Forward-Looking Statements

Transcription

1 August 18, 2016

2 Forward-Looking Statements This presentation includes forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. All statements in this presentation, other than statements of historical fact, including statements regarding the business, strategy, financial position, prospects, plans, objectives, forecasts, and projections of Jonah Energy LLC are forwardlooking statements. Forward-looking statements by their nature address matters that are, to different degrees, uncertain, such as statements about our plans to deploy capital in certain ways. The words anticipate, assume, believe, budget, could, estimate, expect, forecast, intend, plan, project, projection, should, target, will, would, and similar expressions are intended to identify forward-looking statements; however certain forward-looking statements may not use these words or phrases. The forward-looking statements contained herein are based on management s current expectations and beliefs concerning future events and their potential effect on the Company and involve known and unknown risks, uncertainties, and assumptions, which may cause actual results to differ materially from results expressed or implied by the forward-looking statements. These risks include factors such as the imprecise nature of estimating oil and gas reserves; the availability of additional economically attractive exploration, development and acquisition opportunities for future growth; the ability to implement and finance the Base management program; unexpected drilling conditions and results; unsuccessful drilling results; the ability to achieve estimated procurement savings; the availability of drilling, completion, and operating equipment and services; and the risks associated with commodity pricing and the Company s price risk management strategy. The forward-looking statements contained herein speak only as of the date of this presentation. Although Jonah Energy may from time to time voluntarily update its prior forwardlooking statements, it disclaims any commitment to do so. This presentation also includes market data and other statistical information from third-party sources, including independent industry publications, government publications or other published independent sources. Although Jonah Energy believes these third-party sources are reliable as of their respective dates, Jonah Energy has not independently verified the accuracy or completeness of this information. Some data are also based on Jonah Energy s good faith estimates, which are derived from its review of internal sources as well as the third-party sources described above. 1

3 Experienced Leadership Team & Sponsors Executive Management Thomas M. Hart III Chief Executive Officer Financial Sponsors L. Craig Manaugh President & Chief Operating Officer David W. Honeyfield VP & Chief Financial Officer Mike Park VP of Operations Glen Mizenko VP of Asset and Business Development C. Mark Brannum VP, General Counsel & Secretary Rory O Byrne VP & Chief Human Resource Officer Management and Private Investors Jonah board is comprised of financial sponsor representatives, management representatives, and independent members 2

4 Bcf Jonah Energy Overview & Position In The Industry Jonah Energy Highlights Net Acreage ~118,000 Gross Operated Wells >1,700 Economic Undeveloped Locations 1 ~ Operated Rig Count 2 Production Mix Natural Gas: 88% Condensate: 6% NGLs: 6% 2016 Capital Investment Plans ~$120-$130MM Headquarters Denver, CO Employees ~200 Position in the Industry Private Company 2015 Lower 48 Gross Operated Natural Gas Production 2 (Bcf) Hilcorp Energy Co. Chief Oil & Gas LLC Samson Investment Co. Merit Mewbourne Energy Co. Oil Co. J-W Operating Co. LLOG Exploration Co. LLC Yates Petroleum Corp. Templar Energy LLC Indigo Materials LLC 1. Undeveloped 2P locations that have positive PV9% as of June 30, 2016, utilizing flat index pricing of $3.00/MMbtu for gas and $50.00/Bbl for oil and are proved or technically proved (~1,500 total undeveloped locations) 2. Source: Independent research firm IHS via Oil & Gas Finance Journal article on July 11,

5 Strategic Thesis for Jonah Energy LLC Acquire and operate high quality, undercapitalized assets that are out of favor with the large independent / integrated public companies Create exceptional value by acquiring oil & gas fields with undermanaged potential Assemble a team with technical expertise to develop and exploit the acquired assets Initiate base production enhancement strategies to maximize PDP reserves and value Mobilize the capital and talent necessary to fully realize that potential Implement a development plan with the ability to organically grow production from significant undeveloped inventory De-risk and protect EBITDA and Cash Flow through disciplined capital investment and cost management combined with robust and on-going hedging program Repeat: Leverage platform through further application of our model 4

