february 14 2017s1.q4cdn.com/529546945/files/doc_presentations/2017/... · · 2017-02-14the sec...
TRANSCRIPT
22nd Annual Credit Suisse Energy SummitFebruary 14, 2017
Forward‐Looking & Other Cautionary Statements
The fo l l ow ing presenta t ion i n c ludes fo rward ‐ l ook ing s ta tements . These s ta tements re l a te to fu tu re event s , such as ant i c ipa ted revenues , earn ings , bus iness s t ra teg ie s , compet i t i ve pos i t i on or other aspec t s of our opera t ions or opera t ing re su l t s or the i ndus t r i e s or market s i n which we opera te or par t i c ipa te i n genera l , i n c lud ing the ab i l i t y to t ake advantage of oppor tun i t i es i n the o i l and gas i ndus t ry , pro jec t ions rega rd ing to ta l produc t ion , average da i l y produc t ion , the potent i a l to i n c rease work ing i n te res t th rough l ea s ing or poo l ing , l ea se opera t ing expenses , produc t ion taxes as a percentage of revenue , cash G&A expenses , pro jec ted i n te rna l ra tes of re tu rn , and re su l t s of our hedg ing program. Actua l outcomes and re su l t s may d i f fe r mater i a l l y f rom what i s expres sed or fo recas t i n such fo rward ‐ l ook ing s ta tements . These s ta tements are not guarantees of fu tu re per fo rmance and i nvo l ve ce r ta in r i s k s , uncer ta in t i e s and assumpt ions tha t may prove to be i n cor rec t and are d i f f i cu l t to pred i c t such as o i l and gas pr i ces ; opera t iona l hazards and dr i l l i ng r i s k s ; potent i a l fa i l u re to ach ieve , and potent i a l de lays i n ach iev ing expec ted rese rves or produc t ion l eve l s f rom ex i s t i ng and fu tu re o i l and gas deve lopment pro jec t s ; our ab i l i t y to consummate the pend ing STACK/SCOOP acqu i s i t i on ; unsuccess fu l exp lo ra tory ac t i v i t i e s ; unsuccess fu l acqu i s i t i ons ; unexpec ted cos t i n c reases or techn i ca l d i f f i cu l t i e s i n cons t ruc t ing , main ta in ing or modi fy ing company fac i l i t i e s ; potent i a l l i ab i l i t y fo r remed ia l ac t ions under ex i s t i ng or fu tu re env i ronmenta l regu la t ions or f rom pend ing or fu tu re l i t i ga t ion ; l im i ted access to cap i ta l or s i gn i f i can t l y h igher cos t of cap i ta l re l a ted to i l l i qu id i t y or uncer ta in ty i n the domest i c or i n te rna t iona l f i nanc ia l market s ; genera l domest i c and i n te rna t iona l economic and po l i t i ca l cond i t ions , as wel l as changes i n t ax , env i ronmenta l and other l aws app l i cab le to our bus iness and other economic , bus iness , compet i t i ve and/or regu la to ry f ac tor s a f fec t ing our bus iness genera l l y as se t fo r th i n our f i l i ngs wi th the Secur i t i e s and Exchange Commiss ion ( SEC ) . We caut ion you not to p lace undue re l i ance on our fo rward ‐ l ook ing s ta tements , which are on ly as of the date of th i s presenta t ion or as otherw i se i nd i ca ted , and we expres s l y d i s c l a im any re spons ib i l i t y fo r updat ing such i n fo rmat ion .
Th i s presenta t ion may i n c lude non ‐GAAP f i nanc ia l measures . Such non ‐GAAP measures are not a l te rna t i ves to GAAP measures , and you shou ld not cons ider these non ‐GAAP measures i n i so l a t ion or as a subs t i tu te fo r ana ly s i s of our re su l t s as repor ted under GAAP. For add i t iona l d i s c lo su re rega rd ing such non ‐GAAP measures , i n c lud ing reconc i l i a t ions to the i r most d i rec t l y comparab le GAAP measure , p lease re fe r to Jones Energy ’ s mos t recent earn ings re lease at www. jonesenergy . com.
