Sustained strength in oil prices could prompt Baytex Energy Corp. to increase production, with management set to decide through spring breakup, the company’s president and chief operating officer says.

“We certainly have the optionality within the portfolio, depth and quality to go a little bit harder this year and into 2027,” Chad Lundberg, the company’s incoming CEO, told a fourth quarter earnings call on Thursday.

“We’re just really observing the macro climate right now. Obviously, it’s incredibly dynamic, and we’re taking it in and [the company is] not going to make any knee-jerk moves.”

Baytex could potentially expand its capital program with another pad in the Duvernay that is drilled and completed next year, he said. It also could continue to expand its northeastern fairway, maintaining the two rigs drilling there today.

In addition, the company could pivot to the Peace River area where it has exploration work underway and elect to allocate capital into that region, said Lundberg.

“We’re not moving it too fast but those kinds of decisions will come through breakup.”

At Peavine, Baytex is deploying two pilot waterflood projects this year. One is into the part of the play that it has been actively drilling to this point, where the well ultimately will be converted into an injector well. “What we’re looking for there is just how fast can we fill it up to then pressure support the entire system around it to ultimately drive a lower decline and more barrels out of the ground,” he said.

The second pilot is in a new development area where Baytex is drilling the producers and the injectors simultaneously and will turn them on at the same time.

The company is doing the pilots because “we’re not sure what happens with our rock,” said Lundberg. “There are various factors that are maybe unique to our situation, that are potentially different from others.”

Primary development is very strong with Baytex holding 48 of the top 50 wells in the play, and “that’s really part and parcel to the incremental pressure that we have in situ, in the rock itself,” he said.

“If you extrapolate that out, though, to the big picture, we’re pretty excited for what it could do if it were to work with respect to base declines and driving more oil out of the ground.”

Baytex will undertake between now and the end of the year to better understand how the waterfloods are working, said Lundberg. In 2027, the budget could include incremental waterflood injector activity or drilling primary producers and leaving gaps between them for future injector wells, he said. “We’re just going to have to wait and see where we go.”

The company has been doing water and polymer floods for two decades and “it just depends on the quality of rock and then the oil that we’re working with,” said Lundberg. Approximately 10 per cent of its heavy oil production — 43,000 bbls/d in 2025 — is waterflood-derived production, he said.

“We’ve got the technical capacity and teams to really … advance this forward.”