Jones Energy, Inc. (NYSE:JONE) (“Jones Energy” or “the Company”)
today announced financial and operating results for the quarter
ended March 31, 2017 and provided initial guidance for second
quarter 2017.
Highlights
- Average daily net production for the first quarter of 2017 of
18.9 Mboe/d, 1.4 Mboe/d above midpoint of guidance.
- First three operated Merge wells all successfully completed and
flowing back with production increasing on all three wells. IP30
has not been reached yet on any of the wells.
- Completions beginning on the Company’s first Meramec target
this week from the Company’s second two-well Merge pad (wells four
and five).
- Added 3,688 net acres in the Merge for an average price of
$7,500 per acre to the initial 18,000 net acre position since
September 2016. Position is currently 21,724 net acres.
- Initiated long lateral program in Western Anadarko Cleveland
with continued strong results and base production
outperformance.
- Net loss for the first quarter of 2017 of $3.5 million, or a
loss of $0.05 per share, non-GAAP adjusted net income of $3.9
million, or $0.01 per share and EBITDAX of $53 million.1
Jonny Jones, the Company’s Founder, Chairman, and CEO,
commented, “2017 is a transition year for Jones Energy from a
Western Anadarko (Cleveland) focused company to a Merge focused
company. During the first quarter, our production was driven by
strong base production from the Western Anadarko, exceeding the top
end of guidance despite a crippling ice storm in early January.
Strong performance from our Cleveland development program has
highlighted that the asset still competes for capital and continues
to outperform expectations today as we are well into the second
quarter. Our team has also quickly pivoted to the Merge, where we
have kicked-off drilling and intend to build to a three-rig program
as soon as possible. It is still early days in the Merge, and the
three wells we have on production are in the clean-up phase with
production still increasing. Average oil cuts are over 50% on the
first three wells, and we expect to report max IP30 rates on these
wells after peak production is reached. Our first quarter results
highlight our ability to successfully begin the asset transition
while managing our production profile and balance sheet.”
Financial Results
Total operating revenues for the three months ended March 31,
2017 were $41.2 million as compared to $25.9 million for the three
months ended March 31, 2016. Total revenues including current
period settlements of matured derivative contracts were $67.6
million for the three months ended March 31, 2017 as compared to
$68.5 million for the three months ended March 31, 2016.
Total operating expenses for the three months ended March 31,
2017 were $54.7 million as compared to $59.9 million for the three
months ended March 31, 2016. Operating expenses were lower on
a year over year basis largely as a result of lower depletion,
depreciation and amortization costs.
For the three months ended March 31, 2017, the Company reported
a net loss of $3.5 million, or a loss of $0.05 per share as
compared to net income of $48.5 million, or $0.57 per share for the
three months ended March 31, 2016. Excluding, on a tax-adjusted
basis, certain items that the Company does not view as indicative
of its ongoing financial performance, and adjusting for
non-controlling interest, the Company had adjusted net
income for the first quarter 2017 of $3.9 million, or
adjusted net income of $0.01 per share, as compared to
adjusted net loss of $3.5 million, or a loss of
$0.03 per share for the three months ended March 31,
2016.
Earnings before interest, income taxes, depreciation,
amortization, and exploration expense (“EBITDAX”) for the first
quarter 2017 was $53.3 million. This compares to first quarter
2016 EBITDAX of $51.1 million.
First quarter 2017 lease operating expense (“LOE”) of $8.8
million was approximately 2% higher than first quarter 2016
LOE of $8.6 million. On a dollar per boe basis, first quarter
2017 LOE was $5.18 per boe, approximately 11% higher
compared to first quarter 2016 LOE which was $4.65 per
boe due to lower production and higher operated well count.
Operating Results
Western Anadarko (Cleveland)
During the first quarter, the Company spud 15 wells, completed
19 wells, which included 7 wells carried into 2017 from fourth
quarter 2016, and brought 17 wells online in the Cleveland
formation. Average daily net production in the Cleveland was
13.6 MBoe/d in the first quarter of 2017. To date, 60% of
wells brought online in 2017 are performing above expectations, 6
of which have exceeded IP30 rates of 600 Boe/d (31% oil), two of
which have achieved IP30 rates above 1,000 Boe/d (34% oil). These
recent outstanding results illustrate the upside that still exists
in our Cleveland development program even after drilling more than
550 horizontal wells.
Subsequent to the end of the first quarter, Jones Energy
initiated drilling a new development area in Hutchinson County, TX.
This area offsets the Company’s Coble 496-2H which is a 100% Jones
Energy operated well drilled to a 4,255’ lateral length that
achieved an IP30 of 790 Boe/d (63% oil) and has an EUR of 873 MBoe
after being online for nearly 20 months. The Coble well has opened
a new area of Cleveland development where Jones Energy has
accumulated over 14,000 net acres with approximately 60 potential
drilling locations. Furthermore, the Company intends to drill long
laterals in this new area, with the first 7,500’ long lateral
currently drilling. A successful outcome in this new area could
have a meaningful positive impact to Cleveland production
expectations. The Company anticipates drilling several more
long-lateral wells in the second quarter, and as many as 12 gross
(11.6 net) in 2017.
Eastern Anadarko (Merge)
During the first quarter, the Company spud two wells and
completed three wells, all being Woodford targets in the Merge. Due
to the timing of the completions, these initial Merge wells did not
significantly contribute to first quarter production.
Jones Energy continues to run one rig in the Merge and still
anticipates adding a second rig in July with a third rig likely to
follow by year end 2017. Drilling has just finished on the two-well
BOMHOFF pad, which includes the BOMHOFF 20-12-7 1H, a Woodford
target, and the BOMHOFF 20-12-7 2H, which is the Company’s first
Meramec target. Completion operations on the pad are expected to
begin this week.
