Energy Prospectus

Jones reports 3Q results:

EPS of $-0.13 beats by $0.06 Revenue of $44.2M (+ 32.5% Y/Y) misses by $-9.85M
AUSTIN, Texas, Nov. 07, 2017 (GLOBE NEWSWIRE) -- Jones Energy, Inc. (JONE) (“Jones Energy” or “the Company”) today announced financial and operating results for the third quarter ended September 30, 2017 and updated guidance for 2017, including initial fourth quarter 2017 guidance.

Highlights:

Strong initial rates seen from six recently completed wells in the Merge, with rates still increasing.
First pair of long lateral Merge wells drilled at Company-record pace, currently undergoing completions.
Suspended drilling activity in Western Anadarko, released last remaining rig in October.
Average daily net production for third quarter 2017 of 21.4 Mboe/d.
Working with lenders to increase financial flexibility to enable increased Merge activity in 2018.
Net loss for the third quarter of 2017 of $83.0 million, non-GAAP adjusted net loss of $10.9 million, or a loss of $0.13 per share, and EBITDAX of $47.1 million.1

Q3 production tops my forecast of 19,800 BOE per day.

The conference call was very interesting.They are moving most of their spending to the Merge acreage.They are having great results there.The call was very professional and that team seems to be on the conservative side.Yet they are ready to amp up rigs with regards to the right timing.Dan talks about the scoop and stack,I would like to hear his opinion or thoughts on the Merge play.Are there other companies drilling there and what are the results?Thanks

Gulfport Energy and Continental Resources are also active in the area between SCOOP & STACK and they are both reporting very good well results there.
The term "Merge Area" is what Jones calls it.

I am amazed that the market is punishing JONE like this. I look at JONE as a big gamble on the Merge area. All indications are positive for the Merge. What gives?

Small-caps can get hammered when you least expect it. They can have an overall good quarter but one item of "not as good as hoped for" information and some investor hits the sell button.

JONE closed today at less than 1X operating cash flow per share. That is ridiculous unless you think they are going bankrupt.

As of September 30, 2017, the Company had $151 million of outstanding borrowings under its revolving credit facility, resulting in approximately $224 million of total unborrowed capacity, and approximately $6 million in cash. The Company is working with its lenders to increase its financial flexibility, including modifying its financial covenants under the Revolver. The Company believes that it will be successful in its negotiations with its lenders, and expects such negotiations to be finalized in the coming weeks.

I wonder it investors took "working with its lenders" as a bad thing?

The company has more than enough cash flow and liquidity to fund their drilling program through 2018. A strong reserve report at year-end should justify a higher credit facility.