AUSTIN, Texas, Aug. 03, 2016 (GLOBE NEWSWIRE) -- Jones Energy, Inc. (NYSE: JONE ) (“Jones Energy” or “the Company”) today announced financial and operating results for the quarter ended June 30, 2016 as well as the entry into an agreement for a $27.1 million acquisition of assets in the Anadarko Basin, and increased 2016 production guidance while lowering capital guidance.
Highlights
- Average daily net production for the second quarter 2016 of 18.6 MBoe/d, with oil production of 4.4 MBbl/d
- Increasing full year 2016 production guidance by 5%
- Lowering full year 2016 capital guidance by 10%
- Lease operating expense for the second quarter 2016 of $7.5 million, down 12% from last quarter
- Entered into an agreement to acquire approximately 26,000 net acres in Anadarko Basin for $27.1 million, which is expected to add 92 gross/68 net Cleveland locations in core footprint, or approximately 1.5 years of drilling inventory at current rig pace
- Net loss for the second quarter of 2016 of $58.6 million and EBITDAX of $46.2 million
Jonny Jones, the Company’s Founder, Chairman, and CEO, commented, “We reported solid second quarter results, which benefited from production coming in ahead of our expectations and the continued realization of significant lease operating expense savings. Due to our strong operating performance, we are raising 2016 production guidance by 5% while lowering capital guidance by 10%. We are able to lower capital guidance due to the outstanding execution of our Cleveland drilling program and maintenance projects coming in below budget.” Mr. Jones went on to say, “The Anadarko Basin acquisition we announced today is a perfect complement to our existing Cleveland position. This high quality acreage is 98% held-by-production and will improve our overall Cleveland inventory by adding 1.5 years of drilling inventory at a 3 rig pace. I believe this is just the beginning of the many exciting things to come for Jones Energy in 2016 and beyond.”
Anadarko Basin Acquisition
Jones Energy today announced it has entered into a definitive agreement to acquire producing and undeveloped oil and gas assets in the Anadarko Basin for $27.1 million, subject to customary closing adjustments. The assets to be acquired include approximately 26,000 net acres in Lipscomb and Ochiltree Counties in the Texas Panhandle. The Company expects to fund the acquisition with cash on hand, and anticipates the transaction will close by the end of August, subject to completion of due diligence and satisfaction of customary closing conditions.
Acquisition Highlights:
- Approximately 26,000 net acres in the Anadarko Basin
- Expected to add 92 gross/68 net locations in core Cleveland footprint
- Acreage is 98% held by production with no near-term lease expirations
- Daily net production expected to be approximately 850 Boe/d as of August 2016
Financial Results
Total operating revenues for the three months ended June 30, 2016 were $29.1 million as compared to $53.9 million for the three months ended June 30, 2015. Total revenues including current period settlements of matured derivative contracts were $60.6 million for the three months ended June 30, 2016 as compared to $86.3 million for the three months ended June 30, 2015. The decrease was due to lower commodity prices and production volumes.
Total operating expenses for the three months ended June 30, 2016 were $55.9 million as compared to $77.4 million for the three months ended June 30, 2015. Total operating expenses decreased primarily due to lower depreciation, depletion, and amortization expense, lease operating expense, general and administrative expense, and production and ad valorem tax expense.
For the three months ended June 30, 2016, the Company reported a net loss of $58.6 million and an adjusted net loss of $5.7 million, as compared to a net loss of $51.2 million and adjusted net income of $0.2 million for the three months ended June 30, 2015. The decrease was primarily due to lower commodity prices and lower production, which was partially offset by a decrease in operating expenses.
Operational Results
Cleveland
The Company resumed its drilling program in April 2016 and had three rigs running as of June 2016. During the second quarter, the Company spud 11 wells and completed 6 wells.
Daily net production in the Cleveland was 13.0 MBoe/d in the second quarter of 2016 as compared to 14.9 MBoe/d in the first quarter of 2016 and 18.0 MBoe/d in the second quarter of 2015.