Leasing efforts continue to enhance the Company’s position in
the Merge. As of May 3, 2017, the Company held approximately 21,700
net acres. This represents an increase of approximately 21% from
the initial acquisition of 18,000 net acres, all through leasehold
acquisitions and pooling efforts. Jones Energy continues to
aggressively seek opportunities to grow the asset through
acquisitions, leasing and pooling.
Capital ExpendituresDuring the first quarter of
2017, the Company spent $45.7 million on capital expenditures
excluding lease acquisitions, of which $43.7 million was drilling
and completion capital and the remainder was related to maintenance
capital and spending on non-operated wells. The Company spent
$12.4 million on lease acquisitions in the first quarter, bringing
total capital expenditures for the first quarter of 2017 to $58.0
million. The $12.4 million in lease acquisitions capital
expenditures includes $11.1 million of Merge leasing completed
during the first quarter.
2017 Guidance Jones Energy reiterates its
2017 guidance for the full year, projecting average daily
production of 20,700 to 23,000 Boe per day. The Company also
announces second quarter 2017 guidance projecting average daily
production of 20,700 to 21,700 Boe per day. A table has been
provided below with full year and second quarter 2017 guidance by
category.
|
|
|
|
2017 Guidance |
|
|
|
|
2017E |
|
2Q17E |
Total Production
(MMBoe) |
7.6 – 8.4 |
|
1.9 –
2.0 |
Average Daily
Production (MBoe/d) |
20.7 – 23.0 |
|
20.7 –
21.7 |
Crude Oil
(MBbl/d) |
5.7 – 6.3 |
|
|
Natural
Gas (MMcf/d) |
51 – 57 |
|
|
NGLs
(MBbl/d) |
6.5 – 7.2 |
|
|
|
|
|
|
Lease Operating Expense
($mm) |
$45.0 –$50.0 |
|
|
Production Taxes (% of
Unhedged Revenue) * |
4.5% – 5.5% |
|
|
Ad Valorem Taxes ($mm)
* |
$2.7 – $3.0 |
|
|
Cash G&A Expense
($mm) |
$23 – $25 |
|
|
|
|
|
|
Capital
Expenditures ($mm) |
|
|
|
Merge
Drilling and Completion (D&C) |
|
|
|
JONE
Operated D&C |
$ |
88 |
|
|
Non-Operated D&C and Other |
|
22 |
|
|
Total Merge
D&C |
$ |
110 |
|
|
Merge
Leasing and Pooling |
|
20 |
|
|
Total
Merge Capital Expenditures |
$ |
130 |
|
|
|
|
|
|
Cleveland
D&C |
$ |
122 |
|
|
Cleveland
Leasing |
|
5 |
|
|
Total
Cleveland Capital Expenditures |
$ |
127 |
|
|
|
|
|
|
Other |
$ |
18 |
|
|
Total Capital Expenditures |
$ |
275 |
|
|
|
|
|
|
|
* Production and ad valorem taxes are included as
one line item on the Company’s income statement |
|
Liquidity and Hedging
As of March 31, 2017, the Company had outstanding borrowings
under its revolving credit facility of $155 million. The Company
has $270 million of available borrowings under its revolving credit
facility and approximately $9 million in cash, resulting in $279
million of total liquidity.
On March 31, 2017, the Company issued a special stock dividend
of 0.087423 shares of Class A common stock for each outstanding
share of Class A common stock. As a holder of common units of
Jones Energy Holdings, LLC (“JEH”), the Company received cash
distributions from JEH during 2016 and the first quarter of 2017 to
cover certain tax obligations. The cash distributions the Company
received from JEH are in excess of the amount required to satisfy
the Company’s associated tax obligations. The Company contributed
$17.5 million of this excess cash to JEH in exchange for 4,999,927
newly-issued JEH units, and JEH used the contributed cash to pay
down outstanding borrowings under its revolving credit facility.
The special stock dividend was declared in order to equalize the
number of shares of Class A common stock outstanding to the number
of JEH units that the Company holds. The weighted average number of
shares of Class A common stock outstanding during the first quarter
of 2017 was 62.2 million.
