The reason there was zero free cash flow in Q1 is because the size of the capital program in Q1 essentially took all the operating cash flow and committed it to CapEx, leaving nothing for free cash flow. And the reason we did that in Q1 is because, we need to get a strong start to the year because we don’t always know how breakup is going to treat us, like what is going to happen during breakup in Canada. So we always start very strong on our drilling and completions program to set ourselves up for optionality, depending on whatever happens with breakup. And then if we have good options through breakup, we can then levelize our program and levelize our capital, our production profile, as well as our free cash flow generation. And that’s certainly our objective, is to continue to levelize our capital, our production profile, and our free cash flow.
It would be ideal, we certainly recognize it, as does the investment community, if we could stay in the market all four quarters of any given year and, apply a uniform buyback structure. And that is certainly our objective, and we’re working very hard to make that a reality out into the future.
Brian Ector: Thanks, Eric. We’ve got time, I think, for two questions. We’re coming up on the hour. There’s been a very thoughtful and thorough list of questions coming in today. This is a little different, Eric, one around executive compensation. Your thoughts around executive compensation, a comment around stock options. We don’t grant stock options, so maybe just your thoughts on executive compensation and our approach.
Eric Greager: Yes, so our approach to executive compensation is to ensure that all of our executives have a substantial portion of total compensation at risk. Our long-term incentive plan is based on a one-year and three-year TSR. Those TSRs are linked to, total shareholder returns, and so when the share price underperforms, so does our compensation. So we take a direct at-risk compensation hit when share price underperforms. We think that’s the right thing to do. Something like 70% of my own compensation is at risk. And to go beyond that, in the past 15 or 16 months, I’ve bought well north of 1.1 million shares of Baytex and used personal money, personal family money to do so. And I think that’s the right thing to do as well.
Insiders need to own the business. We need to feel the pain. So we think at-risk compensation is an important principle. We think insider ownership is an important principle. And we also mark our compensation every year to our peer group. And we are below the mean, below the median on virtually every executive level of the business in terms of our compensation. And so this is all public information that you can find, as you look through public circulars. But I do think it’s really important to point out, one, we benchmark it. Two, we maintain a competitive level with our peer group and currently below the median. Or a central tendency of that data set. And three, substantial at-risk compensation with substantial portions of insider ownership.
Brian Ector: And last question today, Eric. What has to happen for the share price to reflect the value of the assets? A few investors have reached out today expressing frustration with where we’re trading. What are your thoughts on the value creation for Baytex?
Eric Greager: Yes, I’m frustrated too. I feel your pain. And, I think there are a number of things that are perhaps idiosyncratic or unique to Baytex that are weighing on our short-term, near-term share price performance. One is our substantial ownership by the majority owners of Ranger Juniper Capital. These are smart guys. They’re long-term energy investors. And they are constructive on our business and on energy in general. However, because they’re perceived as eventual sellers and they hold a 12% position in our stock, that weighs on our stock as the so-called overhang. And that’s really not something we can do anything about except to endure. And, I think the second one that’s unique to our stock is the CRA matter. So the Canadian or Canada Revenue Agency, we’ve talked about that.
We’ve disclosed that. It’s not something that this leadership team really had any responsibility over creating, but we have the responsibility to manage and solve for it. So we’ve contained the risk. We’re quite confident that we will prevail based on the feedback from our tax counsel. But even if we don’t prevail, we’ve contained the risk with outside insurance. And so we feel pretty good about that, and that’s all been very thoroughly disclosed. And then beyond that, I think it’s just the — it feels like forever since we closed, and we’ve done a great job integrating Ranger and driving well performance and general operating efficiency into and from the assets. And we’re very pleased with the team’s performance, the asset performance, and the integration performance.
But it’s only 10 months since we closed. And that –, transformational transactions really do take time to stabilize. And I think it’s been a bit of a bumpy ride. So I think first I would say it is not wasted on us that our share price has underperformed. We’re doing everything we can to manage that, and we’re happy to talk one-on-one with any of you who want to unpack this more.
Brian Ector: Excellent. I think it’s a great way to wrap up today’s call. So, Ashia, I think we’ll call it there. Thank you, everyone, and thanks to everyone for participating in our first quarter conference call. Have a great day.
Operator: This concludes today’s conference call. You may disconnect your lines. Thank you for participating, and have a pleasant day.
