HOUSTON, Nov. 12, 2007 (PRIME NEWSWIRE) -- Rosetta Resources Inc. (Nasdaq:ROSE) ("Rosetta" or the "Company") announced today that production and revenues for the third quarter of 2007 were 126 Mmcfe/d and $89.7 million, respectively. Diluted earnings per share for the third quarter of 2007 were $0.25 versus 2006 earnings per share of $0.24, an increase of 4%. In the third quarter of 2007, production and revenues were at their highest levels for the nine quarters that Rosetta has been an independent company.
Production and revenues for year to date 2007 were 118 Mmcfe/d, up 32% from 2006 and $252.4 million, up 27% from 2006 respectively. Diluted earnings per share for the first nine months of 2007 were $0.79 versus 2006 earnings per share of $0.62, an increase of 27%.
OPERATIONS UPDATE
In the Sacramento Basin, the Company drilled nineteen wells in the first three quarters of 2007. Fifteen of these wells have been successful and one was cased waiting further evaluation. Twelve of the fifteen successful wells are currently on production, two are awaiting completion and one is waiting on pipeline connection. Since the end of the third quarter, the Company has drilled and is completing two additional wells with the expectation of drilling eight more wells in the fourth quarter.
The portion of the 2007 drilling program which focused on the south end of the Rio Vista field has been considerably enhanced by the Bradford Island 3D seismic survey that was acquired in 2006 and covers 7,000 acres. Seven wells have been drilled based on the survey this year, bringing the total number of producing wells drilled in this area to eight, with one currently waiting on a pipeline connection. As a result of this success, the Company has installed additional pipeline infrastructure to gather the increased gas production. This south end drilling, coupled with the pipeline improvements, added 10 Mmcfe/d in September.
Also in California, the Company drilled two successful wells in the third quarter on properties acquired from Output Exploration, LLC and OPEX Energy, LLC. The two wells have a combined net production of 3.1 Mmcfe/d. Three additional wells associated with this acquisition are planned before year-end.
In the DJ Basin of Colorado, the Company drilled 54 wells in the first nine months of the year, of which 43 were successful. The Company expects to drill another 15 before year-end. Current net production from the area is approximately 8.0 Mmcfe/d. Recent curtailment of 2 to 3 Mmcfe/d due to operational constraints on the Cheyenne Plains transmission line is presently corrected. The Company has added delivery points into Southern Star and Kinder Morgan pipelines, which is intended to reduce exposure to future curtailments in the area.
In South Texas, Rosetta has drilled 35 wells in its Lobo play at the end of October 2007, and will have drilled 43 wells in the Lobo by year end 2007. Rosetta completed 28 of the 35 wells drilled with net production from these wells of approximately 24 Mmcfe/d. Additionally, the Company has added approximately 10,000 acres in the Lobo region and acquired over 80 square miles of additional 3D seismic coverage. Rosetta plans to shoot an additional 100 plus square miles of 3D seismic over its leasehold in 2008. The 3D coverage, coupled with the leasing activity, is expected to add significantly to Rosetta's drilling inventory in the Lobo play.
In the Company's South Texas Perdido play, nine wells have been drilled and completed with one additional well currently being drilled. The nine completed wells are producing at a combined net rate of approximately 8 Mmcfe/d.
In the Gulf of Mexico, Rosetta's Main Pass 118 and 29 platforms continue to produce at net rates of 8 Mmcfe/d, while the East Cameron 88/89 platform is producing 7 Mmcfe/d net after a successful workover.
Production in Sabine Lake began in early November 2007. The construction of production facilities is near completion with a net production rate to Rosetta expected to reach 7 Mmcfe/d by the end of November.
Rosetta participated in several other successful wells, including the deepening of two wells in Kleberg County and the drilling of a successful Wilcox test in Duval County. Net production from two of these wells is approximately 3 Mmcfe/d with one well yet to be completed. There are three offsets wells planned to the Duval County discovery.
