Barclays CEO Energy-Power...
31
Barclays CEO Energy-Power Conference September 2016
Transcript of Barclays CEO Energy-Power...
Barclays CEO Energy-Power ConferenceSeptember 2016
Forward-Looking & Other Cautionary Statements
T he f o l low i n g pr es ent at i o n inc lud es f or w ar d - l o ok i n g s t at em ent s . T hes e s t at em ent s r e la t e t o f ut ur e event s , s uch as ant ic i pa t e d r e venue s , ear n ings , bus ines s s t r at eg ies , com pet i t i v e pos i t io n or ot her as pect s of our oper at io n s or oper at in g r es u l t s or t he indus t r ie s or m ar ket s in w hich w e oper at e or par t ic i pa t e in gener a l , inc lud i n g t he ab i l i t y t o t ake advant a ge of oppor t u n i t i es in t he o i l and gas indus t r y , pr o ject i on s r egar d in g t ot a l pr oduct io n, average da i ly product i o n, the potent ia l to increas e work ing interes t through leas in g or pool in g , leas e operat in g ex pens es , product io n tax es as a per cent a ge of r evenue, cas h G &A ex pens es , pr o ject e d int er na l r a t es of r et ur n , and r es u l t s of our hedging pr ogr am . Act ua l out com es and r es u l t s m ay d i f f er m at er ia l ly f r om w hat i s ex pr es s ed or f or ecas t in s uch f or w ar d - l o ok i n g s t at em ent s . T hes e s t at em ent s ar e not guar ant ee s of f ut ur e per f or m anc e and involv e cer t a in r i s ks , uncer t a in t ie s and as s um pt io ns t hat m ay pr ove t o be incor r e ct and ar e d i f f i cu l t t o pr ed ic t s uch as o i l and gas pr ices ; oper at i on a l hazar ds and dr i l l i ng r i s ks ; pot ent i a l f a i lur e t o ach ieve, and pot ent i a l de lays in ach iev i n g ex pect ed r es er ves or pr oduct i o n leve ls f r om ex is t ing and f ut ur e o i l and gas deve lo pm e nt pr o ject s ; our ab i l i t y t o cons um m at e t he pendin g S T AC K/S C OOP acquis i t i o n; uns ucces s f u l ex p lor at or y act iv i t i e s ; uns ucces s f u l acquis i t i o ns ; unex pect e d cos t incr eas es or t echnic a l d i f f i cu l t ie s in cons t r uct i n g , m a int a in i ng or m odi f y ing com pany f ac i l i t ie s ; pot ent i a l l iab i l i t y f or r em edia l ac t ions under ex is t ing or f ut ur e env i r onm e nt a l r egu lat i o ns or f r om pendin g or f ut ur e l i t igat i o n ; l im i t ed acces s t o cap i t a l or s ign i f i c an t ly h igher cos t of cap i t a l r e la t ed t o i l l iq u i d i t y or uncer t a i nt y in t he dom es t ic or int er nat i o na l f inanc i a l m ar k et s ; gener a l dom es t ic and int er nat i o na l econom ic and pol i t i c a l condi t i o ns , as w el l as changes in t ax , env i r onm e nt a l and ot her law s appl ica b l e t o our bus ines s and ot her econom ic , bus ines s , compet i t iv e and/or regulato ry f actors a f f ect ing our bus ines s genera l l y as s et f or th in our f i l ings w ith the S ecur i t ie s and E x change Commis s ion ( S E C ) . We caut ion you not t o p lace undue r e l ianc e on our f or w ar d - lo o k i ng s t at em ent s , w hich ar e on ly as of t he dat e of t h is pr es e nt a t io n or as ot her w is e ind icat e d, and w e ex pr es s ly d is c la im any r es pons ib i l i t y f or updat in g s uch in f or m at i o n.
T h is pr es ent at i o n m ay inc lud e non - G AAP f inanc i a l m eas ur es . S uch non - G AAP m eas ur es ar e not a l t er nat i v es t o G AAP m eas ur es , and you s hould not cons ide r t hes e non- G AAP m eas ur es in i s o la t i o n or as a s ubs t i t ut e f or ana lys i s of our r es u l t s as r epor t ed under G AAP . F or addi t io n a l d i s c los ur e r egar d in g s uch non - G AAP m eas ur es , inc lud i n g r econc i l i a t i o ns t o t he i r m os t d i r ect ly com par ab le G AAP m eas ur e , p leas e r ef er t o J ones E ner gy ’ s m os t r ecent ear n ing s r e leas e a t w w w . jones e n er gy . c om .
