Rosetta to spend $590 million on Eagle Ford expansion
Rosetta Resources Inc. today announced its Board of Directors has approved a 2012 capital budget of $640 million. Approximately $590 million, or more than 90 percent, will be spent for activities in the liquids-rich window of the Eagle Ford shale in South Texas, the largest producing area in the Company's portfolio. This capital expenditure program will be funded from internally-generated cash flow supplemented by borrowings under its current credit facility. In addition, the Company released the first horizontal well results from its exploratory program in the Southern Alberta Basin.
"Our 2012 budget reflects the continuing success of our Eagle Ford program that has resulted in strong growth in production and reserves while generating significant returns on our investments. More than 50 percent of our current production is now associated with liquids, lowering our cost structure and delivering increased cash margin performance. Our primary focus remains the evaluation and development of our Eagle Ford assets which we expect to deliver production increases of approximately 40 percent in 2012," said Randy Limbacher, chairman, chief executive officer and president. "Regarding our plans in the Southern Alberta Basin, Rosetta's exploration program is a complex play with limited service infrastructure that will take time for the industry to completely understand and develop. We will complete our current horizontal drilling program and adjust our exploratory efforts and spending to reflect those results and hold our position for future optionality."
Rosetta's 2012 capital program includes a four-rig program in the Eagle Ford shale and the completion of 60 new wells, located both in the Gates Ranch area as well as new sections in the liquids window of the play. During 2011, Rosetta completed 45 wells in the Eagle Ford area. The Company's total exit rate for the year is expected to be approximately 195 million cubic feet equivalent per day ("MMcfe/d"). In January 2012, Eagle Ford firm gross wet gas capacity of 160 million cubic feet per day ("MMcf/d") will become available allowing Rosetta to move 216 MMcfe/d of net Eagle Ford volumes on a firm basis. By mid-year 2012, the Company's net Eagle Ford firm capacity will increase to 263 MMcfe/d.
The 2012 budget allocates approximately five percent of funds for evaluation of the Southern Alberta Basin. Rosetta continues to implement the previously announced seven-well horizontal drilling program to test the economic potential in the Banff, Bakken, and Three Forks reservoirs across its approximately 300,000 net acre position in northwestern Montana. To date, the Company has successfully drilled four of the seven horizontal wells with the remaining three scheduled to be drilled in early 2012. Two of the four wells drilled to date have been completed in the Middle Bakken and have tested at stabilized rates of 154 barrels of oil equivalent per day ("BOE/d") and 104 BOE/d. Completion operations continue on the third well. The remaining four horizontal completions will be tested during the first half of 2012.
12/13/2011