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Citadel Advisors decreases position in Rosetta Resources

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Citadel Advisors: Position updates

Citadel Advisors added to its positions in Silver Bay Realty Trust (SBY), Bonanza Creek Energy (BCEI), Ryland Group (RYL), Astoria Financial (AF), Louisiana-Pacific Corporation (LPX), Rowan Companies (RDC), CommVault Systems (CVLT), and Newfield Exploration (NFX) and decreased its position in Rosetta Resources (ROSE).

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Citadel Advisors and Rosetta Resources

Citadel Advisors filed a 13G with the SEC (U.S. Securities and Exchange Commission) in February 2015 and updated its position in Rosetta Resources (ROSE). According to the filing, Citadel owns 5.4% of the company. The fund now has 3,323,655 shares, down from the 3,916,940 shares it had according to its 13G filing in November 2014.

Overview of Rosetta Resources

Rosetta Resources is an independent exploration and production company. The Houston-based company “is a leading producer in the Eagle Ford Shale in southern Texas, one of the nation’s largest unconventional resource plays.” It also holds a large oil-weighted position in the Permian Basin in western Texas.

The company’s strategy is focused on the acquisition, development, and production of oil, natural gas liquids (or NGLs), and natural gas from unconventional resource plays. The company noted in its 10Q filing that it would continue to consider investments in the Eagle Ford Shale region and in the Permian Basin that offer a viable inventory of projects, including resource-based exploration projects, property acquisitions in early development stages, and acreage swaps.

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Rosetta Resources announces 2015 capital budget and guidance

In December 2014, Rosetta Resources announced its board of directors had approved a 2015 capital budget with the flexibility to spend up to $900 million. Considering the current commodity price environment, the company anticipates total capital spending will be between $700 million and $800 million. Approximately 54% will be allocated to development activities in the higher-rate-of-return project areas of the Eagle Ford Shale in South Texas, and approximately 40% on further delineation activities in the Delaware Basin in West Texas.

Drilling and completion costs should account for approximately 80% of total spending. The remaining 20% is to be allocated to central facilities, leasehold, and other corporate costs. The 2015 capital expenditure program will be funded by a combination of internally generated cash flow, cash on hand, and borrowings under the company’s credit facility.

Revenues grow in 3Q14 but earnings misses estimates

Revenues for the third quarter of 2014 were $365.6 million compared to $194.6 million for the same period in 2013. Adjusted net income missed estimates and came in at $33.4 million, or $0.54 per diluted share, down from $61.7 million, or $1.01 in 3Q13.

In terms of outlook, Rosetta said its 2014 capital guidance remains unchanged at $1.2 billion, excluding acquisition capital. Fourth-quarter capital spending was forecast to be around $170 million. The estimated production guidance range for the fourth quarter is 72 to 74 million barrels of oil equivalent per day, or MMboepd.

The company said it expects to deliver annual production at the high end of the previously disclosed 2014 annual production guidance range of 63 to 66 MMboepd. Rosetta also estimates 2015 capital spending will be approximately $950 million, excluding acquisitions.

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