The SEC requ i res o i l and gas compan ies , i n the i r f i l i ngs wi th the SEC , to d i s c lo se proved re se rves , which are those quant i t i e s of o i l and gas , which , by ana ly s i s of geosc ience and eng ineer ing data , can be es t imated wi th reasonab le ce r ta in ty to be economica l l y produc ib le—from a g i ven date fo rward , f rom known re se rvo i r s , and under ex i s t i ng economic cond i t ions (u s ing unwe ighted average 12 ‐month f i r s t day of the month pr i ces ) , opera t ing methods , and government regu la t ions—pr io r to the t ime at which cont rac t s prov id ing the r i gh t to opera te exp i re , un les s ev idence i nd i ca tes tha t renewa l i s reasonab ly ce r ta in , rega rd le s s of whether dete rmin i s t i c or probab i l i s t i c methods are used fo r the es t imat ion . The SEC a l so permi t s the d i s c lo su re of separa te es t imates of probab le or poss ib le rese rves tha t meet SEC def in i t i ons fo r such re se rves , however , we cur rent l y do not d i s c lo se probab le or poss ib le rese rves i n our SEC f i l i ngs . Our es t imates of " resource potent i a l " i n th i s presenta t ion have been prepared i n te rna l l y by our eng ineer s and management wi thout rev iew by i ndependent eng ineers . These es t imates are not permi t ted to be d i s c lo sed i n our SEC f i l i ngs , do not cons t i tu te " rese rves" as def ined by the SEC and are by the i r nature more specu la t i ve than es t imates of proved , probab le , and poss ib le re se rves .
Fac tor s a f fec t ing u l t imate recovery i n c lude our ab i l i t y to acqu i re the ac reage we are t a rge t ing and the scope of our ongo ing dr i l l i ng program, which wi l l be d i rec t l y a f fec ted by the ava i l ab i l i t y of cap i ta l , dr i l l i ng and produc t ion cos t s , ava i l ab i l i t y of dr i l l i ng se rv i ces and equ ipment , dr i l l i ng re su l t s , l ea se exp i ra t ions , t ranspor ta t ion cons t ra in t s , regu la to ry approva l s and other f ac tor s ; and ac tua l dr i l l i ng re su l t s , i n c lud ing geo log i ca l and mechan i ca l f ac tor s a f fec t ing recovery ra tes . Es t imates of resource potent i a l and dr i l l i ng l o ca t ions may change s i gn i f i can t l y as we pursue acqu i s i t i ons . I n add i t ion , our produc t ion fo recas t s and expec ta t ions fo r fu tu re per iods are dependent upon many assumpt ions , i n c lud ing es t imates of produc t ion dec l ine ra tes f rom ex i s t i ng wel l s and the under tak ing and outcome of fu tu re dr i l l i ng ac t i v i t y , which may be a f fec ted by s i gn i f i can t commod i ty pr i ce dec l i nes or dr i l l i ng cos t i n c reases . U.S . i nves to r s are urged to cons ider c lose l y the o i l and gas d i s c lo sures i n our Form 10 ‐K, Form 10 ‐Qs , Form 8 ‐Ks and other repor t s and f i l i ngs wi th the SEC . Cop ies are ava i l ab le f rom the SEC and f rom the Jones Energy webs i te .
1
Jones Energy Overview
Note: Common and preferred share prices as of February 10, 2017.[1] Par value of $92mm ($50.00/share). 2
NYSE Ticker JONE
Common Share Price $4.30 Preferred Share Price [1] $76.25
Equity Market Cap ($mm)Common Stock $374Preferred Stock [1] 140
Total Equity Market Cap $514
Enterprise Value ($mm) ~$1,200
Common Stock Outstanding (mm)Class A 57.2Class B 29.8
Total Common Stock Outstanding 87.0
4Q16 Production (Mboe/d) 19.2
Proven Mid‐Con OperatorCu
mulative Ho
rizon
tal W
ells Drilled
3
Granite Wash – 28 wells
Tonkawa – 6 wells
Brown Dolomite – 72 wells
Arkoma Woodford – 62 wells
Cleveland – 626 wells
Drilled ~740 horizontal wells in Mid‐Con over
company history
Merge – 27 wells
Executed on 2016 Goals
Execute on Drilling
Improve the Balance Sheet Reduced debt outstanding by $106 million through bond buybacks
High PV Merge wells de‐lever company over time
Liquidity of ~$280 million [1]
Outstanding results from 3 rig program in the Cleveland
Increased 2016 production guidance by 7%
Leveraging Mid‐Con expertise to develop Merge assetsExecute on Drilling
Capture Opportunities Closed bolt‐on Cleveland acquisition
Closed transformative Merge acquisition
Scalable Mid‐Con footprint provides additional opportunities
4[1] Liquidity as of December 31, 2016.