Capital Expenditures
During the second quarter of 2016, the Company spent $17.8 million on capital expenditures, of which $12.4 million was drilling and completion capital, bringing total capital expenditures for the first half of 2016 to $23.8 million.
We are lowering full year 2016 guidance for capital expenditures excluding acquisitions by 10% to $90 million from $100 million primarily due to better than expected execution on our Cleveland drilling program and maintenance projects coming in below budget.
Revised 2016 Guidance and 2017 Preliminary Forecast
The Company has increased its 2016 production guidance, primarily due to base business outperformance as well as the pending acquisition, and has lowered capital guidance excluding the acquisition by 10%. Projected average production for the full year 2016 is expected to be between 17.9 MBoe/d and 19.4 MBoe/d, which is a 5% increase at the midpoint from previous guidance of between 16.8 MBoe/d and 18.7 MBoe/d. Our updated operating plan incorporates the pending acquisition, our current Cleveland AFE of $2.03 million, and our plan to spud approximately 40 gross wells in 2016 with an average working interest of approximately 80%, which is unchanged from previous guidance.
Third quarter 2016 production is projected to be between 17.5 MBoe/d and 18.5 MBoe/d.
A table has been provided below with full year and third quarter 2016 guidance by category, which assumes the pending acquisition is completed as anticipated by the end of August except as otherwise noted:
| 2016 Guidance | |||||||||||||||
| Previous 2016E | Current 2016E | 3Q16E | |||||||||||||
| Total Production (MMBoe) | 6.2 - 6.8 | 6.6 - 7.1 | 1.6 - 1.7 | ||||||||||||
| Average Daily Production (MBoe/d) | 16.8 - 18.7 | 17.9 - 19.4 | 17.5 - 18.5 | ||||||||||||
| Crude Oil (MBbls/d) | 4.3 - 4.8 | 4.5 - 4.9 | 4.4 - 4.6 | ||||||||||||
| Natural Gas (MMcf/d) | 43.9 - 48.8 | 48.0 - 51.9 | 47.2 - 49.7 | ||||||||||||
| NGLs (MBbls/d) | 5.2 - 5.8 | 5.4 - 5.8 | 5.3 - 5.6 | ||||||||||||
| Lease Operating Expense ($mm) | $35.0 - $38.0 | $35.0 - $38.0 | |||||||||||||
| Production Taxes (% of Unhedged Revenue)* | 4.5% - 5.5% | 4.5% - 5.5% | |||||||||||||
| Ad Valorem Taxes ($mm)* | $1.5 - $1.7 | $1.5 - $1.7 | |||||||||||||
| Cash G&A Expense ($mm) | $18.0 - $20.0 | $18.0 - $20.0 | |||||||||||||
| Total Capital Expenditures Excluding Acquisitions ($mm) | $ | 100.0 | $ | 90.0 | |||||||||||
| *Production and ad valorem taxes are included as one line item on the Company’s Consolidated Statements of Operations. | |||||||||||||||
The Company is also providing estimates for production and capital spending in 2017 assuming the Company continues running three Cleveland rigs. These are preliminary estimates and do not represent formal guidance. The estimates incorporate our current Cleveland AFE of $2.03 million and an average working interest of approximately 80%.
| 2017 Preliminary Forecast | |||||||||
| 3 Cleveland Rigs | |||||||||
| Total Production (MMBoe) | 7.0 - 7.8 | ||||||||
| Average Daily Production (MBoe/d) | 19.1 - 21.3 | ||||||||
| Growth over midpoint of 2016 guidance | 8 | % | |||||||
| Total Drilling & Completion Capital ($mm) | $ | 105.0 | |||||||
Liquidity and Hedging
As of June 30, 2016, the Company had aggregate principal amount of senior unsecured notes outstanding of $559.1 million, outstanding borrowings under its revolving credit facility of $185.0 million, and approximately $59.3 million in cash.
