Randy Limbacher, Rosetta's President and CEO, commented, "In the third quarter, Rosetta made significant progress in building a company capable of delivering and sustaining long term profitable growth in production and reserves. We are encouraged by the early results in our Eagle Ford and Bakken programs and we continue to advance our inventory efforts in our core area assets. We believe our recent results position us for the breakout performance we are seeking as part of our shift to a resource player."

FINANCIAL REVIEW

For the third quarter ended September 30, 2009, Rosetta reported net income of $5.7 million, or $0.11 per diluted share, an increase of $105.1 million from net income of ($99.4) million, or ($1.96) per diluted share, for the same period in 2008.

Production for the third quarter of 2009 averaged 120.7 MMcfe/d. Daily production was down 14% overall versus the third quarter of 2008, driven mostly by decline in the Company's non-core assets in the Gulf of Mexico and Texas State Waters. Revenues for the third quarter of 2009 were $64.5 million compared to $130.0 million for the same period in 2008. The decrease in revenues was primarily attributable to lower realized gas prices, including hedging, of $5.61 per Mcf versus $9.47 per Mcf for the same period in 2008. Total revenue in this year's third quarter includes a benefit of $22.9 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 $13.3 million or $1.20 per Mcfe during the third quarter. Direct LOE was $10.0 million or $0.90 per Mcfe, workover costs were ($0.2) million or ($0.01) per Mcfe, ad valorem taxes were $3.0 million or $0.27 per Mcfe, and insurance was $0.5 million or $0.04 per Mcfe. Production taxes were $1.1 million or $0.10 per Mcfe and treating and transportation and marketing charges were $1.8 million or $0.16 per Mcfe. Depreciation, depletion and amortization ("DD&A") was $23.0 million based on a DD&A rate of $2.07 per Mcfe.

General and administrative ("G&A") costs were $10.4 million or $0.94 per Mcfe for the third quarter, including $2.0 million in non-cash stock compensation expense. Excluding stock compensation expense, general and administrative costs were $0.76 per Mcfe. This quarter's G&A included approximately $0.2 million related to the insourcing of our gas marketing function, which was previously handled by Calpine. Going forward, this additional G&A expense is expected to be more than offset by lower marketing expense.

For the nine months ended September 30, 2009, Rosetta reported a net loss of $228.4 million, or a $4.48 loss per diluted share, a decrease of $195.8 million from a net loss of $32.6 million, or a $0.64 loss per diluted share, for the same period in 2008. These results include a first quarter non-cash charge of $238.1 million, net of tax, for impairment of oil and gas properties.

Production and revenues for the nine months ended September 30, 2009 were 142.1 MMcfe/d and $217.5 million, respectively, compared to 148.8 MMcfe/d and $412.8 million in 2008. Average realized gas prices in 2009, including hedging, decreased to $5.46 per Mcf from $9.51 per Mcf in 2008. Total revenue for the first nine months of 2009 included a benefit of $60.1 million due to the effect of natural gas hedging.

For the nine months ended September 30, 2009, LOE was $47.9 million or $1.24 per Mcfe. Direct LOE was $32.3 million or $0.83 per Mcfe, workover costs were $3.1 million or $0.08 per Mcfe, ad valorem taxes were $11.4 million or $0.29 per Mcfe, and insurance was $1.1 million or $0.03 per Mcfe. Production taxes were $4.2 million or $0.11 per Mcfe and treating and transportation and marketing charges were $5.2 million or $0.13 per Mcfe.

General and administrative costs were $32.4 million for the nine months ended September 30, 2009 including $4.7 million in non-cash stock compensation expense.

OPERATIONS REVIEW

During the third quarter, the Company drilled nine gross and nine net wells with a net success rate of 78%. The majority of this drilling activity took place in South Texas as the company increased capital activity when compared to the second quarter of 2009.

Rosetta's average production volumes decreased 14% compared to last year's third quarter due to the impact of significantly reduced capital program activity earlier in the year as well as continued production decline in the company's non-core assets in the Gulf of Mexico and Texas State Waters.

In South Texas, Rosetta drilled eight gross wells in the third quarter, six being productive, for a 75% success rate. Net production from South Texas was 46 MMcfe/d for the quarter, down 9 MMcfe/d compared to the third quarter of 2008, reflecting lower 2009 drilling levels.

In the Rockies, net production was 17 MMcfe/d for the third quarter, up 5 MMcfe/d from the third quarter of 2008, driven by Pinedale acquisition volumes and field optimization in the DJ Basin. The Company is currently evaluating options to initiate drilling activity on its significant DJ Basin inventory, but has no plans to drill in this asset area during the remainder of 2009.

In the Sacramento Basin, average net production was 41 MMcfe/d for the quarter, up 1 MMcfe/d compared to the third quarter of 2008. Despite drilling no new wells in 2009, the Company's successful bypassed pay recompletion program, as well as facility optimization projects, has offset field decline and modestly increased production. The Company recently initiated a third phase of this recompletion program targeting 14 recompletions.

The Company's non-core properties in the Gulf of Mexico and Texas State Waters produced a combined 7 MMcfe/d for the quarter, down 14 MMcfe/d from the third quarter of 2008. These non-core assets are being contemplated for divestiture at some point in the future. In other non-core property activities, the Company generated sale proceeds of $3.4 million in the third quarter. These sales will have a negligible impact on reserves, annual production and acreage positions.

EMERGING PLAY UPDATE

Eagle Ford Shale: Second exploratory well a success, acreage position continues to grow and production from the initial discovery well meeting expectations.

During the quarter, the company drilled and completed its second horizontal exploratory well, the Gates 05D #9-5H, located in Northwest Webb County. This well was successfully drilled to a total measured depth of 12,400 feet (8,300 feet TVD) and had a lateral length of approximately 3,700 feet. The well was first delivered to sales on October 6, 2009. After seven days, the well was producing on a 24/64 inch choke at a rate of 3.5 MMcf/d, 337 Bopd, and 548 Bwpd. The gas stream has high liquid content with a BTU factor of 1,320 BTU/cf. Cumulatively for its first seven days of production, the Gates 05D #9-5H produced 25 MMcf, 2,200 Bbls of condensate, and 20,000 Bbls of frac fluid. The Company holds more than 12,000 net acres in the Gates Ranch.

The previously announced discovery in southwest La Salle County, the Springer Ranch #1H, continues to meet expectations. The Company holds more than 14,000 net acres in the Springer Ranch Area and plans to spud its second exploratory well in this area by the end of the year.

By the end of the quarter, the company's acreage position in the Eagle Ford had grown to more than 42,000 net acres in the play and the company continues to actively lease in the play.

Alberta Basin Bakken: Initial vertical exploratory well taken horizontal and second vertical exploratory well spud.

The Company's first exploratory well in the Alberta Basin to test the Lodgepole, Bakken and Three Forks formations has been successfully drilled horizontally and is currently awaiting completion.