The estimated mark-to-market value of the Company’s commodity
price hedges as of March 31, 2017 was approximately $47.2 million
incorporating strip pricing as of April 28, 2017. During the first
quarter of 2017, Jones Energy unwound approximately $20 million of
its crystalized 2018 and 2019 hedges. Net proceeds from the unwind
have the effect of reducing debt and increasing EBITDAX by
approximately $20 million. The following table summarizes the
Company’s net commodity derivative contracts outstanding as of May
3, 2017 and summarizes approximately $24 million in remaining
crystallized hedge gains in 2018 and 2019:
|
|
|
2Q17 |
3Q17 |
4Q17 |
|
|
Remaining2017 |
|
2018 |
|
2019 |
|
2020 |
Oil Hedges |
|
|
|
|
|
|
|
|
|
|
|
Swaps Sold
(MBbl) |
|
|
465 |
|
525 |
|
480 |
|
|
|
1,470 |
|
1,679 |
|
300 |
|
240 |
Price
($/Bbl) |
|
$ |
66.28 |
$ |
62.48 |
$ |
63.43 |
|
|
$ |
63.99 |
$ |
51.54 |
$ |
50.25 |
$ |
50.10 |
|
|
|
|
|
|
|
|
|
|
|
|
Swaps Sold Related to Offsets (MBbl) |
|
- |
|
- |
|
- |
|
|
|
- |
|
318 |
|
- |
|
- |
Price ($/Bbl) |
|
|
- |
|
- |
|
- |
|
|
|
- |
$ |
77.59 |
|
- |
|
- |
|
|
|
|
|
|
|
|
|
|
|
|
Offset Swaps Purchased (MBbl) |
|
- |
|
- |
|
- |
|
|
|
- |
|
318 |
|
- |
|
- |
Price ($/Bbl) |
|
|
- |
|
- |
|
- |
|
|
|
- |
$ |
46.77 |
|
- |
|
- |
|
|
|
|
|
|
|
|
|
|
|
|
Collars
(MBbl) |
|
|
- |
|
- |
|
- |
|
|
|
- |
|
- |
|
810 |
|
- |
Floor
($/Bbl) |
|
|
- |
|
- |
|
- |
|
|
|
- |
|
- |
$ |
48.52 |
|
- |
Ceiling
($/Bbl) |
|
|
- |
|
- |
|
- |
|
|
|
- |
|
- |
$ |
59.64 |
|
- |
|
|
|
|
|
|
|
|
|
|
|
|
Gas
Hedges |
|
|
|
|
|
|
|
|
|
|
Swaps Sold
(MMcf) |
|
|
4,530 |
|
5,110 |
|
5,070 |
|
|
|
14,710 |
|
22,310 |
|
9,820 |
|
3,600 |
Price
($/Mcf) |
|
$ |
3.89 |
$ |
3.72 |
$ |
3.70 |
|
|
$ |
3.76 |
$ |
2.96 |
$ |
2.83 |
$ |
2.81 |
|
|
|
|
|
|
|
|
|
|
|
|
Swaps Sold Related to Offsets (MMcf) |
|
- |
|
- |
|
- |
|
|
|
- |
|
9,540 |
|
- |
|
- |
Price ($/Mcf) |
|
|
- |
|
- |
|
- |
|
|
|
- |
$ |
4.24 |
|
- |
|
- |
|
|
|
|
|
|
|
|
|
|
|
|
Offset Swaps Purchased (MMcf) |
|
- |
|
- |
|
- |
|
|
|
- |
|
9,540 |
|
- |
|
- |
Price ($/Mcf) |
|
|
- |
|
- |
|
- |
|
|
|
- |
$ |
2.81 |
|
- |
|
- |
|
|
|
|
|
|
|
|
|
|
|
|
Collars
(MMcf) |
|
|
- |
|
- |
|
- |
|
|
|
- |
|
- |
|
11,890 |
|
- |
Floor
($/Mcf) |
|
|
- |
|
- |
|
- |
|
|
|
- |
|
- |
$ |
2.55 |
|
- |
Ceiling
($/Mcf) |
|
|
- |
|
- |
|
- |
|
|
|
- |
|
- |
$ |
3.19 |
|
- |
|
|
|
|
|
|
|
|
|
|
|
|
NGL Swaps
(MBbl) |
|
|
|
|
|
|
|
|
|
|
Ethane |
|
|
|
- |
|
- |
|
- |
|
|
|
- |
|
- |
|
- |
|
- |
Propane |
|
|
|
224 |
|
231 |
|
227 |
|
|
|
682 |
|
850 |
|
- |
|
- |
Iso Butane |
|
|
|
27 |
|
25 |
|
24 |
|
|
|
76 |
|
120 |
|
- |
|
- |
Butane |
|
|
|
76 |
|
81 |
|
81 |
|
|
|
238 |
|
335 |
|
- |
|
- |
Natural
Gasoline |
|
|
83 |
|
93 |
|
93 |
|
|
|
269 |
|
360 |
|
- |
|
- |
Total NGLs |
|
|
|
410 |
|
430 |
|
425 |
|
|
|
1,265 |
|
1,665 |
|
- |
|
- |
|
|
|
|
|
|
|
|
|
|
|
|
NGL Swap
Prices ($/Gal) |
|
|
|
|
|
|
|
|
|
|
Ethane |
|
|
|
- |
|
- |
|
- |
|
|
|
- |
|
- |
|
- |
|
- |
Propane |
|
|
$ |
0.46 |
$ |
0.47 |
$ |
0.47 |
|
|
$ |
0.46 |
|
0.57 |
|
- |
|
- |
Iso Butane |
|
|
|
0.66 |
|
0.60 |
|
0.57 |
|
|
|
0.61 |
|
0.72 |
|
- |
|
- |
Butane |
|
|
|
0.63 |
|
0.61 |
|
0.61 |
|
|
|
0.62 |
|
0.69 |
|
- |
|
- |
Natural
Gasoline |
|
|
1.05 |
|
1.04 |
|
1.04 |
|
|
|
1.04 |
|
1.05 |
|
- |
|
- |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Conference Call Details
Jones Energy will host a conference call for investors and
analysts to discuss its results on Thursday, May 4, 2017 at 10:30
a.m. ET (9:30 a.m. CT). The conference call can be accessed
via webcast through the Investor Relations section of Jones
Energy’s website, www.jonesenergy.com, or by dialing (866) 393-4306
(for domestic U.S.) or (734) 385-2616 (International) and entering
conference code 7807207. If you are not able to participate
in the conference call, the webcast replay and a downloadable audio
file will be available shortly following the call through the
Investor Relations section of the Company’s website,
www.jonesenergy.com.
About Jones Energy
Jones Energy, Inc. is an independent oil and natural gas company
engaged in the development and acquisition of oil and natural gas
properties in the Anadarko and Arkoma basins of Texas and
Oklahoma. Additional information about Jones Energy may be
found on the Company’s website at: www.jonesenergy.com.
