Jones Energy Pivots to the Merge July 2017

Transcription

1 Jones Energy Pivots to the Merge July 07

2 Forward-Looking & Other Cautionary Statements The following presentation includes forward- looking statements. These statements relate to future events, such as anticipated revenues, earnings, business strategies, competitive position or other aspects of our operations or operating results or the industries or markets in which we operate or participate in general, including the productivity of certain resource plays, the availability and our ability to take advantage of acquisitive opportunities in the oil and gas industry, the potential to increase working interest through leasing or pooling, projected well counts, projections regarding total production, average daily production, lease operating expenses, production taxes as a percentage of revenue, ad valorem taxes, cash G&A expenses and projected internal rates of return, and the results of our hedging program. Actual outcomes and results may differ materially from what is expressed or forecast in such forward- looking statements. These statements are not guarantees of future performance and involve certain risks, uncertainties and assumptions that may prove to be incorrect and are difficult to predict such as oil and gas prices; operational hazards and drilling risks; potential failure to achieve, and potential delays in achieving, expected reserves or production levels from existing and future oil and gas development projects; our ability to identify and consummate acquisitions and other growth opportunities; unsuccessful exploratory activities; unsuccessful acquisitions; unexpected cost increases or technical difficulties in constructing, maintaining or modifying company facilities; potential liability for remedial actions under existing or future environmental regulations or from pending or future litigation; limited access to capital or significantly higher cost of capital related to illiquidity or uncertainty in the domestic or international financial markets; general domestic and international economic and political conditions, as well as changes in tax, environmental and other laws applicable to our business and other economic, business, competitive and/or regulatory factors affecting our business generally as set forth in our filings with the Securities and Exchange Commission (SEC). We caution you not to place undue reliance on our forward- looking statements, which are only as of the date of this presentation or as otherwise indicated, and we expressly disclaim any responsibility for updating such information. This presentation may include non- GAAP financial measures. Such non- GAAP measures are not alternatives to GAAP measures, and you should not consider these non- GAAP measures in isolation or as a substitute for analysis of our results as reported under GAAP. For additional disclosure regarding such non- GAAP measures, including reconciliations to their most directly comparable GAAP measure, please refer to Jones Energy s most recent earnings release at The SEC requires oil and gas companies, in their filings with the SEC, to disclose proved reserves, which are those quantities of oil and gas, which, by analysis of geoscience and engineering data, can be estimated with reasonable certainty to be economically producible from a given date forward, from known reservoirs, and under existing economic conditions (using unweighted average - month first day of the month prices), operating methods, and government regulations prior to the time at which contracts providing the right to operate expire, unless evidence indicates that renewal is reasonably certain, regardless of whether deterministic or probabilistic methods are used for the estimation. The SEC also permits the disclosure of separate estimates of probable or possible reserves that meet SEC definitions for such reserves, however, we currently do not disclose probable or possible reserves in our SEC filings. Our estimates of "resource potential" in this presentation have been prepared internally by our engineers and management without review by independent engineers. These estimates are not permitted to be disclosed in our SEC filings, do not constitute "reserves" as defined by the SEC and are by their nature more speculative than estimates of proved, probable, and possible reserves. Factors affecting ultimate recovery include our ability to acquire the acreage we are targeting and the scope of our ongoing drilling program, which will be directly affected by the availability of capital, drilling and production costs, availability of drilling services and equipment, drilling results, lease expirations, transportation constraints, regulatory approvals and other factors; and actual drilling results, including geological and mechanical factors affecting recovery rates. Estimates of resource potential and drilling locations may change significantly as we pursue acquisitions. In addition, our production forecasts and expectations for future periods are dependent upon many assumptions, including estimates of production decline rates from existing wells and the undertaking and outcome of future drilling activity, which may be affected by significant commodity price declines or drilling cost increases. U.S. investors are urged to consider closely the oil and gas disclosures in our Form 0- K, Form 0- Qs, Form 8- Ks and other reports and filings with the SEC. Copies are available from the SEC and from the Jones Energy website.

3 Meramec: A Proven Resource Across the Merge Meramec has expanded south across Merge into SCOOP BLAINE STACK KINGFISHER CANADIAN LOGAN OKLAHOMA JONE BOMHOFF # top decile Merge well Merge reservoir quality better than STACK Play area now ~.6 million acres 7 prospective benches across JONE position 4 Meramec wells planned in 07 program MERGE Meramec Fairway CADDO GRADY SCOOP CLEVELAND MC CLAIN Key Targets Meramec Reservoir Comparison STACK MERGE SCOOP Meramec Woodford Meramec Woodford Sycamore Woodford Reservoir Thickness 50' - 500' 50' - 300' 50' - 300' Net-to-Gross % % % Average Porosity 3-7 % 4-8 % 3-6 % 3

