Thank you for standing by. This is the conference operator. Welcome to the Baytex Energy Corp. Second Quarter 2019 Conference Call and Webcast. As a reminder, all participants are in listen-only mode and the conference is being recorded. After the presentation, there will be an opportunity to ask questions. [Operator Instructions] I would now like to turn the conference over to Brian Ector, Vice President, Capital Markets. Please go head.

Thank you, Ariel. Good morning, ladies and gentlemen. And thank you for joining us today to discuss our second quarter 2019 financial and operating results. With me today are Ed LaFehr, our President and Chief Executive Officer; Rod Gray, Executive VP and Chief Financial Officer; and Jason Jaskela, Executive VP and Chief Operating Officer. While listening, please keep in mind that some of our remarks will contain 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 today’s press release. All dollar amounts referenced in our remarks are in Canadian dollars unless otherwise specified. And with that, I would like to now turn the call over to Ed.

Thanks, Brian, and good morning, everyone. I'd like to welcome everybody to our second quarter 2019 conference call. Our strong operating performance continued during the quarter with our Eagle Ford, Viking and heavy oil assets each delivering robust production and free cash flow. And I'm also excited to announce further success in the East Duvernay shale which has solidified the Pembina area as a highly prospective region for us. I’ll touch on this success in a few minutes. For the quarter, we generated production of over 98,000 boes per day, exceeding the high end of our annual guidance. We delivered adjusted funds flow of $236 million or $0.42 per basic share, a 7% increase compared to $221 million or $0.40 per basic share in Q1 2019. Our exploration and development capital expenditures totaled a $106 million, bringing aggregate spending in the first half of 2019 to $260 million. Our diversified oil portfolio generated a corporate level operating netback including hedging of $31 per boe, which is our highest level since 2014, as our operating netback was almost identical in both our Canadian and Eagle Ford operations. Over the past couple of years I have talked about how we are taking definitive steps to strengthen our balance sheet and reposition Baytex. We delivered another major step on this commitment by generating a record level of free cash flow in the first half of 2019, approximately $200 million. This free cash flow in combination with the strengthening of the Canadian dollar led to a $236 million reduction in net debt as of June 30th. Based on this, we intend to redeem the U.S. $150 million senior unsecured notes at par during the third quarter. This is an important step in our debt reduction strategy. And we continue to maintain strong financial liquidity…

Thank you. We will now begin the question-and-answer session. [Operator Instructions] Our first question comes from Greg Pardy of RBC Capital Markets.

Hey. This is actually Tom Callaghan on behalf of Greg. I just wanted to get your thoughts on share buybacks there. Obviously debt is the priority with respect to the free cash flow you’ve framed. But, just wondering how you think about allocating a portion of that free cash flow buyback? It sounds like from your comments that it might be something more of a longer term as opposed to anything this year. But any insight would be great. Thanks.

Well, we’ve been pretty clear, Tom, and I’ve been pretty clear that our debt to cash flow target is 1.5 times. We’re still in $57 pricing world where we are well hedged. So, we’ve set a debt to cash flow target and believe that 1.5 times is the right number. For $50 oil, we would expect to flex up to 2, and if we’re at $60, $60-plus, we’d be at sort of a 1-time. So, the focus here at Baytex is generating free cash flow through strong operations, delivering repayment to debt and then continuing to drive that down into the one handle range. But, 1.5 times, I’ve been very clear, is our target.

Perfect. Thanks.

This concludes the question-and-answer session. I’d like to turn the conference back over to Brian Ector for closing remarks.

All right. Thanks, Ariel. Thanks everyone for participating in our second quarter conference call, and have a great day.

This concludes today’s conference call. You may disconnect your lines. Thank you for participating and have a pleasant day.