Top Picks 2017: Jones Energy

01/19/2017 6:00 am EST


Elliott Gue

Editor and Publisher, Energy and Income Advisor and Capitalist Times

Our Top Pick for aggressive growth is a small-cap oil and gas producer that recently made a transformative acquisition in the so-called Merge area of the STACK/SCOOP fields in Oklahoma, explains oil sector expert Elliott Gue, editor of Energy and Income Advisor.

The SCOOP/STACK fields in Oklahoma and the Delaware portion of the Permian Basin in West Texas have emerged as the premier rate-of-change fields in the US energy patch.

Both plays remain in the relatively early innings of their development, offer compelling economics and have responded well to enhanced completion techniques.

At the DUG Midcontinent Conference in Oklahoma City, we had the opportunity to do a deep dive on the STACK/SCOOP fields and several promising producers and midstream players in the field.

Jones Energy (JONE) put its first rig to work on its newly acquired acreage in December and plans to drill two wells targeting the upper Woodford formation—the same horizon targeted by Citizen's blockbuster Governor Jones well.

The small-cap exploration and production company should announce the results of these wells by the second or third quarter of 2017, while news from nearby operators could also act as an upside catalyst for the stock.

As Jones Energy proves out its acreage in the Merge, the company will book additional reserves, prompting Wall Street analysts to give the stock a higher interest.

With decent drilling results and oil prices hovering around $50 per barrel, Jones Energy's stock could surge to between $8 and $10 per share by mid-2017.

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