ROSE
Re: ROSE
No. There is nothing in my forecast for the Alberta Bakken.
Wells Fargo Equity Research put out a negative comment on it this morning but they still list it as Outperform with their valuation being $52 to $56 (down from $58 to $62).
My Fair Value estimate is $65/share.
I'm expecting ROSE to have very strong 4th quarter results, so I would be a buyer on today's weakness.
Wells Fargo Equity Research put out a negative comment on it this morning but they still list it as Outperform with their valuation being $52 to $56 (down from $58 to $62).
My Fair Value estimate is $65/share.
I'm expecting ROSE to have very strong 4th quarter results, so I would be a buyer on today's weakness.
Dan Steffens
Energy Prospectus Group
Energy Prospectus Group
Re: ROSE
My forecast model (which had nothing in it for the Alberta Bakken) is based on the following production:
> 187,000 mcfepd for Q4 (54% liquids)
> 230,000 mcfepd for 2012 (61% liquids)
Based on my forecast, ROSE will generate over $10 CFPS next year.
6X CFPS is a conservative multiple for a company with this much growth locked in.
Dan
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(Reuters) - Oil and natural gas producer Rosetta Resources (NasdaqGS:ROSE) forecast an increase in production for next year, but disappointing results from its exploratory well program in the Southern Alberta Basin sent its shares down as much as 11 percent.
Two of the four wells drilled in northwestern Montana stabilized at rates of 154 barrels of oil equivalent per day (boe/d) and 104 boe/d.
Suntrust Robinson Humphrey analyst Neal Dingmann said he had expected each well to test at 250-300 boe/d.
"We will complete our current horizontal drilling program (in Southern Alberta Basin) and adjust our exploratory efforts and spending to reflect those results and hold our position for future optionality," Chief Executive Randy Limbacher said in a statement on Monday.
Analyst Dingmann said Rosetta would not increase its activity in the basin and adopt a wait-and-see approach.
However, the company said it continues to benefit from production growth from its liquids-rich Eagle Ford Shale assets in south Texas.
The Houston-based company expects full-year 2012 production of 220-240 million cubic feet of natural gas equivalents per day (mmcfe/d). Rosetta is currently producing about 195 mmcfe/d.
Rosetta expects to exit 2012 with 250-280 mmcfe/d. It had projected 2011 exit rate of 190-200 mmcfe/d.
The company set a capital budget of $640 million for next year and said 90 percent of it would be spent on the liquids-rich area of the Eagle Ford shale.
Rosetta Resources shares, which have gained 34 percent this year, were trading down $5.02 at $45.55 on Friday on Nasdaq.
> 187,000 mcfepd for Q4 (54% liquids)
> 230,000 mcfepd for 2012 (61% liquids)
Based on my forecast, ROSE will generate over $10 CFPS next year.
6X CFPS is a conservative multiple for a company with this much growth locked in.
Dan
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(Reuters) - Oil and natural gas producer Rosetta Resources (NasdaqGS:ROSE) forecast an increase in production for next year, but disappointing results from its exploratory well program in the Southern Alberta Basin sent its shares down as much as 11 percent.
Two of the four wells drilled in northwestern Montana stabilized at rates of 154 barrels of oil equivalent per day (boe/d) and 104 boe/d.
Suntrust Robinson Humphrey analyst Neal Dingmann said he had expected each well to test at 250-300 boe/d.
"We will complete our current horizontal drilling program (in Southern Alberta Basin) and adjust our exploratory efforts and spending to reflect those results and hold our position for future optionality," Chief Executive Randy Limbacher said in a statement on Monday.
Analyst Dingmann said Rosetta would not increase its activity in the basin and adopt a wait-and-see approach.
However, the company said it continues to benefit from production growth from its liquids-rich Eagle Ford Shale assets in south Texas.
The Houston-based company expects full-year 2012 production of 220-240 million cubic feet of natural gas equivalents per day (mmcfe/d). Rosetta is currently producing about 195 mmcfe/d.
Rosetta expects to exit 2012 with 250-280 mmcfe/d. It had projected 2011 exit rate of 190-200 mmcfe/d.
The company set a capital budget of $640 million for next year and said 90 percent of it would be spent on the liquids-rich area of the Eagle Ford shale.
Rosetta Resources shares, which have gained 34 percent this year, were trading down $5.02 at $45.55 on Friday on Nasdaq.
Dan Steffens
Energy Prospectus Group
Energy Prospectus Group
Re: ROSE
CITI on ROSE:
Rosetta Resources (ROSE)
2012 Capital Budget Issued; Southern Alberta Basin Disappoints
Neutral/High Risk 2H
Price (12 Dec 11) US$43.84
Target price US$50.00
Expected share price return 14.1%
Expected dividend yield 0.0%
Expected total return 14.1%
Market Cap US$2,325M
Capital Budget – ROSE announced a 2012 capital budget of $640mm with 92% of this
for the liquids-rich window in the Eagle Ford shale. This is a sharp increase vs. the
$475mm capital slate this year with a ramp in Eagle Ford activity (4 rigs set to drill 60
wells vs. 45 this year), increased activity outside Gates Ranch and higher well costs.