T he S E C r equir e s o i l and gas com panies , in t he i r f i l ings w i t h t he S E C , t o d is c los e pr oved r es er ves , w hich ar e t hos e quant i t i e s o f o i l and gas , w hich , by ana lys i s of geos c ie nc e and engine er i n g dat a , can be es t im at ed w it h r eas onab l e cer t a int y t o be econom ic a l ly pr oduc i b l e — f r om a g iven dat e f or w ar d, f r om know n r es er voi r s , and under ex is t ing econom ic condi t i o ns ( us ing unw eight e d aver age 12 - m ont h f i r s t day of t he m ont h pr ices ) , oper at i ng m et hods , and gover nm e nt r egu lat i o n s — p r io r t o t he t im e at w hich cont r act s pr ov id i ng t he r ight t o oper at e ex p i r e , un les s ev iden ce ind ica t e s t hat r enew al i s r eas onab l y cer t a in , r egar d l es s of w het her det er m in i s t i c or pr obabi l i s t i c m et hods ar e us ed f or t he es t im at ion. T he S E C a ls o pe r m it s t he d is c los ur e of s epar at e es t im at es of pr obabl e or pos s ib le r es er ves t hat m eet S E C def in i t i o ns f or s uch r es er ves , how ever , w e cur r ent l y do not d is c lo s e pr obab le or pos s ib l e r es er ves in our S E C f i l ing s . Our es t im at es of " r es our ce pot ent i a l" in t h is pr es ent at i o n have been pr epar ed int er na l ly by our eng inee r s and m anagem ent w i t hout r ev iew by indepe n d e nt eng inee r s . T hes e es t im at es ar e not per m it t ed t o be d is c los e d in our S E C f i l ing s , do not cons t i t ut e "r es er ves " as def ine d by t he S E C and ar e by t he i r nat ur e m or e s pecu lat i v e t han es t im at es of pr oved, pr obabl e , and pos s ib le r e s er ves .
F act or s a f f ect ing u l t im at e r ecover y inc lud e our ab i l i t y t o acqui r e t he acr eage w e ar e t ar get in g and t he s cope of our ongoin g dr i l l i n g pr ogr am , w hich w i l l be d i r ect ly a f f ect ed by t he ava i la b i l i t y of cap i t a l , dr i l l i n g and pr oduct i o n cos t s , ava i lab i l i t y of dr i l l i n g s er v ices and equ ipm en t , dr i l l i ng r es u l t s , leas e ex p i r at io n s , t r ans por t at i o n cons t r a i nt s , r egu lat or y appr ova ls and ot her f act or s ; and act ua l dr i l l in g r es u l t s , inc lud i n g geolo g i c a l and m echanic a l f ac t or s a f f ect ing r ecover y r a t es . E s t im at es of r es our ce pot ent i a l and dr i l l i n g locat io ns m ay change s ign i f i c a nt l y as w e pur s ue acquis i t io n s . In addi t i o n , our pr oduct i o n f or ecas t s and ex pect at i on s f or f ut ur e per iods ar e depend e nt upon m any as s um pt io ns , inc lud i n g es t im at es of pr oduct i o n dec l in e r a t es f r om ex is t ing w el l s and t he under t ak i n g and out com e of f ut ur e dr i l l i n g act iv i t y , w hich m ay be a f f ect ed by s ign i f i c a nt com m odit y pr ice dec l in e s or dr i l l i ng cos t incr eas e s . U .S . inves t or s a r e ur ged t o cons id er c los e ly t he o i l and gas d is c los ur es in our F or m 10- K , F or m 10 - Q s , F or m 8 - Ks and ot her r epor t s and f i l ings w i t h t he S E C . C opies ar e ava i lab l e f r om t he S E C and f r om t he J ones E ner gy w ebs i t e .
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Jones Energy Overview
Note: Share price as of August 31, 2016.
