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Rosetta Maintains 2015 Guidance; Hits 66 MBOE/d
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Rosetta Resources Inc. reported its first quarter 2015 results.
Jim Craddock, Rosetta's Chairman, CEO and President, commented: "The Rosetta team carried out our first quarter financial and operational programs with discipline and excellence. As we progress through 2015 we will utilize our free cash flow and ample liquidity to continue to explore opportunities to innovate and optimize our operations in order to remain an efficient low cost operator and deliver strong economic returns."
Production
Production for the quarter averaged 66 thousand barrels of oil equivalent per day, an increase of 21 percent from the same period in 2014 and toward the high end of the 64 -- 67 MBoe/d first quarter 2015 guidance range. The decline in production volumes from the 73 MBoe/d in the fourth quarter 2014 is attributable to the Company's election to manage completion activity to preserve future value given the current commodity price down cycle. Oil production in the first quarter averaged 18 thousand barrels per day, an increase of 14 percent from 2014. Natural gas liquids daily production also increased by 20 percent compared to the prior year first quarter.
Operational Update
In the first quarter of 2015, Rosetta made capital investments of approximately $151.5 million. The Company drilled or participated in a total of 16 gross wells and completed 23 gross wells, of which 19 were placed on production. The first quarter capital spend included approximately $132.2 million for drilling and completion activities and $19.3 million of other capital expenses including leasehold, capitalized interest and geological and geophysical costs.
Access Rosetta's detailed operational results here:
Rosetta Talks New Eagle Ford Frac Design; Wolfcamp Acceleration
Financing and Derivatives Update
On April 21, the Company's Senior Revolving Credit Facility borrowing base and elected commitment amount were reaffirmed at $950 million and $800 million, respectively. As of May 1, 2015, Rosetta had no borrowings outstanding and the full $800 million commitment amount available for borrowing under the Credit Facility giving Rosetta a total liquidity position of $821 million.
At April 28, 2015, Rosetta's notional volumes hedged equated to approximately 75% of its projected 2015 oil equivalent production and 25% of its projected 2016 production. As of March 31, 2015, the Company's commodity hedged positions had a mark-to-market value of roughly $272 million. The attached "Derivatives Summary" table outlines the Company's overall commodity derivatives position as of April 28, 2015.
Outlook
Rosetta expects to deliver second quarter production in the range of 57 -- 60 MBoe/d and spend approximately $55 million in capital investments. The Company's full year capital guidance of approximately $350 million, excluding acquisition capital, remains unchanged from the previous estimate. The remainder of 2015 capital program is based on drilling eight to ten and completing 18 to 20 gross operated horizontal wells. Based on the planned capital level, Rosetta reiterates the full year 2015 production range of 58 -- 62 MBoe/d. The average oil ratio is expected to be approximately 27 percent in 2015 with total liquids estimated at 63 percent.
Financial Results
Rosetta reported adjusted net income (non-GAAP) for the first quarter 2015 was a loss of $8.6 million, or $(0.13) per diluted share, versus adjusted net income of $45.6 million, or $0.74 per diluted share for the same period in 2014. The decrease in adjusted net income was primarily driven by lower commodity prices. Net income for the quarter, which included a non-cash impairment of $798.1 million, was a loss of $539.7 million, or $(8.42) per diluted share, versus net income of $35.2 million, or $0.57 per diluted share, in 2014. Adjusted EBITDA (non-GAAP) was $104.8 million in the first quarter of 2015, compared to $163.8 million in the first quarter 2014.
Revenues for the first quarter of 2015 were $173.1 million compared to $214.6 million for the same period in 2014. First quarter revenues excluding unrealized derivative losses were $187.8 million in 2015 and $230.4 million in 2014. A summary of the Company's quarterly production results and average sales prices by commodity is included in the attached "Summary of Operating Data" table.
Lease operating expense, including workovers and insurance expense, for the first quarter was $3.69 per Boe, a 15 percent increase on a per-unit basis due to lower volumes in the first quarter, but flat compared to fourth quarter on an absolute dollar basis. Similarly, treating and transportation expense increased by nine percent on a per-unit basis versus the prior quarter to $4.13 per Boe, but decreased five percent on an absolute dollar basis. Overall, total cash production costs for the first quarter were five percent lower than the fourth quarter 2014 and below the first quarter guidance range.