6 Jonah Field Execution of Our Strategy JONAH PLATFORM IS COMPLETE WITH MANAGEMENT AND INFRASTRUCTURE TO LEVERAGE ACROSS BROAD ASSET BASE Summary Exploitation of Under-Capitalized Assets Focused enhancement of Jonah field PDP base Maintained ongoing operations with flexibility to adapt to changes in price and cost environments Enhance productivity Culture of execution and continuous results improvement Drive savings and operational efficiencies Focus on free cash flow generation through: Continued deployment of capital at attractive rates of return Rigorous cost management program Long-dated, robust, and ongoing hedge portfolio Base Management (MMcfe/d) Base Management Impact Pre-Jonah Trend Pre-Jonah ~30% Positive Impact 100 May-13 Mar-14 Jan-15 Dec-15 Nov Day Avg. IP New Well Performance (MMcfe/d) Average Feet per Day (Spud to RR) LOE + G&A ($/Mcfe) highest average annual rate since ,250 1Q15 vs. 2Q16: +43% 3Q14 vs. 2Q16: (33%) $ ,000 LOE G&A 4.0 $ $ '05 '06 '07 '08 '09 '10 '11 '12 '13 '14 '15 '16-1Q15 2Q15 3Q15 4Q15 1Q16 2Q16 $0.00 3Q14 4Q14 1Q15 2Q15 3Q15 4Q15 1Q16 2Q16 5

7 % Hedged Protection of Free Cash Flow % of Natural Gas PDP & Remaining 2016 Drilling Program Volumes vs. Hedges (%) 100% 90% 84% 85% 85% 85% 86% NYMEX Gas NWPL Basis WTI Oil 80% 76% 60% 49% 40% 41% 41% 20% 8% 12% 16% 19% 6% 0% Bal Weighted Average Natural Gas Hedge Price ($/MMBtu) Bal $3.51 $3.73 $3.88 $3.91 $3.13 $3.05 Active, consistent and robust hedging program insulates investment returns and mitigates cash flow volatility Note: Bal represents July December Note: PDP as of mid-year 2016 (including 2H16 projected drilling program volumes) 6

8 MMcfe/d Execution Consistency Drives Financial Strength Net Equivalent Sales Volumes (MMcfe/d) vs. Cumulative Debt Retirement ($MM) 350 $ $ Cumulative Debt Retirement ($MM) Net Sales Volumes (MMcfe/d) $200 $150 $100 $MM 50 $50 0 Inception Jun-14 Sep-14 Dec-14 Mar-15 Jun-15 Sep-15 Dec-15 Mar-16 Jun-16 Current $0 In spite of commodity price downturn, Jonah has held production flat at 300+ MMcfe/d while retiring ~$250MM of debt and maintaining $200+MM of liquidity 7

9 Business Development Philosophy Leverage Our Platform Capitalize on the strengths of our organization and our sponsors to identify and execute upon opportunities Acquisition of Under- Capitalized Assets Focus on assets that have been deemphasized by current owners Operational Controls Prefer assets that fit the Jonah model of high operated working interest in a concentrated area of operations PDP Reserve Profile Significant PDP and ongoing cash flow generation Accretive Undeveloped Potential Undeveloped inventory providing attractive rates of returns through reinvestment of cash flow and execution of development program Areas of Business Development Focus Rockies, Mid-Continent, South Texas Commodity agnostic 8

10 Summary Wrap-Up Strong and Experienced Sponsors and Leadership Successful Execution of Jonah Field Acquisition Solid Asset Base & Operational Control Balance Sheet Health Repeatable, Execution-Based Formula Track record of managing the business and delivering on expectations despite difficult commodity price cycle Maintaining production engine while maximizing margins and return on investment through cost reductions and efficiency gains to deliver free cash flow Predictable and stable reserve base and operational control allows us to drive continuous improvement Significantly deleveraging and liquidity protection despite challenging environment Leverage platform by acquiring new assets with similar characteristics to Jonah Field 9

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