Rosetta Resources Plans to Spend $735 Million in the Eagle Ford in 2014

Rosetta Resources Eagle Ford Acreage Map By Area

Rosetta Resources will spend approximately tw0-thirds of its $1.1 billion budget in 2014 in the Eagle Ford.

The company will spend $735 million running 4-5 rigs, with plans to drill and complete 90-95 gross wells. Approximately half of the activity will target the Eagle Ford from the company's Gates Ranch leases.

Read more:Rosetta Acquires Additional Eagle Ford Interests at Gates Ranch

As a result of Eagle Ford and Permian Basin growth, Rosetta expects production to grow 20-30% to 60,000-65,000 boe/d.

“The 2014 capital plan is structured to deliver between 20 and 30 percent combined production growth from our Eagle Ford and Delaware Basin assets. The program reflects increasing activity as we initiate broader scale horizontal development in Reeves County and further expand development in new areas of our current Eagle Ford position,” said Jim Craddock, CEO. “We will continue to focus our efforts on integrating our West Texas assets while continuing to efficiently execute the development of our Eagle Ford leases.”

Rosetta will run six rigs and spend $265 million in the Permian Basin in 2014.

Also read:Rosetta Has Yet To Complete 23% of Its Eagle Ford Wells

Fourth Quarter Operational Delays Impact Production

Rosetta's fourth quarter 2013 production was negatively affected several issues that are estimated to have lowered production by ~4,000 boe/d. Rosetta expects fourth quarter production will average 52,000 boe/d and full-year 2013 production will average 50,000 boe/d.

• Operational issues on a third-party gathering system
• Operational issues at a third-party processing plant
• Wells shut-in due to adjacent well completions
• Rosetta compressor station fire

Jim Craddock, CEO, commented, "Our strength is our people and our personnel have done a great job of minimizing the impacts of several external hurdles we faced this quarter. We look forward to discussing our fourth quarter results, as well as our outlook for 2014, with investors in February."

Rosetta is Proving Eagle Ford Acreage - Growing Production

Rosetta Eagle Ford Map | June 2012

Rosetta Resources tested a 8,100-acre tract for the first time in the third quarter of 2012. The Lasseter & Eppright 1 well is located in central Dimmit County (oil window). The well has a 5,404-ft lateral and was completed with 15 frac stages. In the first seven days online, the well produced 667 b/d of oil, 1.8 mmcfd of residue gas, 262 b/d of NGLs for an equivalent rate of 1,228 boe/d. I'll step out on a limb and say more than 1,000 boe/d is really good sign. We'll likely see the company attribute additional wells to its development program in this area in the coming months.

The promising well wasn't the only news for the company. The company spent a little more than $188 million during the quarter and increased its 2012 capex guidance to $660-680 million for the year (a $20-40 million increase). Otherwise, Rosetta reported good results across the board. The company drilled 25 gross operated wells, while completing 16 wells. Production grew 13% from the previous quarter to 36.5 mboe/d.

The company ran five rigs during the quarter. The bulk of the company's activity is at Gates Ranch (15 of 25 wells drilled in the quarter) where the company continues to see positive well results at 55-acre spacing. Rosetta will keep 2-3 rigs running in the Gates Ranch area and will move its other two rigs around its acreage in other areas. The company has almost 350 more drilling locations left to develop at Gates Ranch.

Rosetta Resources Plans Eagle Ford Development at 55-Acre Spacing at Gates Ranch

Rosetta Eagle Ford Map | June 2012

Rosetta Resources continues to evaluate its well spacing tests across the Eagle Ford, but results to date show no interference from wells tested at 425-565 ft apart or 50-65 acre spacing. Without signs of interference, the company is going forward with development at 55-acres spacing. The lower down-spacing interval will allow the company to drill 428 wells across its Gates Ranch properties; a 29% increase.

Rosetta expects it had approximately 800 net wells to be completed throughout its Eagle Ford position at the end of 2011. Over 30% of those are located in the Gates Ranch area of Webb County where the company has two rigs running continually. The company's rigs are spread throughout the Briscoe Ranch, Central Dimmit County and the company's Karnes County acreage.

