Attached files
| file | filename |
|---|---|
| 8-K - 8K ROSE 3RD Q 2011 CALL PRESENTATION - NBL Texas, LLC | roseqpres.htm |
Rosetta Resources Inc.
Third Quarter 2011
Earnings Review
Earnings Review
November 8, 2011
www.rosettaresources.com / NASDAQ: ROSE
High Asset Quality - Executing on Business Plan - Future Growth Catalysts - Financial Strength
EXHIBIT 99.1
2
– Opening Comments Randy Limbacher
– Financial Review Michael Rosinski
– Operations Update Jim Craddock
– Asset Development Update John Clayton
– Closing Remarks Randy Limbacher
Earnings Call Agenda
3
– Continued to successfully execute operationally -- on target to meet
production guidance with increased mid-stream capacity in Eagle Ford
production guidance with increased mid-stream capacity in Eagle Ford
– Tested three new Eagle Ford shale areas with economic potential of two
wells on par or higher than Gates Ranch
wells on par or higher than Gates Ranch
– Made early call to adjust to 65-acre well spacing in Gates Ranch
– Progressed exploratory evaluations in Southern Alberta Basin
– Increased total project inventory by 30 percent to 2.8 TCFE, reflecting 10-
15 years of drilling opportunities
15 years of drilling opportunities
– Continued to significantly lower overall cost structure
– 2012 Outlook
– Higher capital budget to fund double-digit growth
– 33% increase in Eagle Ford completions
Overview - Randy Limbacher
4
– Continued production growth in spite of impact of operational upset and
asset sales
asset sales
– Set all-time record of 13,000 Bbls/d in liquids production that contributed to
higher average realized prices
higher average realized prices
– Maintained strong cash position
– Hedging positions remain
– Current capability to move net 166 MMcfe/d volumes on firm basis
– Access to four separate Eagle Ford processing facilities
Financial Review - Michael Rosinski
5
Expense Guidance - 2011 Second Half
6
¹ Rosetta’s net equivalent gas production (MMcfe/d) equals 1.35 times gross wet wellhead gas (MMcf/d)
Eagle Ford - Firm Transportation Capacity
7
– Spent $133.8 million in capex, drilled 16 gross and 16 net wells
– Increased total company production to current rate of 195 MMcfe/d; liquids
production to 18,000 Bbls/d
production to 18,000 Bbls/d
– Continued to ramp-up Eagle Ford activity
– Drilled 13 and completed 12 wells during 3Q
– Drilled and completed three discovery wells outside Gates Ranch
– Water infrastructure and recycling in place at Gates Ranch
– Drilled 4 horizontal wells to date in Southern Alberta Basin
– Reaffirmed 2011 production guidance: 160 - 170 MMcfe/d
– Reaffirmed 2012 preliminary estimate: 220 - 240 MMcfe/d
Operations Update - Jim Craddock
8
Quarterly Production Performance
Production
(MMcfe/d)
9
• 10 water supply wells capable of
76 Mbbl/d
76 Mbbl/d
• Could supply ~ 200 fracs per year
• Frac pond storage capacity of
2.1MMbbls ~ 15 fracs
2.1MMbbls ~ 15 fracs
• Gates Ranch located in area of
thick, prolific Carrizo water source
thick, prolific Carrizo water source
• Rosetta reimburses landowner for
water under surface use
agreement
water under surface use
agreement
• Successful water recycling pilot
completed, full recycling of all
produced water now underway -
approx 20% of water usage
completed, full recycling of all
produced water now underway -
approx 20% of water usage
Gates Ranch - Frac Water Availability
10
Gates Ranch - Stable Condensate Yields In Oldest Wells
11
– Infill Drilling at Gates Ranch
– Early decision to now develop on 565-foot well spacing (65-acre effective
spacing)
spacing)
– Full development with 325 horizontal wells; 280 remain to be drilled
– Approximately 9 years of development drilling assuming 2-rig program
– Non-Gates Ranch Testing
– 23,500 net acres in liquids-rich windows
– 3 successful discoveries delineate 13,600 net acres; add 193 well locations
– Roughly 10,000 net acres remain to be tested
– 100% working interests / operated by Rosetta
– Southern Alberta Basin Exploration
– 4 horizontal wells drilled: 1 well completed and testing; 2 wells to be tested by
year-end; 1 well to be completed in first quarter of 2012
year-end; 1 well to be completed in first quarter of 2012
– 3 of the 7 horizontal wells to be drilled and completed in early 2012
Asset Development Update - John Clayton
12
Gates Ranch
Field-wide development plans on 65-acre well spacing
Field-wide development plans on 65-acre well spacing
13
New Eagle Ford Discovery
Briscoe Ranch
Briscoe Ranch
14
New Eagle Ford Discovery
Central Dimmit County
Central Dimmit County
15
New Eagle Ford Discovery
Karnes Trough Area
Karnes Trough Area
16
Eagle Ford Assets
Successfully tested areas total 55,000 net acres of the 65,000 net acres or 85% of portfolio
Successfully tested areas total 55,000 net acres of the 65,000 net acres or 85% of portfolio
17
*Includes only “well tested” inventory and excludes inventory on our 10,000 net acres that has offset data and will be tested in the upcoming quarters.
Eagle Ford
Well Tested Inventory
Well Tested Inventory
18
Southern Alberta Basin
Continuing to move the play forward
Continuing to move the play forward
19
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; availability and limitations of capacity in midstream marketing facilities, including processing plant and
pipeline construction difficulties and operational upsets; climatic conditions; availability and cost of material, supplies,
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; 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; availability and limitations of capacity in midstream marketing facilities, including processing plant and
pipeline construction difficulties and operational upsets; climatic conditions; availability and cost of material, supplies,
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; 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
20
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
21