Miller Energy Resources ("Miller") (NYSE: MILL) releases an update today on its operations both in Alaska and in Tennessee.
Alaska Rework Update
Miller announced today that its wholly owned Alaskan subsidiary, Cook Inlet Energy ("CIE"), led by David Hall, successfully completed a work-over on RU-3 natural gas well on its Osprey platform on February 11, 2013. This is the second successful gas well CIE has brought online in the last two weeks. RU-3 is currently flowing and being unloaded in preparation for four-point flow test, test results forthcoming. Gas production from RU-3 is expected to be exported to help meet gas demand in the Cook Inlet.
CIE successfully re-established gas production from the Tyonek G-0 sand, which had been unable to produce gas since it was unsuccessfully reworked by a previous operator in December 2003. RU-3 encountered an average of 20 feet of net gas pay across an estimated 150-acre reservoir. The zone produced a total of 452 MMscf between May and December of 2003. The well went off production due to mechanical problems and had subsequently been plugged back to a shallower zone for an attempted completion. CIE successfully completed a complex fishing job to remove materials and equipment left in the wellbore from this previous completion attempt in order reopen the deeper proven reservoir and reestablish production.
Company estimates a minimum of 1.2 BCF of remaining reserves should be available from the zone. Immediately prior to going off production in December of 2003, the well was producing in excess of 2.0 MMcfd.
Over the past few weeks, CIE has been conducting simultaneous operations on RU-D1, RU-3, RU-4 and RU-7. Two weeks ago it announced the successful completion of the RU-4 gas well in Lower Tyonek sands, and since then, that well has been producing at approximately 1 MMcfd. CIE has also been conducting operations to replace a failed electric submersible pump (ESP) and add new perforations to its RU-7 oil well and is nearing 50% complete in those activities. In addition to the above, CIE is adding 34' of new perforations in its RU-D1 Class I disposal well to increase injectivity.
Tennessee Drilling Update
In its Tennessee operations, Miller completed its second successful horizontal oil well in the Fort Payne formation, the Maynard H-1, on February 4, 2013.The Maynard H-1 showed the same traits as the CPP-H-1 well with shows of oil and gas throughout the horizontal section of the well and is presently flowing back oil and treatment fluid. With these two wells being the first of their kind in Tennessee, Miller plans to take a methodical approach to completing and producing the two horizontal wells. This methodology will include testing various pumping methods, pressure maintenance programs and proper well configuration in order to maximize the horizontal drilling program in Tennessee. Two more horizontal wells are scheduled to begin within the next 45 days.
About Miller Energy Resources
Miller Energy Resources, Inc. is an oil and natural gas exploration, production and drilling company operating in multiple exploration and production basins in North America. Miller's focus is in Cook Inlet, Alaska and in the heart of Tennessee's Appalachian Basin including the Mississippian Lime and the Chattanooga Shale. Miller is headquartered in Knoxville, Tennessee with offices in Anchorage, Alaska and Huntsville, Tennessee. The company's common stock is listed on the NYSE under the symbol MILL.
Statements Regarding Forward-Looking Information
Certain statements in this press release and elsewhere by Miller Energy Resources¸ Inc. are "forward-looking statements" within the meaning of the Private Securities Litigation Reform Act of 1995. These forward-looking statements involve the implied assessment that the resources described can be profitably produced in the future, based on certain estimates and assumptions. Forward-looking statements are based on current expectations, estimates and projections that involve a number of risks, uncertainties and other factors that could cause actual results to differ materially from those anticipated by Miller Energy Resources, Inc. and described in the forward-looking statements. These risks, uncertainties and other factors include, but are not limited to, the potential for Miller Energy to experience additional operating losses; high debt costs under its existing senior credit facility; potential limitations imposed by debt covenants under its senior credit facility on its growth and ability to meet business objectives; the need to enhance management, systems, accounting, controls and reporting performance; uncertainties related to the filing of its Form 10-K for 2011; litigation risks; its ability to perform under the terms of its oil and gas leases, and exploration licenses with the Alaska DNR, including meeting the funding or work commitments of those agreements; its ability to successfully acquire, integrate and exploit new productive assets in the future; its ability to recover proved undeveloped reserves and convert probable and possible reserves to proved reserves; risks associated with the hedging of commodity prices; its dependence on third party transportation facilities; concentration risk in the market for the oil we produce in Alaska; the impact of natural disasters on its Cook Inlet Basin operations; adverse effects of the national and global economic downturns on our profitability; the imprecise nature of its reserve estimates; drilling risks; fluctuating oil and gas prices and the impact on results from operations; the need to discover or acquire new reserves in the future to avoid declines in production; differences between the present value of cash flows from proved reserves and the market value of those reserves; the existence within the industry of risks that may be uninsurable; constraints on production and costs of compliance that may arise from current and future environmental, FERC and other statutes, rules and regulations at the state and federal level; the impact that future legislation could have on access to tax incentives currently enjoyed by Miller; that no dividends may be paid on its common stock for some time; cashless exercise provisions of outstanding warrants; market overhang related to restricted securities and outstanding options, and warrants; the impact of non-cash gains and losses from derivative accounting on future financial results; and risks to non-affiliate shareholders arising from the substantial ownership positions of affiliates. Additional information on these and other factors, which could affect Miller's operations or financial results, are included in Miller Energy Resources, Inc.'s reports on file with United States Securities and Exchange Commission including its Annual Report on Form 10-K, as amended, for the fiscal year ended April 30, 2012. Miller Energy Resources, Inc.'s actual results could differ materially from those anticipated in these forward- looking statements as a result of a variety of factors, including those discussed in its periodic reports that are filed with the Securities and Exchange Commission and available on its Web site (www.sec.gov). All forward-looking statements attributable to Miller Energy Resources or to persons acting on its behalf are expressly qualified in their entirety by these factors. Investors should not place undue reliance on these forward-looking statements, which speak only as of the date of this press release. We assume no obligation to update forward-looking statements should circumstances or management's estimates or opinions change unless otherwise required under securities law.
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