Jones Energy, Inc. (NYSE:JONE) (“Jones Energy” or “the Company”)
today announced financial and operating results for the quarter and
full year ended December 31, 2017.
Highlights
- Bone 2H Meramec well achieved peak IP30 rate of 1,255 Boe/d
which is 287 Boe/d per 1,000’ of lateral (67% oil, 2-stream). This
well set a new Company record for highest peak IP30 oil rate (835
Bbls/d) achieved in the Merge.
- Two Meramec wells on recent Gamble pad achieved average peak
to-date rate of 226 Boe/d per 1,000’ of lateral (65% oil, 2-stream)
which is 50% above type curve expectations.
- Production for the full year 2017 of 7.8 MMBoe (21,332
MBoe/d).
- Net income for the fourth quarter 2017 of $41.6 million, or
$0.51 per share. Non-GAAP adjusted net loss1 of $28.8 million, or a
loss of $0.33 per share.
- Net loss for the full year 2017 of $178.8 million and EBITDAX
for the full year 2017 of $186.4 million1.
Jones Energy Founder, Chairman, and CEO, Jonny Jones commented,
“2017 was a pivotal year for Jones Energy as we transitioned our
focus to the Merge. During the fourth quarter, we had continued
strong well results from the Merge, with production reaching
roughly a quarter of total Company-wide production. Operationally,
I could not be more pleased with our recent results. In particular,
our Rosewood, Bone, and Gamble pads continue to meet or exceed type
curves. During the fourth quarter, we also made significant
progress with our lending group, receiving covenant relief and
much-needed flexibility. We further increased flexibility with our
successful senior secured first lien offering a few weeks ago. It
is our strategic objective in 2018 to continue to exercise capital
discipline and reduce cash flow outspend while enhancing the value
of our assets.”
Financial Results
Total operating revenues for the three months ended December 31,
2017 were $54.5 million as compared to $39.5 million for the three
months ended December 31, 2016. For the full year 2017,
operating revenues were $188.6 million as compared to $127.8
million for the full year 2016. Total revenues including
current period settlements of matured derivative contracts were
$255.4 million for the full year 2017 as compared to $251.1 million
for the full year 2016.
Total operating expenses for the three months ended December 31,
2017 were $60.8 million as compared to $62.3 million for the three
months ended December 31, 2016. For the full year 2017,
operating expenses were $405.4 million, which includes impairment
chages of $149.6 million. Omitting the 2017 full year impairment
charges, total operating expenses would have been $255.7 million as
compared to total operating expenses of $232.1 million for the full
year 2016.
For the fourth quarter ended December 31, 2017, the Company
reported net income of $41.6 million, or $0.51 per share
attributable to common shareholders, compared to fourth quarter of
2016 net loss of $52.2 million, or net loss of $0.49 per share
attributable to common shareholders. For the full year 2017 the
Company reported a net loss of $178.8 million, or a net loss of
$1.51 per share compared to full year 2016 net loss of $84.8
million, or a net loss of $1.04 per share attributable to common
shareholders.
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 an adjusted net loss2 for the fourth quarter 2017 of
$28.8 million, or an adjusted net loss per share of $0.33, as
compared to adjusted net loss of $5.3 million, or adjusted net loss
per share of $0.06 for the three months ended December 31, 2016.
Adjusted net loss for the full year 2017 was $31.1 million, or an
adjusted net loss per share of $0.42 attributable to common
shareholders as compared to adjusted net loss of $15.5 million, or
adjusted net loss per share of $0.19 attributable to common
shareholders for the full year 2016.
Earnings before interest, income taxes, depreciation,
amortization, and exploration expense (“EBITDAX”) for the fourth
quarter and full year 2017 was $37.7 million and $186.4 million,
respectively3. This compares to fourth quarter and full year 2016
EBITDAX of $43.8 million and $188.0 million, respectively.
Full year 2017 lease operating expense (“LOE”) was $36.6 million
compared to the Company’s full year 2016 LOE of $32.6 million.
Fourth quarter 2017 LOE of $8.9 million was approximately 4% higher
than fourth quarter 2016 LOE of $8.6 million. On a dollar per Boe
basis, full year 2017 LOE was $4.71 per Boe compared to full year
2016 LOE which was $4.64 per boe. Fourth quarter 2017 LOE of $4.59
per Boe was approximately 6% lower than fourth quarter 2016 LOE of
$4.87.
Impact of Recent Tax Reform
In December 2017, the Tax Cuts and Jobs Act was enacted, which
included among its provisions, a reduction of the U.S. federal
corporate income tax rate from 35% to 21%. The lower tax rate led
to a remeasurement of the Company’s deferred tax assets and
liabilities, and resulted in the recognition of a tax benefit of
$17.2 million during the fourth quarter. The amount of the
estimated liability under the Tax Receivable Agreement (“TRA”) has
also been reduced and is now recorded on the Company’s balance
sheet at $61.2 million as of December 31, 2017 and the Company
recognized a $59.5 million benefit in other income related to the
reduction in the TRA liability in the fourth quarter of 2017 as a
result of the enacted tax legislation.
