AUSTIN, Texas--(BUSINESS WIRE)--
Jones Energy, Inc. (NYSE: JONE) (“Jones Energy” or “the Company”) today
announced financial and operating results for the quarter ended March
31, 2014. For the quarter ended March 31, 2014, the Company reported net
income of $9.4 million and EBITDAX of $71.7 million.
2014 First Quarter Highlights
-
Increased average daily net production to a record 21.5 MBoe/d, up 19%
from the fourth quarter of 2013
-
Increased liquids as a percentage of total production to 57%, up from
52% in the fourth quarter of 2013
-
Increased EBITDAX to $71.7 million, up 38% from the fourth quarter of
2013
-
Increased Cleveland average daily net production to 15.6 MBoe/d, up
44% from the fourth quarter of 2013
Jonny Jones
, the Company’s Founder, Chairman and CEO, commented,
“Despite modest continued impacts from winter weather at the beginning
of the quarter, we were able to increase our average daily net
production by 19% from the prior quarter. We believe we are in an
excellent position to successfully execute our 2014 development plan. We
continue to evaluate the results of our Cleveland and Woodford frack
trials and plan to have an update in early August. We are moving forward
with our plan to spud the first of three Tonkawa test wells this quarter
and expect to provide an update on those wells during the third quarter.
Finally, on April 1st, we raised $500 million through our
6.75% senior notes offering, which was upsized from the original
offering amount of $300 million. This provides us with additional
liquidity to execute our 2014 development plan and increases our
capacity to take advantage of other opportunities that may arise in the
coming months.”
Financial Results
Total operating revenues for the three months ended March 31, 2014
increased by $42.7 million (77%) to $98.2 million as compared to $55.5
million for the three months ended March 31, 2013. The majority of the
increase was due to higher crude oil production volumes with the
remainder of the increase attributable to higher natural gas production
volumes combined with higher prices for all products.
Total operating expenses for the three months ended March 31, 2014
increased by $25.0 million (67%) to $62.4 million as compared to $37.4
million for the three months ended March 31, 2013, primarily due to the
increase in production volumes.
Adjusted net income for the three months ended March 31, 2014 increased
by $5.5 million (40%) to $19.3 million as compared to $13.8 million for
the three months ended March 31, 2013, primarily due to the increase in
production volumes and higher prices for all products.
Operational Results
Cleveland
The Company spud 29 wells and completed 23 wells in the Cleveland in the
first quarter of 2014. As of March 31, 2014, 18 wells were in various
stages of completion, and 8 wells were drilling.
The average time from spud to total depth (TD) for a Cleveland well has
been reduced by approximately 14% to 19.0 days in the first quarter of
2014 from 22.1 days in 2013. In the first quarter of 2014, the Company
set a record for spud to TD of 12.6 days for one of its Cleveland wells.
Daily net production in the Cleveland was 15.6 MBoe/d in the first
quarter of 2014, up 44% from the fourth quarter of 2013 and up 73% from
the first quarter of 2013. The production increase was primarily driven
by an acceleration in drilling activity, in addition to some deferral of
production to the first quarter of 2014 due to weather and frack offset
impacts in the fourth quarter of 2013, which was partially offset by
impacts from severe winter weather in the first quarter of 2014.
The Company is continuing to collect data from the 20 well enhanced
frack trial in the Cleveland. All 20 wells were successfully fracked and
have been online for more than 60 days. 16 of the 20 wells have been
online for more than 90 days with 6 of those 16 wells online for more
than 120 days.
The Company has seen an increase in oil production from the frack trial
wells, with 18 of the 20 performing at or above the historical type
curve for oil. The Company believes the increased oil production is a
result of the increased number of frack stages, which is consistent with
historical results observed in the Cleveland. The Company will continue
to monitor production data on the wells prior to making a decision on
whether the level of production is significant enough to justify the
incremental capital investment per well. The Company expects to have
enough data to make a decision on which technique it will utilize going
forward by early August. In the interim, the Company is completing its
Cleveland wells using its historic 20 stage open-hole completion
technique.
