The Osprey platform on the west side of Alaska’s Cook Inlet is producing oil again.
The parent company of operator Cook Inlet Energy LLC of Anchorage announced a well on the platform, the RU-1 well, had been successfully redeveloped by changing an electric submersible pump.
The well is “currently flowing above expected rates” at a steady level of about 350 barrels per day gross, Miller Energy Resources Inc. said in a June 13 press release.
Crude from the platform will be sold to Tesoro, which operates a refinery on the opposite side of the inlet.
JR Wilcox, president of Cook Inlet Energy, told Petroleum News the first shipped production from Osprey and the Redoubt unit came around June 4. It’s the first production from the platform since 2009, when a volcanic eruption and financial trouble hit west Cook Inlet and Osprey’s former owner.
“It’s a great story,” Wilcox said. “How often does a platform come back from the grave?”
Osprey’s revival headlined a slew of news coming from Huntsville, Tenn.-based Miller Energy, which also announced a new line of financing and a new addition to its executive team.
Idle no more“Miller is continuing redevelopment operations on the Osprey and is currently replacing the ESP on the RU-7 well, which is expected to come online in the next week,” the June 13 release said.
“Following this replacement, Miller plans to redevelop and drill additional wells in the Cook Inlet, including the four wells that are expected to produce an additional 2,000 Bbls/d gross from the Osprey platform.”
Osprey is the newest and southernmost platform in Cook Inlet. Forcenergy Inc. completed installation of the platform in 2000 over the Redoubt Shoal field.
Production from Osprey has been a serious disappointment over its history, and for a time it appeared the platform would remain in perpetual “lighthouse mode” as an abandoned ward of the state.
With Miller’s backing, Cook Inlet Energy in December 2009 picked up the idle platform in a package of oil and gas properties previously operated by California-based Pacific Energy Resources Ltd., which had filed for bankruptcy.
“With the successful redevelopment of RU-1, which is exceeding expectations, we continue to demonstrate our operational expertise and our ability to cost effectively operate and redevelop wells in the Redoubt field and our other Alaskan assets,” said Scott M. Boruff, Miller Energy chief executive.
New financing, new presidentAlso on June 13, Miller Energy announced it had closed on a two-year, $100 million credit facility with New York-based Guggenheim Corporate Funding LLC and others.
A credit facility is a loan or collection of loans that can take different forms, from letters of credit to revolving credit to term loans, according to financial websites such as investorwords.com.
Miller Energy said its credit facility “provides for an initial borrowing base of $35 million,” and is secured by “substantially all” of the company’s assets.
“Proceeds from the loan will be utilized to fund development and the construction of a drilling rig to be used to increase oil production both onshore and offshore in Alaska through the drilling of new wells and the reworking of previously producing oil wells,” Miller Energy said in its June 13 press release.
Aside from the Redoubt unit, Miller subsidiary Cook Inlet Energy operates the West McArthur River oil field and the West Foreland gas field. Before the Osprey restart, the company reported total net production of just over 1,000 barrels of oil equivalent per day.
The credit facility “ensures that Miller has the funding to dramatically increase production through low-risk development,” said Boruff, the Miller Energy CEO. “Obtaining a credit facility without an equity component led by Guggenheim was very important for Miller. Beyond the financial security provided by the facility, Miller is pleased to have access to Guggenheim’s significant financial capabilities and extensive oil and gas expertise.”
On June 14, Miller Energy announced a consultant and board member, David J. Voyticky, had been appointed company president. Voyticky, 42, was instrumental in securing the credit facility and offers broad financial experience, having held positions with Goldman, Sachs & Co., J.P. Morgan and others, a Miller Energy press release said.
Living largeAside from Alaska’s Cook Inlet, Miller Energy’s other focus is the Appalachian basin in eastern Tennessee, including the Chattanooga shale.
The company is listed on the New York Stock Exchange, and its stock price has soared since it acquired the Cook Inlet properties.
On June 9, Boruff was featured in a lead, front-page article in the News Sentinel newspaper in Knoxville, Tenn., as the oilman who paid $8.5 million for a mansion known as Villa Collina.
“With eight bedroom suites, 11 full bathrooms and a site overlooking Fort Loudoun Lake, Villa Collina is one of Knoxville’s most lavish homes,” the article said.