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Jones Energy to Divest Non-Core Properties in Arkoma Basin

Zacks Equity Research

Texas-based upstream company Jones Energy, Inc. JONE recently entered into divestment agreements to offload its non-core properties in Arkoma Basin to undisclosed buyers in order to augment its balance sheet.  With the divestment deal, the company will exit the Arkoma Basin which represents just 6% of the company’s projected 2017 revenues.

The company has 277 gross drilling locations and 45 net drilling locations on 12,383 leased acres in Arkoma Basin The production capacity of these properties average over 3,000 barrels of oil equivalent per day – mostly natural gas and natural gas liquids. The total consideration of the deal is valued at $67.5 million. Jones Energy is likely to receive cash payment of $65 million and up to $2.5 million contingent payment based on improving natural gas prices. The proceeds are expected to be used to repay debt under its revolving credit facility. Subject to regulatory approvals and satisfactory closing conditions, the Arkoma transaction is scheduled to close in the third quarter of 2017.

The company sold other non-core assets worth $2.5 million in early 2017. With the current deal, the total divestitures of the company have amounted to $70 million so far this year. The deal is in sync with the company’s strategy to reduce debt and focus on ramping up activities in the Merge play in the prolific Anadarko basin.

Zacks Ranks and Key Picks

Jones Energy deals with the production and acquisition of oil and natural gas properties in Texas and Oklahoma. The company, under the Zacks categorized U.S.Oil & Gas Exploration & Production industry,carries a Zacks Rank #3 (Hold).

Jones Energy, Inc. Price

Jones Energy, Inc. Price | Jones Energy, Inc. Quote

Some better-ranked players from the same industry include Viper Energy Partners LP VNOM, Legacy Reserves LP LGCY and W&T Offshore, Inc. WTI. While Viper Energy sports a Zacks Rank #1(Strong Buy), Legacy Reserves and W&T Offshore carry a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

Viper Energy Partners delivered positive earnings surprise in each of the trailing four quarters, the average being 20.35%.

Legacy Reserves posted positive average earnings surprise of 11.84% in the last four quarters.

W&T Offshore delivered positive earnings surprise in each of the trailing four quarters, the average being 69.21%.

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