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Miller Energy, SEC work toward settlement of enforcement action
Miller Energy Resources Inc. is trying to finalize an enforcement settlement with the U.S. Securities and Exchange Commission.
The matter is bound up in Miller’s Chapter 11 bankruptcy reorganization now pending in Anchorage.
The SEC issued a Jan. 12 order making certain findings and imposing a $5 million civil penalty against Miller as part of a settlement.
“This case involves financial accounting and reporting fraud, as well as audit failures, related to the valuation of certain oil and gas assets acquired by Miller Energy,” the order says.
Those assets, along the west side of Alaska’s Cook Inlet, included the West McArthur River oil field and the offshore Redoubt unit. The SEC, and some of the company’s shareholders, alleged Miller grossly overstated the value of the assets, which it obtained in late 2009 out of the bankruptcy of the prior operator.
Penalty treatment Miller disclosed back in August 2015 that a settlement with the SEC was coming.
Miller isn’t “admitting or denying the findings” in the order, the document says.
The SEC appears unlikely to collect the full $5 million penalty. The order says the penalty would be placed in a class of general, unsecured claims in Miller’s bankruptcy plan of reorganization. The plan estimates a 10 percent recovery on those claims.
A hearing is set for Jan. 27 in the bankruptcy court to consider confirmation of Miller’s reorganization plan, which lays out how the company aims to deal with its heavy debt and other matters and continue as an Alaska oil and gas producer.
Ultimately, holders of claims and equity interests will vote on whether to accept the plan.
After consummation of the plan, Miller would be a private company, no longer publicly traded as it is now.
Complications Miller has asked the court to approve the SEC settlement.
But the company is encountering some problems in pushing its reorganization plan through.
The Internal Revenue Service on Jan. 20 filed an objection to confirmation of the plan.
And one of Miller’s creditors, All American Oilfield LLC, has filed a side suit known as an “adversary proceeding.” The complaint seeks payment for drilling done in the North Fork natural gas field on the Kenai Peninsula.
Miller’s subsidiary, Cook Inlet Energy LLC, operates North Fork and other properties in Alaska.
“Even though Cook Inlet has failed to pay All American’s invoices, it used All American’s invoices … as the basis for receiving tax credits from the State of Alaska,” the adversary complaint alleges.
- WESLEY LOY
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