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| 8-K - ROSE 1ST Q CALL PRESENTATION - NBL Texas, LLC | rosepresslides.htm |
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ROSETTA RESOURCES INC.
First Quarter 2011
Earnings Review
Earnings Review
May 9, 2011
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• Opening Comments - Randy Limbacher
• Financial Review - Michael Rosinski
• Operations Update - Jim Craddock
• Asset Development Update - John Clayton
• Closing Remarks - Randy Limbacher
Earnings Call Agenda
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• Entered 2011 with 2 TCFE in project inventory
• Continued excellent well performance from Gates Ranch wells
in Eagle Ford
in Eagle Ford
• Increased total liquids production for fourth consecutive
quarter
quarter
• Closed $255 million in asset divestitures ahead of schedule
with proceeds exceeding expectations
with proceeds exceeding expectations
• Progressed delineation program in Southern Alberta Basin
Overview - Randy Limbacher
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• Quarterly financial performance in line with expectations
• Strong 1Q production growth driven by Eagle Ford
• Improving cost structure from growth in lower-cost
production
production
• Utilized proceeds from divestiture to improve cash and debt
positions
positions
• Continue to pursue active hedging program
Financial Review - Michael Rosinski
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• Spent $88.1 million in capex, drilled 11 gross and 11 net wells
• Averaged daily production of 155 MMcfe/d, up 25 percent from 1Q 2010
• Currently producing 120 MMcfe/d from Eagle Ford
• Set quarterly total liquids production record of 8,500 Bbls/d; currently
producing 11,000 Bbls/d
producing 11,000 Bbls/d
• Gates Ranch production exceeding expectations
• Drilled and completed 9 wells during 1Q
• Well-pad development lowering costs, reducing drilling time; completed first three
-well pad stimulation
-well pad stimulation
• Added third rig to test other Eagle Ford acreage
• Drilled two vertical wells in Southern Alberta Basin during 1Q
• Revised 2011 production guidance: 155 - 165 MMcfe/d Direct LOE: $0.40 per
Mcfe for remainder of year
Mcfe for remainder of year
Operations Update - Jim Craddock
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• Focused on developing full potential of Gates Ranch
• Wells continue to outperform revised EUR models
• 58 wells to be completed by year-end; represents 25% of total locations
with current spacing
with current spacing
• Five years of inventory with current spacing and completion pace
• Moving ahead with evaluation of untested blocks in Eagle Ford
• Entering next phase of Southern Alberta Basin delineation program
• 11 vertical wells drilled to date and final testing underway
• Three-well horizontal drilling program to begin in next few weeks
• Confident to proceed without partner despite industry interest
Asset Development Update - John Clayton
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Gates Ranch Proper - Individual Well Performance
Normalized actual results versus internal 7.2 Bcfe P50 curve and P90 PUD booking curve
Normalized actual results versus internal 7.2 Bcfe P50 curve and P90 PUD booking curve
5 BCFE Composite Type Curve (PUD bookings)
7.2 BCFE Composite Type Curve
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Gates Ranch Proper - Drilling Activities
Inception to date and full development plan
Year-end 2011
58 wells completed
Total Field Development*
236 wells
*Excludes infill drilling
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Summary - Randy Limbacher
• Double-digit growth in 2011 with current Eagle Ford
development program
development program
• Production in excess of 200 MMcfe/d during 2012 with
majority from liquids
majority from liquids
• Potential upside from untested Eagle Ford assets and
Southern Alberta Basin portfolio
Southern Alberta Basin portfolio
• Streamlined and focused with greater growth
opportunities
opportunities
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This presentation 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 drilling plans, including the acceleration thereof, production rates and guidance,
resource potential, incremental transportation capacity, exit rate guidance, net present value, development plans,
progress on infrastructure projects, exposures to weak natural gas 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 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 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; drilling and completion losses that are generally not recoverable from third
parties or insurance; potential mechanical failure or underperformance of significant wells; pipeline construction
difficulties; climatic conditions; availability and cost of material, equipment and services; the risks associated with
operating in a limited number of geographic areas; actions or inactions of third-party operators of the Company's
properties; the Company's ability to retain skilled personnel; diversion of management's attention from existing
operations while pursuing acquisitions or dispositions; availability of capital; the strength and financial resources of the
Company's competitors; regulatory developments; environmental risks; uncertainties in the capital markets;
uncertainties with respect to asset sales; general economic and business conditions (including the effects of the
worldwide economic recession); industry trends; and other factors detailed in the Company's most recent Form 10-K,
Form 10Q 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.
future events based on currently available information. Forward-looking statements are statements that are not historical
facts, such as expectations regarding drilling plans, including the acceleration thereof, production rates and guidance,
resource potential, incremental transportation capacity, exit rate guidance, net present value, development plans,
progress on infrastructure projects, exposures to weak natural gas 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 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 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; drilling and completion losses that are generally not recoverable from third
parties or insurance; potential mechanical failure or underperformance of significant wells; pipeline construction
difficulties; climatic conditions; availability and cost of material, equipment and services; the risks associated with
operating in a limited number of geographic areas; actions or inactions of third-party operators of the Company's
properties; the Company's ability to retain skilled personnel; diversion of management's attention from existing
operations while pursuing acquisitions or dispositions; availability of capital; the strength and financial resources of the
Company's competitors; regulatory developments; environmental risks; uncertainties in the capital markets;
uncertainties with respect to asset sales; general economic and business conditions (including the effects of the
worldwide economic recession); industry trends; and other factors detailed in the Company's most recent Form 10-K,
Form 10Q 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.
Forward-Looking Statements and Terminology Used
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For filings reporting year-end 2010 reserves, the SEC permits the optional disclosure of probable and possible
reserves. The Company has elected not to report probable and possible reserves in its filings with the SEC. 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 reserves but are potentially recoverable through exploratory drilling or additional drilling or recovery
techniques. Estimates of unproved 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 unproved
resources may change significantly as development provides additional data, and actual quantities that are ultimately
recovered may differ substantially from prior estimates. We use the term “BFIT NPV10” to describe the Company’s
estimate of before income tax net present value discounted at 10 percent resulting from project economic evaluation. The
net present value of a project is calculated by summing future cash flows generated by a project, both inflows and
outflows, and discounting those cash flows to arrive at a present value. Inflows primarily include revenues generated from
estimated production and commodity prices at the time of the analysis. Outflows include drilling and completion capital
and operating expenses. Net present value is used to analyze the profitability of a project. Estimates of net present value
may change significantly as additional data becomes available, and with adjustments in prior estimates of actual quantities
of production and recoverable reserves, commodity prices, capital expenditures, and/or operating expenses.
reserves. The Company has elected not to report probable and possible reserves in its filings with the SEC. 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 reserves but are potentially recoverable through exploratory drilling or additional drilling or recovery
techniques. Estimates of unproved 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 unproved
resources may change significantly as development provides additional data, and actual quantities that are ultimately
recovered may differ substantially from prior estimates. We use the term “BFIT NPV10” to describe the Company’s
estimate of before income tax net present value discounted at 10 percent resulting from project economic evaluation. The
net present value of a project is calculated by summing future cash flows generated by a project, both inflows and
outflows, and discounting those cash flows to arrive at a present value. Inflows primarily include revenues generated from
estimated production and commodity prices at the time of the analysis. Outflows include drilling and completion capital
and operating expenses. Net present value is used to analyze the profitability of a project. Estimates of net present value
may change significantly as additional data becomes available, and with adjustments in prior estimates of actual quantities
of production and recoverable reserves, commodity prices, capital expenditures, and/or operating expenses.
Forward-Looking Statements and Terminology Used
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