Jones Energy, Inc. (NYSE:JONE) (“Jones Energy” or “the Company”)
today announced financial and operating results for the second
quarter ended June 30, 2017, lowered its 2017 capital expenditure,
or Capex, budget and provided updated guidance for 2017, including
initial third quarter 2017 guidance.
Highlights
- Reducing 2017 Capex budget to $250 million from $275 million,
raising midpoint of 2017 production guidance net of Arkoma Basin
divestiture.
- Average daily net production for second quarter 2017 of 23.8
Mboe/d, 12% above the midpoint of guidance.
- Dropped one core Cleveland rig late July. The plan is to drop
second core Cleveland rig in September 2017.
- Second Meramec well GARRETT achieved 672 Bbls/d and 2,344
Mcf/d, with rates still increasing.
- Sold Arkoma Basin properties for $65 million, deal closing is
credit accretive.
- Net loss for the second quarter of 2017 of $145.3 million,
which includes a $161.9 million impairment charge related to the
Arkoma sale, non-GAAP adjusted net income of $5.7 million, or $0.12
per share and EBITDAX of $48.3 million.1
Jonny Jones, the Company’s Founder, Chairman, and CEO,
commented, “Our Merge program continues to build momentum with
seven wells on production and pad drilling underway with a two-rig
program. Today we announced second quarter results that highlight
continued outperformance from our Cleveland base production.
Earlier this week we also announced the closing of the sale of our
Arkoma Basin properties. The Arkoma represented approximately 3.0
Mboe/d of production; however, due to the continued outperformance
of our remaining base, we are raising the midpoint of our 2017
production guidance net of the divestiture. As we continue to
execute on the 2017 program, we now believe that we can achieve our
2017 goals with less Capex than initially budgeted. As such, I’m
pleased to announce we are lowering our 2017 Capex budget to $250
million from the initial budget of $275 million.”
Financial Results
Total operating revenues for the three months ended June 30,
2017 were $48.6 million as compared to $29.1 million for the three
months ended June 30, 2016. Total revenues including current
period settlements of matured derivative contracts were $66.5
million for the three months ended June 30, 2017 as compared to
$60.6 million for the three months ended June 30, 2016.
Total operating expenses for the three months ended June 30,
2017 were $235.1 million as compared to $55.9 million for the three
months ended June 30, 2016. During the second quarter of 2017 the
Company incurred impairment charges of $161.9 million in relation
to its Arkoma sale, whereas no impairment charges were incurred
during the second quarter of 2016. Operating expenses for the
second quarter of 2017 were $73.2 million not including the
one-time impairment. During the second quarter, the company also
incurred exploration expenses of $6.7 million, of which $5.2
million was related to leasehold abandonment mainly in the Western
Anadarko.
For the three months ended June 30, 2017, the Company reported a
net loss of $145.3 million, of which a net loss of $91.2 million,
or $1.39 per share, is attributable to common shareholders. This
compares to a net loss of $58.6 million, of which a net loss of
$23.2 million, or $0.69 per share, was attributable to common
shareholders for the three months ended June 30, 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 second quarter 2017 of $5.7 million,
or adjusted net income of $0.12 per share, as compared to
adjusted net loss of $5.7 million, or a loss of
$0.08 per share for the three months ended June 30,
2016.
Earnings before interest, income taxes, depreciation,
amortization, and exploration expense (“EBITDAX”) for the second
quarter 2017 was $48.3 million. This compares to second
quarter 2016 EBITDAX of $46.2 million.
Operating Results
During the second quarter of 2017 Jones Energy produced 2,166
MBoe, or 23,802 Boe/d, which was 12% above the midpoint of prior
guidance. The production beat included outperformance from both the
Cleveland and Arkoma assets. During the second quarter, the Arkoma
asset contributed approximately 3.0 MBoe/d; however, our sale of
the Arkoma Basin properties closed on August 1, 2017. Guidance for
full year 2017 and third quarter 2017 provided in this release has
been adjusted for the divestiture. A breakout of second quarter
production is shown in the table below.
|
|
Three months ended June 30, 2017: |
|
|
Oil (MBbls) |
|
Natural Gas (MMcf) |
|
NGLs (MBbls) |
|
Total (MBoe) |
Cleveland |
|
448 |
|
3,817 |
|
503 |
|
1,587 |
Merge |
|
64 |
|
377 |
|
43 |
|
170 |
Arkoma |
|
2 |
|
1,117 |
|
85 |
|
273 |
Other |
|
11 |
|
525 |
|
37 |
|
136 |
Total |
|
525 |
|
5,836 |
|
668 |
|
2,166 |
Eastern Anadarko (Merge)
During the second quarter, the Company spud five wells and
completed three wells in the Merge, of which one was a Woodford and
two were Meramec. Jones Energy has spud twelve wells and completed
seven wells in the Merge to date. Second quarter Merge production
was 1.9 Mboe/d, with June production averaging 3.2 Mboe/d.
