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December 2013
Copyright Petroleum Newspapers of Alaska, LLC (Petroleum News)(PNA)©1999-2019 All rights reserved. The content of this article and website may not be copied, replaced, distributed, published, displayed or transferred in any form or by any means except with the prior written permission of Petroleum Newspapers of Alaska, LLC (Petroleum News)(PNA). Copyright infringement is a violation of federal law subject to criminal and civil penalties.
Vol. 18, No. 52 Week of December 29, 2013

Miller Energy answers its critics

In response to challenge from dissident shareholders, company defends its record, says it is ‘open to constructive engagement’

Wesley Loy

For Petroleum News

Miller Energy Resources Inc. says it is taking criticism from a group of dissident shareholders “very seriously.”

The group, which calls itself Concerned Miller Shareholders, recently sent a blistering open letter to fellow shareholders urging replacement of company board members and senior management.

“We believe the company has great assets and a strong operational team in Alaska, but Miller shares are dramatically undervalued due largely to the incompetence of Miller’s senior management and lack of relevant experience, together with its excessive compensation and unacceptable self-dealing,” the letter said.

On Dec. 19, Miller Energy released a statement on the letter.

“The board values the opinions of all of our shareholders, and is always open to constructive engagement with them,” the statement said. “Therefore, despite the fact that the dissidents appear to be led by a former consultant whose contract was not renewed by the company, we are carefully evaluating the concerns raised in their letter.”

Alaska managers ‘excluded’

The dissidents have a website at http://millproxy.com. The full text of the letter is posted there.

The dissidents are nominating a slate of “independent, extremely qualified” board candidates for election at the company’s next annual meeting, expected to be held in late March.

Miller is based in Knoxville, Tenn., and is listed on the New York Stock Exchange. Its main business is in Alaska, where subsidiary Cook Inlet Energy LLC operates a collection of oil and gas properties on the inlet’s west side.

Miller’s overall production is small at just over 4,000 barrels of oil equivalent per day.

The company has borrowed aggressively for Alaska drilling operations and acquisitions.

The dissidents aimed much of their criticism at Scott Boruff, Miller’s chief executive, and David Voyticky, chief financial officer.

“Executives with relevant experience, such as David Hall who runs the operations in Alaska and has 20-plus years of experience in Alaska, have been excluded to a great extent from the senior executive team charged with leading the company,” the letter said. “In fact, the business is run by absentee executives in Tennessee and California who appear very interested in strategies aimed at undermining corporate governance while lining their own pockets and those of their select friends and followers, but neither understand nor seem particularly interested in the operations on the ground in Alaska. We believe, neither Mr. Boruff nor Mr. Voyticky have spent any considerable time in Alaska and in fact have spent more than 95% of their time far removed from the company’s most valuable asset.”

‘A very strong record’

The dissident group is led by Bristol Capital Advisors LLC and Lone Star Value Management LLC, and says it represents about 4.7 percent of Miller’s outstanding common stock.

The group alleges excessive executive compensation, mismanagement, personal use of corporate assets, poor board oversight, weak accounting and “massive shareholder dilution.”

Miller defended itself with its Dec. 19 response.

“We have a very strong record of creating shareholder value over the last several years,” the response said, noting the price of Miller’s common stock had increased more than 120 percent for the year prior to a decline resulting from the dissident letter.

Miller is a small oil and gas producer in Tennessee. The company’s profile began a sharp rise following acquisition of the Alaska properties in late 2009, with its penny stock jumping from the OTC Bulletin Board to the Nasdaq exchange and finally to the New York Stock Exchange. Miller closed on Christmas Eve with a share price of $7.25 and market capitalization of $323 million.

The company’s Alaska subsidiary, Cook Inlet Energy, operates the Osprey offshore platform and the onshore West McArthur River oil field.






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