Rosetta Resources Inc. Announces Record Second Quarter 2008 Production and Revenues and Provides Operational Update

Rosetta Resources Inc. announced financial and operating results for the second quarter 2008. Highlights include:

* Natural gas and crude oil production of 155 MMcfe/d, up 29 percent over the same period in 2007
* Revenues of $154.5 million, an increase of 78 percent from second quarter 2007
* Earnings of $39.3 million or $0.77 per diluted share, up 200 percent and 196 percent, respectively, from the same period a year ago

For the second quarter ended June 30, 2008, Rosetta reported record net income of $39.3 million, or $.77 per diluted share, an increase of 200 percent from $13.1 million, or $0.26 per diluted share, for the same period in 2007. Production and revenues for the second quarter of 2008 were 155 MMcfe/d and $154.5 million, respectively. The increase in revenues was attributable to both higher commodity prices and the higher production. Total revenue was reduced by $16.6 million due to the effect of natural gas hedging.

Total lease operating expense (“LOE”), which includes direct LOE, workovers, ad valorem taxes and insurance, was $14.2 million or $1.00 per Mcfe during the second quarter. Direct LOE was $8.3 million or $0.59 per Mcfe, workover costs were $2.5 million or $0.17 per Mcfe, ad valorem taxes were $2.8 million or $0.20 per Mcfe and insurance was $0.6 million or $0.04 per Mcfe. Production taxes were $5.8 million or $0.41 per Mcfe and treating and transportation and marketing charges were $2.6 million or $0.18 per Mcfe. Depreciation, depletion and amortization was $51.7 million, based on a DD&A rate of $3.67 per Mcfe.

General and administrative costs were $13.5 million for the second quarter including $3.4 million in non-cash stock compensation expense and $1.8 million of legal costs associated with the Calpine lawsuit.

For the six months ended June 30, 2008, Rosetta reported net income of $66.8 million, or $1.31 per diluted share, an increase of 143 percent from $27.1 million, or $0.54 per diluted share, for the same period in 2007. Production and revenues for the first six months of 2008 were 153 MMcfe/d and $282.8 million, respectively. These increases were attributable to higher commodity prices and production. Total revenue was reduced by $17.3 million due to the effect of natural gas hedging.

For the six months ended June 30, 2008, LOE was $27.6 million or $0.98 per Mcfe. Direct LOE was $17.1 million or $0.61 per Mcfe, workover costs were $3.6 million or $0.13 per Mcfe, ad valorem taxes were $5.7 million or $0.20 per Mcfe and insurance was $1.2 million or $0.04 per Mcfe. Production taxes were $9.2 million or $0.33 per Mcfe and treating and transportation and marketing charges were $4.6 million or $0.16 per Mcfe. Depreciation, depletion and amortization was $103.2 million, based on a DD&A rate of $3.70 per Mcfe.

General and administrative costs were $25.6 million for the six months ended June 30, 2008 including $3.7 million in non-cash stock compensation expense and $6.1 million of legal costs associated with the Calpine lawsuit.

Randy L. Limbacher, Rosetta’s President and Chief Executive Officer, commented, “We made tremendous progress in the quarter on our stated priorities for 2008. We delivered strong operational performance during a period of very high prices, which further enhanced our financial position. Organizationally, we made some key hires and are well on our way to having a skilled team in place to focus on program execution and building inventory to fuel growth. It is an exciting time for our company as we gain momentum for the future.”

OPERATIONS UPDATE

During the second quarter, the Company drilled 35 gross and 28 net wells with a net success rate of 87%. The majority of this drilling activity took place in South Texas and the Rockies. Year to date through the second quarter, the Company has drilled 71 gross and 61 net wells with a net success rate of 85%.

In the Sacramento Basin, the Company drilled one well which was successful, as drilling activity resumed late in the second quarter. Average production from the Basin was 44 MMcfe/d for the quarter.

In the Rockies, the Company drilled 17 wells in the second quarter, of which 15 were successful. Net production from the area was 11 MMcfe/d for the second quarter. In the San Juan Basin, the Company acquired a non-operated interest in a producing property in May 2008 for a purchase price of approximately $29.5 million. Production from this property is expected to average 2 MMcfe/d net in the third quarter of 2008.

In South Texas, Rosetta drilled 15 wells in the second quarter, with 12 being productive for an 80% success rate. Net production from this region, including both the Lobo and Perdido trends, was 59 MMcfe/d for the quarter.

Rosetta drilled one successful well in Sabine Lake in the second quarter of 2008. The State Tract 30-3 was tied in and on production in late July at an initial rate of approximately 3 MMcfe/d net. Average production from Sabine Lake for the quarter was 13 MMcfe/d.

2008 OUTLOOK

The Company’s capital spending plan remains at $290 million for the year. Production guidance also remains unchanged at an annual average of 140-150 MMcfe/d. The guidance range reflects anticipated decline in the latter part of the year, particularly in the Gulf of Mexico where the Company has significantly scaled back capital spending.

The Company’s hedge position is unchanged with 67,892 MMBtu/d hedged for the balance of 2008 at an average price $7.75 per MMBtu. For 2009, 52,141 MMBtu/d are hedged at an average price of $7.65 per MMBtu, along with 10,000 MMBtu/d for 2010 at an average price of $8.31 per MMBtu.

With respect to the Calpine lawsuit, the Company continues to defend against what the Company believes are meritless claims by Calpine arising out of a transaction that Calpine’s board and an extensive group of professionals thoroughly vetted, reviewed and approved.

On July 7, 2008, the Company filed a letter with the Bankruptcy Court in New York setting forth the legal deficiencies in Calpine Corporation’s claims and requesting the required conference with the Court prior to filing a motion for summary judgment in Rosetta’s favor as to all claims by Calpine Corporation. Rosetta is seeking dismissal of the action given the evidence that the transaction by which Rosetta acquired the oil and gas business conducted by Calpine Corporation’s subsidiaries establishes that Calpine Corporation did not transfer any property to Rosetta and is legally prohibited from challenging transfers made to Rosetta by Calpine subsidiaries Calpine Fuels Corporation and Calpine Gas Holdings LLC.

Separately, Rosetta filed a motion that contends that PA Consulting Group (“PA”), who has acted as one of Calpine’s consultants in the bankruptcy process, should be disqualified from providing any opinions on at least two grounds. First, in May 2008, Calpine and PA agreed to a revised engagement agreement under which PA’s Todd Filsinger agreed to serve as Calpine’s Interim Chief Operating Officer and PA became eligible to receive a success fee. In addition to Mr. Filsinger’s dual roles, PA’s potential recovery of an additional fee affected by the outcome of a case in which it purports to render expert testimony violates Rule 7-109(C) of the Code of Professional Responsibility, requiring PA’s disqualification. Second, Rosetta contends that, as the consultants who advised Calpine to file the lawsuit, PA lacks independence and is conflicted from rendering an impartial view on valuation. The Bankruptcy Court set August 27, 2008 as the hearing date for Rosetta’s motion.

For more information, visit http://www.rosettaresources.com.