Jones Energy is running two rigs in the Merge and plans to add a
third rig by year end 2017. One rig is drilling the two-well
HARDESTY pad while the other is drilling the three-well ROSEWOOD
pad. The NOLA MAY SHAY 19-9-6 1H, the Company’s third Meramec well,
was successfully completed and is flowing back. The Company’s
second Meramec well, the GARRETT has achieved 672 Bo/d and 2,344
Mcf/d to-date with rates still increasing. The BOMHOFF pad
continues to show strong production, but the wells have not yet
reached a peak 30-day rate.
Jones Energy has updated its drilling schedule and now expects
to drill 24 gross (15 net) Merge wells in 2017, of which 17 gross
wells are planned to be Meramec and the remaining to be Woodford.
The program includes a mix of single well locations and two-well
and three-well pads. The Company now plans to drill six long
lateral wells in the second half of 2017, of which three are
planned to be 10,000’ laterals and three are planned to be 7,500’
laterals. The updated number of total wells planned for the year
reflects the increased number of days allotted for long lateral
drilling and completion time associated with pad drilling. The
Company is now using Gen-3 completion designs for its Woodford
wells, which include increased proppant loading and tighter frac
spacing then prior completion designs. The new design is expected
to result in single well Woodford AFEs for 5,000’ laterals of $5.1
to $5.8 million. In the Meramec, Jones Energy projects single well
AFEs for 5,000’ laterals of $5.4 - $6.1 million. The higher end of
both ranges represents drilling in the deeper part of the Company’s
acreage. Merge Operated D&C capital for the full year 2017
program is now projected to be $83 million versus the initial
budget of $88 million.
Western Anadarko (Cleveland)
During the second quarter, the Company spud 16 wells and
completed four wells in the Cleveland, with the lower number of
completions being a result of the current frac schedule.
Average daily net production in the Cleveland was 17.4 MBoe/d in
the second quarter of 2017.
Jones Energy dropped one core Cleveland rig in late July and is
currently running two rigs in the Western Anadarko. Jones Energy
plans to drop the remaining core Cleveland rig in September. One
rig continues in the long lateral development area of Hutchinson
County, TX. The Company now expects to drill 43 gross (40.5 net)
wells in the 2017 program in the Cleveland. As a result of the
updated rig schedule, full year 2017 Cleveland D&C capital is
now projected to be $110 million versus the initial budget of $122
million.
Capital ExpendituresDuring the second quarter
of 2017, the Company spent $47.5 million on capital expenditures
excluding lease acquisitions, of which $46.8 million was drilling
and completion capital and the remainder was related to maintenance
capital and spending on non-operated wells. The Company spent $9.9
million on lease acquisitions in the second quarter, bringing total
capital expenditures for the second quarter of 2017 to $57.4.
Year-to-date capital expenditures total $115.4 million.
Jones Energy now budgets full year 2017 Capex of $250 million
versus the initial budget of $275 million. The updated budget
reflects reduced activity in the Cleveland, realized and projected
cost inflation, increased costs related to frac designs in the
Merge, increased costs related to long lateral drilling, and less
than anticipated non-op spending from the initial budget. The
Company continues to have a high degree of flexibility in its
program and could take further action if conditions merit.
Updated 2017 Guidance Jones Energy is
incorporating the recent Arkoma Basin divestiture and updated
capital plan into its updated full year 2017 guidance. The Company
now projects an average daily production of 20,700 to 22,000 Boe/d
for full year 2017, which is an increase in guidance net of the
divested Arkoma Basin assets which were producing 3.0 MBoe/d.
Initial third quarter 2017 guidance of 20,000 to 21,000 Boe/d has
also been announced. A table has been provided below with
full year and third quarter 2017 guidance by category.
2017
Guidance |
Previous |
|
PF Arkoma |
|
Updated |
|
|
|
2017E |
|
Divestiture |
|
2017E |
|
3Q17E |
Total Production
(MMBoe) |
7.6 –
8.4 |
|
7.1 –
8.0 |
|
7.6 –
8.0 |
|
1.8 –
1.9 |
Average Daily
Production (MBoe/d) |
20.7 –
23.0 |
|
19.6 –
21.9 |
|
20.7 –
22.0 |
|
20.0 –
21.0 |
Crude Oil
(MBbl/d) |
5.7 –
6.3 |
|
5.7 –
6.3 |
|
5.5 –
5.9 |
|
5.3 –
5.6 |
Natural
Gas (MMcf/d) |
51 –
57 |
|
47 –
53 |
|
52 –
55.3 |
|
49.3 –
51.6 |
NGLs
(MBbl/d) |
6.5 –
7.2 |
|
6.1 –
6.8 |
|
6.5 –
6.9 |
|
6.5 –
6.8 |
|
|
|
|
|
|
|
|
Lease Operating Expense
($mm) |
$45.0
– $50.0 |
|
$43.5
- $48.5 |
|
$40.0
– $45.0 |
|
|
Production Taxes (% of
Unhedged Revenue) * |
4.5% –
5.5% |
|
|
|
4.5% –
5.5% |
|
|
Ad Valorem Taxes ($mm)
* |
$2.7 –
$3.0 |
|
|
|
$2.7 –
$3.0 |
|
|
Cash G&A Expense
($mm) |
$23 –
$25 |
|
|
|
$23 –
$25 |
|
|
|
|
|
|
|
|
|
|
* Production and ad valorem taxes are
included as one line item on the Company’s income statement |
2017 Guidance,
Continued |
|
Previous |
|
Current |
|
|
2017E |
|
2017E |
Capital Expenditures
($mm) |
|
|
|
|
Merge JONE Operated
D&C |
|
$88 |
|
$83 |
Merge Non-Operated
D&C and Other |
|
|
22 |
|
|
17 |
Total
Merge D&C |
|
$110 |
|
$100 |
Merge Leasing and
Pooling |
|
|
20 |
|
|
23 |
Total
Merge Capital Expenditures |
|
$130 |
|
$123 |
|
|
|
|
|
Cleveland D&C |
|
$122 |
|
$110 |
Cleveland Leasing |
|
|
5 |
|
|
5 |
Total
Cleveland Capital Expenditures |
|
$127 |
|
$115 |
|
|
|
|
|
Other |
|
$18 |
|
$12 |
Total Capital Expenditures |
|
$275 |
|
$250 |
|
|
|
|
|
|
|
Liquidity and Hedging
As of June 30, 2017, the Company had $181 million outstanding
borrowings under its revolving credit facility, $244 million
undrawn under its revolving credit facility and approximately $6
million in cash, resulting in approximately $250 million of total
liquidity. Following the closing of the Arkoma Basin properties,
the Company’s borrowing based was reduced to $375 million.
