Rosetta Resources Inc. Announces 2014 First Quarter Financial and Operational Results

Rosetta Resources Inc. Announces 2014 First Quarter Financial and Operational
Results

  *Increased total daily oil production by 30 percent versus 2013 and 8
    percent quarter-over-quarter
  *Increased total daily equivalent production by 16 percent versus 2013 and
    5 percent quarter-over-quarter
  *Achieved 23 percent quarter-over-quarter growth in Permian daily
    equivalent production
  *Successfully advanced Delaware Basin horizontal well program, doubling net
    project inventory
  *Reaffirms 2014 capital, volume and expense guidance

HOUSTON, May 5, 2014 (GLOBE NEWSWIRE) -- Rosetta Resources Inc. (Nasdaq:ROSE)
("Rosetta" or the "Company") today reported first quarter 2014 net income of
$35.2 million, or $0.57 per diluted share, versus net income of $53.5 million,
or $1.01 per diluted share, for the same period in 2013. Adjusted net income
(non-GAAP) for the quarter was $45.6 million, or $0.74 per diluted share,
excluding an after-tax unrealized loss on derivatives of $10.1 million, versus
adjusted net income of $62.5 million, or $1.18 per diluted share in 2013. The
decrease in adjusted net income was primarily due to higher operating costs
offset by higher production and realized prices. A summary of the adjustments
made to calculate adjusted net income is included in the attached "Non-GAAP
Reconciliation Disclosure" table.

"Rosetta is off to a great start in 2014 continuing our trend of production
growth. Our first quarter results are in line with our expectations and we are
on track to deliver on our annual targets," said Jim Craddock, Rosetta's
Chairman, CEO and President. "Rosetta made significant progress in the
advancement of our Delaware Basin horizontal program as we doubled our
inventory of net well locations. Also, during the quarter, our Eagle Ford
program was a key driver of our operational success. As the year progresses,
we will maintain our focus on program execution and evaluation of various
long-term growth catalysts in our core areas."

2014 First Quarter Results

Production for the quarter averaged a record 54 thousand barrels of oil
equivalent per day ("MBoe/d"), an increase of 16 percent from the same period
in 2013 and 5 percent from the prior quarter. The increase for both periods
was attributable to production growth from the Company's Eagle Ford and
Permian Basin assets. Oil production in the first quarter averaged 16 thousand
barrels ("MBbls") per day, an increase of 30 percent from 2013. Natural gas
liquids ("NGLs") daily production also increased by 12 percent compared to the
prior year first quarter. Rosetta began the quarter averaging 51 MBoe/d in
January. Production in February averaged 55 MBoe/d and the Company ended the
quarter producing an average of 57 MBoe/d in March.

Revenues for the first quarter of 2014 were $214.6 million compared to $178.1
million for the same period in 2013. First quarter revenues including realized
derivatives were $230.4 million in 2014 and $192.1 million in 2013. A summary
of the Company's quarterly production results and average sales prices by
commodity is included in the attached "Summary of Operating Data" table.

As anticipated, the addition of the high-margin Permian Basin assets impacted
first quarter operating costs. Direct lease operating expense ("LOE") for the
first quarter was $3.23 per barrel of oil equivalent ("BOE"), an increase of
24 percent versus the fourth quarter on a per-unit basis. Treating and
transportation increased by seven percent versus the prior quarter to $4.23
per BOE. In total, cash production costs, including LOE, treating and
transportation and taxes other than income, grew by 14 percent on a per-unit
basis compared to the prior quarter, but full year per-unit expense guidance
remains intact. A summary of the Company's first quarter operating costs on a
per-unit basis is included in the attached "Summary of Operating Data" table.

Operational Update

In the first quarter of 2014, Rosetta made capital investments of
approximately $361 million, excluding acquisitions. The Company drilled a
total of 47 gross operated wells and completed 54 gross wells, of which 45
were placed on production. The first quarter capital spend included
approximately $36 million for central facilities projects.

