Cook Inlet producer expands rig fleet

Miller Energy Resources Inc. is adding a third rig to its Alaska drilling fleet.

Tennessee-based Miller operates in Alaska via its Anchorage-based subsidiary, Cook Inlet Energy LLC.

In filings with the U.S. Securities and Exchange Commission, Miller said it had entered into an option to purchase the rig for $3.25 million. The option is with Baker Hughes.

“We expect to close on the purchase of this rig in May 2014, and to then make improvements to it needed to drill the Sabre prospect,” Miller said in an April 17 filing with the SEC. “The estimated costs of the improvements will be approximately $8 million.”

The newly acquired rig will be known as rig 36.

The company’s existing fleet includes rig 35, working atop the Osprey offshore platform in Cook Inlet, and the truck-mounted rig 34, which has been used to explore natural gas prospects on the inlet’s west side.

Sabre is an oil prospect adjacent to the company’s West McArthur River field.

Up to six wells will be needed to develop Sabre, and “we expect that the preliminary gross cost to drill, test and complete the first well in this prospect will be in the range of approximately $25-30 million,” Miller said.

—Wesley Loy