The estimated mark-to-market value of the Company’s commodity
price hedges as of June 30, 2017 was approximately $30 million
incorporating strip pricing as of August 1, 2017. During the second
quarter of 2017, Jones Energy unwound approximately $8 million of
its crystalized hedges. Net proceeds from the unwind have the
effect of reducing debt and increasing EBITDAX by approximately $8
million. The following table summarizes the Company’s net commodity
derivative contracts outstanding as of August 3, 2017 and
summarizes approximately $15 million in remaining crystallized
hedge gains in 2018:
|
|
|
3Q17 |
4Q17 |
|
|
2017 |
2018 |
2019 |
2020 |
Oil Hedges |
|
|
|
|
|
|
|
|
|
|
Swaps Sold
(MBbl) |
|
525 |
480 |
|
|
1,005 |
2,364 |
900 |
240 |
Price
($/Bbl) |
|
$62.48 |
$63.43 |
|
|
$62.94 |
$51.08 |
$50.05 |
$50.10 |
Swaps Sold (MBbl) |
|
- |
- |
|
|
- |
294 |
- |
- |
Price ($/Bbl) |
|
- |
- |
|
|
- |
$78.58 |
- |
- |
Offset Swaps Purchased (MBbl) |
- |
- |
|
|
- |
294 |
- |
- |
Price ($/Bbl) |
|
- |
- |
|
|
- |
$46.79 |
- |
- |
Collars
(MBbl) |
|
- |
- |
|
|
- |
- |
810 |
- |
Floor
($/Bbl) |
|
- |
- |
|
|
- |
- |
$48.52 |
- |
Ceiling
($/Bbl) |
|
- |
- |
|
|
- |
- |
$59.64 |
- |
|
|
|
|
|
|
|
|
|
|
|
Gas
Hedges |
|
|
|
|
|
|
|
|
|
Swaps Sold
(MMcf) |
|
5,110 |
5,070 |
|
|
10,180 |
22,310 |
9,820 |
3,600 |
Price
($/Mcf) |
|
$3.72 |
$3.70 |
|
|
$3.71 |
$2.96 |
$2.83 |
$2.81 |
Swaps Sold (MMcf) |
|
- |
- |
|
|
- |
3,930 |
- |
- |
Price ($/Mcf) |
|
- |
- |
|
|
- |
$4.27 |
- |
- |
Offset Swaps Purchased (MMcf) |
- |
- |
|
|
- |
3,930 |
- |
- |
Price ($/Mcf) |
|
- |
- |
|
|
- |
$2.81 |
- |
- |
Collars
(MMcf) |
|
- |
- |
|
|
- |
- |
11,890 |
- |
Floor
($/Mcf) |
|
- |
- |
|
|
- |
- |
$2.55 |
- |
Ceiling
($/Mcf) |
|
- |
- |
|
|
- |
- |
$3.19 |
- |
|
|
|
|
|
|
|
|
|
|
|
NGL Swaps
(MBbl) |
|
|
|
|
|
|
|
|
|
Ethane |
|
|
- |
- |
|
|
- |
- |
- |
- |
Propane |
|
|
231 |
227 |
|
|
458 |
850 |
- |
- |
Iso Butane |
|
|
25 |
24 |
|
|
49 |
120 |
- |
- |
Butane |
|
|
81 |
81 |
|
|
162 |
335 |
- |
- |
Natural
Gasoline |
|
93 |
93 |
|
|
186 |
360 |
- |
- |
Total
NGLs |
|
430 |
425 |
|
|
855 |
1,665 |
- |
- |
NGL Swap
Prices ($/Gal) |
|
|
|
|
|
|
|
|
Ethane |
|
|
- |
- |
|
|
- |
- |
- |
- |
Propane |
|
|
$0.47 |
$0.47 |
|
|
$0.47 |
0.57 |
- |
- |
Iso Butane |
|
|
0.6 |
0.57 |
|
|
0.59 |
0.72 |
- |
- |
Butane |
|
|
0.61 |
0.61 |
|
|
0.61 |
0.69 |
- |
- |
Natural
Gasoline |
|
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 Friday, August 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 (833) 231-8272
(for domestic U.S.) or (647) 689-4117 (International) and entering
conference code 56297957. 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 Eastern and Western Anadarko basin of Texas and
Oklahoma. Additional information about Jones Energy may be
found on the Company’s website at: www.jonesenergy.com.