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NYSE Ticker: JONE
Share Price: $2.77
Common Stock: $232 million
Preferred Stock: $92 million
Total Equity Market Cap: $324 million
Enterprise Value: ~$1 billion
Common Stock:
Class A: 53.8 million
Class B: 29.9 million
Total: 83.7 million
2Q16 Production: 18.6 Mboe/d
0
100
200
300
400
500
600
700
Proven Mid-Con OperatorC
um
ula
tive
Ho
rizo
nta
l Wel
ls D
rille
d
3
Granite Wash – 28 wells
Arkoma Woodford – 62 wells
Tonkawa – 6 wells
Cleveland – 525 wells
Drilled ~700 horizontal wells in
Mid-Con over company history
Brown Dolomite – 72 wells
Executing on 2016 Goals
Execute on Drilling
Improve the Balance Sheet
Reduced debt outstanding by $106 MM through bond buybacks
High PV STACK/SCOOP wells delever company over time
Liquidity of $280 million and net debt/LTM EBITDAX of 3.0x
Outstanding results from 3 rig program in the Cleveland
Increased 2016 production guidance by 5%, decreased capex by 10%
Will leverage Mid-Con expertise to develop STACK/SCOOP assets
Execute on Drilling
Capture Opportunities Recently completed bolt-on Cleveland acquisition
Announced transformative STACK/SCOOP acquisition
Scalable Mid-Con footprint provides additional opportunities
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Transformative STACK/SCOOP Acquisition
Expands Mid-Con footprint to STACK/SCOOP
~18,000 net acres primarily in Canadian & Grady Counties, OK for $136.5 MM [1]
Implied acreage value of ~$7,600 per net acre
330 MMBoe of net unriskedresource potential [2]
~70% of acreage is operated
~12,300 net acres with average working interest of ~50%
~90% of asset value tied to acreage in oil fairway
Western Anadarko BasinCleveland
Eastern Anadarko BasinSTACK/SCOOP
Arkoma BasinWoodford
Acquisition
Note: Operated acreage defined as sections where Company owns greater than 160 net acres[1] Acquisition expected to close in September 2016; subject to diligence, satisfaction of closing conditions and obtaining certain consents [2] Company internal estimate
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Acquisition Highlights
Transformative Transaction
Best-in-Class Returns
Significant Upside
Potential
Well-level returns among the best in lower 48
Allows Jones to leverage best-in-class Mid-Con expertise in new play
Attractive entry cost relative to recent transactions
Multiple benches provide true stacked pay potential
Potential to outperform type curve and lower well costs
Expect to increase working interest through leasing, pooling, etc.
Provides scalable footprint in coveted STACK/SCOOP play
Enriches cash flow profile with inventory of high return wells
Significant deleveringimpact to company over time
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OKC
JONE Acreage
Industry View of STACK/SCOOP Play
Stratigraphic Column
Primary Targets
Secondary Targets
Oswego
Cherokee
Morrow
Chester
Meramec/
Upper Sycamore
Osage/
Lower Sycamore
Dev
on
ian
Woodford
Silu
rian
Hunton
Mis
siss
ipia
nP
enn
sylv
ania
n
Springer
CANA
STACK
SCOOP
JONE Acreage in “Merge” Area
Play boundaries driven by geography, not geology
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Jones’ View of STACK/SCOOP Play
Stratigraphic Column
Primary Targets
Secondary Targets
Oswego
Cherokee
Morrow
Chester
Meramec/
Upper Sycamore
Osage/
Lower Sycamore
Dev
on
ian
Woodford
Silu
rian
Hunton
Mis
siss
ipia
nP
enn
sylv
ania
n
Springer
Woodford productive fairway is continuous from north to south