4 Jones Meramec Well Results Bomhoff 0--7 H 4,48 Lateral Length Peak Rate: 650 Bo/d & 6,306 Mcf/d Current Rate: 58 Bo/d & 4,89 Mcf/d KINGFISHER 5 Garrett 4--6 H 4,697 Lateral Length Peak Rate: 67 Bo/d &,580 Mcf/d Current Rate: 63 Bo/d &,568 Mcf/d CANADIAN Dream Cooler XH 9,637 Lateral Length Peak IP30: 36 Bo/d & 5,57 Mcf/d 6 5 OKLAHOMA Meramec Fairway 6 Lydia -6H 4,795 Lateral Length Peak IP30: 436 Bo/d & 3,67 Mcf/d 3 Rosemary H--36 7,506 Lateral Length Peak IP30:,03 Bo/d & 3,30 Mcf/d CLEVELAND 7 Rosemary H--36 7,603 Lateral Length Peak IP30:,9 Bo/d & 3,065 Mcf/d 4 Huffman H ,8 Lateral Length Peak IP30: 543 Bo/d & 3,4 Mcf/d GRADY 8 Hinparr HX 9,898 Lateral Length Peak IP30:,06 Bo/d & 4,780 Mcf/d JONE Operated well JONE Non-Op well JONE Rig () Industry Rig (8) MC CLAIN Well has not yet reached peak IP30 rate 4

5 Initial Meramec Well Exceeds Type Curve 00,000 90,000 80,000 BOMHOFF 0--7 H Type Curve Cumulative Production (BOE) 70,000 60,000 50,000 40,000 30,000 0,000 0, Type Curve IP Range (Boe/d) EUR Range (MBOE) Days Producing % Oil % Liquids Gross Locations Meramec,000, , % 65 75%,06 Initial production and type curve reported as 3-stream and normalized to 5,000 lateral. 5

6 Meramec Oil Tracking Best-in-Class Rates Robust early oil production driving high returns and cash flow generation Second Meramec well GARRETT outpacing best-in-class BOMHOFF well Daily Oil Rates Cumulative Oil Production 800 5, , Facilities work 5,000 Bo/d 400 Bo/d 300 0, , Days Producing Days Producing BOMHOFF 0--7 H GARRETT 4--6 H BOMHOFF 0--7 H GARRETT 4--6 H 6

7 Jones Woodford Well Results Bomhoff 0--7 H 4,366 Lateral Length Peak Rate: 78 Bo/d & 3,574 Mcf/d Current Rate: 97 Bo/d &,863 Mcf/d KINGFISHER 7 Anderson H-8 4,949 Lateral Length Peak IP30: 36 Bo/d &,47 Mcf/d Osborn H-0 4,930 Lateral Length Peak IP30: 66 Bo/d &,60 Mcf/d CANADIAN OKLAHOMA 8 Bornemann H-7 4,834 Lateral Length Peak IP30: 0 Bo/d & 3,744 Mcf/d 3 Huffman H ,45 Lateral Length Peak IP30: 30 Bo/d &,83 Mcf/d 4 Gary H-360X 7,49 Lateral Length Peak IP30: 699 Bo/d & 3,488 Mcf/d 4 0 Woodford Fairway 9 Barbour -0-7 H 4,09 Lateral Length Peak IP30: 7 Bo/d &,67 Mcf/d Toy Darrow H CLEVELAND 8,8 Lateral Length 7 Peak IP30: 35 Bo/d &,48 Mcf/d 5 Doris ,04 Lateral Length Peak IP30: 684 Bo/d & 4,67 Mcf/d Radcliff -7H 4,338 Lateral Length Peak IP30: 46 Bo/d &,776 Mcf/d 6 Hardesty H--5 7,465 Lateral Length Peak IP30: 45 Bo/d & 4,604 Mcf/d GRADY Kanon H-5-9,350 Lateral Length Peak IP30: 35 Bo/d &,970 Mcf/d JONE Operated well JONE Non-Op well JONE Rig () Industry Rig (8) MC CLAIN Well has not yet reached peak IP30 rate 7

8 Woodford: Cracking the Code Woodford: Gen 3 vs. Gen Frac Design 50,000 45,000 BOMHOFF 0--7 H 40,000 Cumulative Production (BOE) 35,000 30,000 5,000 0,000 5,000 0,000 Gen- Average Gen 3 frac Gen frac 5, Days Producing Type Curve IP Range (Boe/d) EUR Range (MBOE) % Oil % Liquids Gross Locations Woodford 600, , % 55 84%,833 Gen Average production includes the average cumulative production from HARDY 5--6-WH, BENNETT WH, and BELYEU WH. Cumulative production and type curve based on 3-stream reporting and normalized to 5,000 lateral length. 8

9 Keys to Woodford Success: Frac Design Evolution GEN 3 Today Initial Conclusions: Tighter stage spacing and greater proppant loading drives well performance. GEN JONE enters the Merge GEN Proppant (lbs. / ft.) Fluid Concentration (Bbls. /ft.) Cluster Spacing (ft.) Stage Spacing (ft.) GEN Early Merge Drilling 3, , <,500 ~

10 JONE Merge Position Update Merge Entry: September 06 Today: July 07 Net Acres: 6,975,68 Operated Sections: 9 35 Total Sections: 9 35 Gross Loc. Resource (MMBoe) Gross Loc. Resource (MMBoe) Meramec 740 5,06 93 Woodford,375 5,833 7 Hunton Springer TOTAL, ,5 505 Producing: 7 48 Net Production (Boe/d): 38 3,354 Acreage closed and funded Net unrisked resource potential based on Company internal estimates 0