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 (GlobeNewswire) -- 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:
Well Name | Rosetta WI, % | Wolfcamp Zone/Lateral | # Frac Stages | 7-Day IP 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 3rd 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.
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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.
Investor Contact:
Antoinette D. (Toni) Green
Vice President, Investor Relations & Planning
Rosetta Resources Inc.
info@rosettaresources.com
Rosetta Resources Inc.
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Rosetta Resources Inc.
Rosetta Resources Inc.