Jones’ acreage is in the heart of productive fairway
Woodford Fairway
Meramec/Sycamore Fairway
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JONE Acreage
OKC
Stacked Pay Potential with Three Primary Targets
Key Acreage Attributes
Stacked pay potential
High-quality Woodford shale
Primary initial target
Oil rich
Brittle mineralogy
Emerging Sycamore resource
Very similar in rock quality to Meramec to the North
North STACK SCOOP
MERAMEC
UPPER SYCAMORE
CHESTER SHALE
HUNTON
Acquisition Acreage
WOODFORDUpper
LOWER SYCAMORE
Lower
OSAGE
Top
Sea
lR
eser
voir
Primary Targets
South
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5S/4W
5S/3W
BLAINE
CADDO
CANADIAN
CLEVELAND
COMANCHE
CUSTER
DEWEY
GRADY
KINGFISHER
KIOWA
LOGAN
MC CLAIN
OKLAHOMA
STEPHENS
WASHITA
Early View: Woodford Thickness Matters
CANA
STACK
SCOOP
JONE Acreage
Woodford Productive FairwayThickness Map
Legacy industry activity targeted areas with highest Woodford thickness
However, reservoir thickness is not the primary driver of well performance in shale plays
Multiple factors drive well performance, including:
Numerous geological parameters
Drilling and completion techniques
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PHI>12%
300
0
Jones’ View: Quality over Quantity
Reservoir Quality Index based on proprietary petrophysical analysis
Identified key reservoir attributes that predict well performance based on data from thousands of wells, including:
Porosity
Mineralogy
Brittleness
Organic Content
Reservoir rated on a scale of 0 to 10
BLAINE
CADDO
CANADIAN
CARTER
CLEVELAND
COMANCHE
COTTON
CUSTER
DEWEY
GARFIELD
GARVIN
GRADY
JACKSON
KINGFISHER
KIOWA
LOGAN
MAJOR
McCLAIN
MURRAY
NOBLE
OKLAHOMA
STEPHENS
TILLMAN
WASHITA
WOODWARD
POTTAWATOMIE
JONE Acreage
RQI
10
0
Woodford Productive FairwayReservoir Quality Index (RQI) Map
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CANA
STACK
SCOOP
MarathonMeyer 1106 1-21W H
Spud Nov 2014Lower Sycamore
IP30: 670 BOE/D (35% oil)
NewfieldPeters 1H – 15XSpud Aug 2014
WoodfordIP30: 918 BOE/D (80% oil)
CitizenGov. James 1H – 32
Spud Aug 2015Woodford
IP30: 2,074 BOE/D (70% oil)
CitizenRosemary 2H-1-36Spud January 2016
Lower SycamoreIP30: 1,316 BOE/D (75% oil)
CimarexStraka 1H-36X
Spud Sept 2014Woodford
IP30: 888 BOE/D (55% oil)
NewfieldCarole 1H-21X
Spud January 2015Woodford
IP30: 535 BOE/D (80% oil)
DevonWildcard 2215-1H
Spud Sept 2014Meramec
IP30: 757 BOE/D (75% oil)
BLAINE
CADDO
CANADIAN
CARTER
CLEVELAND
COMANCHE
COTTON
CUSTER
DEWEY
GARFIELD
GARVIN
GRADY
JACKSON
KINGFISHER
KIOWA
LOGAN
MAJOR
McCLAIN
MURRAY
NOBLE
OKLAHOMA
STEPHENS
TILLMAN
WASHITA
WOODWARD
POTTAWATOMIE
Compelling Recent Well Results
JONE Acreage
CitizenRosemary 1H-1-36Spud January 2016Upper Sycamore
IP30: 1,599 BOE/D (70% oil)
Most recent results highlighted in yellow
CANADIAN
GRADY
CADDO
McCLAIN
OKLAHOMA
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Optimization Driving Step Change in Well Results
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50,000
100,000
150,000
200,000
1 2 3 4 5 6
Cu
mu
lati
ve 2
-str
eam
BO
E
Months of Production
Well Results on Acquisition Footprint Recent well results materially better than legacy wells
Industry optimization has lead to improved results
Key drivers of well performance:
Proper landing points
Staying in zone
Optimized completions
Recent Industry Wells with Modern Completions
Legacy Industry Wells
JONE Type Curve
Source: JONE type curve based on internal assumptions. More detailed info on type curve can be found in appendix.