Operating Results
Eastern Anadarko (Merge)
The Company is pleased to announce that its four-well Gamble pad
has recently been placed on production. The pad is located in
southern Canadian County, OK near the Company’s previously
announced Garrett well. While the Gamble wells have not yet reached
peak rates, two of the Meramec wells on the pad have achieved an
average peak to-date rate of 226 Boe/d per 1,000’ of lateral (65%
oil, 2-stream), which is 50% above Company expectations.
Furthermore, the Company’s Bone 2H Meramec well that previously
achieved a peak IP24 rate of 1,474 Boe/d, which is 337 Boe/d per
1,000’ of lateral (69% oil, 2-stream), has now achieved a peak IP30
rate for both its oil and gas streams of 1,255 Boe/d, which is 287
Boe/d per 1,000’ of lateral (67% oil, 2-stream). To-date the
Company’s combined average of all eight of its Meramec wells that
have achieved peak IP30 rates is 229 Boe/d per 1,000’ of lateral
(47% oil, 2-stream). The Company has three Gen-3 Woodford wells
that have reached peak IP30 rates, which have achieved a combined
average of 153 Boe/d per 1,000’ of lateral (43% oil,
2-stream).
During the fourth quarter, the Company drilled a total of six
wells and completed a total of 10 wells in the Merge as it
continued with a two-rig program. The Company drilled its fastest
well to-date in the Merge during the quarter, drilling a single
section lateral in 8.3 days, surpassing its previous record which
was set earlier in the fourth quarter of 9.2 days from Spud to TD.
The Company exited the year with 17 wells producing and 12 wells in
various stages of drilling and completion.
Western Anadarko (Cleveland)
During October 2017, the Company drilled one well in the
Cleveland and then released its last remaining rig in the Western
Anadarko. The Company completed and placed online six wells that
had been carried into the quarter.
Fourth Quarter and Full Year 2017 Production
As previously reported, Jones Energy produced 1,951 MBoe, or
21,207 Boe/d during the fourth quarter of 2017 with total liquids
volumes representing 59% of production. Merge production continued
to increase quarter-over-quarter, representing approximately 24% of
total Company production for the fourth quarter of 2017 as compared
to approximately 17% of total Company production for the third
quarter of 2017, excluding volumes related to the Arkoma
divestiture in the third quarter. Quarter-over-quarter oil volumes
also continued to increase. Oil production for the fourth quarter
of 2017 was 29.3% of total volumes as compared to 24.6% for the
third quarter of 2017, representing an increase of 4.7%.
A breakout of fourth quarter production is shown in the table
below.
|
|
|
Three months ended December 31, 2017: |
|
Oil
(MBbls) |
|
Natural Gas (MMcf) |
|
NGLs
(MBbls) |
|
Total
(MBoe) |
|
% of Total |
Cleveland |
426 |
|
3,210 |
|
417 |
|
1,378 |
|
71 |
% |
Merge |
138 |
|
1,110 |
|
136 |
|
459 |
|
24 |
% |
Other |
8 |
|
443 |
|
32 |
|
114 |
|
6 |
% |
Total |
572 |
|
4,763 |
|
585 |
|
1,951 |
|
100 |
% |
|
|
|
|
|
|
|
|
|
|
For the full year 2017, Jones Energy produced 21,332 Boe/d with
total liquids volumes of 56%. For the full year 2017, the Company’s
production grew 22% as compared to average 2016 production,
excluding production from the Arkoma from both years. The Company
drilled 41 gross (38.3 net) wells in the Cleveland formation and 27
gross (17.4 net) wells in the Merge.
Capital Expenditures for the Fourth Quarter and Full Year
2017
Jones Energy previously disclosed total fourth quarter 2017
capital expenditures of $63.3 million, with $57.3 million, or
91%, related to drilling and completing operated wells. The
remaining $6.0 million was primarily related to
participation in non-op drilling.
For the full year 2017, the Company previously disclosed total
capital expenditures of $248.0 million, of which $126 million
(or 51%) was spent in the Merge. For the full year 2017, 83% of
total capital expenditures was related to drilling and completing
wells.
Hedging Update
The following table summarizes the Company’s net commodity
derivative contracts outstanding as of February 27, 2018:
|
|
|
|
|
2018 |
2019 |
2020 |
Oil Hedges |
|
|
|
Swaps Sold (MBbl) |
2,364 |
1,020 |
660 |
Price ($/Bbl) |
$51.08 |
$50.04 |
$50.00 |
|
|
|
|
Collars (MBbl) |
- |
810 |
- |
Floor ($/Bbl) |
- |
$48.52 |
- |
Ceiling ($/Bbl) |
- |
$59.64 |
- |
|
|
|
|
Gas Hedges |
|
|
|
|
|
|
|
Swaps Sold (MMcf) |
18,190 |
7,260 |
8,400 |
Price ($/Mcf) |
$2.98 |
$2.84 |
$2.79 |
|
|
|
|
Collars (MMcf) |
- |
11,890 |
- |
Floor ($/Mcf) |
- |
$2.55 |
- |
Ceiling ($/Mcf) |
- |
$3.19 |
- |
|
|
|
|
NGL Swaps (MBbl) |
|
|
|
Ethane |
- |
- |
- |
Propane |
850 |
- |
- |
Iso Butane |
120 |
- |
- |
Butane |
335 |
- |
- |
Natural Gasoline |
360 |
- |
- |
Total NGLs |
1,665 |
- |
- |
|
|
|
|
NGL Swap Prices
($/Gal) |
|
|
|
Ethane |
- |
- |
- |
Propane |
0.57 |
- |
- |
Iso Butane |
0.72 |
- |
- |
Butane |
0.69 |
- |
- |
Natural Gasoline |
1.05 |
- |
- |
|
|
|
|
Basis Hedges: |
|
|
|
ANR (MMcf) |
6,000 |
- |
- |
Price
($/Mcf) |
$0.40 |
- |
- |
PEPL (MMcf) |
2,000 |
- |
- |
Price
($/Mcf) |
$0.45 |
- |
- |
|
|
|
|
Conference Call Details
Jones Energy will host a conference call for investors and
analysts to discuss its results on Wednesday, February 28, 2018 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 9178268. 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.