_______________
1Adjusted 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, updated guidance regarding the
number of rigs that will be running in 2017, the timing and
location of the development of the new Merge acreage, levels of
single-well authorizations for expenditures and 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 third 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
June 30, |
|
Six months ended
June 30, |
(in thousands of dollars except per share data) |
|
2017 |
|
2016 |
|
2017 |
|
2016 |
Operating
revenues |
|
|
|
|
|
|
|
|
|
|
|
|
Oil and gas sales |
|
$ |
48,114 |
|
|
$ |
28,398 |
|
|
$ |
88,791 |
|
|
$ |
53,478 |
|
Other revenues |
|
|
512 |
|
|
|
746 |
|
|
|
1,068 |
|
|
|
1,524 |
|
Total operating
revenues |
|
|
48,626 |
|
|
|
29,144 |
|
|
|
89,859 |
|
|
|
55,002 |
|
Operating costs
and expenses |
|
|
|
|
|
|
|
|
|
|
|
|
Lease operating |
|
|
9,425 |
|
|
|
7,545 |
|
|
|
18,231 |
|
|
|
16,162 |
|
Production and ad
valorem taxes |
|
|
2,790 |
|
|
|
1,727 |
|
|
|
1,884 |
|
|
|
3,328 |
|
Exploration |
|
|
6,725 |
|
|
|
77 |
|
|
|
9,669 |
|
|
|
239 |
|
Depletion, depreciation
and amortization |
|
|
45,336 |
|
|
|
38,137 |
|
|
|
80,990 |
|
|
|
79,899 |
|
Impairment of oil and
gas properties |
|
|
161,886 |
|
|
|
— |
|
|
|
161,886 |
|
|
|
— |
|
Accretion of ARO
liability |
|
|
266 |
|
|
|
297 |
|
|
|
467 |
|
|
|
590 |
|
General and
administrative |
|
|
8,633 |
|
|
|
8,126 |
|
|
|
16,674 |
|
|
|
15,630 |
|
Total operating
expenses |
|
|
235,061 |
|
|
|
55,909 |
|
|
|
289,801 |
|
|
|
115,848 |
|
Operating income
(loss) |
|
|
(186,435 |
) |
|
|
(26,765 |
) |
|
|
(199,942 |
) |
|
|
(60,846 |
) |
Other income
(expense) |
|
|
|
|
|
|
|
|
|
|
|
|
Interest expense |
|
|
(12,677 |
) |
|
|
(12,807 |
) |
|
|
(25,564 |
) |
|
|
(27,605 |
) |
Gain on debt
extinguishment |
|
|
— |
|
|
|
8,878 |
|
|
|
— |
|
|
|
99,530 |
|
Net gain (loss) on
commodity derivatives |
|
|
21,527 |
|
|
|
(40,002 |
) |
|
|
43,847 |
|
|
|
(22,783 |
) |
Other income
(expense) |
|
|
29,834 |
|
|
|
(338 |
) |
|
|
30,414 |
|
|
|
(113 |
) |
Other income (expense),
net |
|
|
38,684 |
|
|
|
(44,269 |
) |
|
|
48,697 |
|
|
|
49,029 |
|
Income (loss) before
income tax |
|
|
(147,751 |
) |
|
|
(71,034 |
) |
|
|
(151,245 |
) |
|
|
(11,817 |
) |
Income tax
provision (benefit) |
|
|
(2,419 |
) |
|
|
(12,388 |
) |
|
|
(2,398 |
) |
|
|
(1,685 |
) |
Net income (loss) |
|
|
(145,332 |
) |
|
|
(58,646 |
) |
|
|
(148,847 |
) |
|
|
(10,132 |
) |
Net income (loss)
attributable to non-controlling interests |
|
|
(56,093 |
) |
|
|
(35,401 |
) |
|
|
(58,221 |
) |
|
|
(5,798 |
) |
Net income
(loss) attributable to controlling interests |
|
$ |
(89,239 |
) |
|
$ |
(23,245 |
) |
|
$ |
(90,626 |
) |
|
$ |
(4,334 |
) |
Dividends and accretion
on preferred stock |
|
|
(1,966 |
) |
|
|
— |
|
|
|
(3,993 |
) |
|
|
— |
|
Net income
(loss) attributable to common shareholders |
|
$ |
(91,205 |
) |
|
$ |
(23,245 |
) |
|
$ |
(94,619 |
) |
|
$ |
(4,334 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
Earnings (loss)
per share: |
|
|
|
|
|
|
|
|
|
|
|
|
Basic - Net income
(loss) attributable to common shareholders |
|
$ |
(1.39 |
) |
|
$ |
(0.69 |
) |
|
$ |
(1.48 |
) |
|
$ |
(0.13 |
) |
Diluted - Net income
(loss) attributable to common shareholders |
|
$ |
(1.39 |
) |
|
$ |
(0.69 |
) |
|
$ |
(1.48 |
) |