EAGLE FORD

Daily production from the Eagle Ford was 50 MBoe/d in the first quarter, an
increase of seven percent from the prior year and four percent versus the
prior quarter. Rosetta operated five to seven rigs in the Eagle Ford area
during the first quarter. Capital spending included $258 million for drilling
and completion activity in the Eagle Ford shale. During the quarter, 35 wells
were drilled and 39 completed, of which 32 were brought online. At the end of
the quarter, 57 drilled wells were awaiting completion, down from 61 in the
prior quarter.

Since beginning operations in the Eagle Ford area, Rosetta has completed 244
gross horizontal wells as of March 31, 2014. During the second quarter of
2014, the Company expects to complete 25 to 30 Eagle Ford wells and continue
to operate four to five rigs in the play, including two to three rigs in the
Gates Ranch area.

PERMIAN BASIN

Rosetta's production from the Permian averaged approximately 4 MBoe/d in the
first quarter, an increase of 23 percent from the prior quarter. The Company
operated five to six rigs in the Delaware Basin area during the first quarter.
During the quarter, 12 gross operated wells were successfully drilled
including five horizontal and seven vertical wells. A total of 15 gross
operated wells were completed, two of which were horizontal wells.

In Reeves County, Rosetta successfully advanced the Company's Wolfcamp
horizontal program with the completion of two operated Wolfcamp 'A' wells, as
detailed in the table below:

                     Rosetta Wolfcamp     # Frac 7-Day IP
Well Name             WI, %   Zone/Lateral Stages Boe/d    Oil %
Balmorhea Ranch 41-3H 100     A/4,100'     14     987      79
Sam Bass 15-2H        100     A/4,100'     14     *692     54
*unstabilized                                          

The Company also participated in five Wolfcamp horizontal wells completed by
other operators in Reeves County, including four Wolfcamp 'A' wells and one
Wolfcamp 'B/C' well.As Rosetta moves forward with delineation and development
in Reeves County, the total horizontal inventory portfolio has doubled to
approximately 900 net locations compared to year-end 2013.

During the second quarter of 2014, the Company plans to operate five to six
rigs in the play, including four to five rigs dedicated to horizontal
drilling. The Company expects to complete four to eight operated gross
horizontal wells, including a lower Wolfcamp well, a 3^rd Bone Spring test,
and a three-well spacing pilot.Rosetta also plans to spud an upper Wolfcamp
horizontal well with a 7,500-foot lateral length.

Financing and Derivatives Update

As of March 31, 2014, the Company's borrowing base and committed amount
totaled $800 million under its Senior Revolving Credit Facility ("Credit
Facility"), with net borrowings outstanding of $60 million under the Credit
Facility.As previously announced on April 2, the Company amended its Credit
Facility increasing the borrowing base from $800 million to $950 million. The
committed amount under the Credit Facility was reconfirmed at $800 million. On
April 30, 2014, Rosetta had $150 million in net borrowings outstanding with
$650 million available for borrowing under the Credit Facility.

Following the quarter ended March 31, 2014, Rosetta executed additional
derivative transactions for 2016 natural gas production.The attached
"Derivatives Summary" table outlines the Company's overall commodity
derivatives position as of April 30, 2014.

2014 Outlook

Rosetta's 2014 capital guidance of $1.1 billion, excluding acquisition
capital, remains unchanged from the previous estimate.The 2014 capital
program is based on a four to five-rig Eagle Ford program in South Texas and a
Delaware Basin program averaging six rigs during the year.Based on the
planned capital level, Rosetta reiterates the full year 2014 production range
of 60 – 65 MBoe/d, which represents approximately 20 – 30 percent
year-over-year production growth.The average oil ratio is expected to be
approximately 30 percent in 2014 with total liquids estimated at 63 percent.A
summary of the Company's cost per-unit expense guidance for full year 2014 is
outlined in the attached "Summary of Guidance" table and is also reaffirmed.

