Energy Prospectus

I just finished updating our profile on Jones Energy. This company is way off the Wall Street "radar screen". It is almost entirely insulated from low commodity prices because it has a very high percentage of production hedged at good prices. Today the stock is trading for about 1X operating cash flow per share. Below are First Call's CFPS estimates, not mine (which are higher).

2017 = $1.39 CFPS (my operating cash flow per share forecast is $1.93)
2018 = $2.06
2019 = $4.58

Jones Energy's Q1 production beat my forecast and they have increased production guidance.

I talked to the IR manager after they released Q1 results. He was not interested in hosting an EPG luncheon in Houston. I told him that the company really needs to get out more and tell their story since IMHO it is grossly undervalued. He may have taken it to heart since they are going to two big industry conferences in June. I bring this to your attention because the Wall Street Gang should like this story.

Some upstream companies do not realize how important IR really is. They think if they do a good job that Wall Street will notice them. If they hit their new guidance, it should draw a lot of attention. They will soon be announcing some good well results in STACK and they are ramping up to a three rig program in the play, which they call the "Merge Area".

I have posted my forecast/valuation model to the EPG website. Take a look at the production growth at the bottom of the Excel spreadsheet.

NOTE: JONE reports cash settlements on their hedges as "Cash Flow From Investing Activities" in the Statement of Cash Flows. I think this is the reason my CFPS number is much higher than what First Call is showing.

Direct link to our profile on JONE: https://energyprospectus.com/jones-energy-jone-profile/

from the iv board,, tks o and b

Small producers selling assets to pay bills now? (JONE)

I had some Jones Energy, sold it about 60 cents ago... stock hit low of $1.40 Wednesday.

http://www.oilandgasinvestor.com/jones- ... ma-1635086

Jones Energy Inc. (NYSE: JONE) will exit the Arkoma Basin after entering agreements to sell several noncore assets for up to $67.5 million—exceeding analyst expectations by roughly 35%.

Jones said the Arkoma deals consist of a $65 million cash payment and up to $2.5 million in a contingency payment based on improving natural gas prices. The company has also sold other noncore assets worth $2.5 million in 2017, bringing its total announced divestitures to $70 million so far this year.

Jones did not disclose any of the buyers of its Arkoma assets.

Richard Tullis, an analyst with Capital One Securities, said June 9 that Jones had been marketing the Arkoma and other noncore properties with the hope of generating about $75 million.

“We value these properties at about $50 million,” Tullis said, adding that production averaged about 3,000 barrels of oil equivalent per day, nearly all natural gas and NGL.

...

Jonny Jones, founder, chairman and CEO, said Jones Energy continues to meet its goals for the year, including a ramp up of activity in the Oklahoma Merge and noncore divestitures.

“The sale of our Arkoma Basin asset and other properties is a significant catalyst in our deleveraging story,” Jones said in a press release. “The Arkoma represents just 6% of our projected 2017 revenues and we view the deal as an accretive transaction to the company.”

The Arkoma transactions are expected to be completed during the third quarter of 2017. Detring Energy Advisors was Jones’ exclusive adviser for the sale.

JONE will go up or down based on well results in Merge.

Dan:
What do you think of the well results in the MERGE area. They are not the blockbusters that Devon has been reporting from the STACK, but seem solid.
Thanks.

Dan

Jones Energy's Q2 production of 23,800 BOE per day compares to my forecast of 21,000 Boepd.

Highlights:
•BOMHOFF #2, JONE’s first Meramec well, achieves top decile of Merge wells, reaching a peak rate of 650 Bo/d and 6,306 Mcf/d. (1,751 BOE per day)
•BOMHOFF #1, JONE’s first Woodford Generation 3 frac, shows 3x uplift from Generation 2 frac average, achieves peak rate of 278 Bo/d and 3,574 Mcf/d.
•Second Merge rig deployed as planned July 1, 2017.
•Arkoma divestiture is anticipated to close on August 1, 2017.
•Second quarter production of approximately 23,800 Boe/d, exceeding high end of guidance.

For wells with less than a mile long laterals, they are very good.