CORRESP 1 filename1.htm Document

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October 15, 2020

VIA EDGAR

Division of Corporation Finance
United States Securities and Exchange Commission
Washington, D.C. 20549

Attention: John Hodgin, Office of Energy & Transportation

Re:    BAYTEX ENERGY CORP.
Form 40-F for the Fiscal Year ended December 31, 2019
Filed March 10, 2020
           SEC File No. 001-32754

Dear Sir/Madam,

This letter sets forth the responses of Baytex Energy Corp. (“Baytex”, the “Company,” or “we”) to the comments received from the staff of the Division of Corporation Finance (the “Staff”) of the Securities and Exchange Commission by letter dated September 25, 2020 (the “Comment Letter”).

We have repeated each comment from the Comment Letter and provided our response to each comment below.

1.We understand from your response to our prior comment letter that you will provide disclosures beginning with your next annual report on Form 40-F, consistent with the revisions outlined in your response letter. Please also incorporate the revisions that are necessary to address the concerns outlined in the remaining comment in this letter.

We confirm that in future filings, beginning with our Annual Report on Form 40-F for the year ended December 31, 2020, the Company will incorporate the revisions necessary to address the concerns outlined in the remaining comment in this letter.

2.We note that your response to prior comment five, regarding the reasons for significant changes in total proved reserves, indicates that the change attributed to improved recovery for fiscal 2018 was the result of infill drilling.

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However, we believe that changes associated with infill drilling should be categorized as revisions of previous estimates, rather than improved recovery, based on the guidance in subparagraphs (a) and (b) of FASB ASC 932-235-50-5.
Under this guidance, improved recovery relates to the recovery of hydrocarbons, beyond primary recovery, obtained through secondary or tertiary recovery methods that generally supplement the natural reservoir recovery processes. Please revise the classifications within your reserves reconciliations and the associated narratives accordingly.

We have revised the Appendix I attached to our letter dated September 14, 2020 to reflect the categorization of changes associated with infill drilling as revisions of previous estimates, rather than improved recovery. The revised Appendix I is attached to this letter. In addition, we have provided revised explanations for the reasons for significant changes to the net quantities of total proved reserves for each line in the reserves reconciliation attached as Appendix I. They are as follows:

Revisions of Previous Estimates
In 2018, the company realized additional net proved reserves of 19,105 Mboe. This was primarily due to 13,003 Mboe of revisions from infill drilling comprised of: 10,341 Mboe in the Viking, 1,822 Mboe in the Eagle Ford and 840 Mboe in Peace River and Lloydminster. The remainder of the revisions were attributable to 4,042 Mboe due to well performance in our Canadian and Eagle Ford assets and 2,060 Mboe due to changes to the constant price forecast.

Purchase of minerals in place
In 2018, the Company acquired 60,452 Mboe of net proved reserves. 60,443 Mboe as the result of the Company’s strategic combination with Raging River Exploration Inc. and 9 Mboe as a result of minor property acquisitions in Canada.

Extensions and Discovery
In 2019, the Company added 35,763 Mboe of net proved reserves. 23,376 Mboe were added in Canada as a result of our 2019 drilling program and 12,387 Mboe were added in our Eagle Ford acreage due to improved well performance.

These classification changes also result in a change to the table showing our Reconciliation of Changes in Standardized Measure of Future Net Cash Flows Discounted at 10% per Year Relating to Net Proved Petroleum and Natural Gas Reserves for 2018. We have attached an updated table as Appendix II.

We would respectfully ask that you confirm our answers and proposed course of action is satisfactory so that we can proceed accordingly.

If you have any further questions, please do not hesitate to contact me at: (587) 952-3160.



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Yours truly,
BAYTEX ENERGY CORP.