The Company recently completed the redetermination of its borrowing base under its senior secured credit facility, which was redetermined at $410 million and which will increase to $425 million upon the closing of the Company’s planned $27.1 million acquisition of Anadarko Basin assets.
As of August 1, 2016, the Company had issued 498,400 shares under its equity distribution agreement at an average price of $4.31 per share for gross proceeds of $2.1 million.
The estimated mark-to-market value of the Company’s commodity price hedges was approximately $135 million incorporating strip pricing as of July 28, 2016. The following table summarizes the Company’s net commodity derivative contracts outstanding as of July 28, 2016:
| Current Net Hedge Positions 1 | |||||||||
| Fiscal Year Ending December 31, | |||||||||
| 2016 2 | 2017 | 2018 | |||||||
| Oil, Natural Gas and NGL Swaps | |||||||||
| Oil (MBbl) | 743 | 1,594 | - | ||||||
| Natural Gas (MMcf) | 8,580 | 16,780 | 6,000 | ||||||
| Ethane (MBbl) | 24 | - | - | ||||||
| Propane (MBbl) | 390 | 735 | - | ||||||
| Iso Butane (MBbl) | 52 | 103 | - | ||||||
| Butane (MBbl) | 140 | 264 | - | ||||||
| Natural Gasoline (MBbl) | 134 | 252 | - | ||||||
| Total NGLs (MBbl) | 740 | 1,354 | - | ||||||
| Weighted Average Net Prices | |||||||||
| Oil ($ / Bbl) | $ | 93.07 | $ | 66.98 | - | ||||
| Natural Gas ($ / Mcf) | $ | 4.22 | $ | 3.85 | $ | 2.99 | |||
| Ethane ($ / Gal) | $ | 0.21 | - | - | |||||
| Propane ($ / Gal) | $ | 0.53 | $ | 0.44 | - | ||||
| Iso Butane ($ / Gal) | $ | 0.66 | $ | 0.63 | - | ||||
| Butane ($ / Gal) | $ | 0.66 | $ | 0.60 | - | ||||
| Natural Gasoline ($ / Gal) | $ | 1.34 | $ | 1.00 | - | ||||
1 2018 and 2019 hedges that have been offset are not shown as part of the Company’s net hedge position. 2 2016 hedges shown for the remaining two quarters of the year.
Conference Call Details
Jones Energy will host a conference call for investors and analysts to discuss its results on Thursday, August 4, 2016 at 11:00 a.m. ET (10:00 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 (877) 201-0168 (for domestic U.S.) or (647) 788-4901 (International) and entering conference code 43750203. 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 .
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 number of rigs that will be running in 2016, the revised 2016 production guidance and capital budget, the ability to close the pending acquisition of assets in the Anadarko Basin and the expected benefits from such acquisition, the cost to drill and complete wells and the resultant impact on the revised 2016 capital budget, 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 full year and third quarter of 2016, and estimates for production and capital spending in 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, 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) | 2016 | 2015 | 2016 | 2015 | |||||||||
| Operating revenues | |||||||||||||
| Oil and gas sales | $ | 28,398 | $ | 53,222 | $ | 53,478 | $ | 110,456 | |||||
| Other revenues | 746 | 695 | 1,524 | 1,557 | |||||||||