1 Adjusted net income, adjusted net income per share and
EBITDAX are supplemental non-GAAP financial measures that are used
by management and external users of our consolidated financial
statements, such as industry analysts, investors, lenders and
rating agencies. For additional information, including
reconciliations to the most comparable GAAP financial measures,
please see “Non-GAAP Financial Measures and Reconciliations”
below.
Forward-Looking Statements
This press release contains forward-looking statements within
the meaning of Section 27A of the Securities Act of 1933 and
Section 21E of the Securities Exchange Act of 1934. All statements,
other than statements of historical facts, included in this press
release that address activities, events or developments that the
Company expects, believes or anticipates will or may occur in the
future are forward-looking statements. Without limiting the
generality of the foregoing, forward-looking statements contained
in this press release specifically include the expectations of
plans, strategies, objectives and anticipated financial and
operating results of the Company, continuing guidance regarding the
number of rigs that will be running in 2017, the timing of the
development of the new Merge acreage, the anticipated acquisition
of additional acreage in the Merge, the cost to drill and complete
wells and the resultant impact on the 2017 capital budget, and
projections regarding total production, average daily production,
percentage liquids, operating expenses, production and ad valorem
taxes as a percentage of revenue, cash G&A expenses and capital
expenditure levels for the full year and second quarter of
2017. These statements are based on certain assumptions made
by the Company based on management’s experience and perception of
historical trends, current economic and market conditions,
anticipated future developments and other factors believed to be
appropriate. Such statements are subject to a number of
assumptions, risks and uncertainties, many of which are beyond the
control of the Company, which may cause actual results to differ
materially from those implied or expressed by the forward-looking
statements. These include, but are not limited to, changes in
oil and natural gas prices, weather and environmental conditions,
the timing and amount of planned capital expenditures, availability
and method of funding of acquisitions and divestitures, or the
ability to integrate any acquisitions, uncertainties in estimating
proved reserves and forecasting production results, operational
factors affecting the commencement or maintenance of producing
wells, the condition of the capital markets generally, as well as
the Company’s ability to access them, the proximity to and capacity
of transportation facilities, and uncertainties regarding
environmental regulations or litigation and other legal or
regulatory developments affecting the Company’s business and other
important factors that could cause actual results to differ
materially from those projected as described in the Company’s
reports filed with the SEC.
Any forward-looking statement speaks only as of the date on
which such statement is made and the Company undertakes no
obligation to correct or update any forward-looking statement,
whether as a result of new information, future events or otherwise,
except as required by applicable law.
Jones Energy, Inc.Consolidated Statement of
Operations (Unaudited)
|
|
Three months ended
March 31, |
(in thousands of dollars except per share data) |
|
2017 |
|
|
2016 |
|
Operating
revenues |
|
|
|
|
|
|
Oil and gas sales |
|
$ |
40,677 |
|
|
$ |
25,080 |
|
Other revenues |
|
|
556 |
|
|
|
778 |
|
Total operating
revenues |
|
|
41,233 |
|
|
|
25,858 |
|
Operating costs
and expenses |
|
|
|
|
|
|
Lease operating |
|
|
8,806 |
|
|
|
8,617 |
|
Production and ad
valorem taxes |
|
|
(906 |
) |
|
|
1,601 |
|
Exploration |
|
|
2,944 |
|
|
|
162 |
|
Depletion, depreciation
and amortization |
|
|
35,654 |
|
|
|
41,762 |
|
Accretion of ARO
liability |
|
|
201 |
|
|
|
293 |
|
General and
administrative |
|
|
8,041 |
|
|
|
7,504 |
|
Total operating
expenses |
|
|
54,740 |
|
|
|
59,939 |
|
Operating income
(loss) |
|
|
(13,507 |
) |
|
|
(34,081 |
) |
Other income
(expense) |
|
|
|
|
|
|
Interest expense |
|
|
(12,887 |
) |
|
|
(14,798 |
) |
Gain on debt
extinguishment |
|
|
— |
|
|
|
90,652 |
|
Net gain (loss) on
commodity derivatives |
|
|
22,320 |
|
|
|
17,219 |
|
Other income
(expense) |
|
|
580 |
|
|
|
225 |
|
Other income (expense),
net |
|
|
10,013 |
|
|
|
93,298 |
|
Income (loss) before
income tax |
|
|
(3,494 |
) |
|
|
59,217 |
|
Income tax
provision (benefit) |
|
|
21 |
|
|
|
10,703 |
|
Net income (loss) |
|
|
(3,515 |
) |
|
|
48,514 |
|
Net income (loss)
attributable to non-controlling interests |
|
|
(2,128 |
) |
|
|
29,603 |
|
Net income
(loss) attributable to controlling interests |
|
$ |
(1,387 |
) |
|
$ |
18,911 |
|
Dividends and accretion
on preferred stock |
|
|
(2,027 |
) |
|
|
— |
|
Net income
(loss) attributable to common shareholders |
|
$ |
(3,414 |
) |
|
$ |
18,911 |
|
|
|
|
|
|
|
|
Earnings (loss)
per share (1): |
|
|
|
|
|
|
Basic - Net income
(loss) attributable to common shareholders |
|
$ |
(0.05 |
) |
|
$ |
0.57 |
|
Diluted - Net income
(loss) attributable to common shareholders |
|
$ |
(0.05 |
) |
|
$ |
0.57 |
|
|
|
|
|
|
|
|
Weighted
average Class A shares outstanding (1): |
|
|
|
|
|
|
Basic |
|
|
62,197 |
|
|
|
33,222 |
|
Diluted |
|
|
62,197 |
|
|
|
33,222 |
|
(1) All share and earnings per share information presented
has been recast to retrospectively adjust for the effects of the
0.087423 per share Special Stock Dividend distributed on March 31,
2017.