_________________________________
1 Adjusted net loss, adjusted net loss 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.
2 Adjusted net loss, adjusted net loss 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.
3 EBITDAX is a supplemental non-GAAP financial
measure that is used by management and external users of the
Company’s consolidated financial statements, such as industry
analysts, investors, lenders and rating agencies.
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 basin of Oklahoma and Texas. Additional
information about Jones Energy may be found on the Company’s
website at: www.jonesenergy.com.
Investor Contacts:Robert Brooks, 512-328-2953Executive Vice
President & CFOOrPage Portas, 512-493-4834Investor Relations
Associate
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, including guidance regarding the
deployment of rigs in the Company’s areas of operation and the
anticipated drilling plans, the initial 2018 capital budget and
operating plan, drilling, completion and leasing capital
expenditures in the Company’s areas of operation, the estimated
impact of recent tax reform, expected fluctuations in 2018
production, timing of production impacts, and projections regarding
total production, average daily production, lease operating
expenses, production taxes, cash G&A expenses and capital
expenditure levels for 2018. These statements are based on
certain assumptions made by the Company based on management’s
experience and perception of historical trends, current 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,
uncertainties in estimating proved reserves and forecasting
production results, operational factors affecting the commencement
or maintenance of producing wells, covenants in the Company’s debt
documents and their potential effect on the ability to engage in
certain transactions, the condition of the capital markets
generally, as well as the Company’s ability to access them, ability
to fund growth opportunities, the proximity to and capacity of
transportation facilities, non-performance by third parties of
contractual obligations, 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
|
|
Three months ended
December 31, |
|
Year ended
December 31, |
(in thousands of dollars except per share data) |
|
2017 |
|
|
2016 |
|
|
2017 |
|
|
2016 |
|
Operating
revenues |
|
|
|
|
|
|
|
|
|
|
|
|
Oil and gas sales |
|
$ |
53,966 |
|
|
$ |
38,817 |
|
|
$ |
186,393 |
|
|
$ |
124,877 |
|
Other revenues |
|
|
546 |
|
|
|
675 |
|
|
|
2,180 |
|
|
|
2,970 |
|
Total operating
revenues |
|
|
54,512 |
|
|
|
39,492 |
|
|
|
188,573 |
|
|
|
127,847 |
|
Operating costs
and expenses |
|
|
|
|
|
|
|
|
|
|
|
|
Lease operating |
|
|
8,947 |
|
|
|
8,613 |
|
|
|
36,636 |
|
|
|
32,640 |
|
Production and ad
valorem taxes |
|
|
2,233 |
|
|
|
2,707 |
|
|
|
6,874 |
|
|
|
7,768 |
|
Exploration |
|
|
2,507 |
|
|
|
5,436 |
|
|
|
14,145 |
|
|
|
6,673 |
|
Depletion, depreciation
and amortization |
|
|
39,881 |
|
|
|
37,481 |
|
|
|
167,224 |
|
|
|
153,930 |
|
Impairment of oil and
gas properties |
|
|
1,632 |
|
|
|
— |
|
|
|
149,648 |
|
|
|
— |
|
Accretion of ARO
liability |
|
|
240 |
|
|
|
350 |
|
|
|
960 |
|
|
|
1,263 |
|
General and
administrative |
|
|
5,399 |
|
|
|
7,562 |
|
|
|
29,892 |
|
|
|
29,640 |
|
Other operating |
|
|
— |
|
|
|
199 |
|
|
|
— |
|
|
|
199 |
|
Total operating
expenses |
|
|
60,839 |
|
|
|
62,348 |
|
|
|
405,379 |
|
|
|
232,113 |
|
Operating income
(loss) |
|
|
(6,327 |
) |
|
|
(22,856 |
) |
|
|
(216,806 |
) |
|
|
(104,266 |
) |
Other income
(expense) |
|
|
|
|
|
|
|
|
|
|
|
|
Interest expense |
|
|
(13,270 |
) |
|
|
(12,730 |
) |
|
|
(51,651 |
) |
|
|
(53,127 |
) |
Gain on debt
extinguishment |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
99,530 |
|
Net gain (loss) on
commodity derivatives |
|
|
(29,293 |
