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, 2016 as well as a resumption of its Cleveland drilling program, and provided updated 2016 production and capital expenditure guidance.
Highlights
- Average daily net production for the first quarter 2016 of 20.4 MBoe/d, with oil production of 5.3 MBbl/d, both above the top end of guidance
- EBITDAX for the first quarter 2016 of $51.1 million and net income of $48.5 million
- Adjusted net loss for the first quarter 2016 of $3.5 million, or ($0.03) per share
- Repurchased an additional $20.3 million in face value of senior notes for $11.2 million (55% of par), resulting in total repurchases year-to-date of $190.9 million in face value of senior notes for $84.8 million (44% of par)
- Year-to-date debt repurchases expected to result in approximately $13 million in annual interest savings and approximately $90 million in interest savings over the life of the bonds
- Resuming Cleveland drilling program with $2.03 million AFE; expect to have 3 rigs running in June 2016
- Updating 2016 production and capex guidance; expect to spend $100 million in capex for 16.8 to 18.7 MBoe/d in production, resulting in an approximately 10% increase in 2016 production guidance
- Locked in $47 million in gains associated with 2018 and 2019 hedges and added hedges as a result of the drilling program resumption; mark-to-market hedge value of $173 million incorporating strip pricing as of April 29, 2016
Jonny Jones, the Company’s Founder, Chairman, and CEO, commented, “Our decision to put rigs back to work in the Cleveland is supported by compelling after-tax returns, which have resulted from our increased type curve, the additional cost savings our team has achieved, and higher commodity prices. Managing our balance sheet is paramount, and we expect our credit metrics to improve with our resumption of drilling and the additional debt buybacks we were able to complete. We expect to generate positive free cash flow in 2016 under our updated capital and operating plan. In addition, our resumed drilling program is expected to reverse production declines in 2016 and puts the Company in a position to deliver production growth in 2017.” Mr. Jones went on to say, “We deployed our first Cleveland rig at the beginning of April and expect to have a total of three Cleveland rigs in the field in June.”
Financial Results
Total operating revenues for the three months ended March 31, 2016 were $25.9 million as compared to $58.1 million for the three months ended March 31, 2015. Total revenues including current period settlements of matured derivative contracts were $68.5 million for the three months ended March 31, 2016 as compared to $94.5 million for the three months ended March 31, 2015. The decrease was due to lower commodity prices and production, partially offset by higher current period settlements of matured derivative contracts.
Total operating expenses for the three months ended March 31, 2016 were $59.9 million as compared to $79.9 million for the three months ended March 31, 2015. Total operating expenses decreased primarily due to lower depreciation, depletion, and amortization expense, lease operating expense, and production and ad valorem tax expense. In addition, the Company had $3.0 million in standby rig costs included in other operating expenses in the first quarter of 2015 that did not recur in the first quarter of 2016.
For the three months ended March 31, 2016, the Company reported an adjusted net loss of $3.5 million as compared to adjusted net income of $3.0 million for the three months ended March 31, 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 paused its drilling program in the Fall of 2015 and did not spud any wells in the first quarter of 2016. The Company resumed drilling with one Cleveland rig in April 2016 and plans to have three Cleveland rigs running in June 2016.
Daily net production in the Cleveland was 14.9 MBoe/d in the first quarter of 2016 as compared to 17.7 MBoe/d in the fourth quarter of 2015 and 19.0 MBoe/d in the first quarter of 2015.
Capital Expenditures
During the first quarter of 2016, the Company spent $6.0 million on capital expenditures.
Revised 2016 Capital Budget and Operating Plan
The Company has updated its 2016 capital budget and now expects to spend $100 million in 2016, resulting in projected average production of between 16.8 MBoe/d and 18.7 MBoe/d. Second quarter 2016 production is projected to be between 17.3 MBoe/d and 18.3 MBoe/d. Our updated capital plan incorporates our current Cleveland AFE of $2.03 million and our plan to spud at least 40 gross wells in 2016 with an average working interest of approximately 80%.
