UPDATE 1-Canada oil producer Baytex restarts idled wells as prices rise -source

(Adds background, paragraphs 6-14)
By Nia Williams
CALGARY, Alberta, June 8 (Reuters) - Baytex Energy Corp
BTE.TO has restarted nearly all the heavy crude output it shut
last year, encouraged by the months-long rally in oil prices, a
source familiar with the matter said on Wednesday.
It is among the first signs of a North American producer
restarting wells that were deemed uneconomic during the deepest
part of the global crude price slump.
Around 95 percent of the idled Baytex wells have been turned
back on, roughly half of them in May and the rest in June, said
the source, who declined to be named because he is not
authorised to speak to the media.
"We have not drilled any new wells, but old wells that were
uneconomic are coming back on now prices are back up," he said.
The medium-sized producer did not immediately respond to a
request for comment, but on a May 3 earnings call Chief
Executive Officer James Bowzer said if prices held around $45 a
barrel he expected to have most production back online by July.
A year ago, Baytex starting shutting 7,500 barrels per day
of low-margin and loss-making conventional heavy oil production
in the Peace River and Lloydminster regions in western Canada.
Canada's heavy crude producers were among the first to close
active wells last year during the steepest rout in crude prices
in a generation. Many have slashed costs and ramped up
efficiencies to survive a lower-for-longer market.
While only a small portion of Canada's 3.9 million bpd of
capacity, the Baytex restart may kindle concerns in the oil
market that fresh supply could snuff out the recent price rally
if the pace accelerates.
Canadian Natural Resources Ltd CNQ.TO , Husky Energy
HSE.TO and Gear Energy GXE.TO also shut in around 5,000 bpd
between them last year. Those companies did not immediately
respond to queries on whether they had restarted production.
U.S. crude CLc1 hit a 2016 high on Wednesday of $51.34 a
barrel. O/R
In the United States, oil drillers added rigs last week for
only the second time this year, but there are few other known
examples of existing wells being restarted as producers remain
cautious about the sustainability of the price recovery.

Nimble U.S. shale producers, particularly those in the
Permian where costs are lower and wells are close to refineries,
can make money at $50, but many are still bleeding cash.
Unlike oil sands operations, conventional heavy oil
production is quick and relatively cheap to shut and restart in
response to changing prices.