Rosetta Resources Inc. Announces 2010 Financial And Operational Results And Provides 2011 Outlook

HOUSTON, Feb. 25, 2011 (GLOBE NEWSWIRE) -- Rosetta Resources Inc. (Nasdaq:ROSE) ("Rosetta" or the "Company") today announced financial and operating results for the fourth quarter and full year 2010 that reflect the Company's success as an unconventional resource player and its growing production and reserves position in the Eagle Ford shale in South Texas.

"In 2010, we began to realize the benefits of our transformation to an unconventional resource player. We improved virtually every aspect of the underlying fundamentals of our business while establishing one of the industry's most competitive positions in the Eagle Ford shale play. In the process, we shifted our production base to a more balanced portfolio weighted toward oil, condensate and natural gas liquids," said Randy Limbacher, Rosetta's chairman, president and CEO. "As a result of our early success in the Eagle Ford and the divestiture of legacy assets to fund our growth initiative there, Rosetta enters 2011 a much more focused company with a larger production, inventory and reserves base for significant growth and a balance sheet that reflects financial discipline."

Below is a summary of financial and operational highlights from the year:

• Established a major new base of production and reserves in the Eagle Ford shale - The South Texas play is now Rosetta's largest producing area recording a total daily net production exit rate of 86 million cubic feet of natural gas equivalent as of December 31, 2010. Of that production, 49 percent was oil, condensate and natural gas liquids ("NGLs"). During 2010, Rosetta successfully delineated its 26,500-acre position in the Gates Ranch, drilling 25 successful wells, of which 16 were completed. Less than seven percent of the Gates Ranch identified inventory is drilled and on production. Based on actual Gates Ranch well performance, the Company has revised its original estimated ultimate recovery ("EUR") rates to 7.2 billion cubic feet equivalent ("Bcfe") gross per well. Utilizing this new EUR, one typical Gates Ranch well has a before income tax net present value ("BFIT NPV10") of $13.4 million. The Company has also drilled a successful well on its nearby Light Ranch acreage in central Dimmit County that is expected to increase the potential number of drilling locations.  
• Shifted production portfolio to a more balanced commodity mix and set record highs for annual and quarterly total liquids production - Rosetta ended 2010 with approximately 30 percent of its production from oil, condensate and NGLs and that amount is expected to increase as more production is brought on-line from the Eagle Ford shale. During the fourth quarter, daily total liquids production averaged 7,100 barrels. This more balanced commodity mix reduces exposure to cyclical swings in energy pricing.  
• Rep laced 482 percent of production, increased proved reserve base by 36 percent and significantly reduced finding and development costs - During 2010, Rosetta made total capital expenditures of $339.4 million and drilled 127 gross and 124 net wells with a net success rate of 98 percent. Proved reserves as of December 31, 2010 were 479 Bcfe. The Company's reserve replacement cost per thousand cubic feet equivalent ("Mcfe") was $1.40. Reserve replacement calculations include net reserve additions from drilling activity, proved acquisitions, price revisions and performance revisions.  
• More than doubled resource inven t ory base - Driven by growth in the Eagle Ford shale, Rosetta more than doubled its project inventory base from the previous year to 2.1 trillion cubic feet of natural gas equivalent including proved undeveloped reserves.  
• Maintained production volumes d u ring a period of divestitures -During 2010, Rosetta averaged production of 138 MMcfe/d for the year. The Company sold assets in Arkansas, Oklahoma, Mississippi, Texas, Louisiana, New Mexico and Wyoming for approximately $90 million with the net proceeds redeployed into higher-return shale positions. The Company now expects to close sales of its remaining properties in the DJ Basin in the Rockies and holdings in the Sacramento Basin of California by the end of the second quarter in 2011.  
• Moved ahead with exploratory evaluations of large leasehold position in Southern Alberta Basin -Rosetta continued its drilling program on its approximately 300,000-acre position in northwest Montana.As of December 31, 2010, six vertical delineation wells had been drilled with another five planned for the first half of 2011. The Company currently has two rigs under contract.  
• Maintained commitment to financial discipline - The Company continued to divert spending from natural gas producing areas to more promising opportunities offered by its Eagle Ford shale assets. While capital spent exceeded internal cash flows due to increased activity in the Eagle Ford shale, the Company balanced the capital budget with asset sales, cash on hand and additional financing to fund drilling activities.

2010 Fourth Quarter Results

For the fourth quarter ended December 31, 2010, Rosetta reported a net loss of $1.4 million, or $(0.02) per diluted share, versus a net income of $9.2 million, or $0.19 per diluted share, for the same period in 2009. These results include the impact of a $3.5 million before tax expense related to the closure of its Denver office and an $8.1 million deferred income tax expense charge due to partial impairment of the deferred tax asset as a result of divestitures.