We expect our updated plan to result in the decline rate of our average production for the fourth quarter of 2016 compared to the fourth quarter of 2015 being cut in half when compared to our previous plan, which did not incorporate a drilling program.
A table has been provided below with full-year and second quarter 2016 guidance by category:
|
2016 Updated Guidance |
|||||||||
| Previous 2016E | Updated 2016E | 2Q16E | |||||||
| Total Production (MMBoe) | 5.6 – 6.2 | 6.2 – 6.8 | 1.6 – 1.7 | ||||||
| Average Daily Production (MBoe/d) | 15.5 – 17.0 | 16.8 – 18.7 | 17.3 – 18.3 | ||||||
| Crude Oil (MBbl/d) | 3.6 – 3.9 | 4.3 – 4.8 | 4.0 – 4.2 | ||||||
| Natural Gas (MMcf/d) | 41.7 – 45.9 | 43.9 – 48.8 | 47.0 – 49.5 | ||||||
| NGLs (MBbl/d) | 4.9 – 5.4 | 5.2 – 5.8 | 5.5 – 5.8 | ||||||
| Lease Operating Expense ($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 – $20.0 | |||||||
| Total Capital Expenditures ($mm) | $25.0 | $100.0 |
*Production and ad valorem taxes are included as one line item on the Company’s Consolidated Statements of Operations.
Liquidity and Hedging
In April 2016, through several open market purchases, the Company repurchased an aggregate principal amount of $20.3 million of its 6.75% senior unsecured notes due 2022 for $11.2 million, or 55% of par, excluding accrued interest and including any associated fees. Year-to-date, the Company has repurchased $90.9 million principal amount of its 6.75% senior unsecured notes due 2022 for $38.3 million, and $100.0 million principal amount of its 9.25% senior unsecured notes due 2023 for $46.5 million, in each case excluding accrued interest and including any associated fees. The Company used cash on hand and borrowings from its revolver to fund the note repurchases completed this year. As a result of these repurchases, as of April 29, 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, $325.0 million undrawn on its revolving credit facility, and approximately $34.3 million in cash.
The Company is still in the process of completing the spring redetermination of its senior secured credit facility and expects the resulting borrowing base to be approximately $400 million.
In March 2016, the Company entered into offsetting hedge transactions in respect of all of its 2018 and 2019 hedges, which resulted in a locked-in gain of $47 million. In addition, with the resumption of a Cleveland drilling program, the Company has begun adding hedges in 2016 and 2017. The estimated mark-to-market value of the Company’s commodity price hedges was $173 million incorporating strip pricing as of April 29, 2016. The following table summarizes the Company’s commodity derivative contracts outstanding:
| Current Net Hedge Positions1 | |||||||||
| Fiscal Year Ending December 31, | |||||||||
|
20162 |
2017 | ||||||||
|
Oil, Natural Gas and NGL Swaps |
|||||||||
| Oil (MBbl) | 1,132 | 1,594 | |||||||
| Natural Gas (MMcf) | 12,970 | 15,570 | |||||||
| Ethane (MBbl) | 38 | - | |||||||
| Propane (MBbl) | 571 | 735 | |||||||
| Iso Butane (MBbl) | 76 | 103 | |||||||
| Butane (MBbl) | 204 | 264 | |||||||
| Natural Gasoline (MBbl) | 198 | 252 | |||||||
| Total NGLs (MBbl) | 1,087 | 1,354 | |||||||
|
Weighted Average Prices |
|||||||||
| Oil ($ / Bbl) | $ | 93.20 | $ | 66.98 | |||||
| Natural Gas ($ / Mcf) | $ | 4.25 | $ | 3.98 | |||||
| Ethane ($ / Gal) | $ | 0.21 | - | ||||||
| Propane ($ / Gal) | $ | 0.53 | $ | 0.44 | |||||
| Iso Butane ($ / Gal) | $ | 0.70 | $ | 0.63 | |||||
| Butane ($ / Gal) | $ | 0.68 | $ | 0.60 | |||||
| Natural Gasoline ($ / Gal) | $ | 1.37 | $ | 1.00 | |||||
12018 and 2019 hedges have been offset and are therefore not shown as part of the Company’s net hedge position.
