Rosetta Resources (ROSE, Financial) recorded significant volume production in each of its product components particularly natural gas liquids, natural gas and oil. It also completed the operations at seven Permian horizontal wells in Reeves County. It successfully completed six operated Wolfcamp A wells grossly producing on an average approximately seven-day IP rates of over 1,300 barrels of oil equivalent per day per well.
Smart operational moves
At present, Rosetta has approximately 47,000 total acres in Reeves County, an increase from the 40,000-total-acre position when it dived into the production at the site past 18 months.
Excluding the Deacon Jim 6 #1H well, the average production for five wells is approximately 1,400 BOEs per day. Rosetta is continually making excellent progress in optimizing its closing procedures in the Wolfcamp A.
The significant production at each of the seven key wells of Rosetta is expected to significantly expand the company’s cash position, going forward.
Further,Ă‚ starting in July, Rosetta concluded an innovative Ventures test in the Third Bone Springs. The Johnny Ringo 9 #2H reported an early gross seven-day IP production of nearly 1,250 barrels of oil equivalent per day.
Focusing on the right area
Rosetta is focused on constantly improving the economic returns at the Delaware and Permian wells by optimizing both drilling and completion designs coupled with knowing about the rocks by leveraging its descriptive techniques.
Rosetta’s key joint venture during the quarter and implementation of improved new design and drilling techniques is believed to enhance the overall oil and gas production for the company.
Moving ahead into 2015, Rosetta expects to deliver over 20% annual production growth by leveraging 20% lesser total capital compared to 2014.
Rosetta declared its third quarter production at 73,500 BOEs per day, an increase from the 61,500 BOEs per day delivered in the second quarter primarily due to the company’s third row at Gates Ranch going online, some impressive Eagle Ford general run times and some solid well performances in the Permian Basin.
The improvement in the annual production of gas and oil by Rosetta highlights the effectiveness of the company’s processes leading to better production at reduced capital expenditures.
In the fourth quarter of 2014, Rosetta has started drilling upper wells at Briscoe Ranch, and targets beginning the operations at Upper Eagle Ford wells in northern Gates in 2015.
Rosetta has about 300 highly successful Upper Eagle Ford sites spread across its northern Gates Ranch, Briscoe and L&E acreage. The performance at Upper Eagle Ford EURs is yet to be determined and early studies suggest huge potential.
The highly successful drilling operations at the key wells of Rosetta are estimated to significantly expand the company’s production base and thus driving enhanced shareholder returns.
The Pecos well is the company’s farthest northwest well to date and is about 1.5 miles north of the older Balmorhea well. The recently discovered Pecos well was concluded with its innovative design, and it is significantly outperforming the older well. The Dynamite Dan well is currently its outermost westernmost well with a solid geographic extension enabled to the company.
Both the Tall Texan well and the Monroe well are performing superbly and comparable to the excellent Intrepid well performance. The lately concluded Intrepid well is believed to be Rosetta’s best wells to date having 7,000-foot lateral depth.
The present consensus among 22 polled investment analysts is to Buy stock in Rosetta Resources, Inc. and has been unaltered since a Buy rating in February as well primarily due to the strategic company valuations and significant long-term growth prospects supported by a healthy balance sheet.
Rosetta Resources rose by 6.7% on robust production and investment guidance for 2015. This aggressive investment and production strategy is believed to be completely supported by the company’s robust cash flows in 2015. The long-term growth outlook for Rosetta Resources seems solid with Permian Basin and Eagle Ford assets along with a robust drilling inventory.
Conclusion
Overall, the investors are advised to invest into Rosetta Resources, Inc., looking at the impressive valuation levels with a P/E of 8.84, better than the industry’s average of 14.48. The profit margin of 15.57% is also attractive. However, the PEG ratio is slightly disappointing at -0.29, indicating slower growth. Still, looking at the earnings per share estimate of 2.56 the company seems to be delivering profitable long-term returns.