HEDGING UPDATE
The Company has entered into 10,000 MMBtu per day of additional hedges at an average price of $8.29 for 2008, and an additional 11,000 MMBtu per day at an average price of $8.40 for 2009. With the addition of these hedges, the Company now has a total of 64,909 MMBtu per day of hedges at an average price of $7.74 for 2008, and 42,141 MMBtu per day of hedges at an average price of $7.49 for 2009.
Charlie Chambers, Rosetta's Executive Vice President said, "While the third quarter of 2007 represents a high water-mark for production and revenues, we were disappointed that we did not meet our original guidance for the quarter. As discussed earlier, the production shortfall was attributable in large part to factors outside our control, including downstream pipeline bottlenecks and weak prices in the Rockies. We face similar challenges in the fourth quarter. Achieving our total year guidance of 125 Mmcfe/d is dependent on our ability to manage the issues in the DJ Basin and to bring Sabine Lake production up on a timely basis.
"With respect to the Calpine transaction, we have achieved some measure of success. We have received court approval of our partial settlement, but continue to face challenges regarding Calpine's fraudulent conveyance lawsuit. While we were disappointed in the bankruptcy court ruling regarding our Motion to Dismiss Calpine's fraudulent conveyance complaint, we intend to continue to vigorously defend against Calpine's baseless claims."
2007 THIRD QUARTER RESULTS
Rosetta's production for the third quarter 2007 was 11.6 Bcfe or an average of 126 Mmcfe/d. Average realized gas prices for the quarter were $7.39 per Mcf, including a $10.3 million benefit, from the Company's hedging program; and realized oil prices averaged $75.37 per Bbl.
Revenues for Rosetta totaled $89.7 million for the quarter. This represents a 26% increase versus $71.2 million of revenues in the third quarter of 2006.
Total lease operating expense ("LOE"), which includes direct LOE, workover, ad valorem taxes, and insurance, was $11.9 million or $1.03 per Mcfe. Direct LOE was $8.4 million or $0.72 per Mcfe and workover costs were $0.3 million or $0.03 per Mcfe for the period. Third quarter workover costs were favorably effected by an insurance recovery of $2.4 million associated with Hurricane Rita. Ad valorem tax was $2.6 million for the period, which equates to a cost of $0.22 per Mcfe. Production taxes were $1.2 million or $0.11 per Mcfe and treating, transportation and marketing charges were $1.9 million or $0.16 per Mcfe. Depreciation, depletion and amortization expense was $38.2 million, based on an all in DD&A rate of $3.29 per Mcfe.
General and administrative costs were $12.0 million for the third quarter of 2007. During the period, $3.0 million of settlement expense associated with the former Chief Executive Officer was charged as a general and administrative expense.
Net income for the period was $12.7 million or $0.25 per diluted share, which is up 4% compared to $11.9 million of net income or $0.24 per diluted share for the third quarter of 2006.
2007 FIRST NINE MONTHS RESULTS
Rosetta's production for the first nine months of 2007 was 32.2 Bcfe, or an average of 118 Mmcfe/d. Average realized gas prices for the period were $7.60 per Mcfe, including a $17.8 million benefit from the Company's hedging program and realized oil prices averaged $65.08 per Bbl.
Revenues for Rosetta totaled $252.4 million for the first nine months of 2007. This represents a 27% increase versus $199.1 million of revenues in the first nine months of 2006.
Total LOE, which includes direct LOE, workover, ad valorem taxes, and insurance, was $33.3 million or $1.03 per Mcfe. Direct LOE was $21.0 million or $0.65 per Mcfe and workover costs were $3.0 million or $0.09 per Mcfe for the period. The insurance recovery of $2.4 million in costs associated with Hurricane Rita also favorably effected unit workover costs for the period. Ad valorem tax was $7.7 million for the period which equates to a cost of $0.24 per Mcfe. Production taxes were $3.4 million or $0.11 per Mcfe and treating, transportation and marketing charges were $4.9 million or $0.15 per Mcfe. Depreciation, depletion and amortization expense was $105.1 million, based on an all in DD&A rate of $3.26 per Mcfe.