) |
|
|
(32,495 |
) |
|
|
(17,985 |
) |
|
|
(51,264 |
) |
Other income
(expense) |
|
|
42,563 |
|
|
|
285 |
|
|
|
56,952 |
|
|
|
536 |
|
Other income (expense),
net |
|
|
— |
|
|
|
(44,940 |
) |
|
|
(12,684 |
) |
|
|
(4,325 |
) |
Income (loss) before
income tax |
|
|
(6,327 |
) |
|
|
(67,796 |
) |
|
|
(229,490 |
) |
|
|
(108,591 |
) |
Income tax
provision (benefit) |
|
|
(47,960 |
) |
|
|
(15,552 |
) |
|
|
(50,667 |
) |
|
|
(23,786 |
) |
Net income (loss) |
|
|
41,633 |
|
|
|
(52,244 |
) |
|
|
(178,823 |
) |
|
|
(84,805 |
) |
Net income (loss)
attributable to non-controlling interests |
|
|
(5,284 |
) |
|
|
(23,879 |
) |
|
|
(77,331 |
) |
|
|
(42,253 |
) |
Net income
(loss) attributable to controlling interests |
|
$ |
46,917 |
|
|
$ |
(28,365 |
) |
|
$ |
(101,492 |
) |
|
$ |
(42,552 |
) |
Dividends and accretion
on preferred stock |
|
|
(1,965 |
) |
|
|
(1,904 |
) |
|
|
(7,924 |
) |
|
|
(2,669 |
) |
Net income
(loss) attributable to common shareholders |
|
$ |
44,952 |
|
|
$ |
(30,269 |
) |
|
$ |
(109,416 |
) |
|
$ |
(45,221 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
Earnings (loss)
per share: |
|
|
|
|
|
|
|
|
|
|
|
|
Basic - Net income
(loss) attributable to common shareholders |
|
$ |
0.51 |
|
|
$ |
(0.49 |
) |
|
$ |
(1.51 |
) |
|
$ |
(1.04 |
) |
Diluted - Net income
(loss) attributable to common shareholders |
|
$ |
0.51 |
|
|
$ |
(0.49 |
) |
|
$ |
(1.51 |
) |
|
$ |
(1.04 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
Weighted average Class A shares outstanding: |
|
|
|
|
|
|
|
|
|
|
Basic |
|
|
88,381 |
|
|
|
61,993 |
|
|
|
72,411 |
|
|
|
43,506 |
|
Diluted |
|
|
88,381 |
|
|
|
61,993 |
|
|
|
72,411 |
|
|
|
43,506 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Jones Energy, Inc.Consolidated Balance
Sheet
|
|
December 31, |
|
December 31, |
(in thousands of dollars) |
|
2017 |
|
|
2016 |
|
Assets |
|
|
|
|
Current assets |
|
|
|
|
|
|
Cash |
|
$ |
19,472 |
|
|
$ |
34,642 |
|
Accounts
receivable, net |
|
|
|
|
|
|
Oil and
gas sales |
|
|
34,492 |
|
|
|
26,568 |
|
Joint
interest owners |
|
|
31,651 |
|
|
|
5,267 |
|
Other |
|
|
1,236 |
|
|
|
6,061 |
|
Commodity
derivative assets |
|
|
3,474 |
|
|
|
24,100 |
|
Other
current assets |
|
|
14,376 |
|
|
|
2,684 |
|
Total current assets |
|
|
104,701 |
|
|
|
99,322 |
|
Oil and gas properties,
net, at cost under the successful efforts method |
|
|
1,597,040 |
|
|
|
1,743,588 |
|
Other property, plant
and equipment, net |
|
|
2,719 |
|
|
|
2,996 |
|
Commodity derivative
assets |
|
|
172 |
|
|
|
34,744 |
|
Other assets |
|
|
5,431 |
|
|
|
6,050 |
|
Total assets |
|
$ |
1,710,063 |
|
|
$ |
1,886,700 |
|
Liabilities and
Stockholders' Equity |
|
|
|
|
|
|
Current
liabilities |
|
|
|
|
|
|
Trade
accounts payable |
|
$ |
72,663 |
|
|
$ |
36,527 |
|
Oil and
gas sales payable |
|
|
31,462 |
|
|
|
28,339 |
|
Accrued
liabilities |
|
|
21,604 |
|
|
|
25,707 |
|
Commodity
derivative liabilities |
|
|
36,709 |
|
|
|
14,650 |
|
Other
current liabilities |
|
|
4,049 |
|
|
|
2,584 |
|
Total current liabilities |
|
|
166,487 |
|
|
|
107,807 |
|
Long-term debt |
|
|
759,316 |
|
|
|
724,009 |
|
Deferred revenue |
|
|
5,457 |
|
|
|
7,049 |
|
Commodity derivative
liabilities |
|
|
8,788 |
|
|
|
1,209 |
|
Asset retirement
obligations |
|
|
19,652 |
|
|
|
19,458 |
|
Liability under tax
receivable agreement |
|
|
59,596 |
|
|
|
43,045 |
|
Other liabilities |
|
|
811 |
|
|
|
792 |
|
Deferred tax
liabilities |
|
|
14,281 |
|
|
|
2,905 |
|
Total
liabilities |
|
|
1,034,388 |
|
|
|
906,274 |
|
Commitments and
contingencies |
|
|
|
|
|
|
Mezzanine equity |
|
|
|
|
|
|
Series A
preferred stock, $0.001 par value; 1,839,995 shares issued and
outstanding at December 31, 2017 and 1,840,000 shares
issued and outstanding at December 31, 2016 |
|
|
89,539 |
|
|
|
88,975 |
|
Stockholders'
equity |
|
