Jones Energy Inc (NYSE:JONE) has fallen 16% over the last two months. A letter from Q Investments, who owns 5.7% of the company, derided the company telling them to find alternative investments and possibly look to sell the company. Not suprisngly, Q intends to run its own candidates out for board members at the next meeting.
Q Investments has a long track record of protecting shareholder rights and successfully pursuing similar initiatives in numerous other publicly traded companies such as Citadel Broadcasting, Corp,, Houghton Mifflin Harcourt Co., Cedar Fair, L.P., and Quorum Health, Corp.
Jones Energy Inc (NYSE:JONE) is an exploration and production company in the U.S. Mid-Continent. The company operates in the Anadarko and Arkoma basin.
Jones Energy Inc. Class A is based out of Austin, TX and has some 90 employees. Its CEO is Jonny Jones.
JONE is an independent oil and gas company engaged in the exploration, development, production and acquisition of oil and natural gas properties. The Company’s assets are located within the Anadarko and Arkoma basins of Texas and Oklahoma. It owns leasehold interests in oil and natural gas producing properties, as well as in undeveloped acreage, located in the Anadarko and Arkoma basins in Texas and Oklahoma. The Company’s oil is generally sold under short-term, extendable and cancellable agreements with unaffiliated purchasers. The Company’s natural gas is sold at delivery points at or near producing wells to natural gas gathering and marketing companies. Its total estimated proved reserves are approximately 101.7 million barrels of oil equivalent (MMBoe). Approximately 25% of its total estimated proved reserves consist of oil, over 32% consist of natural gas liquids (NGLs) and over 43% consist of natural gas. Its properties include over 1,020 gross producing wells.
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Here are some important quotes below from the letter from Q:
“Your equity started 2017 at $4.60 per share. Since that point, oil and gas prices are approximately down only 9% and 8% across the curve, while your stock has lost approximately 75% of its value and now trades around $1.00!
We believe the market is clearly sending you a wakeup call. We hope you are listening. The market has lost patience. We believe the message is clear – the company has too much leverage and even if you deliver positive well results in the future, you are not going to fix that problem. We believe you need to take immediate action or time may be running out for the survivability of the company.
“We ask the board to immediately start a process to explore all strategic alternatives, which would include selling the company through an equity transaction to allow stakeholders to continue to participate in the upside of the combined entity.”
“As you recall, ownership of your equity is very concentrated with the four large holders (including us) having exposure to over 50% of your outstanding shares. We believe these major shareholders are also becoming impatient with your current progress and are equally frustrated seeing the stock fall below $1.00.”
Jones Energy Inc (NYSE:JONE) is now in the hot seat. JONE has $136.99M market cap with 66.65M in outstanding shares. This battle for control is just beginning for JONE. We are interested to see how this situation will color out over the next few weeks and will be providing updates. Sign-up for continuing coverage on shares of $JONE stock, as well as other hot stock picks, get our free newsletter today and get our next breakout pick!
Disclosure: We hold no position in $JONE, either long or short, and we have not been compensated for this article.