Rosetta Resources Inc. is an independent exploration and production company
engaged in the acquisition and development of onshore unconventional resource
plays in the United States of America.The Company owns positions in the Eagle
Ford area in South Texas and in the Permian Basin in West Texas.Rosetta is
based in Houston, Texas.

[ROSE-F]

Forward-Looking Statements

This press release includes forward-looking statements, which give the
Company's current expectations or forecasts of future events based on
currently available information. Forward-looking statements are statements
that are not historical facts, such as expectations regarding completion of
the proposed acquisition, drilling plans, including the acceleration thereof,
production rates and guidance, proven reserves, resource potential,
incremental transportation capacity, exit rate guidance, net present value,
development plans, progress on infrastructure projects, exposures to weak oil,
natural gas, and NGL prices, changes in the Company's liquidity, changes in
acreage positions, expected expenses, expected capital expenditures, and
projected debt balances. The assumptions of management and the future
performance of the Company are subject to a wide range of business risks and
uncertainties and there is no assurance that these statements and projections
will be met. Factors that could affect the Company's business include, but are
not limited to: the risks associated with drilling and completion of oil and
natural gas wells; the Company's ability to find, acquire, market, develop,
and produce new reserves; the risk of drilling dry holes; oil, liquids and
natural gas price volatility; derivative transactions (including the costs
associated therewith and the abilities of counterparties to perform
thereunder); uncertainties in the estimation of proved, probable, and possible
reserves and in the projection of future rates of production and reserve
growth; inaccuracies in the Company's assumptions regarding items of income
and expense and the level of capital expenditures; uncertainties in the timing
of exploitation expenditures; operating hazards attendant to the oil and
natural gas business; cyber-attacks; drilling and completion losses that are
generally not recoverable from third parties or insurance; potential
mechanical failure or underperformance of significant wells; midstream and
pipeline construction difficulties and operational upsets; climatic
conditions; availability and cost of material, equipment and services; the
risks associated with operating in a limited number of geographic areas,
including the Permian; actions or inactions of third-party operators of the
Company's properties; the Company's ability to retain and hire skilled
personnel; diversion of management's attention from existing operations while
pursuing acquisitions or dispositions; availability and cost of capital; the
strength and financial resources of the Company's competitors; regulatory
developments; environmental risks; uncertainties in the capital markets;
general economic and business conditions; industry trends; and other factors
detailed in the Company's most recent Form 10-K and other filings with the
Securities and Exchange Commission.If one or more of these risks or
uncertainties materialize (or the consequences of such a development changes),
or should underlying assumptions prove incorrect, actual outcomes may vary
materially from those forecasted or expected. The Company undertakes no
obligation to publicly update or revise any forward-looking statements except
as required by law.

References to quantities of oil or natural gas may include amounts that the
Company believes will ultimately be produced, but are not yet classified as
"proved reserves" under SEC definitions. We use the term "net risked
resources" to describe the Company's internal estimates of volumes of natural
gas and oil that are not classified as proved developed reserves but are
potentially recoverable through exploratory drilling or additional drilling or
recovery techniques.Estimates of net risked resources are by their nature
more speculative than estimates of proved reserves and accordingly are subject
to substantially greater risk of actually being realized by the
Company.Estimates of net risked resources may change significantly as
development provides additional data, and actual quantities that are
ultimately recovered may differ substantially from prior estimates.



