Baytex Power (TSX:BTE) is up about 25% from the Might closing low. Traders who missed the bounce are questioning if BTE inventory stays oversold and is nice to purchase for a self-directed Tax-Free Financial savings Account (TFSA) or Registered Retirement Financial savings Plan (RRSP) portfolio.
Baytex Power inventory
Baytex trades close to $2.60 per share on the time of writing, in comparison with a quick dip under $2 in the course of the market pullback just a few months in the past. In 2025, the inventory remains to be down 30% and now sits 50% under its degree at the moment final 12 months.
Lengthy-term followers of Baytex know the journey for buyers has not been a enjoyable one. The share value has been on a gentle decline for the previous three years after topping $8 on the post-pandemic rally. Baytex was truly as little as $0.40 per share on the backside of the 2020 crash. In 2012, buyers paid as a lot as $58 for the inventory.
The large decline within the share value began in 2014 when Baytex made a big acquisition within the Eagle Ford play in Texas, shopping for Aurora Oil and Gasoline for $2.8 billion. The deal closed proper earlier than West Texas Intermediate (WTI) oil plunged from US$100 per barrel in the summertime of 2014 to lower than US$50 per barrel by the tip of the 12 months as Saudi Arabia flooded the market with oil to drive American shale producers out of enterprise.
Baytex discovered itself caught with a heavy debt load and costly belongings that would not generate sufficient money movement to cowl capital expenditures and the beneficiant dividend. Baytex raised the dividend by 9% to an annualized distribution of $2.88 per share when it closed the Aurora deal. At the moment, the inventory traded for near $48. By the tip of 2014, Baytex had already slashed the distribution to guard money movement and ultimately cancelled the payout as oil costs remained beneath strain. The inventory was all the way down to $15 by December 2014 and traded under $5 on the finish of 2015. Nimble merchants had alternatives to make some cash on transient spikes in oil costs, however the downward development continued into the pandemic crash.
Outlook
New administration took management of Baytex in 2017. The corporate labored exhausting to scale back debt whereas avoiding the sale of core belongings because it waited for a restoration in oil costs. This positioned the corporate to learn from the rebound within the value of oil after the pandemic, main the inventory to surge from under $1 to above $8 three years in the past.
One other change within the CEO place occurred in late 2022. Baytex then determined to make one other Eagle Ford acquisition with its buy of Ranger Oil in June 2023 for US$2.5 billion. This saddled the corporate with extra debt because the oil market entered one other gentle patch, with just a few transient value spikes attributable to geopolitical occasions.
Baytex completed the primary quarter of 2025 with whole debt of $2.23 billion. On the time of writing, the corporate has a market capitalization of about $2 billion. Baytex at present pays a dividend that gives a 3.5% yield. Administration is allocating 100% of extra money after capital expenditures and dividend funds to scale back debt. The corporate says it nonetheless expects to generate $200 million in free money movement for 2025 at WTI averaging US$60 per barrel, supported by the corporate’s hedging program.
Analysts broadly anticipate oil costs to stay beneath strain by way of 2026 as rising provide clashes with weak demand, notably in China. Within the occasion the commerce wars set off a recession in the USA and throughout the globe, oil costs might slip again under US$60 per barrel. This could doubtlessly put the dividend vulnerable to a reduce.
Time to purchase Baytex?
The inventory tends to be unstable, with massive strikes occurring over very brief durations of time. Merchants with an urge for food for danger could be interested by shopping for huge pullbacks on the hope of creating fast cash on a spike in oil costs. Purchase-and-hold buyers, nonetheless, ought to most likely search for different alternatives.
