Rosetta Resources Inc. declared its Board of Directors has approved a 2011 capital budget of $360 million. Approximately 90 percent, or $325 million, will be spent for activities in the liquids-rich window of the Eagle Ford shale in South Texas, the largest producing area in the Company's portfolio. This capital expenditure program will be funded from a combination of internally generated cash flow plus proceeds from planned sales of assets in the DJ Basin and California.

"Our 2011 budget completes the successful shift of our asset portfolio from natural gas to predominantly liquids-rich unconventional shale plays that is significantly boosting production volumes, creating double-digit reserve growth and more significantly creating tremendous returns on our investments," said Randy Limbacher, chairman, chief executive officer and president. "More than 30 percent of our current production is now associated with liquids, reducing our exposure to weak natural gas prices and lowering our cost structure. While we intend to move prudently as we take advantage of our highly competitive Eagle Ford shale position, we are confident that Rosetta will increase current daily production to in excess of 200 million cubic feet equivalent in 2012 and when we do so, the majority of our production base and revenues will be from liquids."

Rosetta is confident in its ability to execute the 2011 capital program. This program calls for the drilling of 40 new wells in the Eagle Ford shale, primarily in the Gates Ranch which was successfully delineated in 2010. In conjunction with the accelerated activity, Rosetta has entered into a favorable two-year agreement to secure fracture stimulation services for three weeks per month. During 2010, Rosetta drilled 29 wells in the Eagle Ford area. Twenty-one completed Eagle Ford wells are currently producing 3,100 Bbls/d of oil, 3,900 Bbls/d of NGLs, and 44 MMcf/d of residue gas for a total net 2010 exit rate of 86 MMcfe/d. The Company's total exit rate for 2010 is about 159 MMcfe/d. During the fourth quarter, the Company successfully resolved capacity constraint issues in the Gates Ranch area with the opening of the new Dos Hermanas pipeline. Rosetta recently entered into new agreements which provide for gathering and processing for production from its Dimmit County properties, and increase its firm capacity rights on the Dos Hermanas pipeline beginning in the third quarter of 2011. The Company also entered into new agreements that provide for firm gathering and processing capacity on new facilities that will be available beginning in the fourth quarter of 2011.

The 2011 budget also allocates funds for continued evaluation of the Southern Alberta Basin where the Company holds approximately 300,000 net acres in the Bakken shale that is an analog to the prolific Williston Basin. In 2010, Rosetta drilled four exploratory wells as part of its drilling plan to determine the commerciality of the play.

The $360 million capital program reflects the impact of planned asset sales in the DJ Basin and the Sacramento Basin in California. Proceeds from the divestiture of these higher-cost, natural gas producing properties will be used to fund the acceleration of the Company's shale initiatives. During 2010, Rosetta completed sales of approximately $90 million of assets in Arkansas, Oklahoma, Mississippi, Texas, Louisiana, New Mexico and Wyoming. Those dollars are being redeployed to activities in the Eagle Ford and Southern Alberta Basin.

Guidance and Hedging Update Full year 2011 production guidance is uncertain depending on the timing of planned divestitures. Keeping the volumes of the divestment properties in for the full year, Rosetta expects to produce between 160 - 170 MMcfe/d. The DJ Basin and California properties currently produce about 40 MMcfe/d and are expected to contribute about 35 MMcfe/d for full year 2011. The projected 2011 exit rate, excluding the divestment properties, is anticipated to range from 155-165 MMcfe/d, including liquids production of 12,000-15,000 Bbls/d. Rosetta also expects a 25 percent decline in unit cash costs upon the completion of the planned asset sales. Total lifting costs are anticipated to decrease from $0.90-$1.05 per Mcfe to $0.65-$0.75 per Mcfe upon completion of planned divestitures. General and administrative unit costs excluding stock compensation are also expected to decline by approximately 20 percent.

For 2011 and 2012, Rosetta recently added hedges for 1,500 Bbls/d of oil at an average floor price of $75.00 per Bbl and an average ceiling price of $105.45 per barrel. The Company previously hedged a total of 800 Bbls/d of its 2011 crude oil production with collars at an average floor price of $70.00 per Bbl and an average ceiling price of $90.05 per Bbl and a total of 600 Bbl/d of crude with collars at an average floor price of $75.00 per Bbl and an average ceiling price of $102.00 per Bbl for 2012. The Company also hedged a total of 700 Bbl/d of NGLs with fixed price swaps at an average price of $51.74 per Bbl for 2011 and 450 Bbl/d of NGLs with fixed price swaps at an average price of $55.07 per Bbl for 2012, excluding the ethane component for both years. The Company also has 50,000 MMBtu of natural gas hedged for 2011 including 15,000 MMBtu/d of swaps at an average price of $5.90 per MMBtu and 35,000 MMBtu/d of collars with an average floor price of $5.79/MMBtu and average ceiling price of $7.27/MMBtu.

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