Rosetta Resources (ROSE)

[dan_s]

Rosetta Resources (ROSE): An updated Net Income & Cash Flow Forecast has been posted under the Watch List Tab.

I rate this one a STRONG BUY after the company reported strong production growth in Q2 and they increased their full year production guidance. I am increasing my Fair Value Estimate by $7.00 to $76.00/share. Compares to First Call's Price Target of $60.32. [My FVE is what think the company's break-up value or takeover price is today.]

The only downside is that ROSE still produces a lot of natural gas. Their 2014 production mix is roughly 30% crude oil, 33% NGLs and 37% natural gas. Their gas has a high btu content, so it does sell at a premium to Henry Hub. Their realized price for gas in the 2nd quarter (excluding the impact of their hedges) was $4.50/mcf. Their development plan is focused on increasing their liquids production.

2nd quarter production was 61,464 boepd and they are on-track to exit the year over 75,000 boepd. If commodity prices hold near current levels, 2015 is going to be a VERY GOOD year for ROSE and I think it is a Prime Takeover Target today.

We will publish an updated profile on ROSE late this month.