Transformative Merge Acquisition
Expands Mid‐Con footprint to STACK/SCOOP
Initial acquisition of ~18,000 net acres primarily in Canadian & Grady Counties, OK for $136.5mm
Since closing, JONE has added ~3,140 net acres on average below acquisition cost per acre
Initial transaction implied acreage value of ~$7,600 per net acre
330 MMBoe of net unrisked resource potential [1]
1,567 gross drilling locations identified in the Merge
353 gross operated locations with an average working interest of 54%
~90% of asset value tied to acreage in oil fairway
Western Anadarko BasinCleveland
Eastern Anadarko BasinMerge
Arkoma BasinWoodford
Acquisition
Note: Operated acreage defined as sections where Company owns greater than 160 net acres.[1] Company internal estimate. 5
Merge 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 de‐levering impact to company over time
6
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
Devonian
Woodford
Silurian
Hunton
Mississipian
Penn
sylvanian
Springer
CANASTACK
SCOOP
JONE Acreage in “Merge” Area
Play boundaries driven by geography, not geology
7
Jones’ View of STACK/SCOOP Play
Stratigraphic Column
Primary Targets
Secondary Targets
Oswego
Cherokee
Morrow
Chester
Meramec/Upper Sycamore
Osage/Lower Sycamore
Devonian
Woodford
Silurian
Hunton
Mississipian
Penn
sylvanian
Springer
Woodford productive fairway is continuous from north to south Jones’ acreage is in the heart of productive fairway
Woodford Fairway
Meramec/Sycamore Fairway
8
JONE Acreage
OKC
Stacked Pay Potential with Four 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 Seal
Reservoir
Targets
South
9
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
ON
KINGFISHER
KIOWA
LOGAN
MAJOR
McCLAIN
MUR
NOBLE
OKLAHOMA
STEPHENS
TILLMAN
WASHITA
PO
JONE Acreage
RQI
10
0
Woodford Productive FairwayReservoir Quality Index (RQI) Map
10
CANA
STACK
SCOOP
Compelling Recent Well Results
McCLAIN
OKLAHOMA
1111
CANADIAN
GRADY
CADDO
1612
34
5
6
7
8
9
10
13
14 15
1718
11
12
Citizen (6/2016)Toy Darrow 2H‐8‐17
IP30: 1,050 BOE/D (67% oil)
7
Newfield (5/2015)Redhead 1H – 9XX
IP30: 1,120 BOE/D (76% oil)
8
Linn Energy (5/2016)Hinparr 31 06 10 05 1XH
IP30: 2,180 BOE/D (73% oil)
4
Citizen (3/2016)Rikella 1H‐16‐9
IP: 665 BOE/D (85% oil)
5
Citizen (4/2016)Anderson 1H‐33
IP: 1,097 BOE/D (66% oil)
6
Citizen (2/2016)Alma Lee Ezzard 1H
IP30: 1,280 BOE/D (21% oil)
9
Citizen (8/2015)Gov. James 1H – 32
IP30: 2,074 BOE/D (70% oil)
3
Cimarex (9/2014)Straka 1H‐36X
IP30: 888 BOE/D (55% oil)
2
Cimarex (9/2015)Gary 1H‐3601X