Woodford
The Company spud six wells and completed nine wells in the Woodford in
the first quarter of 2014. As of March 31, 2014, four wells were in
various stages of completion, and two wells were drilling.
Daily net production in the Woodford was 3.2 MBoe/d in the first quarter
of 2014 compared to 4.1 MBoe/d in the first and fourth quarters of 2013.
Woodford production in the first quarter of 2014 was in-line with the
Company’s expectations, but declined from the fourth quarter of 2013 due
to frack offset impacts as well as the Company’s practice of batch
completion, which resulted in completed wells being brought online late
in the quarter.
Capital Expenditures
During the first quarter of 2014, the Company spent $108.0 million, of
which $97.2 million was related to drilling and completing wells,
representing 90% of total capital expenditures in the quarter. The table
below summarizes the Company’s capital investment by area for 1Q14:
|
1Q14 Capital Expenditure Summary ($mm)
|
|
|
|
|
|
|
|
1Q14
|
|
Cleveland
|
|
$
|
83.1
|
|
Woodford
|
|
|
13.5
|
|
Other Areas and Non-Op
|
|
|
0.6
|
|
Total Drilling and Completion
|
|
|
97.2
|
|
|
|
|
|
Leasehold and Other
|
|
|
10.8
|
|
Total Capital Expenditures
|
|
$
|
108.0
|
|
|
|
|
|
2Q14 Guidance
The Company is providing production guidance for the second quarter of
2014:
|
2Q14 Production Guidance
|
|
|
|
|
|
|
|
|
|
2Q14E
|
|
Total Production (MMBoe)
|
|
2.00 – 2.05
|
|
Average Daily Production (MBoe/d)
|
|
22.0 – 22.5
|
|
|
|
|
Liquidity
On April 1, 2014, the Company issued $500 million in aggregate principal
amount of 6.75% senior unsecured notes due 2022 at an offering price
equal to 100% of par. The Company received net proceeds of approximately
$489 million, of which $160 million was used to repay all of the
outstanding borrowings under its second lien term loan facility, with
the remaining proceeds used to pay down borrowings under its senior
secured revolving credit facility and increase working capital. After
giving effect to this offering, the Company’s borrowing base on its
senior secured revolving credit facility automatically decreased by $25
million to $550 million. As of March 31, 2014, after giving effect to
this offering and the application of the net proceeds therefrom, the
Company would have had approximately $340 million of available borrowing
capacity under its senior secured revolving credit facility and
approximately $27 million of cash and cash equivalents, providing total
liquidity of approximately $367 million.
Conference Call Details
Jones Energy will host a conference call for investors and analysts to
discuss the results for the quarter on Thursday, May 8, 2014 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 (877) 201-0168 (for domestic U.S.) or (647) 788-4901
(International) and entering conference code 32991686. If you are not
able to participate in the conference call, a telephonic replay will be
available approximately two hours after the call on May 8, 2014 through
Thursday, May 15, 2014. Participants may access this replay by dialing
(855) 859-2056 (for domestic U.S.) or (404) 537-3406 (International),
and entering conference code 32991686. A replay of the conference call
may also be found on the Company’s website.
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 timing and location of our anticipated
drilling activity, results of the Company's drilling program, our
ability to successfully execute our 2014 development plan and the timing
of our decision regarding use of the enhanced frack technique in the
Cleveland, as well as production guidance for the second quarter of
2014. 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 of
planned capital expenditures, availability of acquisitions,
uncertainties in estimating proved reserves and forecasting production
results, operational factors affecting the commencement or maintenance
of producing wells, customers’ elections to reject ethane and include it
as part of the natural gas stream for the remainder of 2014, 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.