Rosetta Resources Planning 65-Acre Spacing - Expanding Gathering

Rosetta Resources is planning to down space to 65-acres per well in the Eagle Ford. That's a nice jump from the 100+ acres spacing most are utilizing across the play. Well results will tell the story, but Rosetta has the confidence to go forward based on what it has seen to date. Development of the company's entire acreage position is expected at a range of 60-80 acres per well. The company also proved the potential of 13,600 acres outside of Gates Ranch. At ~65-acre spacing, that's an additional 200 drilling locations. In addition, Rosetta has a 10,000 acre position that will be tested during 2012.

12 Eagle Ford wells were completed in the third quarter and the company plans to complete 13 wells in the fourth quarter. That pace is close to the long-term target of 60 completions per year. With an inventory of more than 800 wells to be drilled, the Eagle Ford is becoming a 10-15 year development for Rosetta Resources. 

Our Eagle Ford position continues to drive the success of our company as we expand our operations into new parts of the play that will serve as a further catalyst for growth,..

Progressed midstream expansions — Rosetta is benefiting from improved performance by Eagle Ford midstream providers. Recent expansions that became operational in October almost three weeks ahead of schedule increased total firm gross wet gas capacity for the Eagle Ford to 123 million cubic feet per day ("MMcf/d"). This will allow the Company to move 166 million cubic feet equivalent per day ("MMcfe/d") of net Eagle Ford volumes on a firm basis. Firm gross wet gas capacity of 160 MMcf/d will become available in January 2012 increasing Rosetta's net total firm capacity to 216 MMcfe/d.

Rosetta successfully completed 12 Eagle Ford wells during the quarter ended September 30, 2011. As of September 30, 2011, the Company has completed 52 horizontal wells. During the third quarter, Rosetta operated three to four rigs in the Eagle Ford area. Rosetta is the operator and holds a 100 percent working interest in the following three wells drilled in new areas outside of Gates Ranch:

• The Briscoe Ranch 1H well is located north of Gates Ranch in a 3,500-acre section of Rosetta's leasehold in the condensate window in Dimmit County. The well was completed with a 5,500-foot lateral and 15 frac stages and brought on-line on October 26, 2011. The well tested at a gross stabilized rate of 850 Bbl/d of oil, 3.9 MMcf/d of residue gas, 490 Bbl/d of NGLs.

• The Vivion 1H well is located in central Dimmit County in the oil window on an 8,100-acre tract. The well was completed with a 5,600-foot lateral and 15 frac stages and brought on-line on September 14, 2011. The well tested at a gross stabilized rate of 506 Bbl/d of oil, 436 Mcf/d of residue gas, 102 Bbl/d of NGLs.

• The Klotzman #1 well is located on 1,900 acres in DeWitt County in the oil window. The well was completed with a 5,100-foot lateral and 15 frac stages and brought on-line on November 1, 2011. The well tested at a gross stabilized rate of 2,450 Bbl/d of oil, 2.0 MMcf/d of residue gas, 250 Bbl/d of NGLs.

Rosetta plans to complete 13 Eagle Ford wells during the fourth quarter and continue to operate four rigs in the area.

As Rosetta moves forward with the delineation, development, and down-spacing of its Eagle Ford leasehold, the total inventory portfolio in the area has grown 45 percent to 2.7 Tcfe compared to year-end 2010.  At a targeted pace of approximately 60 completions per year, Rosetta expects to develop its current Eagle Ford inventory over the next 10 to 15 years.

Rosetta Resources Down Spacing Test at 50 Acres per Well

Rosetta Resources will be able to provide real production data on the down-spacing potential in the Eagle Ford by the end of 2011. The company is drilling a three well down spacing pilot program to test the potential of 50-acre spacing on the company's Gates Ranch lease in Webb County, TX. If this pilot proves successful, it means the Eagle Ford might have a well inventory that is three times greater than most people expected.

The Company also initiated two separate infill drilling pilot programs at Gates Ranch to test the feasibility of 50-acre spacing. The first pilot program has been drilled and both pilots are expected to be drilled and completed by the end of the year.