General and administrative costs were $30.0 million for the first nine months of 2007, which included the $3.0 million of settlement expense associated with the former Chief Executive Officer.
Net income for the period was $39.8 million or $0.79 per diluted share up 27% compared to $31.4 million of net income or $0.62 per diluted share for the first nine months of 2006.
Rosetta Resources Inc. is an independent oil and gas company engaged in acquisition, exploration, development and production of oil and gas properties in North America. Our operations are concentrated in the Sacramento Basin of California, South Texas, the Gulf of Mexico and the Rocky Mountains. Rosetta is a Delaware corporation based in Houston, Texas.
The Rosetta Resources Inc. logo is available at http://www.primenewswire.com/newsroom/prs/?pkgid=3139
For more information, visit www.rosettaresources.com.
Forward-Looking Statements - All statements, other than statements of historical fact, included in this presentation are forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. These statements are based upon current expectations and are subject to a number of risks, uncertainties and assumptions, which are more fully described in Rosetta Resources Inc.'s Annual Report on Form 10-K and Quarterly Reports on Form 10-Q filed with the Securities and Exchange Commission. These risks, uncertainties and assumptions could cause actual results to differ materially from those described in the forward-looking statements. Rosetta Resources Inc. assumes no obligation and expressly disclaims any duty to update the information contained herein except as required by law.
ROSETTA RESOURCES INC.
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CONSOLIDATED BALANCE SHEET
(In thousands, except share amounts)
September 30, December 31,
2007 2006
------------------------
(Unaudited)
Assets
Current assets:
Cash and cash equivalents $ 13,656 $ 62,780
Accounts receivable 36,324 36,408
Derivative instruments 7,271 20,538
Prepaid expenses 18,986 8,761
Other current assets 4,157 2,965
----------- -----------
Total current assets 80,394 131,452
----------- -----------
Oil and natural gas properties, full cost
method, of which $46.3 million at
September 30, 2007 and $37.8 million at
December 31, 2006 were excluded from
amortization 1,481,033 1,223,337
Other fixed assets 5,978 4,562
----------- -----------
1,487,011 1,227,899
Accumulated depreciation, depletion, and
amortization (248,396) (145,289)
----------- -----------
Total property and equipment, net 1,238,615 1,082,610
Deferred loan fees 2,490 3,375
Other assets 1,426 1,968
----------- -----------
Total other assets 3,916 5,343
----------- -----------
Total assets $ 1,322,925 $ 1,219,405
=========== ===========
Liabilities and Stockholders' Equity
Current liabilities:
Accounts payable $ 35,307 $ 23,040
Accrued liabilities 57,773 43,099
Royalties payable 14,925 9,010
Prepayment on gas sales 16,678 17,868
Deferred income taxes 2,741 7,743
----------- -----------
Total current liabilities 127,424 100,760
Long-term liabilities:
Derivative instruments 12,052 11,014
Long-term debt 250,000 240,000
Asset retirement obligation 17,437 10,253
Deferred income taxes 58,778 35,089
----------- -----------
Total liabilities 465,691 397,116
Stockholders' equity:
Common stock, $0.001 par value; authorized
150,000,000 shares; issued 50,525,323
shares and 50,405,794 shares at
September 30, 2007 and December 31, 2006,
respectively 50 50
Additional paid-in capital 760,004 755,343
Treasury stock, at cost; 105,436 and
85,788 shares at September 30, 2007 and
December 31, 2006, respectively (1,973) (1,562)
Accumulated other comprehensive (loss)
income (2,785) 6,315
Retained earnings 101,938 62,143
----------- -----------
Total stockholders' equity 857,234 822,289
----------- -----------
Total liabilities and stockholders'
equity $ 1,322,925 $ 1,219,405
=========== ===========
ROSETTA RESOURCES INC.