|
$ |
(0.13 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
Weighted
average Class A shares outstanding: |
|
|
|
|
|
|
|
|
|
|
|
|
Basic |
|
|
65,681 |
|
|
|
33,598 |
|
|
|
63,948 |
|
|
|
33,410 |
|
Diluted |
|
|
65,681 |
|
|
|
33,598 |
|
|
|
63,948 |
|
|
|
33,410 |
|
Jones Energy, Inc.Consolidated Balance Sheet
(Unaudited)
(in thousands of dollars) |
June 30, 2017 |
|
December 31, 2016 |
Assets |
|
|
|
|
|
Current assets |
|
|
|
|
|
Cash |
$ |
6,254 |
|
|
$ |
34,642 |
|
Restricted Cash |
|
|
|
|
|
Accounts
receivable, net |
|
|
|
|
|
Oil and
gas sales |
|
24,557 |
|
|
|
26,568 |
|
Joint
interest owners |
|
9,032 |
|
|
|
5,267 |
|
Other |
|
7,205 |
|
|
|
6,061 |
|
Commodity
derivative assets |
|
39,823 |
|
|
|
24,100 |
|
Other
current assets |
|
11,381 |
|
|
|
2,684 |
|
Assets
held for sale |
|
3,455 |
|
|
|
— |
|
Total
current assets |
|
101,707 |
|
|
|
99,322 |
|
Assets held for sale,
net |
|
64,200 |
|
|
|
— |
|
Oil and gas properties,
net, at cost under the successful efforts method |
|
1,545,991 |
|
|
|
1,743,588 |
|
Other property, plant
and equipment, net |
|
2,812 |
|
|
|
2,996 |
|
Commodity derivative
assets |
|
5,914 |
|
|
|
34,744 |
|
Deferred tax
assets |
|
— |
|
|
|
— |
|
Other assets |
|
5,395 |
|
|
|
6,050 |
|
Total
assets |
$ |
1,726,019 |
|
|
$ |
1,886,700 |
|
Liabilities and
Stockholders' Equity |
|
|
|
|
|
Current
liabilities |
|
|
|
|
|
Trade
accounts payable |
$ |
56,053 |
|
|
$ |
36,527 |
|
Oil and
gas sales payable |
|
22,301 |
|
|
|
28,339 |
|
Accrued
liabilities |
|
19,571 |
|
|
|
25,707 |
|
Commodity
derivative liabilities |
|
3,036 |
|
|
|
14,650 |
|
Liability
under tax receivable agreement |
|
— |
|
|
|
— |
|
Other
current liabilities |
|
8,099 |
|
|
|
2,584 |
|
Liabilities related to assets held for sale |
|
7,472 |
|
|
|
— |
|
Total
current liabilities |
|
116,532 |
|
|
|
107,807 |
|
Liabilities related to
assets held for sale |
|
1,143 |
|
|
|
— |
|
Long-term debt |
|
728,163 |
|
|
|
724,009 |
|
Deferred revenue |
|
6,106 |
|
|
|
7,049 |
|
Commodity derivative
liabilities |
|
123 |
|
|
|
1,209 |
|
Asset retirement
obligations |
|
19,061 |
|
|
|
19,458 |
|
Liability under tax
receivable agreement |
|
11,807 |
|
|
|
43,045 |
|
Other liabilities |
|
902 |
|
|
|
792 |
|
Deferred tax
liabilities |
|
2,911 |
|
|
|
2,905 |
|
Total
liabilities |
|
886,748 |
|
|
|
906,274 |
|
|
|
|
|
|
|
Series A
preferred stock, $0.001 par value; 1,840,000 shares issued and
outstanding at June 30, 2017 and
December 31, 2016 |
|
89,288 |
|
|
|
88,975 |
|
Stockholders'
equity |
|
|
|
|
|
Class A
common stock, $0.001 par value; 66,671,659 shares issued and
66,649,057 shares outstanding at June 30, 2017 and
57,048,076 shares issued and 57,025,474 shares outstanding at
December 31, 2016 |
|
67 |
|
|
|
57 |
|
Class B
common stock, $0.001 par value; 29,823,927 shares issued and
outstanding at June 30, 2017 and 29,832,098 shares issued
and outstanding at December 31, 2016 |
|
30 |
|
|
|
30 |
|
Treasury
stock, at cost: 22,602 shares at June 30, 2017 and
December 31, 2016 |
|
(358 |
) |
|
|
(358 |
) |
Additional paid-in-capital |
|
477,390 |
|
|
|
447,137 |
|
Retained
(deficit) / earnings |
|
(121,477 |
) |
|
|
(8,652 |
) |
Stockholders'
equity |
|
355,652 |
|
|
|
438,214 |
|
Non-controlling
interest |
|
394,331 |
|
|
|
453,237 |
|
Total stockholders’
