A liquids-focused unconventional oil and gas makeover at Houston-based Rosetta Resources Inc. is showing the company in a much improved light as it continues to ramp up its activities in the Eagle Ford Shale of South Texas, CEO Randy Limbacher told financial analysts Monday.

“In 2010, we began to realize the benefits of our transformation to an unconventional resource player,” he said. “We improved virtually every aspect of the underlying fundamentals of our business while establishing one of the industry’s most competitive positions in the Eagle Ford Shale play. In the process, we shifted our production base to a more balanced portfolio weighted toward oil, condensate and natural gas liquids.”

The Eagle Ford is the company’s largest producing area, recording 86 MMcfe/d of production as of Dec. 31. Of that, 49% was oil, condensate and natural gas liquids (NGL). Last year Rosetta delineated its 26,500-acre position in the Gates Ranch area of the Eagle Ford, drilling 25 wells, of which 16 were completed.

Less than 7% of the Gates Ranch inventory is drilled and on production, Rosetta said. The company has revised its estimated ultimate recovery (EUR) rates to 7.2 Bcfe gross per well. One typical Gates Ranch well has a before income tax net present value of $13.4 million, according to Rosetta, which has also drilled a successful well on its nearby Light Ranch acreage in central Dimmit County; this is expected to increase the potential number of drilling locations.

Rosetta shares set a new 52-week high Monday of $46.11 before falling back to close at $45.36.

While the company ended 2010 with about 30% of its production coming from oil, condensate and NGLs, the share of those commodities in the total pie is expected to grow as development continues in the Eagle Ford, Rosetta said. “During the fourth quarter, daily total liquids production averaged 7,100 bbl,” Rosetta said. “This more balanced commodity mix reduces exposure to cyclical swings in energy pricing.”

In 2011 Rosetta plans to drill about 40 wells in the Eagle Ford area with a fracture stimulation agreement in place to handle increased activity. More than 90% of planned 2011 spending of $360 million is to be allocated to the Eagle Ford Shale. The capital program also includes funds for the continued evaluation of the Southern Alberta Basin where Rosetta has continued drilling on its 300,000-acre position in northwest Montana. At year-end six vertical delineation wells had been drilled with another five planned for the first half of 2011.

To sharpen its focus on the Eagle Ford, Rosetta has sold assets in Arkansas, Oklahoma, Mississippi, Texas, Louisiana, New Mexico and Wyoming for about $90 million with the net proceeds redeployed into higher-return shale positions. The company said it now expects to close sales of its remaining properties in the Denver-Julesburg Basin in the Rockies and holdings in the Sacramento Basin of California by the end of the second quarter.

For 2010 Rosetta reported net income of $19 million (37 cents/share) compared to a net loss of $219.2 million (minus $4.30/share) a year ago. For 2009 results include a noncash impairment of oil and gas properties of $238.1 million, net of tax.

Production and revenues were 138 MMcfe/d and $308.4 million, respectively, compared to 138 MMcfe/d and $294 million in 2009. Compared to a year ago, higher product revenues from oil and liquids were offset by lower gas hedging gains. Average realized oil prices were $73.91/bbl and average realized NGL prices were $41.24/bbl. Average natural gas prices, including hedging, decreased to $5.32/Mcf from $5.63/Mcf in 2009. Total revenue for the year included a benefit of $32.5 million due to the effect of natural gas hedging.

Proved reserves at year-end were 12.4 million bbl of crude oil and condensate, 19.3 million bbl of NGLs and 289 Bcf of gas. The figures include 273 Bcfe of reserves added primarily from the Eagle Ford and 63 Bcfe divested during the year. Of Rosetta’s total proved reserves, 51% are proved developed and 49% are proved undeveloped. Rosetta replaced 482% of production from all sources.