Key to well results:Land correctly, complete correctly
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Attractive Resource with Upside Potential
Majority of acreage in oil window
10 rigs running on acquisition footprint
NFX, MRO, CLR, XEC, CHK, LINN, and Citizen Energy currently running rigs
Upside potential from downspacing, pad development and stacked pay
Initial Well Spacing
Upside Opportunity
BLAINE
CADDO
CANADIAN
CARTER
CLEVELAND
COMANCHE
COTTON
CUSTER
DEWEY
GARFIELD
GARVIN
GRADY
JACKSON
KINGFISHER
KIOWA
LOGAN
MAJOR
McCLAIN
MURRAY
NOBLE
OKLAHOMA
STEPHENS
TILLMAN
WASHITA
WOODWARD
POTTAWATOMIE
Phase Boundary
Active Industry Rigs
JONE Acreage
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McCLAINGRADY
Recently Completed Bolt-on Cleveland Acquisition
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$26.3 million for ~25,000 net acres in Anadarko Basin
Net production of ~850 Boe/d as of August 2016
Direct overlay with existing footprint
Expected to add 92 gross/68 net Cleveland locations
98% HBP with no near-term lease expirations
Existing JONE Cleveland Acreage
Cleveland Acreage Acquired
Active Industry Rigs
JONE Rigs
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17
14
0
5
10
15
20
25
30
2014 2016E Record
Day
s
Average Spud to Spud
Drilling Faster than Ever in the Cleveland
50% decrease in Cleveland AFE since year-end 2014
Vendor cost reductions and efficiency gains have resulted in savings
Have broken all previous drilling records since resuming Cleveland drilling in April
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$3.8
$2.6
$2.0
$0.0
$0.5
$1.0
$1.5
$2.0
$2.5
$3.0
$3.5
$4.0
YE2014 Summer 2015 Current
$ M
M
Jones Cleveland AFE progression
$0$1$2$3$4
$5$6
$7$8$9
$10
JON
E 1 2 3 4 5 6 7 8 9
10
11
12
13
14
15
LOE
($ p
er B
oe)
2Q16 LOE per Boe
Best-in-Class Operating Costs
2Q16 LOE decreased 36% from 2Q15
Significant savings realized due to operational efficiencies and bid reductions
N o te : P eers in c lu d e BBG , BC E I , C P E , C RZO, F A N G , M T D R, N OG , OA S , P Q , RE X X , RS P P , S G Y , S N , S Y RG a n d W P X .
JONE: $4.46Peer average: $6.48
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$0
$2
$4
$6
$8
$10
$12
$14
2Q15 2Q16
LOE
($ m
m)
Significant YoY LOE Decline
36% decrease
Portfolio of Outstanding Returns
Significant PV-10 uplift for STACK/SCOOP well relative to Cleveland well
Single well IRRs of 75-100% at current strip and PV-10 of $6-11 million
Note: PV-10 based on internal type curve and D&C cost estimates on strip pricing as of 8/31/16. Well-level IRRs based solely on D&C cost investment; does not include land, G&A, and other costs. 18
0%
20%
40%
60%
80%
100%
$0
$2
$4
$6
$8
$10
$12
Cleveland well 5,000' lateralSTACK/SCOOP oil well
10,000' lateralSTACK/SCOOP oil well
IRR
PV
-10
($
mm
)
Outstanding Returns at Current Strip
PV-10 IRR
-40%
-30%
-20%
-10%
0%
10%
20%
30%
($40)
($30)
($20)
($10)
$0
$10
$20
$30
Pro
du
ctio
n G
row
th
Free
Cas
h F
low
($
mm
)2017 Potential Development Scenarios
Catalyst for Production Growth and Improved Credit Metrics
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Ability to deliver meaningful 2017 production growth while staying within cash flow
Company expects to remain compliant with all debt covenants through 2017 and beyond
Note: Scenarios assume Cleveland rigs are running as of January 1, 2017 and 1 STACK/SCOOP rig is running as of January 1, 2017 with 1 or 2 additional STACK/SCOOP rigs running as of April 1, 2017. Scenarios incorporate strip pricing as of August 31, 2016.
3 Cleveland rigs 1 Cleveland, 2 STACK/SCOOP rigs
2 Cleveland, 3 STACK/SCOOP rigs
2017 Free Cash Flow 2017 Production vs. 2016 Guidance Midpoint
Jones Energy: Premier Mid-Con Pure Play
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Premier Asset Base with Multi-Year Inventory
Decades of Mid-Con
Operating Expertise
Balance Sheet & Liquidity to
Facilitate Growth
APPENDIX
2016 Guidance and 3Q Production Guidance
2016E 3Q16E
Total Production (MMBoe) 6.6 – 7.1 1.6 – 1.7
Average Daily Production (MBoe/d) 17.9 – 19.4 17.5 – 18.5
Crude Oil (MBbl/d) 4.5 – 4.9 4.4 – 4.6
Natural Gas (MMcf/d) 48.0 – 51.9 47.2 – 49.7
NGLs (MBbl/d) 5.4 – 5.8 5.3 – 5.6
Lease Operating Expense ($mm) $35.0 – $38.0
Production Taxes (% of Unhedged Revenue)* 4.5% – 5.5%
Ad Valorem Taxes ($mm)* $1.5 – $1.7
Cash G&A Expense ($mm) $18.0 – $20.0
Total Capital Expenditures ($mm) $90.0
*Production and ad valorem taxes are included as one line item on the Company’s income statement.
