Miller Energy Resources Inc. may buy the Cook Inlet assets of Buccaneer Energy Ltd.
In a press release this morning, Miller announced that it had entered into a non-binding letter of intent to buy "substantially all" of Buccaneer's operating assets in Alaska for approximately $40 million to $50 million. The Tennessee-based independent would fund the acquisition "with its existing facilities or other borrowings," the company said.
While any final agreement requires board approval, "management believes the transaction would be accretive to both credit and cash flow per share metrics."
The Australian independent Buccaneer is currently in the middle of bankruptcy proceedings. The company operates the producing Kenai Loop gas field near the city of Kenai. It also owns leases at the onshore West Eagle prospect in the southern Kenai Peninsula and the onshore West Nicolai prospect on the west side of Cook Inlet and deep oil drilling rights at the offshore Nook Cook Inlet unit, operated by ConocoPhillips.
According to Miller, Buccaneer has approximately 1.9 million barrels of oil equivalent of proved reserves and produces approximately 1,700 barrels of oil equivalent per day.
Until now, Buccaneer has been proceeding toward an auction for its assets.
Its largest secured creditor, AIX Energy LLC, had previously agreed to be the stalking-horse bidder for an auction, committing to bid some $58 million for "substantially all" of Buccaneer's assets. A staking horse bidder provides a guaranteed minimum bid.
The move continues Miller's efforts to expand its Alaska operations. For several years, Miller operated exclusively on the west side of Cook Inlet through its subsidiary Cook Inlet Energy LLC. But in the past year, Miller acquired the North Fork unit in the southern Kenai Peninsula and is in the process of acquiring the Badami unit on the eastern North Slope.
- ERIC LIDJI
See story in Sept. 21 issue, available online Friday, Sept. 19 at www.PetroleumNews.com