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Jones Energy Inc Lowers Cleveland Well Cost Ahead of Schedule

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Jones Energy, Inc. has announced financial and operating results for the quarter ended June 30, 2015.

2015 Second Quarter Highlights

• Liquidity of more than $485 million as of June 30, 2015
• Mark-to-market hedge value of approximately $220 million as of late July with estimated oil and gas volumes over 85% hedged through 2016; natural gas liquids (NGLs) estimated volumes hedged roughly 80% in the second half of 2015 and nearly 55% in 2016
• Average daily net production for the quarter was 25.3 MBoe/d, above the top end of guidance
• Raising full-year 2015 production guidance to 23.0 - 24.5 MBoe/d
• Initiated 2015 leasing program
• Deployed two additional rigs in the Cleveland after achieving greater than 30% cost savings since December 2014; currently running five Cleveland rigs with $2.6 million AFE
• Spud 33 of the thirty-three stage open-hole wells as of August 4, 2015, 25 of which have been completed and placed on production
• Results from 33 stage open-hole wells tracking uplift in oil production

Operational Results

Cleveland

• The Company’s second quarter development activity was focused exclusively on the Cleveland. During the second quarter, the Company spud 15 wells and completed 14 wells, with a total of 11 wells seeing first production during the quarter. As of June 30, 2015, six wells were in various stages of completion, and the Company had four rigs running. 
• The Company added its fifth rig in early July. As of August 4, 2015, the Company had completed nine additional wells since the end of the second quarter.
• Daily net production in the Cleveland was 18.0 MBoe/d in the second quarter of 2015, down 5% from the first quarter of 2015 and up 7% from the second quarter of 2014. To date, the Company has spud 33 of the thirty-three stage open-hole wells, 25 of which have been completed and placed on production. Production results for the 33 stage wells continue to reflect the uplifted oil production expectations which were observed during the Company’s completion optimization work in 2014.
• The Company’s target well cost of $2.6 million was achieved during the second quarter, approximately two months ahead of expectations. Drilling efficiencies and cost reductions have persisted as rigs have been added over recent months.

Capital Expenditures

• During the second quarter of 2015, the Company spent $45.5 million, of which $40.5 million was related to drilling and completing wells, representing 89% of total capital expenditures in the quarter. Quarterly spending continues to reflect budgeted expectations with minimal increases arising from non-operating interest owners electing not to participate in the drilling of wells. The Company had anticipated the potential for working interest capture in its 2015 budget as the initial budget projected an average working interest for wells to be drilled of approximately 80%, which was higher than the Company’s average working interest of 70% owned as of the Company’s 2014 year-end reserve report. Through the first six months of 2015, the actual average working interest of the wells spud was 92%. Based upon the current rate of additional working interest capture, the Company is updating its estimated average working interest per well for 2015 to 90% to 95% versus the previously budgeted 80%.
• Through this year’s forecasted average working interest capture of 20% to 25% per drilled well, the Company expects to add the equivalent of between 15 and 18 net locations to its producing well count with minimal cost. This working interest increase achieves the goal of higher rig utilization and net location capture through continued drilling activity.
• Specific to the second half of 2015, the Company is increasing the estimated average working interest per well from the budgeted 80% to between 90% and 95%. This is expected to result in average incremental capital per rig line of approximately $3 million during the second half of 2015, or an increase in total drilling and completion expenditures of approximately $15 million. The Company also has allocated additional capital for leasing during the third and fourth quarter, which together with working interest capture, results in total expected capital expenditures for the full year of approximately $240 million.

Liquidity and Hedging

As of June 30, 2015, the Company had undrawn credit facility availability of $462.5 million and approximately $23 million in cash.