Rosetta Resources Inc.
Consolidated Balance Sheet
(In thousands, except par value and share amounts)
                                                                
                                                    March 31,    December 31,
                                                     2014         2013
                                                    (Unaudited)  
Assets                                                           
Current assets:                                                  
Cash and cash equivalents                            $55,115    $193,784
Accounts receivable                                  130,302     122,677
Derivative instruments                               37          4,307
Prepaid expenses                                     7,932       9,860
Deferred income taxes                                18,963      27,976
Other current assets                                 2,164       1,284
Total current assets                                 214,513     359,888
                                                                
Oil and natural gas properties using the full cost               
method of accounting:
Proved properties                                    4,387,172   3,951,397
Unproved/unevaluated properties, not subject to      727,051     755,438
amortization
Gathering systems and compressor stations            204,944     168,730
Other fixed assets                                   27,299      26,362
                                                    5,346,466   4,901,927
Accumulated depreciation, depletion and              (2,094,737) (2,020,879)
amortization, including impairment
Total property and equipment, net                    3,251,729   2,881,048
Other assets:                                                    
Debt issuance costs                                  24,590      25,602
Derivative instruments                               2,710       5,458
Other long-term assets                               327         4,622
Total other assets                                   27,627      35,682
Total assets                                         $3,493,869 $3,276,618
                                                                
Liabilities and Stockholders' Equity                             
Current liabilities:                                             
Accounts payable and accrued liabilities             $286,397   $190,950
Royalties and other payables                         83,542      78,264
Derivative instruments                               13,738      4,913
Total current liabilities                            383,677     274,127
Long-term liabilities:                                           
Derivative instruments                               438         433
Long-term debt                                       1,560,000   1,500,000
Deferred income taxes                                145,998     136,407
Other long-term liabilities                          18,744      17,317
Total liabilities                                    2,108,857   1,928,284
                                                                
Stockholders' equity:                                            
Preferred stock, $0.001 par value; authorized        --          --
5,000,000 shares; no shares issued in 2014 or 2013
Common stock, $0.001 par value; authorized
150,000,000 shares; issued 62,200,386 shares and     62          61
62,032,162 shares at March 31, 2014 and December 31,
2013, respectively
Additional paid-in capital                           1,186,236   1,182,672
Treasury stock, at cost; 773,061 shares and 724,755
shares at March 31, 2014 and December 31, 2013,      (26,725)    (24,592)
respectively
Accumulated other comprehensive loss                 (105)       (108)
Retained earnings                                    225,544     190,301
Total stockholders' equity                           1,385,012   1,348,334
Total liabilities and stockholders' equity           $3,493,869 $3,276,618




Rosetta Resources Inc.
Consolidated Statement of Operations
(In thousands, except per share amounts)
                                                           
                                             Three Months Ended March 31,
                                             2014           2013
                                             (Unaudited)
Revenues:                                                   
Oil sales                                     $131,677     $110,052
NGL sales                                     55,295        46,461
Natural gas sales                             51,379        33,576
Derivative instruments                        (23,785)      (11,969)
Total revenues                                214,566       178,120
Operating costs and expenses:                               
Lease operating expense                       19,521        8,911
Treating and transportation                   20,677        15,087
Taxes, other than income                      10,206        7,655
Depreciation, depletion and amortization      74,775        44,630
General and administrative costs              19,538        15,532
Total operating costs and expenses            144,717       91,815
Operating income                              69,849        86,305
                                                           
Other expense (income):                                     
Interest expense, net of interest capitalized 15,290        6,069
Interest income                               (12)          --
Other expense (income), net                   151           (30)
Total other expense                           15,429        6,039
                                                           
Income before provision for income taxes      54,420        80,266
Income tax expense                            19,177        26,786
Net income                                    $35,243      $53,480
                                                           
Earnings per share:                                         
Basic                                         $0.57        $1.01
Diluted                                       $0.57        $1.01
                                                           
Weighted average shares outstanding:                        
Basic                                         61,380        52,733
Diluted                                       61,547        53,081




Rosetta Resources Inc.
Consolidated Statement of Cash Flows
(In thousands)
                                                               
