially announced in February. The company stated the deal will increase Baytex’s portfolio of oil-producing land by 162,000 net acres. This includes 741 net undrilled locations that will have an inventory life spanning between 12 and 15 years. 

“This combined company is far better combined than either company could have been standalone,” Eric Greager, the president and chief executive officer of Baytex Energy, said in an interview with BNN Bloomberg Thursday. 

According to Baytex, the deal will grow its presence within the Eagle Ford shale region of Texas, as well as increase its exposure to U.S. Gulf Coast pricing.

According to Greager the company issued 60 per cent more shares as part of the deal to increase production by 80 per cent. He said this translates to a 19 per cent increase in production per share and 90 per cent more cash flow. 

“Again, 90 per cent more cash flow virtually doubles the company. It is a transformational deal. But more importantly, it makes the company more resilient, defensive to low prices, and much more toward high prices,” Greager said. 

In a note to investors Wednesday, analysts at CIBC Equity Research said they did not perceive the company as having inventory issues before the transaction, but that adding 741 new locations could enhance flexibility. 


At current commodity prices, CIBC analysts said they do not view Baytex’s leverage or liquidity as a concern, but said they “view there to be investor concern about the above-average leverage.” 

Greager said the company currently has about $2.5 billion in debt and shoring up its balance sheet remains a top priority. He said with West Texas Intermediate (WTI) prices at US$75 per barrel, the business will generate $1 billion per year in free cash flow and “50 per cent of that will be committed to debt repayment.”

“That means one year from today at US$75 WTI, we'll be back to the same leverage we were at the day we announced this deal.” 

With files from the Canadian Press