Company Description
We are an independent oil and gas company engaged in the development, production
and acquisition of oil and natural gas properties in the Anadarko and Arkoma
basins of Texas and Oklahoma. Our CEO, Jonny Jones, founded our predecessor
company in 1988 in continuation of his family's long history in
the oil and gas
business, which dates back to the 1920s. We have grown rapidly by leveraging our
focus on low cost drilling and completions and our horizontal drilling expertise
to develop our inventory and execute several strategic acquisitions. We have
accumulated extensive knowledge and experience in developing the Anadarko and
Arkoma basins, having concentrated our operations in the Anadarko basin for
25 years and applied our knowledge to the Arkoma basin since 2011. We have
drilled over 580 total wells since our formation, including over 400 horizontal
wells, and delivered compelling economic returns over various commodity price
cycles. Our operations are focused on horizontal drilling and completions within
two distinct basins in the Texas Panhandle and Oklahoma:
. the Anadarko Basin—targeting the liquids-rich Cleveland, Granite Wash,
Tonkawa and Marmaton formations; and
. the Arkoma Basin—targeting the liquids-rich fairway of the Woodford shale
formation.
We optimize returns through a disciplined emphasis on controlling costs and
promoting operational efficiencies, and we believe we are recognized as one of
the lowest-cost drilling and completion operators in the Cleveland and Woodford
shale formations.
The Anadarko and Arkoma basins are among the most prolific and largest onshore
producing oil and natural gas basins in the United States, enjoying multiple
producing horizons and extensive well control demonstrated over seven decades of
development. The formations we target are generally characterized by oil and
liquids-rich natural gas content, extensive production histories, long-lived
reserves, high drilling success rates and attractive initial production rates.
We focus on formations in our operating areas that we believe offer significant
development and acquisition opportunities and to which we can apply our
technical experience and operational excellence to increase proved reserves and
production to deliver compelling economic rates of return. Our goal is to build
value through a disciplined balance between developing our current inventory of
2,435 gross identified drilling locations and actively pursuing joint venture
agreements, farm-out agreements, joint operating agreements and similar
partnering agreements (which we refer to as joint development agreements),
organic leasing proximate to existing acreage and strategic acquisitions. In all
of our joint development agreements, we control the drilling and completion of a
well, which is the phase during which we can leverage our full operational
expertise and cost discipline. Following completion, we in some cases may turn
over operatorship to a partner during the production phase of a well. We believe
the ceding to us of drilling and completion operatorship in our areas of
operation by several large oil and gas companies, including ExxonMobil, BP and
ConocoPhillips, reflects their acknowledgement of our low-cost, safe and
efficient operations.
From December 31, 2010 through December 31, 2012, through our acquisitions and
drilling program, we grew our proved reserves from approximately 34 MMBoe to
85 MMBoe, representing a compound annual growth rate of approximately 58%, while
our average daily net production increased over the same period from
approximately 6.6 MBoe/d to 13.3 MBoe/d, representing a compound annual growth
rate of approximately 42%. For the month ended April 30, 2013 our average daily
net production was 15.8 MBoe/d. In the context of our historical performance and
business strategy execution, we believe we have the opportunities, experience
and knowledge to continue growing both our reserves and production.
As of December 31, 2012, our total estimated proved reserves were approximately
85 MMBoe, of which approximately 46% were classified as proved developed
reserves. Approximately 55% of our total estimated proved reserves as of
December 31, 2012 consisted of oil and NGLs, and 45% consisted of natural gas.
As of December 31, 2012, our properties included approximately 720 gross active
producing wells. For the three years ended December 31, 2012, we drilled
154 wells, substantially all of which we drilled as operator. The following
table presents summary acreage, reserve and production data for each of our core
operating areas:
Month ended
As of December 31, 2012 April 30, 2013 As of April 30, 2013
Estimated net Average daily
proved reserves net production Acreage
% Oil and % Oil and Gross Net
MMBoe NGLs(1) MBoe/d NGLs(1) acreage acreage
Anadarko basin:
Cleveland 40.5 63.8% 8.6 64.2% 102,445 60,575
Granite Wash 4.7 40.2% 1.2 44.3% 10,011 3,915
Arkoma basin:
Woodford(2) 37.9 49.9% 4.1 31.9% 14,539 3,725
Other 2.2 29.4% 1.9 63.3% 37,917 12,762
All properties 85.3 55.4% 15.8 (3) 54.2% 164,912 80,977
(1) Ethane is an NGL and is included in this percentage. Due to recent declines
in ethane pricing and increases in natural gas prices, beginning in
December 2012, purchasers of our Woodford production have been electing
not to recover ethane from the natural gas stream and instead have been
paying us based on the natural gas price for the ethane left in the gas
stream. As a result of the increased energy content associated with the
returned ethane and the absence of plant shrinkage, this ethane rejection
has increased the incremental revenue and volumes that we receive for our
natural gas product relative to what we would have received if the ethane
was separately recovered, but has reduced physical barrels of liquid
ethane that we are selling.
(2) Includes proved undeveloped reserves associated with our joint development
agreement with Southridge Energy, LLC.
(3) Average daily net production increased from 13.3 MBoe/d for the year ended
December 31, 2012, to 15.8 MBoe/d for the month ended April 30, 2013,
primarily due to new wells added through our drilling activities and the
acquisition of 36 gross productive wells in connection with the Chalker
acquisition.
The following table presents summary well and drilling location data for each of
our key formations for the dates indicated:
As of December 31, 2012 As of April 30, 2013
Identified
Producing drilling
wells locations(1)
Gross Net Gross Net
Anadarko basin:
Cleveland 293 191 521 323
Granite Wash 23 16 14 5
Tonkawa — — 194 111
Marmaton — — 351 190
Arkoma basin:
Woodford 122 47 904 127
Other 282 75 451 20
All properties 720 329 2,435 776
(1) Our total identified drilling locations include 361 gross locations
associated with proved undeveloped reserves as of December 31, 2012. We
have estimated our drilling locations based on well spacing assumptions
for the areas in which we operate and other criteria.
Our 2012 capital expenditures, excluding acquisitions, totaled $122.1 million,
during which we drilled 48 gross wells. We expect our 2013 capital expenditure
budget to be approximately $204.0 million, $180 million of which we expect to
use to drill and complete 93 gross (54 net) wells. The remainder of the 2013
capital expenditure budget is expected to be devoted to seismic, leasing and
other discretionary expenditures. Assuming current market conditions and
drilling success rates comparable to our historical performance, we believe we
will be able to fund substantially all of our 2013 budgeted capital expenditures
with our cash flow from operations. We currently expect to allocate our 2013
capital expenditure budget as follows:
2013 capital
expenditure
budget Wells
(in thousands) (gross/net)
Drilling and completion:
Cleveland $ 148,900 62/45
Woodford 22,700 20/8
Other drilling 8,100 11/1
Other activities 24,300 —
All properties $ 204,000 93/54
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Our principal executive offices are located at 807 Las Cimas Pkwy, Suite 350,
Austin, Texas 78746, and our telephone number is (512) 328-2953. Our website
address is www.jonesenergy.com.
Read more:
http://www.nasdaq.com/markets/ipos/company/jones-energy-inc-907504-72629#ixzz2eDjQZeEY
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