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Woodford Oil Window Type Curve – 5,000’ Lateral
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Oil Gas NGLs Total
IP Bbl/d Mcf/d Bbl/d Boe/d
30 Day IP 420 1,140 170 780
90 Day IP 375 1,041 157 706
Cum. Production MBbl MMcf MBbl MBoe
1 year 97 282 42 186
3 year 180 546 82 353
5 year 227 701 106 449
EUR 440 1,423 213 890
% of total 49% 27% 24% 100%
10
100
1,000
10
100
1,000
0 1 2 3 4 5
Mcf
/d
Bb
l/d
Years
Production Profile
Oil NGLs Gas
% Liquids 73%
% Oil 50%
Gas Shrink 27%
NGL Yield (Bbl/Mmcf) 110
Oil Differential ($/Bbl) ($4.00)
Gas Differential ($/Mcf) ($1.60)
NGL Realization (% of WTI) 30%
Fixed Opex ($/Mo./Well) $3,500
AFE ($mm) $4.0
Production Tax - Gas/NGL (Yrs 1-3) 2.5%
Production Tax - Gas/NGL (Yrs 3+) 7.5%
Production Tax - Oil 4.6%
Key Statistics
Increased Cleveland Type Curve
Key Statistic: Oil Gas NGL Total
Cumulative Production Mbbl MMcf Mbbl Mboe1 Year 35 129 20 775 Year 65 282 45 156EUR 116 583 93 306
% of Total 38% 32% 30% 100%
Key statistics shown below for 3P Cleveland type curve for higher density wells
Type curve verified as part of audited 2015 reserve report
Oil consistent with 2015 type curve but gas and NGLs higher
Nearly 60% of oil and 50% of total production recovered in first 5 years
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Western Anadarko Basin Inventory
MarmatonSandstone
Lease Acreage: ~97,000Gross Locations: 473
ClevelandSandstone
Lease Acreage: ~181,000Gross Locations: 711
TonkawaSandstone
Lease Acreage: ~122,000Gross Locations: 279
Current Target Formations
JONE Acreage
Note: All lease acreage and locations as of year-end 2015.
Cleveland play is >2 million acres
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Hugoton
Brown Dolomite
Chase / Council
Grove
Admire
Upper Virgil
Douglas
Tonkawa 7500'
Cottage Grove
Hogshooter
Checkerboard
Cleveland 8500'
Marmaton 9000'
Oswego
Cherokee
Skinner
Red Fork
Atoka
13 Finger Lime
Morrow SH
Morrow SD
Ato
kan
Mo
rro
wa
n
Low
er
Pe
rmia
n
Wo
lfca
mp
ian
Pe
nn
sylv
ania
n
Vir
gilia
nM
isso
uri
anD
esm
oin
esia
n
Current Net Hedge Position
26
2017 2018 2019
3Q 4Q 1Q 2Q 3Q 4Q FY FY
Crude Swaps (Mbbl) 399 463 428 440 390 345 1,014
Hedge Price / Bbl $92.11 $80.89 $68.44 $66.93 $65.09 $66.76 $75.52
Natural Gas Swaps (MMcf) 4,360 4,220 4,240 4,320 4,140 4,080 12,600
Hedge Price / Mcf $4.25 $4.18 $3.99 $3.93 $3.88 $3.86 $4.09
Crude Collars (Mbbl) 780
Floor - Hedge Price / Bbl $48.46
Ceiling - Hedge Price / Bbl $59.62
NGLs (MBbl)
Ethane 12 12 - - - -
Propane 203 202 197 194 186 182
Iso Butane 28 24 27 27 25 24
Butane 73 67 66 66 66 66
N. Gasoline 70 64 63 63 63 63
Total NGL 386 369 353 350 340 335
Hedge Price ($/gal)
Ethane $0.21 $0.21 N/A N/A N/A N/A
Propane 0.53 0.52 0.44 0.44 0.44 0.44
Iso Butane 0.71 0.60 0.66 0.66 0.60 0.57
Butane 0.68 0.65 0.63 0.61 0.59 0.59
N. Gasoline 1.37 1.32 1.02 1.02 0.98 0.98
2016
NGL Hedge Position Detail