IP30: 1,180 BOE/D (52% oil)
1
Citizen (4/2016)Rikella 2H‐16‐9
IP: 1,140 BOE/D (70% oil)
16
Cimarex (6/2016)Lydia 1‐16H
IP30: 1,000 BOE/D (44% oil)
17
Citizen (11/2015)Rosemary 1H‐1‐36
IP30: 1,599 BOE/D (70% oil)
14
Citizen (1/2016)Rosemary 2H‐1‐36
IP30: 1,316 BOE/D (75% oil)
15
Marathon (9/2016)McKinney 1207 1‐35MH
IP30: 1,007 BOE/D (60% oil)
18
Newfield (5/2015)Williams 3H‐7X
IP30: 1,435 BOE/D (78% oil)
12
Vitruvian (12/2015)Burnside 3‐09X16H
IP30: 1,939 BOE/D (11% oil)
11
Eagle Exploration (1/2016)Terry M 0504 – 1‐1H
IP30: 926 BOE/D (75% oil)
10
Marathon (7/2016)1‐11MH Hrdy
IP30: 1,870 BOE/D (56% oil)
13
JONE AcreageJONE Pad SiteWoodfordMeramec/Sycamore#
#Shading denotes new data points
Resource Attracting Top Operators with Upside Potential
Majority of acreage in oil window
9 industry rigs running in the Merge NFX, MRO, CLR, XEC, CHK, LINN, and
Citizen Energy currently running rigs
Upside potential from downspacing, pad development and stacked pay
Currently assuming average of 8 wells per section in the Woodford and 4 wells per section across multiple benches in the Sycamore/Meramec
12
GRADY
Phase Boundary
Active Industry Rigs
JONE Acreage
CADDO
CANADIAN
OKLAHOMA
GRADY
MC CLAIN
BLAINE
CADDO
CANADIAN
CARTER
CLEVELAND
COMANCHE
COTTON
CUSTER
DEWEY
GARFIELD
GARVIN
GRADY
ON
KINGFISHER
KIOWA
LOGAN
MAJOR
McCLAIN
MUR
NOBLE
OKLAHOMA
STEPHENS
TILLMAN
WASHITA
PO
JONE Rig
Cleveland Asset Supports the Base
13
Existing JONE Cleveland Acreage
Active Industry Rigs
JONE Rigs
Maintaining 3‐rig program in 2017 Cleveland still highly economic, competes for capital with Merge at current strip pricing Flexibility to reallocate capital if necessary 3Q16 addition of ~25,000 net acres for $26.3 million, overlaid with existing footprint 8 industry rigs running in the Cleveland, highest since September 2015
26
1714
0
5
10
15
20
25
30
2014 2016E Record
Days
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
Broken all previous drilling records since resuming Cleveland drilling in April 2016
14
$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
$mm
Jones Cleveland AFE progression
$0$5
$10
$15
$20$25
$30
$35
YTD 3Q15 YTD 3Q16
LOE ($ m
m)
Significant YoY LOE Declines
Best‐in‐Class Operating Costs
YTD 3Q16 LOE decreased 27% from YTD 3Q15
Significant savings realized due to operational efficiencies and bid reductions
Continues to be in a leader among peer group average LOE
Note : Peer s i n c l ude BBG , BCE I , CPE , CRZO , FANG, MTDR , NOG, OAS , PQ, REXX , RSPP , SGY , SN , SYRG and WPX.