|
|
|
|
|
Class A
common stock, $0.001 par value; 90,139,840 shares issued and
90,117,238 shares outstanding at December 31, 2017 and
57,048,076 shares issued and 57,025,474 shares outstanding at
December 31, 2016 |
|
|
90 |
|
|
|
57 |
|
Class B
common stock, $0.001 par value; 9,627,821 shares issued and
outstanding at December 31, 2017 and 29,832,098 shares
issued and outstanding at December 31, 2016 |
|
|
10 |
|
|
|
30 |
|
Treasury
stock, at cost: 22,602 shares at December 31, 2017 &
December 31, 2016 |
|
|
(358 |
) |
|
|
(358 |
) |
Additional paid-in-capital |
|
|
606,319 |
|
|
|
447,137 |
|
Retained
(deficit) / earnings |
|
|
(136,274 |
) |
|
|
(8,652 |
) |
Stockholders'
equity |
|
|
469,787 |
|
|
|
438,214 |
|
Non-controlling
interest |
|
|
116,349 |
|
|
|
453,237 |
|
Total stockholders’
equity |
|
|
586,136 |
|
|
|
891,451 |
|
Total liabilities and stockholders' equity |
|
$ |
1,710,063 |
|
|
$ |
1,886,700 |
|
Jones Energy, Inc.Consolidated Statement of
Cash Flow Data
|
|
Twelve Months Ended December 31, |
(in thousands of dollars) |
|
2017 |
|
|
2016 |
|
Cash flows from
operating activities |
|
|
|
|
|
|
Net income (loss) |
|
$ |
(178,823 |
) |
|
$ |
(84,805 |
) |
Adjustments to
reconcile net income (loss) to net cash provided by operating
activities |
|
|
|
|
|
|
Depletion, depreciation, and amortization |
|
|
167,224 |
|
|
|
153,930 |
|
Exploration (dry hole and lease abandonment) |
|
|
11,017 |
|
|
|
6,261 |
|
Impairment of oil and gas properties |
|
|
149,648 |
|
|
|
— |
|
Accretion
of ARO liability |
|
|
960 |
|
|
|
1,263 |
|
Amortization of debt issuance costs |
|
|
3,955 |
|
|
|
4,060 |
|
Stock
compensation expense |
|
|
6,260 |
|
|
|
7,425 |
|
Deferred
and other non-cash compensation expense |
|
|
208 |
|
|
|
804 |
|
Amortization of deferred revenue |
|
|
(1,854 |
) |
|
|
(2,384 |
) |
(Gain)
loss on commodity derivatives |
|
|
17,985 |
|
|
|
51,264 |
|
(Gain)
loss on sales of assets |
|
|
127 |
|
|
|
(14 |
) |
(Gain) on
debt extinguishment |
|
|
— |
|
|
|
(99,530 |
) |
Deferred
income tax provision |
|
|
(47,082 |
) |
|
|
(27,767 |
) |
Change in
liability under tax receivable agreement |
|
|
(59,492 |
) |
|
|
— |
|
Other -
net |
|
|
2,044 |
|
|
|
418 |
|
Changes
in operating assets and liabilities |
|
|
|
|
|
|
Accounts
receivable |
|
|
(34,615 |
) |
|
|
2,276 |
|
Other
assets |
|
|
(12,330 |
) |
|
|
(675 |
) |
Accrued
interest expense |
|
|
(1,422 |
) |
|
|
(4,727 |
) |
Accounts
payable and accrued liabilities |
|
|
35,198 |
|
|
|
17,901 |
|
Net cash provided by operations |
|
|
59,008 |
|
|
|
25,700 |
|
Cash flows from
investing activities |
|
|
|
|
|
|
Additions to oil and
gas properties |
|
|
(245,364 |
) |
|
|
(264,462 |
) |
Net adjustments to
purchase price of properties acquired |
|
|
2,391 |
|
|
|
— |
|
Proceeds from sales of
assets |
|
|
61,290 |
|
|
|
1,645 |
|
Acquisition of other
property, plant and equipment |
|
|
(586 |
) |
|
|
(310 |
) |
Current period
settlements of matured derivative contracts |
|
|
72,265 |
|
|
|
132,265 |
|
Net cash (used in) investing |
|
|
(110,004 |
) |
|
|
(130,862 |
) |
Cash flows from
financing activities |
|
|
|
|
|
|
Proceeds from issuance
of long-term debt |
|
|
162,000 |
|
|
|
130,000 |
|
Repayment of long-term
debt |
|
|
(129,000 |
) |
|
|
(62,000 |
) |
Proceeds from senior
notes |
|
|
— |
|
|
|
— |
|
Purchase of senior
notes |
|
|
— |
|
|
|
(84,589 |
) |
Payment of debt
issuance costs |
|
|
(1,115 |
) |
|
|
— |
|
Payment of cash
dividends on preferred stock |
|
|
(3,368 |
) |
|
|
(1,615 |
) |
Net distributions paid
to JEH unitholders |
|
|
(562 |
) |
|
|
(17,319 |
) |
Net payments for share
based compensation |
|
|
(462 |
) |
|
|
— |
|
Proceeds from sale of
common stock |
|
|
8,333 |
|
|
|
65,446 |
|
Proceeds from sale of
preferred stock |
|
|
— |
|
|
|
87,988 |
|