Jones Energy, Inc.Consolidated Balance Sheet
(Unaudited)
|
|
March 31, |
|
December 31, |
|
(in thousands of dollars) |
|
2017 |
|
|
2016 |
|
|
Assets |
|
|
|
|
|
Current assets |
|
|
|
|
|
|
|
Cash |
|
$ |
8,708 |
|
|
$ |
34,642 |
|
|
Accounts
receivable, net |
|
|
|
|
|
|
|
Oil and
gas sales |
|
|
25,787 |
|
|
|
26,568 |
|
|
Joint
interest owners |
|
|
6,533 |
|
|
|
5,267 |
|
|
Other |
|
|
4,218 |
|
|
|
6,061 |
|
|
Commodity
derivative assets |
|
|
30,101 |
|
|
|
24,100 |
|
|
Other
current assets |
|
|
7,278 |
|
|
|
2,684 |
|
|
Total
current assets |
|
|
82,625 |
|
|
|
99,322 |
|
|
Oil and gas properties,
net, at cost under the successful efforts method |
|
|
1,764,947 |
|
|
|
1,743,588 |
|
|
Other property, plant
and equipment, net |
|
|
2,920 |
|
|
|
2,996 |
|
|
Commodity derivative
assets |
|
|
17,767 |
|
|
|
34,744 |
|
|
Other assets |
|
|
5,762 |
|
|
|
6,050 |
|
|
Total
assets |
|
$ |
1,874,021 |
|
|
$ |
1,886,700 |
|
|
Liabilities and
Stockholders' Equity |
|
|
|
|
|
|
|
Current
liabilities |
|
|
|
|
|
|
|
Trade
accounts payable |
|
$ |
55,757 |
|
|
$ |
36,527 |
|
|
Oil and
gas sales payable |
|
|
28,112 |
|
|
|
28,339 |
|
|
Accrued
liabilities |
|
|
24,948 |
|
|
|
25,707 |
|
|
Commodity
derivative liabilities |
|
|
8,717 |
|
|
|
14,650 |
|
|
Other
current liabilities |
|
|
3,223 |
|
|
|
2,584 |
|
|
Total
current liabilities |
|
|
120,757 |
|
|
|
107,807 |
|
|
Long-term debt |
|
|
701,586 |
|
|
|
724,009 |
|
|
Deferred revenue |
|
|
6,591 |
|
|
|
7,049 |
|
|
Commodity derivative
liabilities |
|
|
178 |
|
|
|
1,209 |
|
|
Asset retirement
obligations |
|
|
20,035 |
|
|
|
19,458 |
|
|
Liability under tax
receivable agreement |
|
|
41,720 |
|
|
|
43,045 |
|
|
Other liabilities |
|
|
949 |
|
|
|
792 |
|
|
Deferred tax
liabilities |
|
|
2,926 |
|
|
|
2,905 |
|
|
Total
liabilities |
|
|
894,742 |
|
|
|
906,274 |
|
|
Series A
preferred stock, $0.001 par value; 1,840,000 shares issued and
outstanding at March 31, 2017 and
December 31, 2016 |
|
|
89,162 |
|
|
|
88,975 |
|
|
Stockholders'
equity |
|
|
|
|
|
|
|
Class A
common stock, $0.001 par value; 63,395,635 shares issued and
63,373,033 shares outstanding at March 31, 2017 and
57,048,076 shares issued and 57,025,474 shares outstanding at
December 31, 2016 |
|
|
63 |
|
|
|
57 |
|
|
Class B
common stock, $0.001 par value; 29,832,098 shares issued and
outstanding at March 31, 2017 and
December 31, 2016 |
|
|
30 |
|
|
|
30 |
|
|
Treasury
stock, at cost: 22,602 shares at March 31, 2017 and
December 31, 2016 |
|
|
(358 |
) |
|
|
(358 |
) |
|
Additional paid-in-capital |
|
|
470,107 |
|
|
|
447,137 |
|
|
Retained
(deficit) / earnings |
|
|
(30,272 |
) |
|
|
(8,652 |
) |
|
Stockholders'
equity |
|
|
439,570 |
|
|
|
438,214 |
|
|
Non-controlling
interest |
|
|
450,547 |
|
|
|
453,237 |
|
|
Total stockholders’
equity |
|
|
890,117 |
|
|
|
891,451 |
|
|
Total
liabilities and stockholders' equity |
|
$ |
1,874,021 |
|
|
$ |
1,886,700 |
|
|
Jones Energy, Inc.Consolidated Statement of
Cash Flow Data (Unaudited)
|
|
Three months ended
March 31, |
(in thousands of dollars) |
|
2017 |
|
|
2016 |
|
Cash flows from
operating activities |
|
|
|
|
|
|
Net income (loss) |
|
$ |
(3,515 |
) |
|
$ |
48,514 |
|
Adjustments to
reconcile net income (loss) to net cash provided by operating
activities |
|
|
|
|
|
|
Depletion, depreciation, and amortization |
|
|
35,654 |
|
|
|
41,762 |
|
Exploration (dry hole and lease abandonment) |
|
|
1,643 |
|
|
|
27 |
|
Accretion
of ARO liability |
|
|
201 |
|
|
|
293 |
|
Amortization of debt issuance costs |
|
|
977 |
|
|
|
1,129 |
|
Stock
compensation expense |
|
|
1,972 |
|
|
|
1,185 |
|
Deferred
and other non-cash compensation expense |
|
|
136 |
|
|
|
268 |
|
Amortization of deferred revenue |
|
|
(458 |
) |
|
|
(645 |
) |
(Gain)
loss on commodity derivatives |
|
|
(22,320 |
) |
|
|
(17,219 |
) |
(Gain)
loss on sales of assets |
|
|
64 |
|
|
|
4 |
|
(Gain) on
debt extinguishment |
|
|
— |
|
|
|
(90,652 |
) |
Deferred
income tax provision |
|
|
21 |
|
|
|
10,564 |
|
Other -
net |
|
|
(627 |
) |
|
|
(963 |
) |
Changes
in operating assets and liabilities |
|
|
|
|
|
|
Accounts
receivable |
|
|
(220 |
) |
|
|
10,655 |
|
Other
assets |
|
|