                                                 Three Months Ended March 31,
                                                 2014           2013
                                                 (Unaudited)
Cash flows from operating activities:                           
Net income                                        $35,243      $53,480
Adjustments to reconcile net income to net cash                 
provided by operating activities:
Depreciation, depletion and amortization          74,775        44,630
Deferred income taxes                             18,604        26,060
Amortization of deferred loan fees recorded as    984           538
interest expense
Stock-based compensation expense                  3,358         2,664
Loss (gain) due to change in fair value of        15,848        13,971
derivative instruments
Change in operating assets and liabilities:                     
Accounts receivable                               (7,625)       (2,955)
Prepaid expenses                                  1,956         771
Other current assets                              (880)         --
Long-term assets                                  43            (1)
Accounts payable and accrued liabilities          3,264         (729)
Royalties and other payables                      5,277         4,476
Other long-term liabilities                       377           (1,266)
Net cash provided by operating activities         151,224       141,639
Cash flows from investing activities:                           
Deposit on Permian acquisition                    --            (38,400)
Acquisitions of oil and gas assets                (79,015)      --
Additions to oil and gas assets                   (268,836)     (175,849)
Disposals of oil and gas assets                   8             (2,651)
Net cash used in investing activities             (347,843)     (216,900)
Cash flows from financing activities:                           
Borrowings on Credit Facility                     80,000        140,000
Payments on Credit Facility                       (20,000)      (85,000)
Proceeds from stock options exercised             61            408
Purchases of treasury stock                       (2,133)       (6,256)
Excess tax benefit from share-based awards        22            --
Net cash provided by financing activities         57,950        49,152
                                                               
Net decrease in cash                              (138,669)     (26,109)
Cash and cash equivalents, beginning of period    193,784       36,786
Cash and cash equivalents, end of period          $55,115      $10,677
                                                               
Supplemental disclosures:                                       
Capital expenditures included in Accounts payable $206,867     $77,867
and accrued liabilities




Rosetta Resources Inc.
Summary of Operating Data
                                                                 
                                                Three Months Ended March 31,
                                                                    % Change
                                                2014      2013     Increase/
                                                                    (Decrease)
                                                                 
Daily production by area (Boe/d):                                 
Eagle Ford                                       49,937   46,839  7%
Permian                                          4,268    --     100%
Other                                            88       159     (45%)
Total (Boe/d)                                    54,293   46,998  16%
                                                                 
                                                                 
Daily production:                                                 
Oil (Bbls/d)                                     16,146   12,421  30%
NGLs (Bbls/d)                                    18,551   16,543  12%
Natural Gas (Mcf/d)                              117,577  108,205 9%
Total (Boe/d)                                    54,293   46,998  16%
                                                                 
                                                                 
Average sales prices:                                             
Oil, excluding derivatives ($/Bbl)               $90.62  $98.44 (8%)
Oil, including realized derivatives ($/Bbl)      88.59    96.54   (8%)
NGL, excluding derivatives ($/Bbl)               33.11    31.20   6%
NGL, including realized derivatives ($/Bbl)      31.38    32.92   (5%)
Natural gas, excluding derivatives ($/Mcf)       4.86     3.45    41%
Natural gas, including realized derivatives      4.66     3.61    29%
($/Mcf)
Total (excluding realized derivatives) ($/Boe)   $48.78  $44.94 9%
Total (including realized derivatives) ($/Boe)   $47.16  $45.41 4%
                                                                 
                                                                 
Average costs (per Boe):                                          
Direct LOE                                       $3.23   $1.97  64%
Workovers                                        0.71     0.08    788%
Insurance                                        0.06     0.05    20%
Treating and Transportation                      4.23     3.57    18%
Taxes, other than income                         2.09     1.81    15%
DD&A                                             15.30    10.55   45%
G&A, excluding stock-based compensation          3.31     3.04    9%
Interest expense                                 3.13     1.43    119%