22016 hedges shown for the remaining three quarters of the year.
Conference Call Details
Jones Energy will host a conference call for investors and analysts to discuss its results on Thursday, May 5, 2016 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 83871791. 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 redeployment of rigs, the revised 2016 capital budget, the cost to drill and complete wells and the resultant impact on the revised 2016 capital budget, the ability to fund the Company’s revised 2016 capital expenditure budget largely with free cash flow, the Company’s hedging program with respect to the redeployment of rigs, the Company’s expectations regarding the results of the borrowing base redetermination under its senior secured credit facility, and 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 2016. 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 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 March 31, | ||||||||||
| (in thousands of dollars except per share data) | 2016 | 2015 | ||||||||
| Operating revenues | ||||||||||
| Oil and gas sales | $ | 25,080 | $ | 57,234 | ||||||
| Other revenues | 778 | 862 | ||||||||
| Total operating revenues | 25,858 | 58,096 | ||||||||
| Operating costs and expenses | ||||||||||
| Lease operating | 8,617 | 12,262 | ||||||||
| Production and ad valorem taxes | 1,601 | 3,708 | ||||||||
| Exploration | 162 | 164 | ||||||||
| Depletion, depreciation and amortization | 41,762 | 52,083 | ||||||||
| Accretion of ARO liability | 293 | 194 | ||||||||
| General and administrative | 7,504 | 8,511 | ||||||||
| Other operating | — | 3,012 | ||||||||
| Total operating expenses | 59,939 | 79,934 | ||||||||
| Operating income (loss) | (34,081 | ) | (21,838 | ) | ||||||
| Other income (expense) | ||||||||||
| Interest expense | (14,798 | ) | (14,129 | ) | ||||||
| Gain on debt extinguishment | 90,652 | — | ||||||||
| Net gain (loss) on commodity derivatives | 17,219 | 46,306 | ||||||||
| Other income (expense) | 225 | (2,299 | ) | |||||||
| Other income (expense), net | 93,298 | 29,878 | ||||||||
| Income (loss) before income tax | 59,217 | 8,040 | ||||||||
| Income tax provision (benefit) | 10,703 | 2,344 | ||||||||
| Net income (loss) | 48,514 | 5,696 | ||||||||
| Net income (loss) attributable to non-controlling interests | 29,603 | 3,508 | ||||||||
| Net income (loss) attributable to controlling interests | $ | 18,911 | $ | 2,188 | ||||||
| Earnings per share: | ||||||||||
| Basic | $ | 0.62 | $ | 0.12 | ||||||
| Diluted | $ | 0.62 | $ | 0.12 | ||||||
| Weighted average shares outstanding: | ||||||||||
| Basic | 30,551 | 18,304 | ||||||||
| Diluted | 30,551 | 18,304 | ||||||||
| Jones Energy, Inc. | ||||||||||
|
Consolidated Balance Sheet (Unaudited) |
||||||||||
| March 31, | December 31, | |||||||||
| (in thousands of dollars) | 2016 | 2015 | ||||||||
| Assets | ||||||||||
| Current assets | ||||||||||
| Cash | $ | 53,805 | $ | 21,893 | ||||||
| Restricted cash | 361 | 330 | ||||||||
| Accounts receivable, net | ||||||||||
| Oil and gas sales | 16,093 | 19,292 | ||||||||
| Joint interest owners | 7,399 | 11,314 | ||||||||
| Other | 15,105 | 15,170 | ||||||||
| Commodity derivative assets | 107,762 | 124,207 | ||||||||
| Other current assets | 3,991 | 2,298 | ||||||||
| Total current assets | 204,516 | 194,504 | ||||||||