equity |
|
749,983 |
|
|
|
891,451 |
|
Total
liabilities and stockholders' equity |
$ |
1,726,019 |
|
|
$ |
1,886,700 |
|
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 June 30, |
|
|
2017 |
|
2016 |
|
Change |
Revenues (in
thousands of dollars): |
|
|
|
|
|
|
|
|
|
Oil and gas sales |
|
$ |
48,114 |
|
$ |
28,398 |
|
$ |
19,716 |
|
Other revenues |
|
|
512 |
|
|
746 |
|
|
(234 |
) |
Current period
settlements of matured derivative contracts |
|
|
17,921 |
|
|
31,410 |
|
|
(13,489 |
) |
Total operating
revenues |
|
$ |
66,547 |
|
$ |
60,554 |
|
$ |
5,993 |
|
|
|
|
|
|
|
|
|
|
|
Net production
volumes: |
|
|
|
|
|
|
|
|
|
Oil (MBbls) |
|
|
525 |
|
|
396 |
|
|
129 |
|
Natural gas (MMcf) |
|
|
5,836 |
|
|
4,608 |
|
|
1,228 |
|
NGLs (MBbls) |
|
|
668 |
|
|
529 |
|
|
139 |
|
Total (MBoe) |
|
|
2,166 |
|
|
1,693 |
|
|
473 |
|
Average net
(Boe/d) |
|
|
23,802 |
|
|
18,604 |
|
|
5,198 |
|
|
|
|
|
|
|
|
|
|
|
Average sales
price, unhedged: |
|
|
|
|
|
|
|
|
|
Oil (per Bbl),
unhedged |
|
$ |
44.40 |
|
$ |
40.68 |
|
$ |
3.72 |
|
Natural gas (per Mcf),
unhedged |
|
|
2.19 |
|
|
1.11 |
|
|
1.08 |
|
NGLs (per Bbl),
unhedged |
|
|
18.02 |
|
|
13.56 |
|
|
4.46 |
|
Combined (per Boe),
unhedged |
|
|
22.21 |
|
|
16.77 |
|
|
5.44 |
|
Average sales
price, hedged: |
|
|
|
|
|
|
|
|
|
Oil (per Bbl),
hedged |
|
$ |
61.30 |
|
$ |
87.87 |
|
$ |
(26.57 |
) |
Natural gas (per Mcf),
hedged |
|
|
4.04 |
|
|
3.40 |
|
|
0.64 |
|
NGLs (per Bbl),
hedged |
|
|
15.36 |
|
|
17.64 |
|
|
(2.28 |
) |
Combined (per Boe),
hedged |
|
|
30.49 |
|
|
35.33 |
|
|
(4.84 |
) |
Average costs
(per BOE): |
|
|
|
|
|
|
|
|
|
Lease operating |
|
$ |
4.35 |
|
$ |
4.46 |
|
$ |
(0.11 |
) |
Production and ad
valorem taxes |
|
|
1.29 |
|
|
1.02 |
|
|
0.27 |
|
Depletion, depreciation
and amortization |
|
|
20.93 |
|
|
22.53 |
|
|
(1.60 |
) |
General and
administrative |
|
|
3.99 |
|
|
4.80 |
|
|
(0.81 |
) |
Jones Energy, Inc.Consolidated Statement of
Cash Flow Data (Unaudited)
|
Six months ended
June 30, |
(in thousands of dollars) |
2017 |
|
2016 |
Cash flows from
operating activities |
|
|
|
|
|
Net income (loss) |
$ |
(148,847 |
) |
|
$ |
(10,132 |
) |
Adjustments to
reconcile net income (loss) to net cash provided by operating
activities |
|
|
|
|
|
Depletion, depreciation, and amortization |
|
80,990 |
|
|
|
79,899 |
|
Exploration (dry hole and lease abandonment) |
|
6,880 |
|
|
|
27 |
|
Impairment of oil and gas properties |
|
161,886 |
|
|
|
— |
|
Accretion
of ARO liability |
|
467 |
|
|
|
590 |
|
Amortization of debt issuance costs |
|
1,953 |
|
|
|
2,107 |
|
Stock
compensation expense |
|
3,736 |
|
|
|
3,084 |
|
Deferred
and other non-cash compensation expense |
|
180 |
|
|
|
401 |
|
Amortization of deferred revenue |
|
(942 |
) |
|
|
(1,241 |
) |
(Gain)
loss on commodity derivatives |
|
(43,847 |
) |
|
|
22,783 |
|
(Gain)
loss on sales of assets |
|
119 |
|
|
|
1 |
|
(Gain) on
debt extinguishment |
|
— |
|
|
|
(99,530 |
) |
Deferred
income tax provision |
|
6 |
|
|
|
(3,291 |
) |
Change in
liability under tax receivable agreement |
|
(30,599 |
) |
|
|
(162 |
) |
Other -
net |
|
1,307 |
|
|
|
1,111 |
|
Changes
in operating assets and liabilities |
|
|
|
|
|
Accounts
receivable |
|
(4,188 |
) |
|
|
11,353 |
|
Other
assets |
|
(12,590 |
) |
|
|
(482 |
) |
Accrued
interest expense |
|
(1,301 |
) |
|
|
(4,201 |
