Barclays CEO Energy-Power Conference September 3, 2014
Jones Energy Overview (NYSE: JONE) NYSE Ticker: JONE Share Price: 19.36 Anadarko Basin Market Key Formations: Cleveland & Tonkawa 955 million Capitalization: Cleveland Daily Production: 16.8 MBoe/d Enterprise 1,675 million…
Extensive Experience Focused on the Mid-Continent Drilling History by Formation 140 120 Brown Dolomite 700% growth in activity over the past Tonkawa 100 Nearly 400 15 years horizontal wells in the Cleveland alone Cleveland…
2014 Mid-Year Highlights Year over Year growth: EBITDAX up 45% Crude oil production up 59% Total production up 41% Cleveland production up 74% Successful Cleveland frack trial outcome Increased 2014 capex budget to 460…
2014 Updated Development Plan Capital spending outlook increasing Total Capex - 460mm Cleveland enhanced frack technique 5% 3% 3% EFT accounts for 45 million Tonkawa well count up from 3 to 6 11% (10 million additional)…
All Signs Point to Growth Through Expanded Oil Production Total Daily Production Daily Oil Production 25.0 8.0 23.0 Frack Trial Frack Trial 7.0 21.0 19.0 6.0 MBoepd MBoepd 17.0 5.0 15.0 13.0 4.0 11.0 3.0 9.0 7.0…
Jones Commodity Price Realizations - Steady and Predictable Steady, predictable differentials Ample midstream takeaway options in the Mid-Continent region Realizations compare favorably to infrastructure constrained regions Jones…
The Anadarko Basin Prolific History with Stacked Pay Potential Stacked pay zones within concentrated footprint provide significant development opportunities Marmaton Current Target 3.2 million acres Formations Tonkawa Sandstone…
Cleveland Play Evolution: More Frack Stages = More Oil SCHULTZ BROS. 5H JOHN B DOYLE 6H JOHN B DOYLE 703-15H IP30: 394 BOE/D IP30: 948 BOE/D IP30: 1,103 BOE/D OIL IP30: 7 BO/D OIL IP30: 138 BO/D OIL IP30: 645 BO/D JONES TRUST…
Cleveland Frack Trial Results Results consistent with expectations (increased oil with little effect on gas production) 30% uplift in oil rates vs. 20 stage comparable wells Cumulative incremental oil production through first 6 months…
Benefits of Sliding Sleeve Completions Plug and Perf Method Plug and perf Unverifiable isolation Likely paying for more stages than achieving Long flowback period PLANNED REAL WORLD (unpredictable) Requires post frack drill-out…
Sliding Sleeve Performance Track Record Key Points EFT Sliding Sleeve Performance History 35,000 sleeves 25,000 99% 100% installed since 2011 98% 98% 20,000 Sliding Sleeves Attempted 99% success rate in 2013 96% 35+ frack…
Enhanced Frack Technique Seeks More Consistent and Higher Returns Enhanced Frack Technique using cemented Expected Outcome sliding sleeves should reduce variability Tighter spread provides more consistent outcomes Increased More…
Cleveland Leasing Update Over 10,000 net acres added during first six months of 2014 for 11 million Replaced 107% of budgeted Cleveland wells for 2014 in only 6 months of leasing (78 net locations) Acreage prospective for Marmaton and…
Tonkawa Provides Opportunities for Significant Additional Oil Production Recently began drilling program Increased 2014 program to 5 6 wells Tonkawa 2.9 million acres 1st wells will employ 20 stage cemented sliding sleeve…
Marmaton Shows Promise As Others Drill Ahead Marmaton lies just below the Marmaton Cleveland formation 3.2 million acres Majority of Jones Anadarko acreage lies within the Marmaton fairway Results by other operators indicate…
Woodford Strategy Update Completing planned activity for 2014 Expect to drill and complete 8 total wells during 2H14 (5 currently left to spud) Drilling program changes currently Vanguard AMI underway Agreed to suspend activity…
Jones Energy A Growing Presence in the Mid-Continent Mid-Continent Focus History of success & reputation as a partner of choice Expertise creates opportunities to acquire at favorable prices Stacked Pay Zones Multiple horizons on…
APPENDIX
2014 Updated Full Year Guidance and Q3 Production Guidance Updated Previous Full Year Total Production (MMBoe)[1] 8.4 - 8.8 8.0 - 8.4 Full Year Average Daily Production (MBoe/d)[1] 23.0 - 24.0 22.0 - 23.0 Third Quarter Total…
20 Stage Open Hole Method Versus Cemented Liner w/Sliding Sleeve Open Hole Completion System Cemented Liner w/Sliding Sleeves 100 SPACING Open Hole Completion System Cemented Liner w/Sliding Sleeves Multiple Stages: 20 43…
How Jones Creates Unmatched Value in the Cleveland IRR 60% Emphasis on Cycle Time 60% Focus on efficiency from spud to first production These five elements Vendor Management 50% create nearly 1 million Competition from multiple…
Corporate Structure Metalmark, Management Public & Other Investors Shareholders Class B Common Stock Class A Common Stock 74.7% of voting power in 25.3% of voting power in Jones Energy, Inc. Jones Energy, Inc. 74.7% of total…
Up-C Structure Overview JONE went public using an Up-C structure Other recent energy IPOs with Up-C structure include: Athlon Energy Inc. Franks International N.V. Parsley Energy, Inc. Due to the Up-C structure, on its financial…
Forecasting JONE EPS The simplest way to forecast JONE EPS is on a 100% basis: Income before income tax - Income tax provision (36.5% of pre-tax income*) Net income Total Class A and B shares outstanding of 49,362,913 Net…
Forecasting JONE EPS Alternatively, EPS can be calculated using net income attributable to controlling interests and Class A shares outstanding: Income before income tax on 100% basis - Pre-tax income attributable to non-controlling…
Understanding JONE EPS Calculation on Reported Financial Statements Breakdown of JONE Income Tax Calculation ( in millions, except per share data) JONE Q2 2014 Income Statement Income before income tax ( in thousands, except per share…
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