Good morning, ladies and gentlemen. Welcome to the Baytex Energy Corp's Second Quarter Results Conference Call. Please be advised that this call is being recorded. I would now like to turn the meeting over to Mr. Brian Aster, Senior Vice President, Capital Markets and Public Affairs. Please go ahead, Mr. Aster.

Thank you, Wayne. Good morning ladies and gentlemen and thank you for joining us today to discuss our 2016 second quarter financial and operating results. With me today are Jim Bowzer, our Chief Executive Officer; Ed LaFehr our newly appointed President; Rod Gray our Chief Financial Officer; and Rick Ramsay our Chief Operating Officer. While listening, please keep in mind that some of our remarks will contain forward looking statements within the meeting of applicable security laws. And I refer you to our advisory regarding forward looking statements, non-GAAP financial measures, and all GAAP information contained in today's press release. All dollars not referenced in our remarks are in Canadian dollars unless otherwise specified and I would now like to turn the call over to Jim.

Thanks Brian and good morning everyone. Our operating results for the second quarter were consistent with our expectations and demonstrate the commitment we have made during this downturn to deploy capital efficiently, maintain strong levels of financial liquidity and reduce cost in all facets of our business. First, let me highlight some of the go through the key highlights for the second quarter. We generated production of 70000 BOEs per day and delivered funds from operations of $81 million or $0.39 per share. We reduced our net debt by $39 million during the quarter as funds from operations exceeded capital expenditures. We realized an operating net back of $14.39 per BOE an increase of 147% from Q1. We reduced operating expenses by 12% to $9.42 per BOE in the first half of 2016 as compared to $10.70 per BOE in the first half of 2015. In addition we maintained strong levels of financial liquidity with the senior secured debt to bank EBITDA ratio up 0.86 to 1. Now moving on to our operating results, our emphasis on deploying capital efficiently wad evidenced during the second quarter as we continued to defer investments in our heavy oil operations in Canada and reduced the pace of development in the Eagle Ford. As a result we significantly curtailed our level of capital spending focusing all development activity in Eagle Ford. Our highest rate of return and highest net back asset. In the second quarter our exploration and development expenditures totaled $36 million down from $82 million in the first quarter of 2016 and down from $141 million in the fourth quarter of 2015. During the second quarter we participated in the drilling of 11 net wells in the Eagle Ford and commenced production from six net wells. This represents a drop of 40%…

Thank you, [Operator Instructions] our first question is from David Popowich from CIBC, please go ahead.

Thanks guys, good quarter today and thank you for taking my question. I guess I just want to get some sense of how we should expect spending on the Eagle Ford to pan out over the rest of this year and into 2017, you guys have gone from a four to six rig program down to a three rig program. What would be the cues for taking that rig count higher, what kind of commodity price should we think of as you guys accelerating spending there.

Dave, you know you're kind of asking to guess what prices might be and that's been pretty tough we floated between just over 50 to 26 bucks in the past six months. So we are where we are, I think it's where we need to be. We made the adjustments that are necessary to keep our capital expenditures within our FFO. I would expect us needing to approach to 50 before we would step back up our activity there. You know where we said here 42 and change, you know it’s a result of the kind of the first quarter and second quarter pricing levels and we expect to remain there through the rest of the year and we'll see what this looks like budget time, I mean if you go back to 2014 we put our budget out in December, we adjusted it in 2015 in February we adjusted it again in August, you came in to the end of '15 we put out a budget in December, we adjusted it in February and here we are adjusting it again based on the swings that we’ve seen in this highly volatile market so, I would expect us needing to get near 50 to try to step back to a few more rigs, with a little bit another fractor or something to keep activity, step back activity levels higher.

Alright, then is it safe to assume that your new production guidance assumes a flat three rig program for the rest of this year.

Yes, it does, pretty much. And just so you know we have rigs coming in and out of our lands, not as much as it used to back when we were seeing 12 or 13 of the 18 rigs during 2014 but Marathon may be running anywhere from 3 to 5 rigs and we’ll see anywhere from 2 to four of them. So it’s kind of an average and it does vary during any given quarter. But three is what we're projecting for the average for the remainder of the year at this time with no change in commodity prices anticipated.

And just you know lastly to follow up on this bent, how many rigs do you figure you need to keep running into play on a net basis to keep your production flat there. How many wells do you have to drill or bring onstream.

It depends to what level production was at, when we hit our peak at Q4 of last year and did over 40000 barrels a day, it takes more you know, if we drill less you have less of the high decline wells online, I’d have to do the math, we'll get you towards that here as we get through the budget year but suffice it to say probably a few more than what we need today. I'll look at in terms more of frac crew, our drilling efficiency continues to improve we can do with four what we did a year ago with six in drilling so it’s certainly a rig more than what we're doing today and probably two fractors probably just to close so maybe two rigs. We'll get that as we look closer to the quarter and see where costs are, you know we're down to eight days per rig, eight days to complete a well, the drilling operations on a well per rig so, that has really helped out. Kind of gives you bit of the ball park anyway Dave.

Sure, that helps, thanks a lot guys.

Thank you, the following question is from Thomas Matthews from AltaCorp Capital, please go ahead.

Hey Jim, just a quick question on the productivity in the Eagle Ford, so this quarter of the 20 wells you brought on you know average 1300 BOE per day, that follows a similar type result from Q1. Just wondering, you know how sustainable is that, is that a result of targeting some of your better acreage or is that due to steps made on well design.

Yes Thomas, it's a little bit of both, there is no doubt that we're continuing to change the spacing of fracs, the amount of sand, the type of perforation, the targeting of the zones within the multi stages that evolution continues and some of it is because of that and it’s also no doubt that where we are drilling with only three rigs running our land we are drilling the very best of what exists out there and part of it is that, we had a major step up from 2015 to 2016 I think it approaches a couple of hundred barrels a day in just these first six months than what we did last year and it’s a little bit of both.

Okay, great, I know there's always been kind of a little bit of a disconnect between you know what Marathon lists in their presentation and then what you guys have in yours and obviously there might be a level of conservatism there, just wondering when or if you would be ramping those numbers up a little bit.

Yes, but probably not yet. And keep in mind that they are drilling outside in the Eagle Ford lands that we do not have interest in so their data will be different.

Right, right, okay, and then just on the Canadian heavy oil, obviously you brought it most of it back on in Q2 with prices falling off again. What kind of price on the downside would you need before you'd start considering shutting that in and absorbing the cost of this shut in and then bringing it back on, is it, it’s kind of likely mid to low 30s again would be required to take that step.

Yes, first of all I really don't want to think about answering that kind of a question I hope we, I'm kidding you Thomas, we don't get there but you're probably, that’s probably close, as we get high 30s I don't think we go through those motions. Low 30s we start thinking about it.

Okay great.

That's a fairly decent estimate.

Okay, sounds good, and then just on the CapEx and so you spent essentially 26.7 million on E&D spending and you drilled 11.3 net wells, I would assume those wells weren't completed just given the relationship between the overall cost of the well and how many you've drilled.

Yes, we have fewer completions during the quarter and I outlined a number of, the details are in our press release I think we had about half a, 40% less wells were completed during the second compared to the first.

Okay, I didn't know where the backlog stood I guess at this point.

Yes, okay.

Good, perfect, thanks Jim.

Thank you, there are no further questions registered at this time, I would like to return the meeting to Mr. Brian Aster.

Alright, thanks Wayne, and thanks everyone for participating in our second quarter results conference call today, have a great day.