15
27% decreaseJONE: $4.47
Peer Average: $6.62
$0
$1
$2
$3
$4
$5
$6
$7
$8
$9
$10
1 2 JONE 4 5 6 7 8 9 10 11 12 13 14 15 16
LTM LOE per Boe
Portfolio of Outstanding Returns
Significant PV‐10 uplift for Merge well relative to Cleveland well
Single well IRRs of 60‐90% at current strip and PV‐10 of $5‐11 million
Note: PV‐10 based on internal type curve and D&C cost estimates on strip pricing as of 2/9/17. Well‐level IRRs based solely on D&C cost investment; does not include land, G&A, and other costs. 16
0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
100%
$0
$2
$4
$6
$8
$10
$12
Cleveland well 5,000' lateral STACK/SCOOP oil well 10,000' lateral STACK/SCOOP oil well
IRR
PV‐10 ($mm)
Outstanding Returns at Current Strip
PV‐10 IRR
2017 Operating Plan and Capital Budget
17
2017 Capital Budget($ in millions)
Merge Capital Expenditures Drilling and Completion JONE Operated $88Non‐Operated and Other 22Drilling and Completion Total $110
Leasing and Pooling 20Total Merge Capital Expenditures $130
Cleveland Capital ExpendituresDrilling and Completion $122Leasing 5
Total Cleveland Capital Expenditures $127
Other Capital Expenditures $18
Total Capital Expenditures ($mm) $275
Plan to drill 26 gross (17 net) wells in the Merge
Initiate Sycamore drilling in 2Q of 2017
Plan to drill 56 gross (45 net) wells in Cleveland
Includes some long laterals
Lease budget supports strong ground‐game
Ramp to 3 rig Merge program
2017 drilling results ramp in 2018 production profile
Additional cash flow generation and de‐levering results in 2018
Jones Energy: Premier Mid‐Con Pure Play
18
Premier Asset Base with Multi‐Year Inventory
Decades of Mid‐Con Operating Expertise
Balance Sheet & Liquidity to
Facilitate Growth
APPENDIX
2017 Guidance and 1Q Production Guidance
2017E 1Q17E
Total Production (MMBoe) 7.6 – 8.4 1.6 – 1.7
Average Daily Production (MBoe/d) 20.7 – 23.0 17.0 – 18.0
Crude Oil (MBbl/d) 5.7 – 6.3
Natural Gas (MMcf/d) 51 – 57
NGLs (MBbl/d) 6.5 – 7.2
Lease Operating Expense ($mm) $45.0 – $50.0
Production Taxes (% of Unhedged Revenue)* 4.5% – 5.5%
Ad Valorem Taxes ($mm)* $2.7 – $3.0
Cash G&A Expense ($mm) $23.0 – $25.0
Total Capital Expenditures ($mm) $275
*Production and ad valorem taxes are included as one line item on the Company’s income statement.20
Woodford Oil Window Type Curve – 5,000’ Lateral
21
Oil Gas NGLs TotalIP Bbl/d Mcf/d Bbl/d Boe/d30 Day IP 420 1,140 170 78090 Day IP 375 1,041 157 706
Cum. Production MBbl MMcf MBbl MBoe1 year 97 282 42 1863 year 180 546 82 3535 year 227 701 106 449
EUR 440 1,423 213 890% of total 49% 27% 24% 100%
10
100
1,000
10
100
1,000
0 1 2 3 4 5
Mcf/d
Bbl/d
Years
Production Profile
Oil NGLs Gas
% Liquids 73%
% Oil 50%
Gas Shrink 27%
NGL Yield (Bbl/Mmcf) 110
Oil Differential ($/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
Western Anadarko Basin Inventory
MarmatonSandstone
Lease Acreage: ~115,000Gross Locations: 473
ClevelandSandstone
Lease Acreage: ~212,000Gross Locations: 788
TonkawaSandstone
Lease Acreage: ~160,000Gross Locations: 279
Current Target Formations
JONE Acreage
Note: All lease acreage and locations as of year‐end 2016.
