Baytex is authorized by its Board of Directors to hedge up to 50% of its net exposure to commodity prices, interest rates and foreign exchange notes. Transactions in excess of this level must be pre-authorized by the Board of Directors. The details of our 2013-2014 hedging positions are as follows:
|WTI Financial Hedging|
|Fixed Price (US$/bbl)||99.56||99.01||97.93|
|Fixed Physical Delivery (Pipeline)|
|Blended WCS (bbl/d)||9,500||2,000|
|Equivalent Heavy Production (bbl/d)||7,315||1,540|
|% of Gross Heavy Production||16%||3%|
|WCS Dollar Differential to WTI||$20.34||$17.87|
|Term Rail (Fixed Price)|
|Heavy Production (bbl/d)||13,723||5,332|
|% of Gross Heavy Production||30%||12%|
|Equivalent WCS Dollar Differential to WTI||$15.78||$16.62|
|% of Gross Heavy Production||46%||15%|
|Equivalent WCS Dollar Differential to WTI||$17.37||$16.90|
(1) Percentage of hedged volumes are based 2013 production guidance, net of royalties (i.e. hedgeable volumes). See notes to financial statements for individual contracts.
(2) Baytex's realized wellhead price includes pricing offsets to WCS that reflect the quality of Baytex's crude oil relative to WCS and the cost of condensate used in blending the heavy oil. In calculating an equivalent WCS dollar differential for the term rail contracts, certain assumptions regarding the cost of condensate have been made. In 2012, Baytex's realized wellhead price averaged 80% of WCS.
(3) Addtional term rail contracts have been entered into that are WCS Index based (floating) and are excluded from the table above.
(4) For financial reporting purposes, rail agreements are not considered financial instruments. The terms of the various physical contracts are captured in our net realized heavy oil price as opposed to being disclosed as gains (losses) on financial instruments.
(5) Equivalent WCS dollar differential based on the WTI $US forward strip as at October 29, 2013, 4Q13: $99.48; 2014: $94.04.
|Q4/2013||FY 2013||FY 2014|
|% Volumes Hedged at Fixed Price (1)||27%||22%||26%|
|Average Fixed Price (US$/mmBtu)||3.94||4.07||4.15|
|% Volumes Hedged Using Collars (1)||25%||19%||7%|
|Average Collar Floor/Ceiling||3.86/4.26||3.64/3.92||4.04/4.52|
|% of Foreign Exchange Hedged||51%||45%||10%|
|Hedged Amount (US$ millions)||104.5||366.4||96|
|Average Forward Rate (CAD per USD)||1.034||1.030||1.058|
|Average Collar Floor (CAD per USD)||1.031||1.013||1.042|
|Interest Rate (2)|
|Hedged Amount (US$ millions)||45||180||135|
(1) Percentage of volumes hedged are based on 2013 production guidance, net of royalties (i.e., hedgable volumes).
(2) Interest rate hedges for our US dollar bank line draw established in September 2009 are forward-starting pay-fixed swaps where the floating rate 3-month LIBOR has been swapped for the fixed rate noted. Interest rate hedges expire September 2014.