Jones Energy Inc. (NYSE:JONE) has signed a definitive purchase and sale agreement to acquire approximately 18,000 net acres primarily in southern Canadian and northern Grady Counties in Oklahoma for $136.5 million.
The majority of the assets are in the oil window, and approximately 70% of acreage is operated with an average working interest of approximately 50%. Jones Energy noted an implied acreage value of approximately $7,600 per net acre.
Jonny Jones, the company’s founder, chairman, and CEO, commented, “We identified this area as a primary target for Jones over a year ago and are thrilled to be acquiring assets in the heart of the STACK/SCOOP play,” adding that the acquisition “high-grades our Midcontinent position and significantly enhances the growth outlook for Jones Energy in 2016 and beyond.”
Seaport Global Securities commented on the deal Thursday morning.
“Without the benefit of an acreage map, tangible offset well results, and economic projections (well cost, EURs, commodity split, etc.) it’s hard to give a thumbs up or down call on this transaction. However, if this acreage – which appears well south of what’s considered the epicenter of the STACK core (more Blaine and Kingfisher counties) – proves to look like the STACK core, then this acreage was a steal at $7.6K/acre (management making the claim that it is on trend), in our view. We note with Q2 earnings, CLR sold what it deemed “non-core” SCOOP acreage on the eastern portion of the play for ~$9K/acre, which may be a fair comp to JONE’s purchase.”
To fund the pending transaction, Jones has launched an underwritten public offering of 14,000,000 shares of its Class A common stock with an option to purchase up to an additional 2,100,000 shares of Class A common stock and an underwritten public offering of 1,000,000 shares of its Series A Perpetual Convertible Preferred Stock at an issue price of $50 per share. The underwriters will have an option to purchase up to an additional 150,000 shares of Series A Perpetual Convertible Preferred Stock.
Any net proceeds in excess of the purchase price will be used for general corporate purposes, which may include leasehold interest and property acquisitions and working capital.
Credit Suisse Securities (USA) LLC and JP Morgan Securities LLC are acting as joint book-running managers for the offerings.
The company anticipates the transaction will close by the end of September, subject to completion of due diligence, satisfaction of customary closing conditions and obtaining certain consents.
Jones Energy Inc. is an independent oil and natural gas company engaged in the development and acquisition of oil and natural gas properties in the Anadarko and Arkoma basins of Texas and Oklahoma.