Thank you for standing by. This is the conference operator. Welcome to the Baytex Energy Corp. First 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, sir.

Thank you, Dylan. Good morning, ladies and gentlemen and thank you for joining us today to discuss our first quarter 2019 financial and operating results. With me today are Ed LaFehr, our President and Chief Executive Officer; Rod Gray, our 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. And I refer you to the advisories regarding forward-looking statements, oil and gas information, and non-GAAP financial and capital management measures in yesterday's press release. All dollar amounts referenced in our remarks are in Canadian dollars unless otherwise specified. And with that, I would now like to turn the call over to Ed.

Thanks, Brian, and good morning, everyone. I'd like to welcome everybody to our first quarter 2019 conference call. In 2018, we repositioned our Company as a high netback light oil producer through our merger with Raging River. We created a new Baytex, one with stronger assets and organizational capability than ever before. And I'm excited very excited to report on our first quarter results today, which marks the first quarter that truly demonstrates the benefits of this combination. We have increased our operating netback, delivered significant free cash flow, and we are taking definitive steps to strengthen our balance sheet. The combination of strong performance in both Canada and the U.S. with improved pricing in Canada has resulted in the 100% increase in our adjusted funds flow compared to the fourth quarter of 2018. Our first quarter results were underpinned by robust operating performance across our entire asset base. We delivered production of 101,000 BOEs per day, which exceeds the high end of our annual guidance and we generated adjusted funds flow of $221 million or $0.40 per basic share. Our exploration and development capital expenditures totaled $154 million, consistent with our full-year guidance expectations, and we reduced our net debt during the quarter by $90 million. In aggregate, our diversified oil portfolio generated a corporate level operating netback of $26.56 per BOE, which is $28.63 BOE including hedging. The Eagle Ford operating netback was $29 per BOE, while our Canadian operating netback was $25 per BOE. Our financial liquidity remained strong with our credit facilities 50% undrawn and our first long-term note maturity not until 2021. I would also note that we have extended the maturity of our revolving credit facilities to April 2021. These facilities are covenant-based and do not require annual or semi-annual reviews. We are well…

Thank you. [Operator Instructions] Our first question is from Phil Skolnick with Eight Capital. Please go ahead.

Yes. Thanks. Good morning. A couple of questions. Just one. What would be your first preference once you get kind of to your 1.5 times debt to cash flow, would it be a combination of dividends and buybacks or would you look to actually put on the dividend?

Well, Phil, we're very much focused on the first priority, which is debt repayment. So, at least in the near term, the remainder of this year, it's all about debt repayment. Anything beyond that, we would obviously go back to our Board. We already have had intensive conversations around this. But, if the current price of our shares is trading where it is, we would have to strongly consider a component of buybacks. But, we're not there today. We are at a place where we want to pay down our debt and become more investable with a wider range of institutional investors.

Perfect. Also, just any thoughts on the Alberta government’s rail, potential for you maybe to -- and some of those other small players to take on a part of that? Is that something that you are in discussions looking that?

No, not in specifically. But, we look at rail consistently through the year, both for the current year and for the next year. And as I said in the call, we've got 11,000 barrels a day on rail in just this week. We were able to put on another 1,000 barrels a day moving from Peace River to the Gulf Coast. So, will be up from 7,500 barrels a day in Peace River to 8,500 barrels a day for the second half of this year. That contract starts July 1st, I believe. So, we are layering on rail deals right now. But we believe when we look at the forward strip on WCC differentials, are attractive in that mid-teens kind of mid-to-high-teens differential equivalent. So, we look at that all the time. We layer on rail just as we layer on hedges when we get the right pricing and terms and volume.

Just finally, how far out are you talking when you're talking about the kind of mid-to-high-teens?

Well, that was second half deal -- second half this year deal that we did. Next year, we've got 5,000 barrels a day contracted. So, I would say full cost of rail for us should be $16 to $18, and that's the kind of level at which we like to put on rail and guarantee our egress. So, the province is still restricted in terms of apportionment. However, we have nothing apportioned. We’re flowing all of our barrels today out of Western Canada. But, it does give us egress protection. And we need a bridge until the time that Enbridge line 3, TMX and/or Keystone come in. And that bridge in the form of the current apportionment and further rail by all of us, we think is essential.

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

Thanks, Dylan. Thanks to everyone for participating in our first quarter conference call. Have a great day.

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