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CONSOLIDATED STATEMENT OF OPERATIONS
(In thousands, except per share amounts)
(Unaudited)
Three Months Ended Nine Months Ended
September 30, September 30,
-------- -------- -------- --------
2007 2006 2007 2006
Revenues:
Natural gas sales $ 79,061 $ 61,366 $225,658 $171,783
Oil sales 10,657 9,831 26,730 27,339
-------- -------- -------- --------
Total revenues 89,718 71,197 252,388 199,122
Operating Costs and Expenses:
Lease operating expense 11,912 9,449 33,274 27,330
Depreciation, depletion, and
amortization 38,186 27,906 105,079 77,574
Treating and transportation 1,412 317 3,057 2,043
Marketing fees 518 526 1,850 1,634
Production taxes 1,243 2,153 3,428 5,476
General and administrative
costs 12,032 8,316 29,999 24,645
-------- -------- -------- --------
Total operating costs and
expenses 65,303 48,667 176,687 138,702
-------- -------- -------- --------
Operating income 24,415 22,530 75,701 60,420
Other (income) expense
Interest expense, net of
interest capitalized 4,332 4,557 13,382 13,060
Interest income (240) (1,099) (1,469) (3,351)
Other (income) expense, net (105) (171) (287) 6
-------- -------- -------- --------
Total other expense 3,987 3,287 11,626 9,715
-------- -------- -------- --------
Income before provision for
income taxes 20,428 19,243 64,075 50,705
Provision for income taxes 7,715 7,321 24,280 19,293
-------- -------- -------- --------
Net income $ 12,713 $ 11,922 $ 39,795 $ 31,412
======== ======== ======== ========
Earnings per share: -------- -------- -------- --------
Basic $ 0.25 $ 0.24 $ 0.79 $ 0.63
======== ======== ======== ========
Diluted $ 0.25 $ 0.24 $ 0.79 $ 0.62
======== ======== ======== ========
Weighted average shares
outstanding:
Basic 50,409 50,282 50,363 50,211
Diluted 50,570 50,426 50,572 50,384
ROSETTA RESOURCES INC.
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CONSOLIDATED STATEMENT OF CASH FLOWS
(In thousands)
(Unaudited)
Nine Months Ended
September 30,
2007 2006
--------- ---------
Cash flows from operating activities
Net income $ 39,795 $ 31,412
Adjustments to reconcile net income to net
cash from operating activities
Depreciation, depletion and amortization 105,079 77,574
Deferred income taxes 24,195 18,991
Amortization of deferred loan fees recorded
as interest expense 885 885
Income from unconsolidated investments (117) (168)
Stock compensation expense 4,090 4,348
Change in operating assets and liabilities:
Accounts receivable 84 5,300
Income taxes receivable -- 6,000
Prepaid expenses (10,225) 605
Other current assets (1,192) (890)
Other assets 331 1,355
Accounts payable 12,267 2,494
Accrued liabilities 3,636 (324)
Royalties payable 4,725 (5,961)
--------- ---------
Net cash provided by operating activities 183,553 141,621
--------- ---------
Cash flows from investing activities
Acquisition of oil and gas properties (38,656) (11,587)
Purchases of property and equipment (205,310) (135,656)
Disposals of property and equipment 1,104 36
Increase in restricted cash -- (15,000)
Other 25 46
--------- ---------
Net cash used in investing activities (242,837) (162,161)
--------- ---------
Cash flows from financing activities
Borrowing from revolving credit facility 10,000 --
Equity offering transaction fees -- 268
Proceeds from issuances of common stock 571 515
Stock-based compensation excess tax benefit -- 302
Purchases of treasury stock (411) (1,526)
--------- ---------
Net cash provided by (used in) financing
activities 10,160 (441)
--------- ---------
Net decrease in cash (49,124) (20,981)
Cash and cash equivalents, beginning of period 62,780 99,724
--------- ---------
Cash and cash equivalents, end of period $ 13,656 $ 78,743
========= =========
Supplemental non-cash disclosures:
Capital expenditures included in accrued
liabilities $ 6,900 $ 3,783
Accrued purchase price adjustment -- 11,400