Thank you for joining us. This is the conference operator. Welcome to the Baytex Energy Corp. Third Quarter 2025 Financial and Operating Results Conference Call. The conference is being recorded. I would now like to turn the conference over to Brian Ector, Senior Vice President, Capital Markets and Investor Relations. Please proceed.

Well, thank you, Michael. Good morning, and welcome to Baytex's Third Quarter 2025 Earnings Call. I am joined today by Eric Greager, our President and Chief Executive Officer; Chad Kalmakoff, our Chief Financial Officer; and Chad Lundberg, our Chief Operating Officer. Before we begin, 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. And after our prepared remarks, we'll open the call for questions from analysts. Webcast participants can also submit questions online. With that, let me turn the call over to Eric.

Thanks, Brian, and good morning, everyone. Q3 was a strong quarter for Baytex. We delivered record production in the Pembina Duvernay, generated robust free cash flow, supported by the strength and reliability of our Canadian heavy oil and U.S. Eagle Ford operations and made further progress on debt reduction. Pembina Duvernay set a new quarterly production record averaging just over 10,000 BOE per day, driven by strong well performance from the third pad we brought on stream in September. We also completed a land swap to consolidate our Southern Duvernay acreage and commissioned new gathering and midstream infrastructure with Gibson Energy, both of which will support more efficient development as we scale up. Our heavy oil and Eagle Ford assets continued to deliver steady volumes and strong cash flow. Heavy oil production grew 5% quarter-over-quarter, while volumes in the Eagle Ford were up 3%. Commodity prices remained soft in the third quarter with WTI averaging approximately USD 65 per barrel, but our strong operational execution and cost discipline enabled us to generate $143 million in free cash flow and reduce net debt to $2.2 billion. With that, I'll turn the call over to Chad Kalmakoff to discuss our financial results.

Thanks, Eric. Third quarter financial results were solid. Adjusted funds flow was $422 million or $0.55 per basic share. Net income for the quarter was $32 million, and we generated $143 million in free cash flow after $270 million in exploration and development expenditures. We returned $17 million to shareholders through our quarterly dividend and reduced net debt by $50 million, bringing net debt at quarter end to $2.2 billion, as Eric noted. Our financial position remains strong. We have significant financial liquidity with over $1.3 billion in undrawn credit capacity on our credit facilities and our first note not maturing until April 2030. Our capital allocation framework remains unchanged. 100% of our free cash flow is directed to debt repayment after funding our dividend. Based on year-to-date results and the forward strip for Q4, we now expect to generate approximately $300 million in free cash flow for 2025. This compares to our previous forecast of $400 million, with the change largely attributed to lower commodity prices during the second half of the year. There is no change to our production guidance, and we expect to reach $2.1 billion of net debt at year-end. I'll pass it on to Chad Lundberg to provide more details on our operating results.

Thanks, Chad. We saw strong operating performance in Q3. Production averaged 151,000 BOE per day, with liquids making up 86% of the mix. We invested $270 million in exploration and development and brought 69 wells on stream, keeping us on track with our plan. In the Pembina Duvernay, production averaged 10,200 BOE per day, up 53% from last quarter. The third pad from our 2025 program came online in September with 2 wells delivering strong 30-day peak rates averaging 1,300 BOE per day per well. The third well encountered casing issues during completion and was subsequently abandoned. We are committed to accelerating full commercialization of the asset, targeting 18 to 20 wells per year by 2027 and ramping production to 20,000 BOE per day by 2029. In addition to our progress in the Duvernay, we continued to expand our heavy oil platform. Heavy oil averaged 47,300 BOE per day, up 5% from Q2. We brought 20 net wells on stream and expanded our core land base in Peace River and northeast Alberta. Our heavy oil inventory now totals approximately 1,100 locations, supporting approximately 10 years of drilling at our current pace. Eagle Ford production remained steady at 82,800 BOE per day, with oil production up 3% from last quarter. We brought 15.6 wells on stream while achieving a 12% improvement in drilling and completions costs. We continue to see strong results from the refracs completed last quarter. Those wells are performing in line with expectations and are informing our plans for an expanded refrac program in 2026. Overall, operational execution across the asset base remains strong, underpinned by our commitment to the health and safety of our workers and the communities in which we operate. Let me turn the call back to Eric for his closing remarks.

Thanks, Chad. Our third quarter results demonstrate Baytex's ability to create value across commodity price cycles. The Pembina Duvernay continues to drive our Canadian growth potential, bolstered by recent consolidation efforts and infrastructure advancements that support future development and operational flexibility. At the same time, our heavy oil and Eagle Ford assets continue to deliver reliable results and cash flow. Our capital discipline and our consistent performance demonstrate our ability to execute through market volatility, maintain financial flexibility and position our company for long-term value creation. Brian, back to you.

