Operations

Williston Basin – Bakken-Three Forks

Baytex acquired significant land positions in the Powder River and Williston basins in 2007 and 2008. Currently, we are focusing our activities on the light oil resource play located in the Divide and Williams Counties of North Dakota. Production is primarily from horizontal wells using multi-stage hydraulic fracturing in the Bakken and Three Forks formations. We have invested in approximately 303,400 (126,400 net) acres of land, of which 257,985 (109,435 net) acres were undeveloped at year-end 2010. In 2009, we drilled four gross (1.5 net) operated wells with a 100% success rate. This was followed up in 2010 with the drilling of 26 (9.5 net) wells, including 25 (9.1 net) oil wells in the Bakken/Three Forks and one (0.4 net) dry and abandoned well in a Lodgepole conventional target, for a success rate of 96%.

In the first half of 2011, we drilled 20 (6.3 net) horizontal oil wells, eight of which were Baytex operated. Due to wet ground conditions, these wells have yet to be put on production long enough to establish 30-day peak production rates. During the third quarter, we intend to fracture-stimulate six wells and we plan to operate a two-rig drilling program for the remainder of the year. Ultimately, we believe the project has the potential to include 100 to 300 wells with average initial production rates expected to be approximately 420 boe/d per well and average recoveries expected to be approximately 420 Mboe per well, based on drilling two-mile (or 1,280-acre spacing unit) wells.

The Contingent Resource Assessment for the Bakken-Three Forks, prepared by Sproule Associates Limited, as at December 31, 2010 equaled 31.2 mmbbl, 77.9 mmbbl, and 145.4 mmbbl of oil per the low, best and high estimates, respectively.