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Every ROSE has its thorn

posted Dec 12, 2011, 10:31 AM by Jeff Davies
Rosetta stock getting pricked today after co. comes out with its 2012 Capex budget and update on Southern Alberta program, the latter of which appears to be the drag on the stock.

  • $640mm program, > 90% allocated to EFS
  • 4 rig program in EFS, expect to complete 60 new wells
  • 195 MMcfe/d '11 exit rate
  • Additional EFS takeaway capacity coming online in Jan '12 and midyear '12
  • Will continue with 7 horizontal well test program in Southern Alberta Bakken
  • Two SAB wells tested at 154 and 104 BOE/d
  • 2012 guidance = 220 -240 MMcfe/d (40% y/y), with 250-280 exit rate 
  • 30% decline in LOE
  • ROSE has been converting about 65% of its revenue into pre-working capital cash flow.  With lower LOE and more liquids going forward, lets assume that number is 70%, so at midpoint of guidance and assuming $7.75/Mcfe blended realized prices, cash flow looks to be about $455mm, so the funding gap could be weighing on shares also.