| Total operating revenues | 29,144 | 53,917 | 55,002 | 112,013 | |||||||||
| Operating costs and expenses | |||||||||||||
| Lease operating | 7,545 | 11,796 | 16,162 | 24,058 | |||||||||
| Production and ad valorem taxes | 1,727 | 3,071 | 3,328 | 6,779 | |||||||||
| Exploration | 77 | 464 | 239 | 628 | |||||||||
| Depletion, depreciation and amortization | 38,137 | 51,302 | 79,899 | 103,385 | |||||||||
| Accretion of ARO liability | 297 | 206 | 590 | 400 | |||||||||
| General and administrative | 8,126 | 9,433 | 15,630 | 17,944 | |||||||||
| Other operating | — | 1,176 | — | 4,188 | |||||||||
| Total operating expenses | 55,909 | 77,448 | 115,848 | 157,382 | |||||||||
| Operating income (loss) | (26,765 | ) | (23,531 | ) | (60,846 | ) | (45,369 | ) | |||||
| Other income (expense) | |||||||||||||
| Interest expense | (12,807 | ) | (16,702 | ) | (27,605 | ) | (30,831 | ) | |||||
| Gain on debt extinguishment | 8,878 | — | 99,530 | — | |||||||||
| Net gain (loss) on commodity derivatives | (40,002 | ) | (25,075 | ) | (22,783 | ) | 21,231 | ||||||
| Other income (expense) | (338 | ) | 675 | (113 | ) | (1,624 | ) | ||||||
| Other income (expense), net | (44,269 | ) | (41,102 | ) | 49,029 | (11,224 | ) | ||||||
| Income (loss) before income tax | (71,034 | ) | (64,633 | ) | (11,817 | ) | (56,593 | ) | |||||
| Income tax provision (benefit) | (12,388 | ) | (13,453 | ) | (1,685 | ) | (11,109 | ) | |||||
| Net income (loss) | (58,646 | ) | (51,180 | ) | (10,132 | ) | (45,484 | ) | |||||
| Net income (loss) attributable to non-controlling interests | (35,401 | ) | (32,737 | ) | (5,798 | ) | (29,229 | ) | |||||
| Net income (loss) attributable to controlling interests | $ | (23,245 | ) | $ | (18,443 | ) | $ | (4,334 | ) | $ | (16,255 | ) | |
| Earnings (loss) per share: | |||||||||||||
| Basic | $ | (0.75 | ) | $ | (0.66 | ) | $ | (0.14 | ) | $ | (0.70 | ) | |
| Diluted | $ | (0.75 | ) | $ | (0.66 | ) | $ | (0.14 | ) | $ | (0.70 | ) | |
| Weighted average shares outstanding: | |||||||||||||
| Basic | 30,897 | 27,904 | 30,724 | 23,131 | |||||||||
| Diluted | 30,897 | 27,904 | 30,724 | 23,131 | |||||||||
Jones Energy, Inc. Consolidated Balance Sheet (Unaudited)
| June 30, | December 31, | ||||||
| (in thousands of dollars) | 2016 | 2015 | |||||
| Assets | |||||||
| Current assets | |||||||
| Cash | $ | 59,298 | $ | 21,893 | |||
| Accounts receivable, net | |||||||
| Oil and gas sales | 18,397 | 19,292 | |||||
| Joint interest owners | 4,701 | 11,314 | |||||
| Other | 11,093 | 15,170 | |||||
| Commodity derivative assets | 63,051 | 124,207 | |||||
| Other current assets | 2,648 | 2,298 | |||||
| Total current assets | 159,188 | 194,174 | |||||
| Oil and gas properties, net, at cost under the successful efforts method | 1,580,248 | 1,635,766 | |||||
| Other property, plant and equipment, net | 3,281 | 3,873 | |||||
| Commodity derivative assets | 60,920 | 93,302 | |||||
| Other assets | 7,365 | 8,039 | |||||
| Total assets | $ | 1,811,002 | $ | 1,935,154 | |||
| Liabilities and Stockholders’ Equity | |||||||
| Current liabilities | |||||||
