Baytex Energy Corp. (TSX:BTE)(NYSE:BTE) is up more than 150% since late January, and investors are wondering if they should step in now or get out while there is still a chance.

Let’s take a look at the current situation to see if Baytex deserves to be in your portfolio.

A long slide from stardom

It wasn’t all that long ago that Baytex was one of the oil patch’s high-flying dividend darlings. The stock traded at $48 and sported an annualized distribution of $2.88 per share.

Unfortunately, the oil rout and an ill-timed acquisition quickly changed everything.

What happened?

Baytex closed its game-changing deal to acquire Aurora Oil & Gas in June of 2014, just before oil prices began to slide. At the time of the purchase, however, the $2.8 billion deal looked like a winner. Oil prices were above US$100 per barrel, and pundits felt good about the move into the highly coveted Eagle Ford shale play in Texas.

A mere 19 months later, investors found themselves screaming at their computer screens and shaking their heads in disbelief as the stock fell to $2 per share.

Why was the crash so bad?

Baytex loaded up on debt to pay for the Aurora purchase. As oil prices continued to fall through the end of 2014, it became evident that the company was headed for a cash crunch, and the stock price plummeted to $15 per share.

To their credit, management moved swiftly. They cut the dividend, slashed capital expenditures, and renegotiated terms with lenders. Baytex also managed to raise funds through a successful equity issue.

By the spring of 2015, things were actually looking pretty good. The price of WTI oil had recovered to US$60 per barrel and Baytex delivered positive free cash flow for the second quarter. The stock had even moved back above $20 per share.

Then the other shoe dropped in the oil market.

Baytex took a beating with the rest its highly leveraged peers, and by the third week of January this year, the stock was pretty much left for dead as oil dropped below US$30 per barrel and the debt pile of $2.05 billion appeared to be insurmountable.

A resurgence

Oil has recovered nicely in the past three months, and Baytex looks like it might still have some fight left.

Despite the big debt burden, Baytex doesn’t have any long-term notes due before 2021. The company also has access to about $800 million in credit lines that are available until at least 2019.

When oil is at US$40 per barrel, Baytex should be able to live within its cash flow, and that has investors piling back into the name.

Should you buy?

The oil rally is taking a breather and nobody knows if the next stop is $30 per barrel or back above $40. As a result, conservative investors might want to wait for confirmation of another move higher in oil before buying.

However, if you believe oil has bottomed out, and you tend to have a contrarian style, there is a good case for buying the stock now. Baytex estimates its net asset value is about $11.00 per share at prices that are lower than the current level. If the company’s calculations are correct, the stock should be trading for more than double today’s price.

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Fool contributor Andrew Walker has no position in any stocks mentioned.