27
2016 2017
3Q 4Q 1Q 2Q 3Q 4Q
Mt. Belvieu NGLs (MBbl)
Ethane - - - - - -
Propane 35 33 30 30 30 30
Iso Butane 3 - 3 3 1 -
Butane 15 12 12 12 12 12
N. Gasoline 18 13 12 12 12 12
Sub-Total Mt. Belvieu 71 58 57 57 55 54
Hedge Price ($/gal)
Ethane N/A N/A N/A N/A N/A N/A
Propane 0.50 0.50 0.46 0.46 0.46 0.46
Iso Butane 1.48 N/A 1.42 1.42 1.42 N/A
Butane 0.95 0.83 0.98 0.92 0.79 0.79
N. Gasoline 1.93 1.85 1.35 1.35 1.16 1.16
Conway NGLs (MBbl)
Ethane 12 12 - - - -
Propane 168 169 167 164 156 152
Iso Butane 25 24 24 24 24 24
Butane 58 55 54 54 54 54
N. Gasoline 52 51 51 51 51 51
Sub-Total Conway 315 311 296 293 285 281
Hedge Price ($/gal)
Ethane $0.21 $0.21 N/A N/A N/A N/A
Propane 0.53 0.53 0.43 0.43 0.43 0.43
Iso Butane 0.62 0.60 0.57 0.57 0.57 0.57
Butane 0.61 0.61 0.55 0.55 0.55 0.55
N. Gasoline 1.18 1.18 0.94 0.94 0.94 0.94
2018/2019 Hedges with Offset Transactions
Total crystallized gain of $47 million in 2018/19
2018 2019
Oil Swaps Sold (Mbbl) 803 339
Hedge Price / Bbl $77.47 $64.65
Oil Swaps Purchased (Mbbl) (803) (339)
Hedge Price / Bbl $46.83 $48.42
Value of Gain Crystallized ($mm) $24.6 $5.5
Natural Gas Swaps Sold (MMcf) 10,260 4,410
Hedge Price / Mcf $4.19 $3.53
Natural Gas Swaps Purchased (MMcf) (10,260) (4,410)
Hedge Price / Mcf $2.81 $2.88
Value of Gain Crystallized ($mm) $14.1 $2.9
Total Crystallized Gain of $47 million
28
NGL Barrel Component Detail
Cleveland Conway
Woodford Mont Belvieu
*Assumes ethane rejection in the Woodford
Ethane – 33%
Propane – 37%
Iso Butane – 5%
Butane – 13%
Natural Gasoline – 12%
Ethane – 13%
Propane – 47%
Iso Butane – 4%
Butane – 19%
Natural Gasoline – 17%
Woodford
Cleveland
Basket Ethane 33% Propane 37% Butane 13% Iso Butane 5% Natural Gasoline 12%
Basket Ethane* 13% Propane 47% Butane 19% Iso Butane 4% Natural Gasoline 17%
(85% of forecasted 2016 NGL production)
(15% of forecasted 2016 NGL production)
29
Corporate Structure
Jones Energy, Inc.(NYSE: JONE)
Jones Energy Holdings, LLC
(JEH LLC)
Metalmark,Management
& Other Investors
PublicShareholders
Class A Common Stock53.8 million shares
64% of voting power in Jones Energy, Inc.
36% of total economic interest
of JEH LLC
64% of total economic interest
of JEH LLC
Class B Common Stock29.9 million shares
36% of voting power in Jones Energy, Inc.
30
Revolving Credit Facility 185
6.75% Senior Notes Due 2022 409
9.25% Senior Notes Due 2023 150
Total Debt $744
Convertible Preferred Shares Outstanding (mm) 1.84
Face Value of Preferred Stock ($/share) $50.00
Common Shares Outstanding (mm) 83.7
Current Share Price ($/share) $2.77
Total Equity $324
Cash 40
Total Enterprise Value $1,028
Jones Energy Enterprise Value ($mm) [1]
[1] Values shown are as of 6/30/16 pro-forma for the Class A common stock and convertible preferred stock offerings in August 2016, the pending STACK/SCOOP acquisition, and the $26.3 million Anadarko Basin acquisition. Share price is as of August 31, 2016.