Rosetta Resources Inc.
Derivatives Summary
Status as of April 30, 2014
                                                             
                                   Notional    Average        Average
                                      Daily
           Settlement Derivative     Volume      Floor Prices    Ceiling
                                                                  Prices
Product     Period     Instrument     Bbl         per Bbl         per Bbl
Crude oil   2014       Costless       3,000       83.33          109.63
                       Collar
                                                             
Crude oil   2014       Swap           6,000       93.13          
Crude oil   2015       Swap           10,000      88.58          
Crude oil   2016       Swap           1,000       84.40          
                                                             
                                                             
                                   Notional                   
                                      Daily
           Settlement Derivative     Volume      Fixed Prices    
Product     Period     Instrument     Bbl         per Bbl         
NGLs        2014       Swap           10,000      37.10          (Includes
                                                                  Ethane)
NGLs        2015       Swap           5,000       31.87          (Includes
                                                                  Ethane)
                                                             
                                                             
                                   Notional    Average        Average
                                      Daily
           Settlement Derivative     Volume      Floor/Fixed     Ceiling
                                                  Prices          Prices
Product     Period     Instrument     MMBtu       per MMBtu       per MMBtu
Natural gas 2014       Costless       50,000      3.60           4.94
                       Collar
Natural gas 2015       Costless       50,000      3.60           5.04
                       Collar
                                                             
Natural gas 2014       Swap           30,000      4.07           
Natural gas 2015       Swap           40,000      4.18           
Natural gas 2016       Swap           30,000      4.04           




Rosetta Resources Inc.
Non-GAAP Reconciliation Disclosure
(In thousands, except per share amounts)
                                                         
The following table reconciles net income (GAAP) to adjusted net income
(non-GAAP) for the three months ended March 31, 2014 and March 31,
2013.Adjusted net income eliminates the unrealized derivative activity from
our financial commodity derivative transactions for both periods, and the
transaction and financing costs associated with the Company's Permian
Acquisition for the quarter ended March 31, 2014, along with the related tax
effects.The Company uses this information to analyze operating trends and for
comparative purposes within the industry. This measure is not intended to
replace the GAAP statistic but rather to provide additional information that
may be helpful in evaluating the Company's operational trends and performance.
                                                         
                                    Three months ended March 31,
                                    2014                  2013
Net income (GAAP)                    $35,243             $53,480
Unrealized derivative loss           15,848               13,971
Permian Acquisition - transaction    310                  --
and financing costs
Tax benefit                          (5,814)              (4,978)
Adjusted net income (Non-GAAP)       $45,587             $62,473
                                                         
                                                         
                                                         
Net income per share (GAAP)                               
Basic                                $0.57               $1.01
Diluted                              0.57                 1.01
                                                         
Adjusted net income per share                             
(Non-GAAP)
Basic                                $0.74               $1.18
Diluted                              0.74                 1.18




Rosetta Resources Inc.
Summary of Guidance
                                             
                                             2014 Full Year
                                                                
MBoe/d                                                           
2014 Average Daily Production                 60         --     65
                                                                
$/BOE                                                            
Direct Lease Operating Expense                $2.85     --       $3.10
Workover Expenses                             0.60       --       0.70
Insurance                                     0.05       --       0.05
Ad Valorem Tax ^ (1)                          0.65       --       0.75
Treating and Transportation                   4.20       --       4.60
Production Taxes ^(1)                         1.30       --       1.40
DD&A                                          14.60      --       16.05
G&A, excluding Stock-Based Compensation       3.40       --       3.70
Interest Expense                              2.55       --       2.80
                                                                
                                                                
^(1) Ad Valorem Tax and Production Taxes are components of Taxes, other than
income.

CONTACT: Investor Contact:
        
         Antoinette D. (Toni) Green
         Vice President, Investor Relations & Planning
         Rosetta Resources Inc.
         info@rosettaresources.com

Rosetta Resources Inc. Logo
 
Press spacebar to pause and continue. Press esc to stop.