(4,912 |
) |
|
|
(1,730 |
) |
Accrued
interest expense |
|
|
3,348 |
|
|
|
(384 |
) |
Accounts
payable and accrued liabilities |
|
|
1,619 |
|
|
|
(7,634 |
) |
Net cash
provided by operations |
|
|
13,583 |
|
|
|
(4,826 |
) |
Cash flows from
investing activities |
|
|
|
|
|
|
Additions to oil and
gas properties |
|
|
(47,110 |
) |
|
|
(7,176 |
) |
Net adjustments to
purchase price of properties acquired |
|
|
2,391 |
|
|
|
— |
|
Proceeds from sales of
assets |
|
|
144 |
|
|
|
3 |
|
Acquisition of other
property, plant and equipment (net of reimbursements) |
|
|
(192 |
) |
|
|
40 |
|
Current period
settlements of matured derivative contracts |
|
|
27,854 |
|
|
|
42,298 |
|
Net cash
(used in) investing |
|
|
(16,913 |
) |
|
|
35,165 |
|
Cash flows from
financing activities |
|
|
|
|
|
|
Proceeds from issuance
of long-term debt |
|
|
30,000 |
|
|
|
75,000 |
|
Repayment of long-term
debt |
|
|
(53,000 |
) |
|
|
— |
|
Purchase of senior
notes |
|
|
— |
|
|
|
(73,427 |
) |
Payment of dividends on
preferred stock |
|
|
(1,840 |
) |
|
|
— |
|
Net distributions paid
to JEH unitholders |
|
|
(562 |
) |
|
|
— |
|
Net payments for share
based compensation |
|
|
(31 |
) |
|
|
— |
|
Proceeds from sale of
common stock |
|
|
2,829 |
|
|
|
— |
|
Net cash
provided by financing |
|
|
(22,604 |
) |
|
|
1,573 |
|
Net
increase (decrease) in cash |
|
|
(25,934 |
) |
|
|
31,912 |
|
Cash |
|
|
|
|
|
|
Beginning of
period |
|
|
34,642 |
|
|
|
21,893 |
|
End of period |
|
$ |
8,708 |
|
|
$ |
53,805 |
|
Supplemental
disclosure of cash flow information |
|
|
|
|
|
|
Cash paid for
interest |
|
$ |
8,559 |
|
|
$ |
14,053 |
|
Change in accrued
additions to oil and gas properties |
|
|
13,294 |
|
|
|
(686 |
) |
Asset retirement
obligations incurred, including changes in estimate |
|
|
413 |
|
|
|
50 |
|
|
|
|
|
|
|
|
|
|
Jones Energy, Inc.Selected Financial and
Operating Statistics
The following table sets forth summary data regarding revenues,
production volumes, average prices and average production costs
associated with our sale of oil and natural gas for the periods
indicated:
|
|
Three Months Ended
March 31, |
|
|
2017 |
|
|
2016 |
|
Change |
Revenues (in
thousands of dollars): |
|
|
|
|
|
|
|
|
|
Oil and
gas sales |
|
$ |
40,677 |
|
|
$ |
25,080 |
|
$ |
15,597 |
|
Other
revenues |
|
|
556 |
|
|
|
778 |
|
|
(222 |
) |
Current
period settlements of matured derivative contracts |
|
|
26,332 |
|
|
|
42,671 |
|
|
(16,339 |
) |
Total
revenues including derivative impact |
|
$ |
67,565 |
|
|
$ |
68,529 |
|
$ |
(964 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net production
volumes: |
|
|
|
|
|
|
|
|
|
Oil
(MBbls) |
|
|
385 |
|
|
|
479 |
|
|
(94 |
) |
Natural
gas (MMcf) |
|
|
4,655 |
|
|
|
4,920 |
|
|
(265 |
) |
NGLs
(MBbls) |
|
|
538 |
|
|
|
555 |
|
|
(17 |
) |
Total
(MBoe) |
|
|
1,699 |
|
|
|
1,854 |
|
|
(155 |
) |
Average
net (Boe/d) |
|
|
18,878 |
|
|
|
20,374 |
|
|
(1,496 |
) |
Average sales
price, unhedged: |
|
|
|
|
|
|
|
|
|
Oil (per
Bbl), unhedged |
|
$ |
47.45 |
|
|
$ |
27.80 |
|
$ |
19.65 |
|
Natural
gas (per Mcf), unhedged |
|
|
2.45 |
|
|
|
1.33 |
|
|
1.12 |
|
NGLs (per
Bbl), unhedged |
|
|
20.41 |
|
|
|
9.41 |
|
|
11.00 |
|
Combined
(per Boe), unhedged |
|
|
23.94 |
|
|
|
13.53 |
|
|
10.41 |
|
Average sales
price, hedged: |
|
|
|
|
|
|
|
|
|
Oil (per
Bbl), hedged |
|
$ |
111.33 |
|
|
$ |
84.03 |
|
$ |
27.30 |
|
Natural
gas (per Mcf), hedged |
|
|
3.60 |
|
|
|
3.67 |
|
|
(0.07 |
) |
NGLs (per
Bbl), hedged |
|
|
13.76 |
|
|
|
17.04 |
|
|
(3.28 |
) |
Combined
(per Boe), hedged |
|
|
39.44 |
|
|
|
36.54 |
|
|
2.90 |
|
Average costs
(per BOE): |
|
|
|
|
|
|
|
|
|
Lease
operating |
|
$ |
5.18 |
|
|
$ |
4.65 |
|
$ |
0.53 |
|
Production and ad valorem taxes |
|
|
(0.53 |
) |
|
|
0.86 |
|
|
(1.39 |
) |
Depletion, depreciation and amortization |
|
|
20.99 |
|
|
|
22.53 |
|
|
(1.54 |
) |
General
and administrative |
|
|
4.73 |
|
|
|
4.05 |
|
|
0.68 |
|
Jones Energy, Inc.Non-GAAP Financial Measures
and Reconciliations
EBITDAX is a supplemental non-GAAP financial
measure that is used by management and external users of our
consolidated financial statements, such as industry analysts,
investors, lenders and rating agencies.