We had previously modeled ~$550mm in total capital expenditures next year.
Production Outlook Unchanged – Management reiterated 2012 production guidance
of 220-240 MMcfe/d, or a ~40% (mid-point) uptick vs. this year, while the 2011 targeted
exit rate remains at ~195 MMcfe/d. We model 233 MMcfe/d, or a 41% uptick next year.
Cost Guidance – Guidance for 2012 per-unit lifting costs is $0.27/Mcfe vs. $0.33/Mcfe
in H2’11with per-unit G&A costs also improving. Production taxes rise to $0.25/Mcfe
from ~$0.17/Mcfe in H2’11 due to the changing production mix while transportation and
per-unit DD&A cost guidance also increased slightly.
Hedging Added – Hedges were added for 2012 with ~63% (up from 56%) of oil
volumes now hedged with $79-115/Bbl collars and ~40% (up from 17%) of NGL output
hedged with swaps at an average price of $63.77/Bbl. However, natural gas hedges
were unchanged with ~18% of 2012 volumes hedged with $5.13-6.31/Mcf collars.
Southern Alberta Bakken Results Disappoint – Initial results were disclosed on two
horizontal wells which tested at stabilized rates of 154 BOE/d and 104 BOE/d, which
fall short of ROSE’s target for commercial development that it has previously stated
requires 250 BOE/d IP rates with lower $4.0mm well costs versus actual exploratory
costs to date of $6.0-7.0mm. Thus, ROSE has allocated just 5% of its 2012 capital
budget to the Southern Alberta Basin as it appears to be scaling back activity in
response to cost inflation and lackluster results to date. But the company plans to
complete and test another 5 horizontal wells later this year and in H1’2012.
Adjusting Estimates – Based on revised cost guidance but primarily due to the added
NGL hedges, we are increasing our 2012 EPS/CFPS estimates to $4.01/$9.40 from
$3.82/$9.02, and for 2013 our estimates go to $6.05/$13.42 from $6.09/$13.26.
Rosetta Resources (ROSE)
2012 Capital Budget Issued; Southern Alberta Basin Disappoints
Neutral/High Risk 2H
Price (12 Dec 11) US$43.84
Target price US$50.00
Expected share price return 14.1%
Expected dividend yield 0.0%
Expected total return 14.1%
Market Cap US$2,325M
Capital Budget – ROSE announced a 2012 capital budget of $640mm with 92% of this
for the liquids-rich window in the Eagle Ford shale. This is a sharp increase vs. the
$475mm capital slate this year with a ramp in Eagle Ford activity (4 rigs set to drill 60
wells vs. 45 this year), increased activity outside Gates Ranch and higher well costs.
We had previously modeled ~$550mm in total capital expenditures next year.
Production Outlook Unchanged – Management reiterated 2012 production guidance
of 220-240 MMcfe/d, or a ~40% (mid-point) uptick vs. this year, while the 2011 targeted
exit rate remains at ~195 MMcfe/d. We model 233 MMcfe/d, or a 41% uptick next year.
Cost Guidance – Guidance for 2012 per-unit lifting costs is $0.27/Mcfe vs. $0.33/Mcfe
in H2’11with per-unit G&A costs also improving. Production taxes rise to $0.25/Mcfe
from ~$0.17/Mcfe in H2’11 due to the changing production mix while transportation and
per-unit DD&A cost guidance also increased slightly.
Hedging Added – Hedges were added for 2012 with ~63% (up from 56%) of oil
volumes now hedged with $79-115/Bbl collars and ~40% (up from 17%) of NGL output
hedged with swaps at an average price of $63.77/Bbl. However, natural gas hedges
were unchanged with ~18% of 2012 volumes hedged with $5.13-6.31/Mcf collars.
Southern Alberta Bakken Results Disappoint – Initial results were disclosed on two
horizontal wells which tested at stabilized rates of 154 BOE/d and 104 BOE/d, which
fall short of ROSE’s target for commercial development that it has previously stated
requires 250 BOE/d IP rates with lower $4.0mm well costs versus actual exploratory
costs to date of $6.0-7.0mm. Thus, ROSE has allocated just 5% of its 2012 capital
budget to the Southern Alberta Basin as it appears to be scaling back activity in
response to cost inflation and lackluster results to date. But the company plans to
complete and test another 5 horizontal wells later this year and in H1’2012.
Adjusting Estimates – Based on revised cost guidance but primarily due to the added
NGL hedges, we are increasing our 2012 EPS/CFPS estimates to $4.01/$9.40 from
$3.82/$9.02, and for 2013 our estimates go to $6.05/$13.42 from $6.09/$13.26.
Re: ROSE
Note the huge jump in cash flow per share over the next two years. This is in line with my forecast.
Forget the Alberta Bakken! ROSE has some great acreage in the Eagle Ford and that is exactly what we want them to focus on.
Forget the Alberta Bakken! ROSE has some great acreage in the Eagle Ford and that is exactly what we want them to focus on.
Dan Steffens
Energy Prospectus Group
Energy Prospectus Group