Net cash provided by financing |
|
|
35,826 |
|
|
|
117,911 |
|
Net increase (decrease) in cash |
|
|
(15,170 |
) |
|
|
12,749 |
|
Cash |
|
|
|
|
|
|
Beginning of
period |
|
|
34,642 |
|
|
|
21,893 |
|
End of period |
|
$ |
19,472 |
|
|
$ |
34,642 |
|
Supplemental
disclosure of cash flow information |
|
|
|
|
|
|
Cash paid for interest,
net of capitalized interest |
|
$ |
49,101 |
|
|
$ |
53,816 |
|
Cash paid for income
taxes |
|
|
2,318 |
|
|
|
— |
|
Change in accrued
additions to oil and gas properties |
|
|
3,921 |
|
|
|
9,325 |
|
Asset retirement
obligations incurred, including changes in estimate |
|
|
924 |
|
|
|
(1,276 |
) |
|
|
|
|
|
|
|
|
|
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
December 31, |
|
Year Ended
December 31, |
|
2017 |
|
2016 |
|
Change |
|
2017 |
|
2016 |
|
Change |
Revenues (in thousands of dollars): |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Oil and
gas sales |
$ |
53,966 |
|
$ |
38,817 |
|
$ |
15,149 |
|
|
$ |
186,393 |
|
$ |
124,877 |
|
$ |
61,516 |
|
Other
revenues |
|
546 |
|
|
675 |
|
|
(129 |
) |
|
|
2,180 |
|
|
2,970 |
|
|
(790 |
) |
Current
period settlements of matured derivative contracts |
|
706 |
|
|
21,630 |
|
|
(20,924 |
) |
|
|
66,851 |
|
|
123,249 |
|
|
(56,398 |
) |
Total
operating revenues |
$ |
55,218 |
|
$ |
61,122 |
|
$ |
(5,904 |
) |
|
$ |
255,424 |
|
$ |
251,096 |
|
$ |
4,328 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net production
volumes: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Oil
(MBbls) |
|
572 |
|
|
414 |
|
|
158 |
|
|
|
1,964 |
|
|
1,685 |
|
|
279 |
|
Natural
gas (MMcf) |
|
4,763 |
|
|
4,712 |
|
|
51 |
|
|
|
20,425 |
|
|
18,842 |
|
|
1,583 |
|
NGLs
(MBbls) |
|
585 |
|
|
571 |
|
|
14 |
|
|
|
2,418 |
|
|
2,204 |
|
|
214 |
|
Total
(MBoe) |
|
1,951 |
|
|
1,770 |
|
|
181 |
|
|
|
7,786 |
|
|
7,029 |
|
|
757 |
|
Average net (Boe/d) |
|
21,207 |
|
|
19,239 |
|
|
1,968 |
|
|
|
21,332 |
|
|
19,205 |
|
|
2,127 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Average sales
price, unhedged: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Oil (per
Bbl), unhedged |
$ |
52.56 |
|
$ |
44.68 |
|
$ |
7.88 |
|
|
$ |
47.46 |
|
$ |
37.83 |
|
$ |
9.63 |
|
Natural
gas (per Mcf), unhedged |
|
1.80 |
|
|
2.16 |
|
|
(0.36 |
) |
|
|
2.07 |
|
|
1.67 |
|
|
0.40 |
|
NGLs (per
Bbl), unhedged |
|
26.20 |
|
|
17.73 |
|
|
8.47 |
|
|
|
21.09 |
|
|
13.48 |
|
|
7.61 |
|
Combined
(per Boe), unhedged |
|
27.66 |
|
|
21.93 |
|
|
5.73 |
|
|
|
23.94 |
|
|
17.77 |
|
|
6.17 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Average sales
price, hedged: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Oil (per
Bbl), hedged |
$ |
59.15 |
|
$ |
79.94 |
|
$ |
(20.79 |
) |
|
$ |
74.91 |
|
$ |
84.71 |
|
$ |
(9.80 |
) |
Natural
gas (per Mcf), hedged |
|
2.62 |
|
|
3.26 |
|
|
(0.64 |
) |
|
|
3.50 |
|
|
3.45 |
|
|
0.05 |
|
NGLs (per
Bbl), hedged |
|
14.30 |
|
|
16.82 |
|
|
(2.52 |
) |
|
|
14.30 |
|
|
17.25 |
|
|
(2.95 |
) |
Combined (per Boe), hedged |
|
28.02 |
|
|
32.79 |
|
|
(4.77 |
) |
|
|
32.53 |
|
|
34.96 |
|
|
(2.43 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Average costs
(per BOE): |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Lease
operating |
$ |
4.59 |
|
$ |
4.87 |
|
$ |
(0.28 |
) |
|
$ |
4.71 |
|
$ |
4.64 |
|
$ |
0.07 |
|
Production and ad valorem taxes |
|
1.14 |
|
|
1.53 |
|
|
(0.39 |
) |
|
|
0.88 |
|
|
1.11 |
|
|
(0.23 |
) |
Depletion, depreciation, amortization |
|
20.44 |
|
|
21.18 |
|
|
(0.74 |
) |
|
|
21.48 |
|
|
21.90 |
|
|
(0.42 |
) |
General and
administrative |
|
2.77 |
|
|
4.27 |
|
|
(1.50 |
) |
|
|
3.84 |
|
|
4.22 |
|
|
(0.38 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
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 the
Company’s consolidated financial statements, such as industry
analysts, investors, lenders and rating agencies.
