Noble Financial affirms Jones Energy (NYSE: JONE) at Hold following Q1 results issued late Thursday. The company reported Q1 EPS of ($0.03), which was $0.01 better than the analyst estimate of ($0.04). Revenue for the quarter came in at $25.9 million versus the consensus estimate of $47.39 million.

Michael Heim offered the following observations and commentary on Friday:

• Production strong. Jones reported production of 20.4 MBOE/day for the quarter, above previous guidance. In light of strong production, management has raised its 2016 production guidance to 16.8-19.7 MBOE/day from 15.5-17.0 MBOE/day. Jones has developed a good track record of beating guidance. Management pointed to continued improvements in drilling as the cause of the good results.
• Costs also falling. Leasing operating costs were $4.65 per BOE, although management indicated that number was helped by a large number of well work-overs. Well drilling costs were near $2 million, a significant drop from previous years.
• Drilling is resumed. Management indicated that it resumed drilling in the Cleveland Field in April and will expand to three drilling rig this summer. It believes three rigs should be enough to maintain production levels. It has increased its capital expenditure budget accordingly. Management also hinted that its M&A activity is heating up and it could be a buyer (most likely of working interests from partners in existing wells).

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