Explanatory Note
The historical financial information contained in this report relates to
periods that ended both prior to and after the completion of the initial
public offering (“the Offering”) of 12,500,000 shares of Class A common
stock of Jones Energy, Inc. (the “Company”) at a price of $15.00 per
share. The Company’s Class A common stock began trading on the New York
Stock Exchange (“NYSE”) under the symbol “JONE” on July 24, 2013, and
the Offering closed on July 29, 2013. The consolidated financial
statements and related discussion of financial condition and results of
operations contained in this report relating to periods prior to the
Offering pertain to Jones Energy Holdings LLC (“JEH”). In connection
with the completion of the Offering, the Company became a holding
company whose sole material asset consists of JEH LLC Units. As the sole
managing member of JEH LLC, the Company is responsible for all
operational, management and administrative decisions relating to JEH
LLC’s business and consolidates the financial results of JEH LLC and its
subsidiaries.
JEH LLC acts as a holding company of operating subsidiaries that own and
operate assets that are used in the exploration, development, production
and acquisition of oil and natural gas properties. Prior to the
Offering, the equity capital of JEH LLC consisted of several classes of
limited liability company units with differing entitlements to
distributions. In connection with the Offering, the Jones family,
Metalmark Capital, Wells Fargo Central Pacific Holdings, Inc., and
certain members of management, or, collectively, the Existing Owners,
converted their existing membership interests in JEH LLC into a single
class of units (the “JEH LLC Units”), and the Second Amended and
Restated Limited Liability Company Agreement of JEH LLC was amended and
restated to, among other things, modify JEH LLC’s equity capital to
consist solely of the JEH LLC Units and admit the Company as the sole
managing member of JEH LLC.
Jones Energy, Inc.
Consolidated Statement of Operations
(Values
in thousands, except per share data)
|
The following table summarizes our revenues and expenses for the
periods indicated:
|
|
|
|
|
|
|
Three Months Ended March 31,
|
|
|
|
|
|
2014
|
|
|
|
2013
|
|
|
|
|
|
|
|
|
|
Operating revenues
|
|
|
|
|
|
|
Oil and gas sales
|
|
|
$
|
97,867
|
|
|
$
|
55,259
|
|
|
Other revenues
|
|
|
|
377
|
|
|
|
221
|
|
|
Total operating revenues
|
|
|
|
98,244
|
|
|
|
55,480
|
|
|
Operating costs and expenses
|
|
|
|
|
|
|
Lease operating
|
|
|
|
10,014
|
|
|
|
5,345
|
|
|
Production taxes
|
|
|
|
4,762
|
|
|
|
2,452
|
|
|
Exploration
|
|
|
|
2,821
|
|
|
|
126
|
|
|
Depletion, depreciation and amortization
|
|
|
|
39,345
|
|
|
|
25,101
|
|
|
Accretion of discount
|
|
|
|
170
|
|
|
|
97
|
|
|
General and administrative (including non-cash compensation expense)
|
|
|
|
5,260
|
|
|
|
4,312
|
|
|
Total operating expenses
|
|
|
|
62,372
|
|
|
|
37,433
|
|
|
Operating income
|
|
|
|
35,872
|
|
|
|
18,047
|
|
|
Other income (expense)
|
|
|
|
|
|
|
Interest expense
|
|
|
|
(8,043
|
)
|
|
|
(8,187
|
)
|
|
Net loss on commodity derivatives
|
|
|
|
(17,250
|
)
|
|
|
(11,383
|
)
|
|
Gain on sales of assets
|
|
|
|
65
|
|
|
|
70
|
|
|
Other income (expense), net
|
|
|
|
(25,228
|
)
|
|
|
(19,500
|
)
|
|
Income (loss) before income tax
|
|
|
|
10,644
|
|
|
|
(1,453
|
)
|
|
|
|
|
|
|
|
|
Income tax provision
|
|
|
|
1,257
|
|
|
|
(1
|
)
|
|
Net income (loss)
|
|
|
|
9,387
|
|
|
|
(1,452
|
)
|
|
Net income attributable to non-controlling interests
|
|
|
|
7,715
|
|
|
|
-
|
|
|
Net income (loss) attributable to controlling interests
|
|
|
$
|
1,672
|
|
|
$
|
(1,452
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Earnings per share:
|
|
|
|
|
|
|
Basic
|
|
|
$
|
0.13
|
|
|
|
|
Diluted
|
|
|
$
|
0.13
|
|
|
|
|
Weighted average shares outstanding:
|
|
|
|
|
|
|
Basic
|
|
|
|
12,500
|
|
|
|
|
Diluted
|
|
|
|
12,512
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Jones Energy, Inc.