/s/ Rodney D. Gray

Rodney D. Gray
Executive Vice President and
Chief Financial Officer



APPENDIX I (Page 1 of 2)

CanadaUnited States
Crude OilNGLBitumenNatural
Gas		Crude OilNGLBitumenNatural
Gas
(mbbl)(mbbl)(mbbl)(mmcf)(mbbl)(mbbl)(mbbl)(mmcf)
Net proved reserves
December 31, 201729,636 1,214 12,115 45,974 35,770 58,449 — 168,624 
Revisions of previous estimates17,133 (395)(482)853 5,625 (2,222)— (4,177)
Improved recovery1,647 — — — — — — — 
Purchases of minerals in place56,837 241 — 20,246 — — — — 
Extensions and discoveries2,149 567 — 2,357 — — — — 
Production(11,113)(404)(198)(14,452)(4,234)(3,523)— (13,312)
Sales of minerals in place(1)— — — — — — — 
December 31, 201896,289 1,224 11,435 54,978 37,161 52,705 — 151,136 
Revisions of previous estimates(2,324)694 429 13,188 91 (97)— 11,900 
Improved recovery— — — — — — — — 
Purchases of minerals in place1,209 1 — 85 — — — — 
Extensions and discoveries18,990 1,321 — 18,392 4,158 5,426 — 16,813 
Production(14,995)(436)(727)(16,372)(3,725)(4,359)— (14,485)
Sales of minerals in place(2,289)— — (83)— — — — 
December 31, 201996,879 2,804 11,136 70,188 37,685 53,675 — 165,363 
Net proved developed reserves
End of year 201720,207 583 7,376 29,141 14,156 19,822 — 67,150 
End of year 201846,557 772 8,616 39,222 13,466 23,432 — 68,273 
End of year 201947,577 1,179 9,286 44,537 16,119 23,906 — 71,748 
Net proved undeveloped reserves
End of year 20179,429 631 4,739 16,833 21,614 38,627 — 101,474 
End of year 201849,732 452 2,819 15,756 23,696 29,272 — 82,863 
End of year 201949,302 1,625 1,850 25,651 21,566 29,769 — 93,615 




APPENDIX I (Page 2 of 2)

Total
Crude OilNGLBitumenNatural
Gas		Total
(mbbl)(mbbl)(mbbl)(mmcf)(mboe)
Net proved reserves
December 31, 201765,406 59,663 12,115 214,598 172,951 
Revisions of previous estimates22,758 (2,616)(482)(3,324)19,105 
Improved recovery1,647 — — — 1,647 
Purchases of minerals in place56,837 241 — 20,246 60,452 
Extensions and discoveries2,149 567 — 2,357 3,109 
Production(15,347)(3,926)(198)(27,764)(24,098)
Sales of minerals in place(1)— — — (1)
December 31, 2018133,450 53,929 11,435 206,114 233,165 
Revisions of previous estimates(2,233)597 429 25,088 2,974 
Improved recovery— — — — — 
Purchases of minerals in place1,209 1 — 85 1,224 
Extensions and discoveries23,148 6,748 — 35,205 35,763 
Production(18,720)(4,795)(727)(30,857)(29,385)
Sales of minerals in place(2,289)— — (83)(2,303)
December 31, 2019134,564 56,479 11,136 235,551 241,438 
Net proved developed reserves
End of year 201734,363 20,405 7,376 96,291 78,192 
End of year 201860,022 24,204 8,616 107,495 110,758 
End of year 201963,696 25,085 9,286 116,285 117,447 
Net proved undeveloped reserves
End of year 201731,043 39,259 4,739 118,307 94,759 
End of year 201873,428 29,724 2,819 98,619 122,407 
End of year 201970,869 31,395 1,850 119,266 123,991 





APPENDIX II (Page 1 of 1)

As at December 31, 2018
(thousands of Canadian dollars)		CanadaUnited StatesTotal
Balance, beginning of year$355,205 $1,145,248 $1,500,453 
Sales, net of production costs$(255,967)$(478,727)$(734,694)
Net change in prices and production costs related to future production$(33,000)$498,009 $465,009 
Changes in previously estimated production costs incurred during the period$(773,071)$104,733 $(668,338)
Development costs incurred during the period$291,550 $193,604 $485,154 
Extensions, discoveries and improved recovery, net of related costs$53,963 $— $53,963 
Revisions of previous quantity estimates$927,949 $31,639 $959,588 
Sales of reserves in place$(15,000)$— $(15,000)
Purchases of reserves in place$865,223 $— $865,223 
Accretion of discount$35,520 $116,576 $152,096 
Net change in income taxes$— $(92,495)$(92,495)
Balance, end of year$1,452,372 $1,518,587 $2,970,959