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Vol. 15, No. 24 Week of June 13, 2010
Providing coverage of Alaska and northern Canada's oil and gas industry

Oil Patch Insider

Investors show lots of love for Alaska newcomer Miller Petroleum; Chappell retires from BP; Pearce moves on

Oil giant BP has seen its stock price plummet by more than half since the Deepwater Horizon exploded on April 20.

But the trend is markedly different for a small oil and gas company that ventured onto the Alaska scene a few months ago.

On June 9, shares of Miller Petroleum Inc. closed at $5.35, up an astounding 1,521 percent from the 33 cents seen on the same date a year earlier. At $5.35 per share, the company’s market capitalization is $145 million.

Most of the surge in Miller’s stock value has come since an Oct. 20, 2009, announcement that the Tennessee company had completed an agreement to buy the assets of a fledgling Anchorage firm called Cook Inlet Energy.

Cook Inlet Energy would manage to grab, with Miller’s help, a modest assortment of oil and gas properties on the west side of Alaska’s Cook Inlet — assets that had been temporarily abandoned to the state following the financial collapse of their former owner, Pacific Energy Resource Ltd. of California.

In its Oct. 20 press release, Miller’s chief executive, Scott Boruff, said the Alaska deal “increases our reserves by 30 fold,” declaring: “We hit it out of the park on this one.”

Since then, Miller Petroleum, which also calls itself Miller Energy Resources, hasn’t been shy about issuing more press releases touting the incremental successes of its Cook Inlet Energy subsidiary in rehabilitating its Alaska wells.

Most recently, Miller on May 25 announced the “successful” workover of three wells in its West McArthur River unit, with work under way on a fourth well.

“The rework of this well is intended to establish oil production from the currently producing Hemlock formation and natural gas production from the Tyonek gas sand formation,” Miller said. “A gross sand interval of approximately 60 feet has been identified in the well and is considered the largest zone that has been observed fieldwide.”

On April 6, Cook Inlet Energy announced it had reached its goal, far ahead of schedule, of more than 1,100 barrels of oil equivalent per day. Production was almost zero when the company took over the properties.

The buzz surrounding the Alaska venture evidently has excited investors, as Miller’s stock price has trended up sharply, spiking as high as $6.60 on March 31.

Miller, based in Huntsville, Tenn., near Knoxville, touts Cook Inlet and Tennessee’s Appalachian basin as its focus and characterizes itself as “the largest operator of natural gas and oil wells in Tennessee.”

On its polished website it features a photo of Osprey, a disappointing Cook Inlet offshore platform that nearly became an orphan of the state.

To acquire the Alaska assets, Miller rounded up financing of nearly $4.5 million, working with a New York investment firm called Vulcan Capital Management.

As Miller’s stock price has soared, so has its profile.

Formerly its share price was quoted on the OTC Bulletin Board. But in May, Miller Petroleum shares began trading on the tech-heavy NASDAQ exchange under the symbol MILL.

On May 19, Miller issued yet another press release: The Tennessee Oil and Gas Association had named Boruff its 2009 Tennessee Oil Man of the Year.

The release said Boruff and Miller had completed two acquisitions in Tennessee in 2009 plus the Alaska deal, termed the largest acquisition in the 40-year history of the company.

—Wesley Loy

Ann Womack-Kolton takes Ronnie Chappell’s position at BP

By now everyone has heard about BP hiring former U.S. Vice President Dick Cheney’s press officer to run its media relations in the United States.

But what no one seems to realize is that Ann Womack-Kolton is taking Ronnie Chappell’s position.

Chappell, former BP spokesman in Alaska and, until March, vice president of media for “The Americas” at BP in Houston, recently told Petroleum News he retired in March, prior to the April 20 Transocean rig explosion on a BP exploration well in the Gulf of Mexico — and not long after he got a new boss in London, former editor of the Financial Times, Andrew Gowers.

The other information few journalists point out is that for all the criticism BP is taking over Womack-Kolton’s stint with Cheney, she only spent five months as his spokeswoman in the 2004 campaign and, per the personable and intelligent Gowers, “will in no way be responsible for BP’s relations with Capitol Hill.”

Womack-Kolton spent most of her time in the George W. Bush administration in a much less controversial position as public affairs head for the Department of Energy.

As for Chappell, who worked for ARCO Alaska until 1999 when he went to work for BP in Anchorage, he says he’s “happy as can be” in his retirement.

—Kay Cashman

Wondering what Drue Pearce is up to?

Since Drue Pearce was asked to step down as federal coordinator for Alaska natural gas pipeline projects by the newly elected U.S. President Barrack Obama in 2009, she has been keeping busy — and holding onto her Alaska citizenship.

The Obama administration selected another Alaskan, Larry Persily, to succeed Pearce, who was the first person to hold the position of federal coordinator.

The coordinator’s job is to expedite permitting and construction of a natural gas pipeline, working with some 20 federal agencies, the Canadian government, the State of Alaska, tribal governments and other stakeholders.

A Republican and former president of the Alaska State Senate, Pearce took the post in 2006 during President George W. Bush’s second term. She quickly assembled a small staff, established a headquarters in Washington, D.C., and opened a second office in Anchorage.

In press interviews at the time of her resignation, which was effective this past January, Pearce said she didn’t want to leave the position.

Indeed, the federal law that created the coordinator’s office, the Alaska Natural Gas Pipeline Act of 2004 says the president shall appoint a coordinator, as head of an independent office in the executive branch, “to serve a term to last until one year following the completion of the project.”

Never one to remain idle Pearce told Petroleum News June 8 that she is already “doing some contract work,” some in conjunction with her husband Michael F.G. Williams, a former oil company executive, through Phoenix Systems Management and Consulting, or Phoenix SMC.

“We invested in a company called Spill Shield; that’s one of the primary things we’re doing at the moment,” she said.

Pearce, Williams and their daughter are still living in Accokeek, Md., where she was based for her federal coordinator’s position, but they are “progressively spending more and more time in Alaska.”

Pearce said she can be reached on her cell phone at 907 230-8558.

—Kay Cashman

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