Consolidated Balance Sheet
(Values
in thousands)
|
|
|
|
March 31,
|
|
December 31,
|
|
|
|
|
|
2014
|
|
|
|
2013
|
|
|
|
|
|
|
|
|
|
Assets
|
|
|
|
|
|
|
Current assets
|
|
|
|
|
|
|
Cash
|
|
|
$
|
27,297
|
|
|
$
|
23,820
|
|
|
Restricted Cash
|
|
|
|
67
|
|
|
|
45
|
|
|
Accounts receivable, net
|
|
|
|
|
|
|
Oil and gas sales
|
|
|
|
80,500
|
|
|
|
51,233
|
|
|
Joint interest owners
|
|
|
|
58,895
|
|
|
|
42,481
|
|
|
Other
|
|
|
|
4,247
|
|
|
|
16,782
|
|
|
Commodity derivative assets
|
|
|
|
4,168
|
|
|
|
8,837
|
|
|
Other current assets
|
|
|
|
2,501
|
|
|
|
2,392
|
|
|
Deferred tax assets
|
|
|
|
12
|
|
|
|
12
|
|
|
Total current assets
|
|
|
|
177,687
|
|
|
|
145,602
|
|
|
Oil and gas properties, net, at cost
|
|
|
|
|
|
|
under the successful efforts method
|
|
|
|
1,363,393
|
|
|
|
1,297,228
|
|
|
Other property, plant and equipment, net
|
|
|
|
3,472
|
|
|
|
3,444
|
|
|
Commodity derivative assets
|
|
|
|
20,806
|
|
|
|
25,398
|
|
|
Other assets
|
|
|
|
14,264
|
|
|
|
15,006
|
|
|
Deferred tax assets
|
|
|
|
618
|
|
|
|
1,301
|
|
|
Total assets
|
|
|
$
|
1,580,240
|
|
|
$
|
1,487,979
|
|
|
Liabilities and Stockholders' Equity
|
|
|
|
|
|
|
Current liabilities
|
|
|
|
|
|
|
Trade accounts payable
|
|
|
$
|
126,785
|
|
|
$
|
89,430
|
|
|
Oil and gas sales payable
|
|
|
|
82,979
|
|
|
|
66,179
|
|
|
Accrued liabilities
|
|
|
|
17,485
|
|
|
|
10,805
|
|
|
Commodity derivative liabilities
|
|
|
|
11,830
|
|
|
|
10,664
|
|
|
Asset retirement obligations
|
|
|
|
2,794
|
|
|
|
2,590
|
|
|
Total current liabilities
|
|
|
|
241,873
|
|
|
|
179,668
|
|
|
Long-term debt
|
|
|
|
678,000
|
|
|
|
658,000
|
|
|
Deferred revenue
|
|
|
|
14,287
|
|
|
|
14,531
|
|
|
Commodity derivative liabilities
|
|
|
|
104
|
|
|
|
190
|
|
|
Asset retirement obligations
|
|
|
|
8,633
|
|
|
|
8,373
|
|
|
Deferred tax liabilities
|
|
|
|
3,375
|
|
|
|
3,093
|
|
|
Total liabilities
|
|
|
|
946,272
|
|
|
|
863,855
|
|
|
Commitments and contingencies
|
|
|
|
|
|
|
Stockholders' equity
|
|
|
|
|
|
|
Class A common stock, $0.001 par value; 12,526,580 shares issued and
outstanding
|
|
|
|
13
|
|
|
|
13
|
|
|
Class B common stock, $0.001 par value; 36,836,333 shares issued and
outstanding
|
|
|
|
37
|
|
|
|
37
|
|
|
Additional paid-in-capital
|
|
|
|
173,626
|
|
|
|
173,169
|
|
|
Retained earnings (deficit)
|
|
|
|
(514
|
)
|
|
|
(2,186
|
)
|
|
Stockholders' equity
|
|
|
|
173,162
|
|
|
|
171,033
|
|
|
Non-controlling interest
|
|
|
|
460,806
|
|
|
|
453,091
|
|
|
Total stockholders' equity
|
|
|
|
633,968
|
|
|
|
624,124
|
|
|
Total liabilities and stockholders' equity
|
|
|
$
|
1,580,240
|
|
|
$
|
1,487,979
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Jones Energy, Inc.