| Trade accounts payable | $ | 18,940 | $ | 7,467 | |||
| Oil and gas sales payable | 25,224 | 32,408 | |||||
| Accrued liabilities | 23,456 | 27,341 | |||||
| Commodity derivative liabilities | 1,359 | 11 | |||||
| Asset retirement obligations | 679 | 679 | |||||
| Total current liabilities | 69,658 | 67,906 | |||||
| Long-term debt | 729,856 | 837,654 | |||||
| Deferred revenue | 10,176 | 11,417 | |||||
| Commodity derivative liabilities | 1,978 | — | |||||
| Asset retirement obligations | 21,015 | 20,301 | |||||
| Liability under tax receivable agreement | 38,064 | 38,052 | |||||
| Deferred tax liabilities | 19,837 | 22,972 | |||||
| Total liabilities | 890,584 | 998,302 | |||||
| Commitments and contingencies | |||||||
| Stockholders’ equity | |||||||
| Class A common stock, $0.001 par value; 31,266,437 shares issued and 31,243,835 shares outstanding at June 30, 2016 and 30,573,509 shares issued and 30,550,907 shares outstanding at December 31, 2015 | 32 | 31 | |||||
| Class B common stock, $0.001 par value; 31,230,213 shares issued and outstanding at June 30, 2016 and 31,273,130 shares issued and outstanding at December 31, 2015 | 31 | 31 | |||||
| Treasury stock, at cost: 22,602 shares at June 30, 2016 and December 31, 2015 | (358 | ) | (358 | ) | |||
| Additional paid-in-capital | 368,306 | 363,723 | |||||
| Retained earnings | 32,235 | 36,569 | |||||
| Stockholders’ equity | 400,246 | 399,996 | |||||
| Non-controlling interest | 520,172 | 536,856 | |||||
| Total stockholders’ equity | 920,418 | 936,852 | |||||
| Total liabilities and stockholders’ equity | $ | 1,811,002 | $ | 1,935,154 | |||
Jones Energy, Inc. Consolidated Statement of Cash Flow Data (Unaudited)
| Six Months Ended June 30, | |||||||
| (in thousands of dollars) | 2016 | 2015 | |||||
| Cash flows from operating activities | |||||||
| Net income (loss) | $ | (10,132 | ) | $ | (45,484 | ) | |
| Adjustments to reconcile net income (loss) to net cash provided by operating activities | |||||||
| Depletion, depreciation, and amortization | 79,899 | 103,385 | |||||
| Exploration (dry hole and lease abandonment) | 27 | — | |||||
| Accretion of ARO liability | 590 | 400 | |||||
| Amortization of debt issuance costs | 2,107 | 2,159 | |||||
| Stock compensation expense | 3,084 | 3,248 | |||||
| Deferred and other non-cash compensation expense | 401 | 218 | |||||
| Amortization of deferred revenue | (1,241 | ) | (1,028 | ) | |||
| (Gain) loss on commodity derivatives | 22,783 | (21,231 | ) | ||||
| (Gain) loss on sales of assets | 1 | 6 | |||||
| (Gain) on debt extinguishment | (99,530 | ) | — | ||||
| Deferred income tax provision | (3,291 | ) | (11,109 | ) | |||
| Other - net | 949 | 760 | |||||
| Changes in operating assets and liabilities | |||||||
| Accounts receivable | 11,353 | 47,947 | |||||
| Other assets | (482 | ) | 995 | ||||
| Accrued interest expense | (4,201 | ) | 8,368 | ||||
| Accounts payable and accrued liabilities | 3,683 | (15,291 | ) | ||||
| Net cash provided by operations | 6,000 | 73,343 | |||||
| Cash flows from investing activities | |||||||
