Rosehill Resources Inc fka ROSEQ

[OilStockReport]

In the wake of the Gulf oil disaster, it’s just about the last place that many investors want to be. And the numbers bear it out…
Since BP’s big blowout, shares of Transocean Ltd. (NYSE: RIG) have crumbled by nearly 30%. Atwood Oceanics, Inc. (NYSE: ATW) shares have sunk nearly 20% since the disaster. And share prices of other deepwater drillers are also down.

Rosetta Resources, Inc. (Nasdaq: ROSE) is an independent oil and gas exploration, development and acquisition company.

Unlike many of its larger competitors, Rosetta is perfectly happy drilling in the ground. Most of its current operations are located in south Texas, the Rocky Mountains and the Sacramento Basin in California.

And its ground-drilling strategy has laid a strong foundation: low-cost reserves, a solid balance sheet, ample cash flows and a crackerjack management team led by CEO Randy Limbacher.

When energy prices dropped a few years ago, Limbacher’s strategy looked like it might fail. But he combated the upheaval by overseeing a 60% cut in the company’s spending – a decision that maintained its solid foundation.

Case in point: During 2008, Rosetta drilled 184 wells. But in 2009, that number dropped to just 43 wells. However, 83% of them were successful and the company used the cash it saved to purchase additional promising oil and gas acreage on the cheap.

And despite the huge spending cuts, Rosetta’s production only declined 6% in 2009 – due in large part to the exploration successes that resulted from its more selective drilling process.

Like a retailer who sells goods that people always need, Rosetta is also able to enjoy repeat revenue from “legacy wells” – wells that churn out continued production and, in turn, generate a steady, predictable income stream for the company.

As a result of those legacy wells, new production from Rosetta’s Eagle Ford Rosetta’s Eagle Ford acreage, plus a successful drilling program in the Rocky Mountains, Rosetta now forecasts a 5% to 12% production increase in 2010.

The Eagle Ford basin is particularly promising. Rosetta has six wells in production there, with a further five awaiting completion and another 30 or so planned.

It’s highly impressive execution, given that Rosetta has taken Eagle Ford from the concept stage to full-scale production in less than a year. And it’s the driving force behind a four-fold increase in the company’s proven reserves.

The company only debuted on the stock market in 2006 and it already boasts a $1.3 billion market cap. And a year from now, there’s an excellent chance you could be sitting on some excellent gains.