Canaccord Adams Initiates Coverage on Rosetta Resources (ROSE) with a Buy

June 5, 2009 10:47 AM EDT

Canaccord Adams initiates coverage on Rosetta Resources (Nasdaq: ROSE) with a Buy. Price target $10.

Canaccord analyst says, "Legacy assets providing a launch pad: As of year-end 2008, Rosetta Resources had proved reserves of 398 Bcfe made up of 82% proved developed and 95% gas, with most of the proved reserves concentrated in California and South Texas. The company has a risked resource inventory of 1,158 projects, which includes PUD, probable and possible reserves, with 299 bcfe of potential. In addition, Rosetta has a growth portfolio with net resource potential of 1.3 Tcfe. Currently, the company has $167 million available under its borrowing base. Including cash on hand of $33 million, the company has approximately $200 million in liquidity. In addition, we expect free cash flow generation of $87 million for 2009."

"The stock is attractively priced, in our view, for a company with legacy onshore assets and a strong balance sheet. In addition, Rosetta Resources looks well positioned to take advantage of the current downturn and has the ability to reconfigure its portfolio through opportunistic acquisitions. While we do not expect the company to be transformed overnight, we believe that Rosetta will evolve over time, adding high-growth resource plays and coring up its diverse portfolio."

Rosetta Resources Inc. together with its subsidiaries (Rosetta) is an independent oil and gas company engaged in the acquisition, exploration, development and production of oil and gas properties in North America.

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