| Additions to oil and gas properties | (27,592 | ) | (229,060 | ) | |||
| Proceeds from sales of assets | 5 | 21 | |||||
| Acquisition of other property, plant and equipment (net of reimbursements) | 12 | (382 | ) | ||||
| Current period settlements of matured derivative contracts | 77,622 | 67,646 | |||||
| Net cash provided by / (used in) investing | 50,047 | (161,775 | ) | ||||
| Cash flows from financing activities | |||||||
| Proceeds from issuance of long-term debt | 75,000 | 75,000 | |||||
| Repayment under long-term debt | — | (335,000 | ) | ||||
| Proceeds from senior notes | — | 236,475 | |||||
| Purchase of senior notes | (84,589 | ) | — | ||||
| Payment of debt issuance costs | — | (1,513 | ) | ||||
| Net distributions paid to JEH unitholders | (10,109 | ) | — | ||||
| Proceeds from sale of common stock | 1,056 | 122,779 | |||||
| Net cash (used in) / provided by financing | (18,642 | ) | 97,741 | ||||
| Net increase (decrease) in cash | 37,405 | 9,309 | |||||
| Cash | |||||||
| Beginning of period | 21,893 | 13,566 | |||||
| End of period | $ | 59,298 | $ | 22,875 | |||
| Supplemental disclosure of cash flow information | |||||||
| Cash paid for interest | $ | 29,700 | $ | 19,517 | |||
| Change in accrued additions to oil and gas properties | 1,980 | (100,927 | ) | ||||
| Current additions to ARO | 81 | 931 | |||||
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, | Six Months Ended June 30, | |||||||||||||||||||||||||||||
| 2016 | 2015 | Change | 2016 | 2015 | Change | |||||||||||||||||||||||||
| Revenues (in thousands of dollars): | ||||||||||||||||||||||||||||||
| Oil and gas sales | $ | 28,398 | $ | 53,222 | $ | (24,824 | ) | $ | 53,478 | $ | 110,456 | $ | (56,978 | ) | ||||||||||||||||
| Other revenues | 746 | 695 | 51 | 1,524 | 1,557 | (33 | ) | |||||||||||||||||||||||
| Current period settlements of matured derivative contracts | 31,410 | 32,344 | (934 | ) | 74,081 | 68,719 | 5,362 | |||||||||||||||||||||||
| Total revenues including derivative impact | $ | 60,554 | $ | 86,261 | $ | (25,707 | ) | $ | 129,083 | $ | 180,732 | $ | (51,649 | ) | ||||||||||||||||
| Net production volumes: | ||||||||||||||||||||||||||||||
| Oil (MBbls) | 396 | 644 | (248 | ) | 875 | 1,400 | (525 | ) | ||||||||||||||||||||||
| Natural gas (MMcf) | 4,608 | 6,139 | (1,531 | ) | 9,528 | 12,103 | (2,575 | ) | ||||||||||||||||||||||
| NGLs (MBbls) | 529 | 637 | (108 | ) | 1,084 | 1,264 | (180 | ) | ||||||||||||||||||||||
| Total (MBoe) | 1,693 | 2,304 | (611 | ) | 3,547 | 4,681 | (1,134 | ) | ||||||||||||||||||||||
| Average net (Boe/d) | 18,604 | 25,319 | (6,715 | ) | 19,489 | 25,862 | (6,373 | ) | ||||||||||||||||||||||
| Average sales price, unhedged: | ||||||||||||||||||||||||||||||
| Oil (per Bbl), unhedged | $ | 40.68 | $ | 51.73 | $ | (11.05 | ) | $ | 33.63 | $ | 47.62 | $ | (13.99 | ) | ||||||||||||||||
| Natural gas (per Mcf), unhedged | 1.11 | 1.73 | (0.62 | ) | 1.22 | 2.07 | (0.85 | ) | ||||||||||||||||||||||
| NGLs (per Bbl), unhedged | 13.56 | 14.62 | (1.06 | ) | 11.44 | 14.78 | (3.34 | ) | ||||||||||||||||||||||