The Company defines 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 the Company’s operating performance and
compare the results of its operations from period to period and
against its peers without regard to its financing methods or
capital structure. The Company excludes the items listed
above from net income in arriving at EBITDAX because these amounts
can vary substantially from company to company within its 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 the Company’s 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. The Company’s presentation of EBITDAX
should not be construed as an inference that its results will be
unaffected by unusual or non-recurring items and should not be
viewed as a substitute for GAAP. The Company’s 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
December 31, |
|
Year Ended
December 31, |
(in thousands of dollars) |
|
2017 |
|
|
2016 |
|
|
2017 |
|
|
2016 |
|
Reconciliation
of net income to EBITDAX |
|
|
|
|
|
|
|
|
|
|
|
|
Net
income (loss) |
|
$ |
41,633 |
|
|
$ |
(52,244 |
) |
|
$ |
(178,823 |
) |
|
$ |
(84,805 |
) |
Interest
expense |
|
|
13,270 |
|
|
|
12,730 |
|
|
|
51,651 |
|
|
|
53,127 |
|
Exploration expense |
|
|
2,507 |
|
|
|
5,436 |
|
|
|
14,145 |
|
|
|
6,673 |
|
Income
taxes |
|
|
(47,960 |
) |
|
|
(15,552 |
) |
|
|
(50,667 |
) |
|
|
(23,786 |
) |
Depreciation and depletion |
|
|
39,881 |
|
|
|
37,481 |
|
|
|
167,224 |
|
|
|
153,930 |
|
Impairment of oil and natural gas properties |
|
|
1,632 |
|
|
|
— |
|
|
|
149,648 |
|
|
|
— |
|
Accretion
of ARO liability |
|
|
240 |
|
|
|
350 |
|
|
|
960 |
|
|
|
1,263 |
|
Change in
TRA liability |
|
|
(43,661 |
) |
|
|
(362 |
) |
|
|
(59,492 |
) |
|
|
(784 |
) |
Other
non-cash charges |
|
|
152 |
|
|
|
(25 |
) |
|
|
2,044 |
|
|
|
1,202 |
|
Stock
compensation expense |
|
|
558 |
|
|
|
2,156 |
|
|
|
6,260 |
|
|
|
7,425 |
|
Deferred
and other non-cash compensation expense |
|
|
(127 |
) |
|
|
190 |
|
|
|
208 |
|
|
|
804 |
|
Net
(gain) loss on derivative contracts |
|
|
29,293 |
|
|
|
32,495 |
|
|
|
17,985 |
|
|
|
51,264 |
|
Current period settlements of matured derivative contracts |
|
706 |
|
|
|
21,630 |
|
|
|
66,851 |
|
|
|
123,249 |
|
Amortization of deferred revenue |
|
|
(437 |
) |
|
|
(556 |
) |
|
|
(1,854 |
) |
|
|
(2,384 |
) |
(Gain)
loss on sale of assets |
|
|
(4 |
) |
|
|
54 |
|
|
|
127 |
|
|
|
(14 |
) |
(Gain) on
debt extinguishment |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
(99,530 |
) |
Financing
expenses and other loan fees |
|
|
25 |
|
|
|
23 |
|
|
|
97 |
|
|
|
321 |
|
EBITDAX |
|
$ |
37,708 |
|
|
$ |
43,806 |
|
|
$ |
186,364 |
|
|
$ |
187,955 |
|
Jones Energy, Inc. Non-GAAP Financial
Measures and Reconciliations
Adjusted net loss is a supplemental non-GAAP financial measure
that is used by management and external users of the Company’s
consolidated financial statements. The Company defines
Adjusted net loss as net income (loss) 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. The Company believes adjusted net loss is
useful to investors because it provides readers with a more
meaningful measure of its profitability before recording certain
items for which the timing or amount cannot be reasonably
determined. However, this measure is provided in
addition to, not as an alternative for, and should be read in
conjunction with, the information contained in the Company’s
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 loss for the
periods indicated:
|
|
Three Months Ended
December 31, |
|
Year Ended
December 31, |
|
(in thousands except per share data) |
|
2017 |
|
|
2016 |
|
|
2017 |
|
|
2016 |
|
|
Net income
(loss) |
|
$ |
41,633 |
|
|
$ |
(52,244 |
) |
|
$ |
(178,823 |
) |
|
$ |
(84,805 |
) |
|
Net (gain) loss on
derivative contracts |
|
|
29,293 |
|
|
|
32,495 |
|
|
|
17,985 |
|
|
|
51,264 |
|
|
Current period
settlements of matured derivative contracts |
|
|
706 |
|
|
|
21,630 |
|
|
|
66,851 |
|
|
|
123,249 |
|
|
Impairment of oil and
gas properties |
|
|
1,632 |
|
|
|
— |
|
|
|
149,648 |
|
|
|
— |
|
|
Exploration |
|
|
2,507 |
|
|
|
5,436 |
|
|
|
14,145 |
|
|
|
6,673 |
|
|
Non-cash stock