| Oil and gas properties, net, at cost under the successful efforts method | 1,600,290 | 1,635,766 | ||||||||
| Other property, plant and equipment, net | 3,509 | 3,873 | ||||||||
| Commodity derivative assets | 84,284 | 93,302 | ||||||||
| Other assets | 7,309 | 7,709 | ||||||||
| Total assets | $ | 1,899,908 | $ | 1,935,154 | ||||||
| Liabilities and Stockholders’ Equity | ||||||||||
| Current liabilities | ||||||||||
| Trade accounts payable | $ | 8,835 | $ | 7,467 | ||||||
| Oil and gas sales payable | 28,548 | 32,408 | ||||||||
| Accrued liabilities | 23,426 | 27,341 | ||||||||
| Commodity derivative liabilities | — | 11 | ||||||||
| Asset retirement obligations | 679 | 679 | ||||||||
| Total current liabilities | 61,488 | 67,906 | ||||||||
| Long-term debt | 749,312 | 837,654 | ||||||||
| Deferred revenue | 10,772 | 11,417 | ||||||||
| Asset retirement obligations | 20,629 | 20,301 | ||||||||
| Liability under tax receivable agreement | 37,623 | 38,052 | ||||||||
| Deferred tax liabilities | 33,533 | 22,972 | ||||||||
| Total liabilities | 913,357 | 998,302 | ||||||||
| Commitments and contingencies | ||||||||||
| Stockholders’ equity | ||||||||||
| Class A common stock, $0.001 par value; 30,573,509 shares issued and 30,550,907 shares outstanding at March 31, 2016 and December 31, 2015 | 31 | 31 | ||||||||
| Class B common stock, $0.001 par value; 31,273,130 shares issued and outstanding at March 31, 2016 and December 31, 2015 | 31 | 31 | ||||||||
| Treasury stock, at cost; 22,602 shares at March 31, 2016 and December 31, 2015 | (358 | ) | (358 | ) | ||||||
| Additional paid-in capital | 364,908 | 363,723 | ||||||||
| Retained earnings | 55,480 | 36,569 | ||||||||
| Stockholders’ equity | 420,092 | 399,996 | ||||||||
| Non-controlling interest | 566,459 | 536,856 | ||||||||
| Total stockholders’ equity | 986,551 | 936,852 | ||||||||
| Total liabilities and stockholders’ equity | $ | 1,899,908 | $ | 1,935,154 | ||||||
| Jones Energy, Inc. | ||||||||||
|
Consolidated Statement of Cash Flow Data (Unaudited) |
||||||||||
| Three Months Ended March 31, | ||||||||||
| (in thousands of dollars) | 2016 | 2015 | ||||||||
| Cash flows from operating activities | ||||||||||
| Net income (loss) | $ | 48,514 | $ | 5,696 | ||||||
| Adjustments to reconcile net income (loss) to net cash provided by operating activities | ||||||||||
| Depletion, depreciation, and amortization | 41,762 | 52,083 | ||||||||
| Exploration (dry hole and lease abandonment) | 27 | — | ||||||||
| Accretion of ARO liability | 293 | 194 | ||||||||
| Amortization of debt issuance costs | 1,129 | 937 | ||||||||
| Stock compensation expense | 1,185 | 1,424 | ||||||||
| Other non-cash compensation expense | 268 | 109 | ||||||||
| Amortization of deferred revenue | (645 | ) | (525 | ) | ||||||
| (Gain) loss on commodity derivatives | (17,219 | ) | (46,306 | ) | ||||||
| (Gain) loss on sales of assets | 4 | 26 | ||||||||
| (Gain) on debt extinguishment | (90,652 | ) | — | |||||||
| Deferred income tax provision | 10,564 | 2,314 | ||||||||
| Other - net | (963 | ) | 407 | |||||||
| Changes in operating assets and liabilities | ||||||||||
| Accounts receivable | 10,655 | 36,268 | ||||||||
| Other assets | (1,700 | ) | 323 | |||||||
| Accrued interest expense | (384 | ) | 10,904 | |||||||
| Accounts payable and accrued liabilities | (7,634 | ) | (18,340 | ) | ||||||