Consolidated Statement of Cash Flow Data
(Values
in thousands)
|
|
|
|
Three Months Ended March 31,
|
|
|
|
|
|
2014
|
|
|
|
2013
|
|
|
|
|
|
|
|
|
|
Cash flows from operating activities
|
|
|
|
|
|
|
Net income (loss)
|
|
|
$
|
9,387
|
|
|
$
|
(1,452
|
)
|
|
Adjustments to reconcile net income to net cash
|
|
|
|
|
|
|
provided by operating activities
|
|
|
|
|
|
|
Exploration expense
|
|
|
|
2,767
|
|
|
|
-
|
|
|
Depletion, depreciation, and amortization
|
|
|
|
39,345
|
|
|
|
25,101
|
|
|
Accretion of discount
|
|
|
|
170
|
|
|
|
97
|
|
|
Amortization of debt issuance costs
|
|
|
|
700
|
|
|
|
664
|
|
|
Stock compensation expense
|
|
|
|
457
|
|
|
|
120
|
|
|
Other non-cash compensation expense
|
|
|
|
127
|
|
|
|
-
|
|
|
Amortization of deferred revenue
|
|
|
|
(244
|
)
|
|
|
-
|
|
|
Net loss on commodity derivatives
|
|
|
|
17,250
|
|
|
|
11,383
|
|
|
Gain on sales of assets
|
|
|
|
(65
|
)
|
|
|
(70
|
)
|
|
Deferred income taxes
|
|
|
|
966
|
|
|
|
(23
|
)
|
|
Other - net
|
|
|
|
67
|
|
|
|
165
|
|
|
Changes in assets and liabilities
|
|
|
|
|
|
|
Accounts receivable
|
|
|
|
(46,893
|
)
|
|
|
(7,846
|
)
|
|
Other assets
|
|
|
|
428
|
|
|
|
(2,768
|
)
|
|
Accounts payable and accrued liabilities
|
|
|
|
35,746
|
|
|
|
5,625
|
|
|
Net cash provided by operations
|
|
|
|
60,208
|
|
|
|
30,996
|
|
|
Cash flows from investing activities
|
|
|
|
|
|
|
Additions to oil and gas properties
|
|
|
|
(85,028
|
)
|
|
|
(36,883
|
)
|
|
Net adjustments to purchase price of properties acquired
|
|
|
|
13,681
|
|
|
|
-
|
|
|
Proceeds from sales of assets
|
|
|
|
66
|
|
|
|
2
|
|
|
Acquisition of other property, plant and equipment
|
|
|
|
(270
|
)
|
|
|
(51
|
)
|
|
Current period settlements of matured derivative contracts
|
|
|
|
(4,663
|
)
|
|
|
4,039
|
|
|
Change in restricted cash
|
|
|
|
(22
|
)
|
|
|
-
|
|
|
Net cash used in investing
|
|
|
|
(76,236
|
)
|
|
|
(32,893
|
)
|
|
Cash flows from financing activities
|
|
|
|
|
|
|
Proceeds from issuance of long-term debt
|
|
|
|
20,000
|
|
|
|
-
|
|
|
Repayment under long-term debt
|
|
|
|
-
|
|
|
|
(5,000
|
)
|
|
Payment of debt issuance costs
|
|
|
|
(495
