Is Baytex a Buy After Cutting Debt and Selling Eagle Ford?

December 18, 2025 — 08:43 am EST Written by Nilanjan Choudhury for Zacks-> Baytex Energy Corp. BTE has taken a decisive step by selling its Eagle Ford assets for $2.3 billion, fundamentally reshaping its capital structure. Management plans to direct the bulk of proceeds toward repaying bank debt and retiring senior notes, leaving the company with a far simpler balance sheet and only one bond issue outstanding. The transaction also supports renewed shareholder returns, including maintaining the current dividend and resuming share repurchases. For shareholders, this matters because a lower debt load makes the company easier to value and reduces risk, especially while free cash flow remains somewhat unpredictable.Cash flow strength is improving, but near-term headwinds remain. The 2025 free cash flow outlook has been lowered to about C$300 million due to weaker oil prices, especially with conservative assumptions for fourth-quarter pricing. Still, after recent asset sales, Baytex now needs lower oil prices to break even, helped by reduced interest costs and leaner spending. This supports ongoing cash generation in a softer price environment, though meaningful upside will likely depend on a recovery in oil prices.Baytex’s heavy oil assets now sit at the heart of the investment case. Clearwater and similar projects generate solid cash flow at relatively low oil prices, making them competitive with peers. That said, heavy oil discounts can add more price swings than light oil. Even so, lower balance-sheet risk, improving cash flow durability, and stronger earnings momentum tip the balance favorably. Taken together, these factors support Baytex’s Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.Drilling Tools International DTI: It is a Houston-based oilfield services company specializing in downhole tools, machining, and inspection solutions for horizontal and directional drilling. With a fleet of more than 65,000 tools and technologies such as Drill-N-Ream and RotoSteer, Drilling Tools International supports well construction and optimization across major U.S. basins. The #1 Ranked company’s footprint includes 16 domestic facilities and 11 international locations spanning the Middle East, Europe, and Asia, with over 90% of 2024 revenue generated in the Western Hemisphere. Founded in 1984, Drilling Tools International has expanded through acquisitions and steady investment in patented technologies, growing its portfolio from 2 to 16 patented products.USA Compression Partners, LP USAC: It is one of the largest independent natural gas compression services providers across the United States in terms of fleet horsepower. USA Compression Partners is well-positioned to capitalize on the growth of key natural gas-producing regions, such as the Permian, Mid-Continent, and Gulf Coast. These areas are experiencing rising production due to increasing LNG exports and electricity demand. USA Compression Partners benefits from long-term relationships with major operators, a large compression fleet, and high customer retention. The Zacks #1 Ranked company’s strategic deployment of new units and strong 2025 guidance indicate continued growth. Additionally, tight equipment supply and a diversified regional footprint reduce risk while boosting competitive advantages. With a planned ERP system upgrade, USA Compression is set for operational improvements. Consequently, USA Compression Partners is expected to offer substantial upside potential from the current price levels.Shares of Baytex have gained more than 22% so far this year, breezing past the industry's minuscule growth. Image Source: Zacks Investment ResearchBaytex currently has an average brokerage recommendation (ABR) of 1.73 on a scale of 1 to 5 (Strong Buy to Strong Sell), calculated based on the actual recommendations (Buy, Hold, Sell, etc.) made by 11 brokerage firms. Image Source: Zacks Investment ResearchSee how the Zacks Consensus Estimate for Baytex’s earnings has been revised over the past 90 days. Image Source: Zacks Investment Research Want to be tipped off early to our 10 top picks for the entirety of 2026? History suggests their performance could be sensational. 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(DTI) : Free Stock Analysis ReportThis article originally published on Zacks Investment Research (zacks.com).Zacks Investment ResearchThe views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.This data feed is not available at this time.