| Net cash (used in) / provided by operations | (4,796 | ) | 45,514 | |||||||
| Cash flows from investing activities | ||||||||||
| Additions to oil and gas properties | (7,176 | ) | (151,104 | ) | ||||||
| Proceeds from sales of assets | 3 | 3 | ||||||||
| Acquisition of other property, plant and equipment | 40 | (62 | ) | |||||||
| Current period settlements of matured derivative contracts | 42,298 | 32,611 | ||||||||
| Change in restricted cash | (30 | ) | (37 | ) | ||||||
| Net cash (used in) / provided by investing | 35,135 | (118,589 | ) | |||||||
| Cash flows from financing activities | ||||||||||
| Proceeds from issuance of long-term debt | 75,000 | 65,000 | ||||||||
| Repayment under long-term debt | — | (335,000 | ) | |||||||
| Proceeds from senior notes | — | 236,475 | ||||||||
| Purchase of senior notes | (73,427 | ) | — | |||||||
| Payment of debt issuance costs | — | (1,473 | ) | |||||||
| Proceeds from sale of common stock | — | 122,778 | ||||||||
| Net cash provided by financing | 1,573 | 87,780 | ||||||||
| Net increase (decrease) in cash | 31,912 | 14,705 | ||||||||
| Cash | ||||||||||
| Beginning of period | 21,893 | 13,566 | ||||||||
| End of period | $ | 53,805 | $ | 28,271 | ||||||
| Supplemental disclosure of cash flow information | ||||||||||
| Cash paid for interest | $ | 14,053 | $ | 1,939 | ||||||
| Change in accrued additions to oil and gas properties | (686 | ) | (68,521 | ) | ||||||
| Current additions to ARO | — | 736 | ||||||||
|
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 March 31, | |||||||||||||
| 2016 | 2015 | Change | |||||||||||
| Revenues (in thousands of dollars): | |||||||||||||
| Oil and gas sales | $ | 25,080 | $ | 57,234 | $ | (32,154 | ) | ||||||
| Other revenues | 778 | 862 | (84 | ) | |||||||||
| Current period settlements of matured derivative contracts | 42,671 | 36,375 | 6,296 | ||||||||||
| Total revenues including derivative impact | $ | 68,529 | $ | 94,471 | $ | (25,942 | ) | ||||||
| Net production volumes: | |||||||||||||
| Oil (MBbls) | 479 | 756 | (277 | ) | |||||||||
| Natural gas (MMcf) | 4,920 | 5,964 | (1,044 | ) | |||||||||
| NGLs (MBbls) | 555 | 627 | (72 | ) | |||||||||
| Total (MBoe) | 1,854 | 2,377 | (523 | ) | |||||||||
| Average net (Boe/d) | 20,374 | 26,411 | (6,037 | ) | |||||||||
| Average sales price, unhedged: | |||||||||||||
| Oil (per Bbl), unhedged | $ | 27.80 | $ | 44.11 | $ | (16.31 | ) | ||||||
| Natural gas (per Mcf), unhedged | 1.33 | 2.43 | (1.10 | ) | |||||||||
| NGLs (per Bbl), unhedged | 9.41 | 14.96 | (5.55 | ) | |||||||||
| Combined (per Boe), unhedged | 13.53 | 24.08 | (10.55 | ) | |||||||||
| Average sales price, hedged: | |||||||||||||
| Oil (per Bbl), hedged | $ | 84.03 | $ | 71.98 | $ | 12.05 | |||||||
| Natural gas (per Mcf), hedged | 3.67 | 3.69 | (0.02 | ) | |||||||||
| NGLs (per Bbl), hedged | 17.04 | 27.41 | (10.37 | ) | |||||||||
| Combined (per Boe), hedged | 36.54 | 39.38 | (2.84 | ) | |||||||||
| Average costs (per Boe): | |||||||||||||
| Lease operating | $ | 4.65 | $ | 5.16 | $ | (0.51 | ) | ||||||
| Production and ad valorem taxes | 0.86 | 1.56 | (0.70 | ) | |||||||||
| Depletion, depreciation and amortization | 22.53 | 21.91 | 0.62 | ||||||||||
| General and administrative | 4.05 | 3.58 | 0.47 | ||||||||||
|
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 March 31, | ||||||||||
| (in thousands of dollars) | 2016 | 2015 | ||||||||