| Combined (per Boe), unhedged | 16.77 | 23.10 | (6.33 | ) | 15.08 | 23.60 | (8.52 | ) | ||||||||||||||||||||||
| Average sales price, hedged: | ||||||||||||||||||||||||||||||
| Oil (per Bbl), hedged | $ | 87.87 | $ | 75.59 | $ | 12.28 | $ | 85.77 | $ | 73.64 | $ | 12.13 | ||||||||||||||||||
| Natural gas (per Mcf), hedged | 3.40 | 3.20 | 0.20 | 3.54 | 3.44 | 0.10 | ||||||||||||||||||||||||
| NGLs (per Bbl), hedged | 17.64 | 27.09 | (9.45 | ) | 17.33 | 27.25 | (9.92 | ) | ||||||||||||||||||||||
| Combined (per Boe), hedged | 35.33 | 37.14 | (1.81 | ) | 35.96 | 38.28 | (2.32 | ) | ||||||||||||||||||||||
| Average costs (per Boe): | ||||||||||||||||||||||||||||||
| Lease operating | $ | 4.46 | $ | 5.12 | $ | (0.66 | ) | $ | 4.56 | $ | 5.14 | $ | (0.58 | ) | ||||||||||||||||
| Production and ad valorem taxes | 1.02 | 1.33 | (0.31 | ) | 0.94 | 1.45 | (0.51 | ) | ||||||||||||||||||||||
| Depletion, depreciation and amortization | 22.53 | 22.27 | 0.26 | 22.53 | 22.09 | 0.44 | ||||||||||||||||||||||||
| General and administrative | 4.80 | 4.09 | 0.71 | 4.41 | 3.83 | 0.58 | ||||||||||||||||||||||||
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) | 2016 | 2015 | 2016 | 2015 | |||||||||
| Reconciliation of EBITDAX to net income | |||||||||||||
| Net income (loss) | $ | (58,646 | ) | $ | (51,180 | ) | $ | (10,132 | ) | $ | (45,484 | ) | |
| Interest expense | 12,083 | 15,902 | 26,118 | 29,263 | |||||||||
| Exploration expense | 77 | 464 | 239 | 628 | |||||||||
| Income taxes | (12,388 | ) | (13,453 | ) | (1,685 | ) | (11,109 | ) | |||||
| Amortization of deferred financing costs | 724 | 800 | 1,487 | 1,568 | |||||||||
| Depreciation and depletion | 38,137 | 51,302 | 79,899 | 103,385 | |||||||||
| Accretion of ARO liability | 297 | 206 | 590 | 400 | |||||||||
| Reduction of TRA liability | 267 | — | (162 | ) | — | ||||||||
| Other non-cash charges | 1,645 | 353 | 1,111 | 760 | |||||||||
| Stock compensation expense | 1,899 | 1,824 | 3,084 | 3,248 | |||||||||
| Deferred and other non-cash compensation expense | 133 | 109 | 401 | 218 | |||||||||
| Net (gain) loss on commodity derivatives | 40,002 | 25,075 | 22,783 | (21,231 | ) | ||||||||
| Current period settlements of matured derivative contracts | 31,410 | 32,344 | 74,081 | 68,719 | |||||||||
| Amortization of deferred revenue | (596 | ) | (503 | ) | (1,241 | ) | (1,028 | ) | |||||
| (Gain) loss on sales of assets | (3 | ) | (20 | ) | 1 | 6 | |||||||
| (Gain) on debt extinguishment | (8,878 | ) | — | (99,530 | ) | — | |||||||
| Stand-by rig costs | — | 1,176 | — | 4,188 | |||||||||
| Financing expenses and other debt fees | 73 | 28 | 273 | 2,301 | |||||||||
| EBITDAX | $ | 46,236 | $ | 64,427 | $ | 97,317 | $ | 135,832 | |||||
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, | Six Months Ended June 30, | |||||||||||||||
| (in thousands of dollars, except per share data) | 2016 | 2015 | 2016 | 2015 | ||||||||||||
| Net income (loss) | $ | (58,646 | ) | $ | (51,180 | ) | $ | (10,132 | ) | $ | (45,484 | ) | ||||
| Net (gain) loss on commodity derivatives | 40,002 | 25,075 | 22,783 | (21,231 | ) | |||||||||||