We define EBITDAX as earnings before interest
expense, income taxes, depreciation, depletion and amortization,
exploration expense, gains and losses from derivatives less the
current period settlements of matured derivative contracts, and the
other items described below. EBITDAX is not a measure of net
income as determined by United States generally accepted accounting
principles, or GAAP. Management believes EBITDAX is useful
because it allows them to more effectively evaluate our operating
performance and compare the results of our operations from period
to period and against our peers without regard to our financing
methods or capital structure. We exclude the items listed
above from net income in arriving at EBITDAX because these amounts
can vary substantially from company to company within our industry
depending upon accounting methods and book values of assets,
capital structures and the method by which the assets were
acquired. EBITDAX has limitations as an analytical tool and
should not be considered as an alternative to, or more meaningful
than, net income as determined in accordance with GAAP or as an
indicator of our liquidity. Certain items excluded from EBITDAX are
significant components in understanding and assessing a company’s
financial performance, such as a company’s cost of capital and tax
structure, as well as the historical costs of depreciable
assets. Our presentation of EBITDAX should not be construed
as an inference that our results will be unaffected by unusual or
non-recurring items and should not be viewed as a substitute for
GAAP. Our computations of EBITDAX may not be comparable to
other similarly titled measures of other companies.
The following table sets forth a reconciliation of
net income (loss) as determined in accordance with GAAP to EBITDAX
for the periods indicated:
|
|
Three Months Ended
March 31, |
(in thousands of dollars) |
|
2017 |
|
|
2016 |
|
Reconciliation
of EBITDAX to net income |
|
|
|
|
|
|
Net
income (loss) |
|
$ |
(3,515 |
) |
|
$ |
48,514 |
|
Interest
expense |
|
|
12,887 |
|
|
|
14,798 |
|
Exploration expense |
|
|
2,944 |
|
|
|
162 |
|
Income
taxes |
|
|
21 |
|
|
|
10,703 |
|
Depreciation and depletion |
|
|
35,654 |
|
|
|
41,762 |
|
Accretion
of ARO liability |
|
|
201 |
|
|
|
293 |
|
Change in
TRA liability |
|
|
(668 |
) |
|
|
(429 |
) |
Other
non-cash charges |
|
|
41 |
|
|
|
(534 |
) |
Stock
compensation expense |
|
|
1,972 |
|
|
|
1,185 |
|
Deferred
and other non-cash compensation expense |
|
|
136 |
|
|
|
268 |
|
Net
(gain) loss on derivative contracts |
|
|
(22,320 |
) |
|
|
(17,219 |
) |
Current
period settlements of matured derivative contracts |
|
|
26,332 |
|
|
|
42,671 |
|
Amortization of deferred revenue |
|
|
(458 |
) |
|
|
(645 |
) |
(Gain)
loss on sale of assets |
|
|
64 |
|
|
|
4 |
|
(Gain) on
debt extinguishment |
|
|
— |
|
|
|
(90,652 |
) |
Financing
expenses and other loan fees |
|
|
24 |
|
|
|
200 |
|
EBITDAX |
|
$ |
53,315 |
|
|
$ |
51,081 |
|
Jones Energy, Inc. Non-GAAP Financial Measures
and Reconciliations
Adjusted Net Income is a supplemental non-GAAP financial measure
that is used by management and external users of the Company’s
consolidated financial statements. We define Adjusted Net
Income as net income excluding the impact of certain non-cash items
including gains or losses on commodity derivative instruments not
yet settled, impairment of oil and gas properties, non-cash
compensation expense, and the other items described below. We
believe adjusted net income and adjusted earnings per share are
useful to investors because they provide readers with a more
meaningful measure of our profitability before recording certain
items for which the timing or amount cannot be reasonably
determined. However, these measures are provided in addition
to, not as an alternative for, and should be read in conjunction
with, the information contained in our financial statements
prepared in accordance with GAAP. The following table
provides a reconciliation of net income (loss) as determined in
accordance with GAAP to adjusted net income for the periods
indicated:
|
|
Three Months Ended
March 31, |
(in thousands except per share data) |
|
2017 |
|
|
2016 |
|
Net income
(loss) |
|
$ |
(3,515 |
) |
|
$ |
48,514 |
|
Net
(gain) loss on derivative contracts |
|
|
(22,320 |
) |
|
|
(17,219 |
) |
Current
period settlements of matured derivative contracts |
|
|
26,332 |
|
|
|
42,671 |
|
Exploration |
|
|
2,944 |
|
|
|
162 |
|
Non-cash