All right. Thanks, Eric. Before we open the line for questions, I want to address the recent news reporting regarding our U.S. Eagle Ford assets. As a matter of policy, we do not comment on speculation. Our focus remains on consistent operational execution, capital discipline and maximizing value. We ask that analysts' questions remain focused on our third quarter results and published guidance. And operator, we're now ready for questions.

The first question comes from Phillips Johnston with Capital One.

My first question is about the $24 million in acquisitions made in Q3. I assume that was distributed across the three areas mentioned in the release. Should we understand that there was any significant production associated with these transactions, or was it all undeveloped land?

Eric Greager here. Thanks for the question. The acquisitions consisted entirely of undeveloped land in the Ardmore area, specifically in the Cold Lake oil sands Mannville stack development, as well as the larger Peace River oil sands Pekisko area. The Ardmore area included about 4.5 net sections, while the Peace River oil sands Pekisko area encompassed approximately 40.5 net sections, both in the heavy oil sector. In Spartan and Pembina Duvernay, we similarly focused on areas in the South known as Gilby, which previously had a checkerboard development pattern.

Okay. Great. Makes sense. And as you mentioned, we saw a nice uptick in your heavy oil production. It was up 7% in Q2, and then, up another 5% or so here in Q3, and that was after 3 sequential quarterly declines. Can you talk about what's driven that growth? And what we should expect for Q4 and into 2026?

Yes, it's somewhat early to discuss 2026, but I can say that we are actively working on our 2025 plan. Aside from the changes we implemented in May following our Q1 announcement, we are focused on executing our strategy. We have outlined our capital profile with an understanding of potential breakup impacts on access. If the breakup is minimal, that will offer more options in our plan. Overall, we are simply following our strategy and observing stronger performance across all assets due to our capital investments. We are consistently executing our plan, and the performance has been better than we initially communicated to the market, which aligns with our conservative guidance approach.

And your next question comes from Luke Davis with Raymond James.

Doing some good work in Canada. I'm wondering if can you just provide some parameters sort of by asset in terms of what you expect those to look like, say, over the next 3 to 5 years. And have you kind of contextualized that in the current commodity price environment versus something a little bit more favorable, call it, mid-cycle price?

Sorry, what assets did you say?

Canadian, general.

Okay. Yes. Luke, it's Eric again. Yes. So look, I think 2026 commodity pricing is anyone's guess, but if things go into the 50s, we're probably looking at a plan that is more conservative. That is what you would expect, and I think what any producer of a commodity would do, something that's probably closer to flat. If prices move higher toward mid-cycle through 2026 and into 2027, then naturally, we would lean in because there's a lot of value to pull forward for shareholders. I'm sure that's what you would expect me to say. The assets are just performing really well. I mean, we've got strong geology teams working all across our heavy oil fairway, the engineering teams and our long history across our large heavy oil fairway means the hit rate is pretty good on exploration and development. And in Duvernay, it's just been a really strong year in terms of fracture complexity, completion uniformity, well performance on the whole, and we couldn't be more pleased with the results across our Duvernay as well. So across the Canadian portfolio, it just feels really good. Our Viking assets run steady and flat and are extremely reliable in terms of their input and output factors. So that's the way I would characterize it.

All right. That's helpful. I'm wondering also if you could just dig into the Duvernay a little bit more. Well performance looks very good. I'm wondering if there's anything that you can tweak going forward, and how you'd expect sort of the productivity parameters to change? And then, you did abandon 1 well, so I'm wondering if you can just flesh out some of the issues you had and maybe some learnings coming out of that.

You bet, Luke. I'm going to pitch it over to Chad Lundberg here for that one.

Great. Thanks. Two parts to your question, so I'll address the hole first. This was an issue that resulted from the construction of the well really on the upfront drilling. So it's something to do with the casing and the cement. We believe it's an isolated incident and that we will have it resolved for our programs forward. So I think that's the key thing is we believe it's isolated, and going forward, we've figured it out. Your second question, just on Duvernay performance, so yes, year-over-year, we've seen a strong improvement in IPs. As everybody knows, we're currently declining the wells to try to understand how that relates to EURs. We think we have a high chance of seeing an improvement in EURs as well. When you really think about how we constructed this year, we're trying to understand completion efficiency and just our ability to deliver sand and energy into the formation. We think we made big strides this year and that, that some of these results are a direct result of that. As we think about programs forward, we're not done. And I don't know if we'll ever be done. These things are a continuous improvement cycle. But we do have more improvements that we're working through at this point in time that we're excited to deploy through 2026 and see where the results take us.

This concludes the question-and-answer session from the phone lines. I'd like to turn the conference back over to Brian Ector for any questions received online.

Thanks, Michael. We had a couple of questions come in on the webcast, but I do believe they've been addressed through the analysts' Q&A already. So I think with that, we are going to wrap up today's call. I'd like to thank everyone for joining. And thanks again for your time, and have a great day.

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