Consolidated Statements of Operations JONES ENERGY, INC. Year Ended December 31, (In thousands of dollars)  2013 2012 Operating revenues Oil and gas sales  $258,063 $148,967 Other revenues  1,106 847 Total operating revenues  259,169 149,814 Operating costs and expenses Lease operating  27,781 23,097 Production taxes  12,865 5,583 Exploration 1,710 356 Depletion, depreciation and amortization  114,136 80,709 Impairment of oil and gas properties  14,415 18,821 Accretion of discount  608 533 General and administrative (including non-cash compensation expense)  31,902 15,875 Total operating expenses  203,417 144,974 Operating income  55,752 4,840 Other income (expense) Interest expense  (30,774) (25,292) Net gain (loss) on commodity derivatives  (2,566) 16,684 Gain on bargain purchase  - - Gain (loss) on sales of assets  (78) 1,162 Other income (expense), net  (33,418) (7,446) Income (loss) before income tax  22,334 (2,606) Income tax provision Current  85 - Deferred  (156) 473 Total income tax provision  (71) 473 Net income (loss)  22,405 (3,079) Net income attributable to non-controlling interests  24,591 - Net income (loss) attributable to controlling interests  $ (2,186) $ (3,079) Adjusted net income  (1)  $ 54,792 $ 29,411 EBITDAX (2) $ 204,997 $ 135,741 Production (MMBoe)  6.2 4.9 Proved reserves (MMBoe)  89.0 85.3 (1)  Adjusted net income is a supplemental non-GAAP  fi nancial measure that is used by management and external users of the  Company’s consolidated  fi nancial statements. We de fi ne adjusted net income as net income excluding the impact of certain  non-cash items including gains or losses on commodity derivative instruments not yet settled, impairment of oil and gas  properties, non-cash compensation expense, and the gain on bargain purchase associated with the Southridge acquisition  in 2011. For a reconciliation of adjusted net income to our net income, see Item 6. “Selected Financial Data –Non-GAAP  fi nancial measures” in our attached Form 10-K. (2)  EBITDAX is a supplemental non-GAAP  fi nancial measure that is used by management and external users of the Company’s  consolidated  fi nancial statements. We de fi ne EBITDAX as earnings before interest expense, income taxes, depreciation,  depletion and amortization, exploration expense, gains and losses from derivatives less the current period settlements of  matured derivative contracts, and other items. For a reconciliation of EBITDAX to our net income, see Item 6. “Selected  Financial Data –Non-GAAP  fi nancial measures” in our attached Form 10-K.