| Reconciliation of EBITDAX to net income | ||||||||||
| Net income | $ | 48,514 | $ | 5,696 | ||||||
| Interest expense | 14,035 | 13,361 | ||||||||
| Exploration expense | 162 | 164 | ||||||||
| Income taxes | 10,703 | 2,344 | ||||||||
| Amortization of deferred financing costs | 763 | 768 | ||||||||
| Depreciation and depletion | 41,762 | 52,083 | ||||||||
| Accretion of ARO liability | 293 | 194 | ||||||||
| Reduction of TRA liability | (429 | ) | — | |||||||
| Other non-cash charges | (534 | ) | 407 | |||||||
| Stock compensation expense | 1,185 | 1,424 | ||||||||
| Other non-cash compensation expense | 268 | 109 | ||||||||
| Net (gain) loss on commodity derivatives | (17,219 | ) | (46,306 | ) | ||||||
| Current period settlements of matured derivative contracts | 42,671 | 36,375 | ||||||||
| Amortization of deferred revenue | (645 | ) | (525 | ) | ||||||
| (Gain) loss on sales of assets | 4 | 26 | ||||||||
| (Gain) on debt extinguishment | (90,652 | ) | — | |||||||
| Stand-by rig costs | — | 3,012 | ||||||||
| Financing expenses and other loan fees | 200 | 2,273 | ||||||||
| EBITDAX | $ | 51,081 | $ | 71,405 | ||||||
|
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 March 31, | ||||||||||
| (in thousands of dollars, except per share data) | 2016 | 2015 | ||||||||
| Net income | $ | 48,514 | $ | 5,696 | ||||||
| Net (gain) loss on commodity derivatives | (17,219 | ) | (46,306 | ) | ||||||
| Current period settlements of matured derivative contracts | 42,671 | 36,375 | ||||||||
| Exploration | 162 | 164 | ||||||||
| Non-cash stock compensation expense | 1,185 | 1,424 | ||||||||
| Other non-cash compensation expense | 268 | 109 | ||||||||
| (Gain) on debt extinguishment | (90,652 | ) | — | |||||||
| Stand-by rig costs | — | 3,012 | ||||||||
| Financing expenses | — | 2,250 | ||||||||
| Reduction of TRA liability | (429 | ) | — | |||||||
| Tax impact of adjusting items (1) | 11,059 | 321 | ||||||||
| Change in valuation allowance | 989 | — | ||||||||
| Adjusted net income (loss) | $ | (3,452 | ) | $ | 3,045 | |||||
| Adjusted net income (loss) attributable to non-controlling interests | (2,618 | ) | 1,495 | |||||||
| Adjusted net income (loss) attributable to controlling interests | $ | (834 | ) | $ | 1,550 | |||||
(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 March 31, |
Three Months Ended March 31, |
|||||||||
| 2016 | 2015 | |||||||||
| Earnings per share (basic and diluted) | $ | 0.62 | $ | 0.12 | ||||||
| Net (gain) loss on commodity derivatives | (0.27 | ) | (0.83 | ) | ||||||
| Current period settlements of matured derivative contracts | 0.69 | 0.65 | ||||||||
| Exploration | — | — | ||||||||
| Non-cash stock compensation expense | 0.02 | 0.03 | ||||||||
| Other non-cash compensation expense | — | — | ||||||||
| (Gain) on debt extinguishment | (1.47 | ) | — | |||||||
| Stand-by rig costs | — | 0.05 | ||||||||
| Financing expenses | — | 0.04 | ||||||||
| Reduction of TRA liability | (0.01 | ) | — | |||||||
| Tax impact of adjusting items (1) | 0.36 | 0.02 | ||||||||
| Change in valuation allowance | 0.03 | — | ||||||||
| Adjusted earnings (loss) per share (basic and diluted) | $ | (0.03 | ) | $ | 0.08 | |||||
| Effective tax rate on net income attributable to controlling interests | 31.3 | % | 36.1 | % | ||||||
(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.
