1. Organization and Description of Business

Organization

Jones Energy, Inc. (the "Company") was formed in March 2013 as a Delaware corporation to become a publicly-traded entity and the holding company of Jones Energy Holdings, LLC ("JEH"). As the sole managing member of JEH, the Company is responsible for all operational, management and administrative decisions relating to JEH's business and consolidates the financial results of JEH and its subsidiaries.

JEH was formed as a Delaware limited liability company on December 16, 2009 through investments made by the Jones family and through private equity funds managed by Metalmark Capital and Wells Fargo Energy Capital (collectively, the "Pre-IPO owners"). JEH acts as a holding company of operating subsidiaries that own and operate assets that are used in the exploration, development, production and acquisition of oil and natural gas properties.

The Company's certificate of incorporation authorizes two classes of common stock, Class A common stock and Class B common stock. The Class B common stock is held by the owners of JEH prior to the Company's initial public offering ("IPO") and can be exchanged (together with a corresponding number of units representing membership interests in JEH ("JEH Units")) for shares of Class A common stock on a one-for-one basis, subject to customary conversion rate adjustments for stock splits, stock dividends and reclassifications and other similar transactions. The Class B common stock has no economic rights but entitles its holders to one vote on all matters to be voted on by the Company's stockholders generally. As a result of the IPO and as of February 29, 2016, the Pre-IPO owners had 74.7% and 50.6%, respectively, of the total economic interest in JEH, but with no voting rights or management power over JEH, resulting in the Company reporting this ownership interest as a non-controlling interest. Prior to the IPO, JEH owned the controlling interest in the Company; hence all of the net income earned prior to the IPO date is reflected in the net income attributable to non-controlling interests on the Consolidated Statement of Operations for the year ended December 31, 2013.

Description of Business

The Company is engaged in the exploration, development, production and acquisition of oil and natural gas properties in the mid-continent United States. The Company's assets are located within the Anadarko and Arkoma basins of Texas and Oklahoma, and are owned by JEH and its operating subsidiaries. The Company is headquartered in Austin, Texas.

Revision of Previously Issued Financial Statements

During the first quarter of 2015, we identified an error in our previously issued Form 10-K for the year ended December 31, 2014 related to the over accrual for production taxes which would have been material to the first quarter of 2015 and could be material to projected 2015 annual results if recorded as an out of period adjustment in such period. Therefore we have revised our Balance Sheet and Consolidated Statement of Operations for the year and quarter ended December 31, 2014, as noted in the table below. This revision had no impact on our net cash provided by operations in our Consolidated Statement of Cash Flows for the twelve months ended December 31, 2014. We have determined that this error is not material to the consolidated financial statements of any prior period presented.

In addition, we identified an error in our previously issued Form 10-K for the year ended December 31, 2014 related to the exchange of Class B shares for Class A shares. Therefore we revised our Consolidated Balance Sheet and Statement of Changes in Stockholders' Equity for the year ended December 31, 2014 as noted in the table below. This revision had no impact on Class A or Class B shares outstanding at December 31, 2014. We have determined that this error is not material to the consolidated financial statements of any prior period presented.

Consolidated Balance Sheet:

	December 31, 2014								December 31, 2014
	December 31, 2014			Production tax		Exchange of Class B shares			December 31, 2014
(in thousands of dollars)	As Reported			Production tax		Exchange of Class B shares			As Revised
Accounts Receivable, Oil and gas sales	$	49,861		$	1,621		—		$	51,482
Deferred tax liabilities	$	27,330	(1)	$	144		—		$	27,474
Additional paid in capital	$	177,133			—	$	1,630		$	178,763
Retained earnings	$	38,682		$	268		—		$	38,950
Non-controlling interest	$	636,366		$	1,209	$	(1,630	)	$	635,945

(1)Certain prior period amounts have been reclassified to conform to the current presentation.

Consolidated Statements of Operations—for the twelve months ended:

	December 31, 2014						December 31, 2014
	December 31, 2014			Production tax			December 31, 2014
(in thousands except per share data)	As Reported			Production tax			As Revised
Production and ad valorem taxes	$	24,177	(1)	$	(1,621	)	$	22,556
Income tax provision (benefit)	$	26,074		$	144		$	26,218
Net income (loss)	$	224,143		$	1,477		$	225,620
Net income (loss) attributable to non-controlling interests	$	183,275		$	1,209		$	184,484
Net income (loss) attributable to controlling interests	$	40,868		$	268		$	41,136
Earnings (Loss) per share:
Basic	$	3.26		$	0.02		$	3.28
Diluted	$	3.26		$	0.02		$	3.28

(1)Certain prior period amounts have been reclassified to conform to the current presentation.