When ExxonMobil, BP Plc and ConocoPhilips need a highly economic well drilled in the Cleveland play in the Anadarko Basin, do these industry behemoths, with their vast knowledge and capital resources, roll out the rigs and do it themselves? Heck no. They call Jones Energy Inc.

Jones—with a mere $200 million market cap—holds the brass ring as low-cost operator in the play, outpacing the big boys by $1 million to $2 million per well. In fact, the mega-oils are more than happy to hand over half of their positions, as well as operatorship, to let Jones do the lifting.

“We’ve been outsourced to the majors for many years,” said Mike McConnell, Jones president. “We put out cost caps that are so substantially lower than what they were going to spend, that we don’t pay additional promote—we just guarantee the cost cap. It’s about execution to us. We love that.”

Jones, based in Austin, Texas, first partnered with ExxonMobil in 1999, drilling its first Cleveland wells in 2004. Devon Energy and Samson Resources are also partners of Jones. Jones has entered five drilling agreements with BP over the years, and is currently operating the British company’s entire Cleveland portfolio, for which Jones earns half. When drilling its own, BP wells cost $4 million; Jones offered a cost cap of $2.35 million per well.

“They ran the economics, shut down the drilling program and handed it to Jones,” McConnell recounted. “They thought we were taking all the risk. We drilled 25 wells and never hit the cost cap.”

And they love it, he said. “They get production. Their acreage is being used. They know the maximum they’re going to spend per well. If we drill it cheaper, it’s still 50/50; we get the benefit. So we get acreage we didn’t have to pay for, and they get very economical wells in a program they can’t drill.”

Although Jones Energy is newly public—it IPOed in July 2013—it is not new to oil and gas. The Jones family legacy spans 90 years and three generations, starting with patriarch A.V. Jones Sr. His grandson, Jonny Jones, son of EnerVest chairman John Rex Jones, launched the current Jones Energy in 1988.

How does Jones drill and complete wells so efficiently? “It’s part of our DNA,” said McConnell, once a roommate with Jonny Jones at the University of Oklahoma. "We challenge our operations every single day.” Five keys define its operational success.

First is being geographically focused: The company is a single-minded Midcontinent player. Second is extensive unconventional experience, with more than 460 horizontal wells drilled in nine different formations. Third, “we strive to make every element of our program fit for purpose,” including rigs properly sized to the reservoir and completion designs tailored to the play.

Fourth: “We use local knowledge and relationships to ensure competitive pricing and best services to get the best results. We look at vendors as our partners; we listen to them. And we pay our bills on time.”

Finally, “we have a relentless focus on cycle time, from spud to first production. This not only saves us money, but it accelerates production.”

Might I add a sixth: Jones uses openhole completions almost exclusively—and successfully. “It’s a very economical way to get off fracks,” he said. “It’s cheaper. It’s faster. We’ll have gas flowing in a day.”

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