compensation expense |
|
|
558 |
|
|
|
2,156 |
|
|
|
6,260 |
|
|
|
7,425 |
|
|
Deferred
and other non-cash compensation expense |
|
(127 |
) |
|
|
190 |
|
|
|
208 |
|
|
|
804 |
|
|
(Gain) on debt
extinguishment |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
(99,530 |
) |
|
Tax impact of adjusting
items (1) |
|
|
(20,961 |
) |
|
|
(15,069 |
) |
|
|
(69,627 |
) |
|
|
(20,774 |
) |
|
Change in TRA
liability |
|
|
(43,661 |
) |
|
|
(362 |
) |
|
|
(59,492 |
) |
|
|
(784 |
) |
|
Change in valuation
allowance (2) |
|
|
(40,386 |
) |
|
|
452 |
|
|
|
21,719 |
|
|
|
950 |
|
|
Adjusted
net loss |
|
|
(28,806 |
) |
|
|
(5,316 |
) |
|
|
(31,126 |
) |
|
|
(15,528 |
) |
|
Adjusted net loss
attributable to non-controlling interests |
|
|
(1,650 |
) |
|
|
(3,221 |
) |
|
|
(8,333 |
) |
|
|
(9,861 |
) |
|
Adjusted net loss
attributable to controlling interests |
|
|
(27,156 |
) |
|
|
(2,095 |
) |
|
|
(22,793 |
) |
|
|
(5,667 |
) |
|
Dividends and accretion
on preferred stock |
|
|
(1,965 |
) |
|
|
(1,904 |
) |
|
|
(7,924 |
) |
|
|
(2,669 |
) |
|
Adjusted net loss
attributable to common shareholders |
|
$ |
(29,121 |
) |
|
$ |
(3,999 |
) |
|
$ |
(30,717 |
) |
|
$ |
(8,336 |
) |
|
Effective
tax rate on net income (loss) attributable to controlling
interests |
|
|
|
25.1 |
|
% |
|
35.2 |
|
% |
- 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.
- Includes adjustment for valuation allowance and IRC Section 382
limitation.
Jones Energy, Inc. Non-GAAP Financial Measures
and Reconciliations
Adjusted net loss per share is a supplemental non-GAAP financial
measure that is used by management and external users of the
Company’s consolidated financial statements. The Company
defines adjusted net loss per share as earnings per share plus that
portion of the components of adjusted net income (loss) allocated
to the controlling interests divided by weighted average shares
outstanding. The Company believes adjusted net loss per share
is useful to investors because it provides readers with a more
meaningful measure of its profitability before recording certain
items for which the timing or amount cannot be reasonably
determined. However, this measure is provided in addition to,
not as an alternative for, and should be read in conjunction with,
the information contained in the Company’s financial statements
prepared in accordance with GAAP. The following table
provides a reconciliation of earnings per share to adjusted net
loss per share for the period indicated:
|
Three Months Ended
December 31, |
|
Year Ended
December 31, |
|
2017 |
|
|
2016 |
|
|
2017 |
|
|
2016 |
|
Earnings per
share (basic and diluted): |
$ |
0.51 |
|
|
$ |
(0.49 |
) |
|
$ |
(1.51 |
) |
|
$ |
(1.04 |
) |
Net (gain) loss on
derivative contracts |
|
0.29 |
|
|
|
0.35 |
|
|
|
0.29 |
|
|
|
0.70 |
|
Current period
settlements of matured derivative contracts |
|
0.01 |
|
|
|
0.23 |
|
|
|
0.65 |
|
|
|
1.53 |
|
Impairment of oil and
gas properties |
|
0.02 |
|
|
|
— |
|
|
|
1.43 |
|
|
|
— |
|
Exploration |
|
0.03 |
|
|
|
0.06 |
|
|
|
0.14 |
|
|
|
0.10 |
|
Non-cash stock
compensation expense |
|
0.01 |
|
|
|
0.02 |
|
|
|
0.06 |
|
|
|
0.10 |
|
Deferred and other
non-cash compensation expense |
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
0.01 |
|
(Gain) on debt
extinguishment |
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
(1.13 |
) |
Tax impact of adjusting
items (1) |
|
(0.24 |
) |
|
|
(0.23 |
) |
|
|
(0.96 |
) |
|
|
(0.46 |
) |
Change in TRA
liability |
|
(0.50 |
) |
|
|
(0.01 |
) |
|
|
(0.82 |
) |
|
|
(0.02 |
) |
Change in valuation
allowance (2) |
|
(0.46 |
) |
|
|
0.01 |
|
|
|
0.30 |
|
|
|
0.02 |
|
Adjusted net loss per
share (basic and diluted) |
$ |
(0.33 |
) |
|
$ |
(0.06 |
) |
|
$ |
(0.42 |
) |
|
$ |
(0.19 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
Weighted average Class A shares outstanding: |
|
|
|
|
|
|
|
|
|
Basic |
|
88,381 |
|
|
|
61,993 |
|
|
|
72,411 |
|
|
|
43,506 |
|
Diluted |
|
88,381 |
|
|
|
61,993 |
|
|
|
72,411 |
|
|
|
43,506 |
|
- 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.
- Includes adjustment for valuation allowance and IRC Section 382
limitation.