Cleveland play is >2 million acres
22
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
Atokan
Mor
row
an
Lower Permian
Wolfcam
pian
Penn
sylvanian
Virgilian
Missou
rian
Desm
oinesia
n
Current Hedge Position
23[1] Swaps purchased to crystalize $45mm gain
1Q17 2Q17 3Q17 4Q17 2017 2018 2019Oil HedgesSwaps Sold (MBbl) 428 440 390 345 1,603 1,817 219Price ($/Bbl) $68.44 $66.93 $65.09 $66.76 $66.85 $62.84 $64.96
Offset Swaps Purchased (MBbl)[1] ‐ ‐ ‐ ‐ ‐ 803 219Price ($/Bbl) ‐ ‐ ‐ ‐ ‐ $46.83 $48.57
Collars (MBbl) ‐ ‐ ‐ ‐ ‐ ‐ 810Floor ($/Bbl) ‐ ‐ ‐ ‐ ‐ ‐ $48.52Ceiling ($/Bbl) ‐ ‐ ‐ ‐ ‐ ‐ $59.64
Gas HedgesSwaps Sold (MMcf) 4,240 4,320 4,140 4,080 16,780 23,840 3,750Price ($/Mcf) $3.99 $3.93 $3.88 $3.86 $3.98 $3.49 $3.50
Offset Swaps Purchased (MMcf)[1] ‐ ‐ ‐ ‐ ‐ 9,900 3,750Price ($/Mcf) ‐ ‐ ‐ ‐ ‐ $2.81 $2.86
Collars (MMcf) ‐ ‐ ‐ ‐ ‐ ‐ 11,890Floor ($/Mcf) ‐ ‐ ‐ ‐ ‐ ‐ $2.55Ceiling ($/Mcf) ‐ ‐ ‐ ‐ ‐ ‐ $3.19
NGL Swaps (MBbl)Ethane ‐ ‐ ‐ ‐ ‐ ‐ ‐Propane 197 194 186 182 759 ‐ ‐Iso Butane 27 27 25 24 103 ‐ ‐Butane 66 66 66 66 264 ‐ ‐Natural Gasoline 63 63 63 63 252 ‐ ‐Total NGLs 353 350 340 335 1,378 ‐ ‐
NGL Swap Prices ($/Gal)Ethane ‐ ‐ ‐ ‐ ‐ ‐ ‐Propane $0.44 $0.44 $0.44 $0.44 $0.44 ‐ ‐Iso Butane 0.66 0.66 0.60 0.57 0.63 ‐ ‐Butane 0.63 0.61 0.59 0.59 0.60 ‐ ‐Natural Gasoline 1.02 1.02 0.98 0.98 1.00 ‐ ‐
NGL Hedge Position Detail
24
1Q17 2Q17 3Q17 4Q17 2017Mont Belvieu NGL Swaps (MBbl)Propane 30 30 30 30 120Iso Butane 3 3 1 ‐ 7Butane 12 12 12 12 48Natural Gasoline 12 12 12 12 48MB NGLs 57 57 55 54 223
Mont Belvieu NGL Swap Prices ($/Gal)Propane $0.46 $0.46 $0.46 $0.46 $0.46Iso Butane 1.42 1.42 1.42 ‐ 1.42Butane 0.98 0.92 0.79 0.79 0.87Natural Gasoline 1.35 1.35 1.16 1.16 1.25
Conway NGL Swaps (MBbl)Propane 167 164 156 152 639Iso Butane 24 24 24 24 96Butane 54 54 54 54 216Natural Gasoline 51 51 51 51 204CW NGLs 296 293 285 281 1,155
Conway NGL Swap Prices ($/Gal)Propane $0.43 $0.43 $0.43 $0.43 $0.43Iso Butane 0.57 0.57 0.57 0.57 0.57Butane 0.55 0.55 0.55 0.55 0.55Natural Gasoline 0.94 0.94 0.94 0.94 0.94
NGL Barrel Component Detail
Cleveland Conway
Woodford Mont Belvieu
*Assumes ethane rejection in the Woodford
Ethane – 31%
Propane – 37%
Iso Butane – 5%Butane – 13%
Natural Gasoline – 14%
Ethane – 13%
Propane – 46%
Iso Butane – 4%
Butane – 19%
Natural Gasoline – 18%
Woodford
Cleveland
Basket Ethane 31% Propane 37% Butane 13% Iso Butane 5% Natural Gasoline 14%
Basket Ethane* 13% Propane 46% Butane 19% Iso Butane 4% Natural Gasoline 18%
(79% of forecasted 2017 NGL production)
(9% of forecasted 2017 NGL production)
25
Corporate Structure
Jones Energy, Inc.(NYSE: JONE)
Jones Energy Holdings, LLC(JEH LLC)
Metalmark,Management
& Other Investors
PublicShareholders
Class A Common Stock57.2 million shares
66% of voting power in Jones Energy, Inc.
34% of total economic interest
of JEH LLC
66% of total economic interest
of JEH LLC
Class B Common Stock29.8 million shares
34% of voting power in Jones Energy, Inc.
26