Rosetta Resources Hits Record Production and Proved Reserves in 2013

RosettaEagleFordMap

Rosetta Resources had a record setting year in 2013, increasing total annual production from ~37,000 boe/d in 2012 to 50,000 boe/d. That's an increase of 34%.

The company also increased its total reservesby 39%  to 279 million boe.

Approximately 30% or 84 mmboe of the total added reserves came from Rosetta's successful development of the Eagle Ford.

“In 2013, we continued to deliver competitive growth in production and reserves while expanding our operations into a new basin. We remain focused on developing our Eagle Ford assets and committed to fully advancing our Permian Basin operations.”

— Jim Craddock. Rosetta's CEO

Rosetta Resources Eagle Ford Drilling and Completion Initiatives

In total, Rosetta spent ~67% of it's development budget in the Eagle Ford in 2013. $600 million was spent on drilling and completion activity in the Eagle Ford shale, with Rosetta drilling 111 wells and completing 79.

As of late 2013, Rosetta still had a lot of running room in the Eagle Ford. Approximately 23% of the wells the company has drilled in the Eagle Ford were sitting idle and waiting to be completed.

Read more:Rosetta Resources Has Yet to Complete 23% of its Drilled Eagle Ford Wells

According to the company, well costs improved in the Eagle Ford and have fallen to $6.5 - $7 million for average wells.

Rosetta Resources Expanding in Delaware Basin

Rosetta is also expanding into other areas, including the Delaware Basin. On December 3o, 2013, the company entered an agreement to acquire assets in the basin for $85 million. The purchase covers 5,078 net acres (14,985 gross) in Reeves County.

Rosetta at a Glance in 2013

• Total annual production up ~34% to 50,000 boe/d
• Eagle Ford added 30% or 84 mmboe to company's reserves
• $600 million spent on drilling and completion  in Eagle Ford
• Eagle Ford wells drilled - 111
• Eagle Ford completed wells - 79
• Purchase of 5,078 net acres for $85 million in Delaware Basin

BHP - Petrohawk Deal Brings Australia to the Eagle Ford

Petrohawk's Eagle Ford position is paying off in a big way.  The company has received a bid to be acquired by BHP Billiton for a 65% premium over the prior days stock price. Petrohawk's leading position in the Eagle Ford is likely a primary driver behind the acquisition. The company is strategically positioned in two of the hottest areas of the Eagle Ford with its Black Hawk and Hawkville field positions. The company also has a sizeable oil position at the Red Hawk Field in the Eagle Ford Shale Oil window that has not provided the economic results needed to compete for capital with Petrohawks other assets. Expect the Red Hawk Field to get more attention now that the operator has much deeper pockets. Overall, drilling rates across Petrohawks asset base will likely increase as BHP looks to accelerate value from its newly acquired assets.

That's a hefty price but BHP needs the people and the assets. After several failed bids to consolidate in the mining industry, the company turned to investing in oil & gas exploration and production.

The Petrohawk acquisition follows BHP's $4.75 billion acquisition of Chesapeake's Fayetteville Shale assets. BHP only got the assets in the Chesapeake deal, so over the next year the company was tasked with building a large US E&P business. The Petrohawk acquisition gives them the human capital and just happens to be a company that was a leader in the Fayetteville Shale before divesting assets to focus in the Haynesville Shale and Eagle Ford Shale.

BHP gets Petrohawk with its three core positions which include 225,000 acres in the Haynesville Shale, 120,000 net acres in the Lower Bossier Shale, 332,000 acres in the Eagle Ford Shale, and 325,000 acres in the Midland/Delaware basins, which is prospective for the Avalon Shale, Bone Springs, and Wolfcampian formation.

Combined with the Chesapeake deal, BHP will become one of the top ten natural gas producers in the US. The company's onshore US operations will include almost 1,500,000 net acres that produce over 1.3 Bcf per day.

BHP Billiton [ASX: BHP, NYSE: BHP, LSE: BLT, JSE: BIL] and Petrohawk Energy Corporation (“Petrohawk”) [NYSE: HK] announced today that the companies have entered into a definitive agreement for BHP Billiton to acquire Petrohawk for US$38.75 per share by means of an all-cash tender offer for all of the issued and outstanding shares of Petrohawk, representing a total equity value of approximately US$12.1 billion and a total enterprise value of approximately US$15.1 billion, including the assumption of net debt. The Petrohawk board of directors has unanimously recommended to Petrohawk shareholders that they accept the offer.

The transaction would provide BHP Billiton with operated positions in the three world class resource plays of the Eagle Ford and Haynesville shales, and the Permian Basin. Petrohawk’s assets cover approximately 1,000,000 net acres in Texas and Louisiana, with estimated 2011 net production of approximately 950 million cubic feet equivalent per day (MMcfe/d), or 158 thousand barrels of oil equivalent per day (Mboe/d). At year-end 2010, Petrohawk reported proved reserves of 3.4 trillion cubic feet of natural gas equivalent (Tcfe). The company has a current non-proved resources base of 32 Tcfe for a total risked resource base of 35 Tcfe. Petrohawk reported gross assets of US$8.2 billion as at 31 March 2011 and US$390 million of profit before tax for the year ended 31 December 2010.