| Current period settlements of matured derivative contracts | 31,410 | 32,344 | 74,081 | 68,719 | ||||||||||||
| Exploration | 77 | 464 | 239 | 628 | ||||||||||||
| Non-cash stock compensation expense | 1,899 | 1,824 | 3,084 | 3,248 | ||||||||||||
| Deferred and other non-cash compensation expense | 133 | 109 | 401 | 218 | ||||||||||||
| (Gain) on debt extinguishment | (8,878 | ) | — | (99,530 | ) | — | ||||||||||
| Stand-by rig costs | — | 1,176 | — | 4,188 | ||||||||||||
| Financing expenses | — | — | — | 2,250 | ||||||||||||
| Reduction of TRA liability | 267 | — | (162 | ) | — | |||||||||||
| Tax impact of adjusting items (1) | (11,390 | ) | (9,593 | ) | (331 | ) | (9,272 | ) | ||||||||
| Change in valuation allowance | (597 | ) | — | 392 | — | |||||||||||
| Adjusted net income (loss) | $ | (5,723 | ) | $ | 219 | $ | (9,175 | ) | $ | 3,264 | ||||||
| Adjusted net income (loss) attributable to non-controlling interests | (2,948 | ) | 899 | (5,566 | ) | 2,394 | ||||||||||
| Adjusted net income (loss) attributable to controlling interests | $ | (2,775 | ) | $ | (680 | ) | $ | (3,609 | ) | $ | 870 | |||||
| Weighted average shares outstanding: | ||||||||||||||||
| Basic and diluted | 30,897 | 27,904 | 30,724 | 23,131 | ||||||||||||
| Adjusted earnings (loss) per share (basic and diluted) | $ | (0.09 | ) | $ | (0.02 | ) | $ | (0.12 | ) | $ | 0.04 | |||||
(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.
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, | Six Months Ended June 30, | ||||||||||||
| (in thousands of dollars, except per share data) | 2016 | 2015 | 2016 | 2015 | |||||||||
| Earnings (loss) per share (basic and diluted) | $ | (0.75 | ) | $ | (0.66 | ) | $ | (0.14 | ) | $ | (0.70 | ) | |
| Net (gain) loss on commodity derivatives | 0.64 | 0.41 | 0.37 | (0.16 | ) | ||||||||
| Current period settlements of matured derivative contracts | 0.51 | 0.52 | 1.20 | 1.15 | |||||||||
| Exploration | — | 0.01 | — | 0.01 | |||||||||
| Non-cash stock compensation expense | 0.03 | 0.03 | 0.05 | 0.06 | |||||||||
| Deferred and other non-cash compensation expense | — | — | 0.01 | — | |||||||||
| (Gain) on debt extinguishment | (0.14 | ) | — | (1.60 | ) | — | |||||||
| Stand-by rig costs | — | 0.02 | — | 0.05 | |||||||||
| Financing expenses | — | — | — | 0.04 | |||||||||
| Reduction of TRA liability | 0.01 | — | (0.01 | ) | — | ||||||||
| Tax impact of adjusting items (1) | (0.37 | ) | (0.35 | ) | (0.01 | ) | (0.41 | ) | |||||
| Change in valuation allowance | (0.02 | ) | — | 0.01 | — | ||||||||
| Adjusted earnings (loss) per share (basic and diluted) | $ | (0.09 | ) | $ | (0.02 | ) | $ | (0.12 | ) | $ | 0.04 | ||
| Weighted average shares outstanding: | |||||||||||||
| Basic and diluted | 30,897 | 27,904 | 30,724 | 23,131 | |||||||||
| Effective tax rate on net income (loss) attributable to controlling interests | 36.8 | % | 37.0 | % | 36.8 | % | 37.0 | % | |||||
(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.
Investor Contacts: Cathleen King, 512-493-4834 Investor Relations Or Robert Brooks, 512-328-2953 Executive Vice President & CFO