stock compensation expense |
|
|
1,972 |
|
|
|
1,185 |
|
Deferred
and other non-cash compensation expense |
|
|
136 |
|
|
|
268 |
|
(Gain) on
debt extinguishment |
|
|
— |
|
|
|
(90,652 |
) |
Change in
TRA liability |
|
|
(668 |
) |
|
|
(429 |
) |
Tax
impact of adjusting items (1) |
|
|
(1,877 |
) |
|
|
11,059 |
|
Change in
valuation allowance |
|
|
912 |
|
|
|
989 |
|
Adjusted net income
(loss) |
|
|
3,916 |
|
|
|
(3,452 |
) |
Adjusted net income
(loss) attributable to non-controlling interests |
|
|
973 |
|
|
|
(2,618 |
) |
Adjusted net income
(loss) attributable to controlling interests |
|
|
2,943 |
|
|
|
(834 |
) |
Dividends and accretion
on preferred stock |
|
|
(2,027 |
) |
|
|
— |
|
Adjusted net income
(loss) attributable to common shareholders |
|
$ |
916 |
|
|
$ |
(834 |
) |
|
|
|
|
|
|
|
Weighted
average Class A shares outstanding (2): |
|
|
|
|
|
|
Basic |
|
|
62,197 |
|
|
|
33,222 |
|
Diluted |
|
|
62,197 |
|
|
|
33,222 |
|
|
|
|
|
|
|
|
Adjusted earnings per
share (basic and diluted) (2) |
|
$ |
0.01 |
|
|
$ |
(0.03 |
) |
(1) In arriving at adjusted net income, the tax impact of the
adjustments to net income is determined by applying the appropriate
tax rate to each adjustment and then allocating the tax impact
between the controlling and non-controlling interests.
(2) All share and earnings per share information presented has
been recast to retrospectively adjust for the effects of the
0.087423 per share Special Stock Dividend distributed on March 31,
2017.
Jones Energy, Inc. Non-GAAP Financial Measures
and Reconciliations
Adjusted Earnings per Share is a supplemental non-GAAP financial
measure that is used by management and external users of the
Company’s consolidated financial statements. We define
Adjusted Earnings per Share as earnings per share plus that portion
of the components of adjusted net income allocated to the
controlling interests divided by weighted average shares
outstanding. We believe adjusted earnings per share is useful
to investors because it provides readers with a more meaningful
measure of our profitability before recording certain items for
which the timing or amount cannot be reasonably determined.
However, these measures are provided in addition to, not as an
alternative for, and should be read in conjunction with, the
information contained in our financial statements prepared in
accordance with GAAP. The following table provides a
reconciliation of earnings per share to adjusted earnings per share
for the period indicated:
|
|
Three Months Ended March 31, |
|
|
|
2017 |
|
|
2016 |
|
|
|
|
|
|
|
|
|
|
Earnings
(loss) per share (basic and diluted) |
|
$ |
(0.05 |
) |
|
$ |
0.57 |
|
|
Net
(gain) loss on commodity derivatives |
|
|
(0.24 |
) |
|
|
(0.26 |
) |
|
Current
period settlements of matured derivative contracts |
|
|
0.28 |
|
|
|
0.63 |
|
|
Exploration |
|
|
0.03 |
|
|
|
— |
|
|
Non-cash
stock compensation expense |
|
|
0.02 |
|
|
|
0.02 |
|
|
Deferred
and other non-cash compensation expense |
|
|
— |
|
|
|
— |
|
|
(Gain) on
debt extinguishment |
|
|
— |
|
|
|
(1.34 |
) |
|
Stand-by
rig costs |
|
|
— |
|
|
|
— |
|
|
Financing
expenses |
|
|
— |
|
|
|
— |
|
|
Change in
TRA liability |
|
|
(0.01 |
) |
|
|
(0.01 |
) |
|
Tax
impact of adjusting items (1) |
|
|
(0.03 |
) |
|
|
0.33 |
|
|
Change in
valuation allowance |
|
|
0.01 |
|
|
|
0.03 |
|
|
Adjusted earnings (loss) per share (basic and diluted)
(2) |
|
$ |
0.01 |
|
|
$ |
(0.03 |
) |
|
|
|
|
|
|
|
|
|
EPS attributed to
Q1 2017 hedge unwinds (gains) |
|
|
(0.14 |
) |
|
|
— |
|
|
Adjusted earnings
per share (basic and diluted), adjusted for hedge unwinds |
|
$ |
(0.13 |
) |
|
$ |
— |
|
|
|
|
|
|
|
|
|
|
Shares (Basic)
(2) |
|
|
62,197 |
|
|
|
33,222 |
|
|
Shares (Diluted)
(2) |
|
|
62,197 |
|
|
|
33,222 |
|
|
Effective tax
rate on net income attributable to controlling interests |
|
|
37.6 |
% |
|
|
31.3 |
% |
|
|
|
|
|
|
|
|
|
(1) In arriving at adjusted net income, the tax impact of the
adjustments to net income is determined by applying the appropriate
tax rate to each adjustment and then allocating the tax impact
between the controlling and non-controlling interests.
(2) All share and earnings per share information presented has
been recast to retrospectively adjust for the effects of the
0.087423 per share Special Stock Dividend distributed on March 31,
2017.
Investor Contact:
Page Portas, 512-493-4834
Investor Relations Associate
Or
Robert Brooks, 512-328-2953
Executive Vice President & CFO
ir@jonesenergy.com