) |
Accounts
payable and accrued liabilities |
|
6,268 |
|
|
|
3,683 |
|
Net cash
provided by operations |
|
21,478 |
|
|
|
6,000 |
|
Cash flows from
investing activities |
|
|
|
|
|
Additions to oil and
gas properties |
|
(107,250 |
) |
|
|
(27,592 |
) |
Net adjustments to
purchase price of properties acquired |
|
2,391 |
|
|
|
— |
|
Proceeds from sales of
assets |
|
2,730 |
|
|
|
5 |
|
Acquisition of other
property, plant and equipment |
|
(436 |
) |
|
|
12 |
|
Current period
settlements of matured derivative contracts |
|
45,738 |
|
|
|
77,622 |
|
Net cash
(used in) / provided by investing |
|
(56,827 |
) |
|
|
50,047 |
|
Cash flows from
financing activities |
|
|
|
|
|
Proceeds from issuance
of long-term debt |
|
75,000 |
|
|
|
75,000 |
|
Repayment of long-term
debt |
|
(72,000 |
) |
|
|
— |
|
Purchase of senior
notes |
|
— |
|
|
|
(84,589 |
) |
Payment of cash
dividends on preferred stock |
|
(3,367 |
) |
|
|
— |
|
Net distributions paid
to JEH unitholders |
|
(562 |
) |
|
|
(10,109 |
) |
Net payments for share
based compensation |
|
(462 |
) |
|
|
— |
|
Proceeds from sale of
common stock |
|
8,352 |
|
|
|
1,056 |
|
Net cash
provided by / (used in) financing |
|
6,961 |
|
|
|
(18,642 |
) |
Net
increase (decrease) in cash |
|
(28,388 |
) |
|
|
37,405 |
|
Cash |
|
|
|
|
|
Beginning of
period |
|
34,642 |
|
|
|
21,893 |
|
End of period |
$ |
6,254 |
|
|
$ |
59,298 |
|
Supplemental
disclosure of cash flow information |
|
|
|
|
|
Cash paid for
interest |
$ |
24,064 |
|
|
$ |
29,700 |
|
Change in accrued
additions to oil and gas properties |
|
13,155 |
|
|
|
1,980 |
|
Asset retirement
obligations incurred, including changes in estimate |
|
395 |
|
|
|
160 |
|
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
June 30, |
|
Six Months Ended
June 30, |
(in thousands of dollars) |
2017 |
|
2016 |
|
2017 |
|
2016 |
Reconciliation
of EBITDAX to net income |
|
|
|
|
|
|
|
|
|
|
|
Net
income (loss) |
$ |
(145,332 |
) |
|
$ |
(58,646 |
) |
|
$ |
(148,847 |
) |
|
$ |
(10,132 |
) |
Interest
expense |
|
12,677 |
|
|
|
12,807 |
|
|
|
25,564 |
|
|
|
27,605 |
|
Exploration expense |
|
6,725 |
|
|
|
77 |
|
|
|
9,669 |
|
|
|
239 |
|
Income
taxes |
|
(2,419 |
) |
|
|
(12,388 |
) |
|
|
(2,398 |
) |
|
|
(1,685 |
) |
Depreciation and depletion |
|
45,336 |
|
|
|
38,137 |
|
|
|
80,990 |
|
|
|
79,899 |
|
Impairment of oil and natural gas properties |
|
161,886 |
|
|
|
— |
|
|
|
161,886 |
|
|
|
— |
|
Accretion
of ARO liability |
|
266 |
|
|
|
297 |
|
|
|
467 |
|
|
|
590 |
|
Change in
TRA liability |
|
(29,931 |
) |
|
|
267 |
|
|
|
(30,599 |
) |
|
|
(162 |
) |
Other
non-cash charges |
|
1,266 |
|
|
|
1,645 |
|
|
|
1,307 |
|
|
|
1,111 |
|
Stock
compensation expense |
|
1,764 |
|
|
|
1,899 |
|
|
|
3,736 |
|
|
|
3,084 |
|
Deferred
and other non-cash compensation expense |
|
44 |
|
|
|
133 |
|
|
|
180 |
|
|
|
401 |
|
Net
(gain) loss on derivative contracts |
|
(21,527 |
) |
|
|
40,002 |
|
|
|
(43,847 |
) |
|
|
22,783 |
|
Current
period settlements of matured derivative contracts |
|
17,921 |
|
|
|
31,410 |
|
|
|
44,253 |
|
|
|
74,081 |
|
Amortization of deferred revenue |
|
(484 |
) |
|
|
(596 |
) |
|
|
(942 |
) |
|
|
(1,241 |
) |
(Gain)
loss on sale of assets |
|
55 |
|
|
|
(3 |
) |
|
|
119 |
|
|
|
1 |
|
(Gain) on
debt extinguishment |
|
— |
|
|
|
(8,878 |
) |
|
|
— |
|
|
|
(99,530 |
