AUSTIN, Texas, Feb. 27, 2018 (GLOBE NEWSWIRE) -- 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, 512-328-2953
Executive Vice President & CFO
Or
Page Portas, 512-493-4834
Investor 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.