|
)
|
|
|
(25
|
)
|
|
Net cash provided by (used in) financing
|
|
|
|
19,505
|
|
|
|
(5,025
|
)
|
|
Net increase (decrease) in cash
|
|
|
|
3,477
|
|
|
|
(6,922
|
)
|
|
Cash
|
|
|
|
|
|
|
Beginning of period
|
|
|
|
23,820
|
|
|
|
23,726
|
|
|
End of period
|
|
|
$
|
27,297
|
|
|
$
|
16,804
|
|
|
Supplemental disclosure of cash flow information
|
|
|
|
|
|
|
Cash paid for interest
|
|
|
$
|
6,814
|
|
|
$
|
6,325
|
|
|
Change in accrued additions to oil and gas properties
|
|
|
|
22,714
|
|
|
|
6,625
|
|
|
Current additions to ARO
|
|
|
|
330
|
|
|
|
69
|
|
|
Deferred offering costs
|
|
|
|
408
|
|
|
|
1,534
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Jones Energy, Inc.
Selected Financial and Operating
Statistics
The following table sets forth summary data regarding production
volumes, average prices and average production costs associated with our
sale of oil and natural gas for the periods indicated:
|
|
|
|
Three Months Ended March 31,
|
|
|
|
2014
|
|
2013
|
|
Net production volumes:
|
|
|
|
|
|
|
Oil (MBbls)
|
|
|
|
575
|
|
|
312
|
|
Natural gas (MMcf)
|
|
|
|
5,009
|
|
|
4,266
|
|
NGLs (MBbls)
|
|
|
|
523
|
|
|
406
|
|
Total (MBoe)
|
|
|
|
1,933
|
|
|
1,429
|
|
Average net (Boe/d)
|
|
|
|
21,478
|
|
|
15,878
|
|
Average sales price, unhedged:
|
|
|
|
|
|
|
Oil (per Bbl), unhedged
|
|
|
$
|
93.78
|
|
$
|
88.38
|
|
Natural gas (per Mcf), unhedged
|
|
|
|
4.27
|
|
|
3.00
|
|
NGLs (per Bbl), unhedged
|
|
|
|
43.13
|
|
|
36.69
|
|
Combined (per Boe) realized, unhedged
|
|
|
|
50.63
|
|
|
38.67
|
|
Average sales price, hedged:
|
|
|
|
|
|
|
Oil (per Bbl), hedged
|
|
|
$
|
87.57
|
|
$
|
86.26
|
|
Natural gas (per Mcf), hedged
|
|
|
|
4.06
|
|
|
4.01
|
|
NGLs (per Bbl), hedged
|
|
|
|
38.75
|
|
|
36.91
|
|
Combined (per Boe) realized, hedged
|
|
|
|
47.05
|
|
|
41.29
|
|
Average costs (per Boe):
|
|
|
|
|
|
|
Lease operating
|
|
|
$
|
5.18
|
|
$
|
3.74
|
|
Production taxes
|
|
|
|
2.46
|
|
|
1.72
|
|
Depletion, depreciation and amortization
|
|
|
|
20.35
|
|
|
17.57
|
|
General and administrative
|
|
|
|
2.72
|
|
|
3.02
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Jones Energy, Inc.