) |
Financing
expenses and other loan fees |
|
24 |
|
|
|
73 |
|
|
|
48 |
|
|
|
273 |
|
EBITDAX |
$ |
48,271 |
|
|
$ |
46,236 |
|
|
$ |
101,586 |
|
|
$ |
97,317 |
|
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
June 30, |
(in thousands except per share data) |
|
2017 |
|
2016 |
Net income
(loss) |
|
$ |
(145,332 |
) |
|
$ |
(58,646 |
) |
Net
(gain) loss on derivative contracts |
|
|
(21,527 |
) |
|
|
40,002 |
|
Current
period settlements of matured derivative contracts |
|
|
17,921 |
|
|
|
31,410 |
|
Impairment of oil and gas properties |
|
|
161,886 |
|
|
|
— |
|
Exploration |
|
|
6,725 |
|
|
|
77 |
|
Non-cash
stock compensation expense |
|
|
1,764 |
|
|
|
1,899 |
|
Deferred
and other non-cash compensation expense |
|
|
44 |
|
|
|
133 |
|
(Gain) on
debt extinguishment |
|
|
— |
|
|
|
(8,878 |
) |
Financing
expenses |
|
|
— |
|
|
|
— |
|
Change in
TRA liability |
|
|
(29,931 |
) |
|
|
267 |
|
Tax
impact of adjusting items |
|
|
(34,141 |
) |
|
|
(11,390 |
) |
Change in
valuation allowance |
|
|
48,261 |
|
|
|
(597 |
) |
Adjusted net income
(loss) |
|
|
5,670 |
|
|
|
(5,723 |
) |
Adjusted net income
(loss) attributable to non-controlling interests |
|
|
(3,991 |
) |
|
|
(2,948 |
) |
Adjusted net income
(loss) attributable to controlling interests |
|
|
9,661 |
|
|
|
(2,775 |
) |
Dividends and accretion
on preferred stock |
|
|
(1,966 |
) |
|
|
— |
|
Adjusted net income
(loss) attributable to common shareholders |
|
$ |
7,695 |
|
|
$ |
(2,775 |
) |
|
|
|
|
|
|
|
Weighted
average Class A shares outstanding: |
|
|
|
|
|
|
Basic |
|
|
65,681 |
|
|
|
33,598 |
|
Diluted |
|
|
65,681 |
|
|
|
33,598 |
|
|
|
|
|
|
|
|
Adjusted earnings per
share (basic and diluted) |
|
$ |
0.12 |
|
|
$ |
(0.08 |
) |
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
June 30, |
|
|
|
2017 |
|
2016 |
Earnings per
share (basic and diluted): |
|
$ |
(1.39 |
) |
|
$ |
(0.69 |
) |
|
Net
(gain) loss on derivative contracts |
|
|
(0.23 |
) |
|
|
0.59 |
|
|
Current
period settlements of matured derivative contracts |
|
|
0.19 |
|
|
|
0.46 |
|
|
Impairment of oil and gas properties |
|
|
1.70 |
|
|
|
— |
|
|
Exploration |
|
|
0.07 |
|
|
|
0.03 |
|
|
Non-cash
stock compensation expense |
|
|
0.02 |
|
|
|
— |
|
|
Deferred
and other non-cash compensation expense |
|
|
— |
|
|
|
(0.13 |
) |
|
(Gain) on
debt extinguishment |
|
|
— |
|
|
|
— |
|
|
Financing
expenses |
|
|
— |
|
|
|
— |
|
|
Change in
TRA liability |
|
|
(0.46 |
) |
|
|
0.01 |
|
|
Tax
impact of adjusting items |
|
|
(0.51 |
) |
|
|
(0.33 |
) |
|
Change in
valuation allowance |
|
|
0.73 |
|
|
|
(0.02 |
) |
|
Adjusted earnings per
share (basic and diluted) |
|
$ |
0.12 |
|
|
$ |
(0.08 |
) |
|
|
|
|
|
|
|
|
|
EPS attributed to 2Q
2017 hedge unwinds (gain) |
|
|
(0.05 |
) |
|
|
— |
|
|
Adjusted earnings per
share (basic and diluted), adjusted for hedge unwinds |
|
$ |
0.07 |
|
|
$ |
— |
|
|
|
|
|
|
|
|
|
|
Weighted
average Class A shares outstanding: |
|
|
|
|
|
|
|
Basic |
|
|
65,681 |
|
|
|
33,598 |
|
|
Diluted |
|
|
65,681 |
|
|
|
33,598 |
|
|
Effective tax rate on
net income (loss) attributable to controlling interests |
|
|
40.3 |
|
% |
|
36.8 |
|
% |
|
|
|
|
|
|
|
|
|
|
Investor Contact:
Page Portas, 512-493-4834
Investor Relations Associate
Or
Robert Brooks, 512-328-2953
Executive Vice President & CFO
ir@jonesenergy.com