Non-GAAP Financial Measures and
Reconciliations
(Values in thousands)
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, net gains
(losses) on commodity derivatives (excluding current period settlements
of matured derivative contracts), and other items. 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 March 31,
|
|
|
|
|
|
2014
|
|
|
|
2013
|
|
|
|
|
|
|
|
|
|
Reconciliation of EBITDAX
|
|
|
|
|
|
|
to net income
|
|
|
|
|
|
|
Net income (loss)
|
|
|
$
|
9,387
|
|
|
$
|
(1,452
|
)
|
|
Interest expense (excluding amortization of deferred financing costs)
|
|
|
|
7,343
|
|
|
|
7,523
|
|
|
Exploration expense
|
|
|
|
2,821
|
|
|
|
126
|
|
|
Income taxes
|
|
|
|
1,257
|
|
|
|
(1
|
)
|
|
Amortization of deferred financing costs
|
|
|
|
700
|
|
|
|
664
|
|
|
Depreciation and depletion
|
|
|
|
39,345
|
|
|
|
25,101
|
|
|
Accretion expense
|
|
|
|
170
|
|
|
|
97
|
|
|
Other non-cash charges
|
|
|
|
67
|
|
|
|
165
|
|
|
Stock compensation expense
|
|
|
|
457
|
|
|
|
120
|
|
|
Other non-cash compensation expense
|
|
|
|
127
|
|
|
|
-
|
|
|
Net loss on commodity derivatives
|
|
|
|
17,250
|
|
|
|
11,383
|
|
|
Current period settlements of matured derivative contracts
|
|
|
|
(6,909
|
)
|
|
|
3,748
|
|
|
Amortization of deferred revenue
|
|
|
|
(244
|
)
|
|
|
-
|
|
|
Gain on sales of assets
|
|
|
|
(65
|
)
|
|
|
(70
|
)
|
|
EBITDAX
|
|
|
$
|
71,706
|
|
|
$
|
47,404
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Jones Energy, Inc.
Non-GAAP Financial Measures and
Reconciliations
(Values in thousands, except per share data)
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, and non-cash compensation expense. 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 March 31,
|
|
|
|
|
|
2014
|
|
|
|
2013
|
|
|
|
|
|
|
|
|
|
Net income (loss)
|
|
|
$
|
9,387
|
|
|
$
|
(1,452
|
)
|
|
Net loss on commodity derivatives
|
|
|
|
17,250
|
|
|
|
11,383
|
|
|
Current period settlements of matured
|
|
|
|
|
|
|
derivative contracts
|
|
|
|
(6,909
|
)
|
|
|
3,748
|
|
|
Non-cash stock compensation expense
|
|
|
|
457
|
|
|
|
120
|
|
|
Other non-cash compensation expense
|
|
|
|
127
|
|
|
|
-
|
|
|
Tax impact (1)
|
|
|
|
(1,029
|
)
|
|
|
-
|
|
|
Adjusted net income
|
|
|
$
|
19,283
|
|
|
$
|
13,799
|
|
|
|
|
|
|
|
|
|
Adjusted net income attributable to non-controlling interests
|
|
|
|
15,828
|
|
|
|
|
Adjusted net income attributable to controlling interests
|
|
|
$
|
3,455
|
|
|
|
|
|
|
|
|
|
|
|
Weighted average shares outstanding:
|
|
|
|
|
|
|
Basic
|
|
|
|
12,500
|
|
|
|
|
Diluted
|
|
|
|
12,512
|
|
|
|
|
Adjusted earnings per share (basic and diluted)
|
|
|
$
|
0.28
|
|
|
|
|
|
|
|
|
|
|
|
Effective tax rate on net income attributable to controlling
interests
|
|
|
|
36.5
|
%
|
|
|
(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 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 March 31,
|
|
|
|
|
|
2014
|
|
|
|
|
|
|
|
Earnings per share (basic and diluted)
|
|
|
$
|
0.13
|
|
|
Net loss on commodity derivatives
|
|
|
|
0.35
|
|
|
Current period settlements of matured
|
|
|
|
|
derivative contracts
|
|
|
|
(0.14
|
)
|
|
Non-cash stock compensation expense
|
|
|
|
0.01
|
|
|
Other non-cash compensation expense
|
|
|
|
0.01
|
|
|
Tax impact
|
|
|
|
(0.08
|
)
|
|
Adjusted earnings per share (basic and diluted)
|
|
|
$
|
0.28
|
|
Source: Jones Energy, Inc.