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Miller Energy ups its Alaska reserves Company hopes new estimate will lead to cheaper financing; dissident shareholders look to replace directors, senior management Wesley Loy For Petroleum News
Miller Energy Resources Inc. has greatly increased its oil and gas reserves in Alaska’s Cook Inlet, based on a new estimate from an independent petroleum reserves consulting firm.
The report from Ryder Scott Co. shows “proved developed” reserves of about 6.1 million barrels of oil equivalent, up from a previous reserves report of 1.6 million barrels.
Most of the gain is attributed to three recompleted wells on the company’s Osprey offshore platform, plus the new Sword No. 1 well drilled from the inlet’s west bank.
Miller, based in Tennessee, operates in Alaska via its Anchorage-based subsidiary, Cook Inlet Energy LLC.
“We started our process with Ryder Scott in order to facilitate our financing objectives,” Scott Boruff, Miller’s chief executive, said in a Dec. 12 press release. “Given lender focus on proved developed reserves, we expect this report will greatly enhance our ability to access cheaper capital. Moreover, the increase in proved developed reserves attributed by Ryder Scott validates our team’s ability to execute on our development and acquisition strategy.”
Shareholder revolt News of the reserves increase comes amid a potential storm for Miller, which is listed on the New York Stock Exchange.
A group of shareholders on Dec. 17 said they would try to reconstitute Miller’s board of directors and replace senior management. The group, representing just under 5 percent of Miller’s outstanding shares, said Boruff and David Voyticky, the company’s chief financial officer, were unqualified and overpaid.
The shareholder group said the company stock was “significantly undervalued.”
However, the group allowed that Miller “has valuable assets and a strong operational team on the ground in Alaska.”
David Hall is Miller’s point man in Alaska.
The shareholder group touted a slate of candidates for the company board, including Bill Richardson, the former U.S. energy secretary and New Mexico governor.
The group said it nominated its candidates for election at Miller’s next annual stockholders meeting, expected to be held in late March.
Aiming for 6,000 barrels The shareholder protest appeared to drive down Miller’s stock price. Shares closed at $7.65 on Dec. 18, down from $8.60 on Dec. 16.
Miller made its entry into the Alaska oil and gas arena in December 2009, when its subsidiary, Cook Inlet Energy, took over an assortment of shut-in assets acquired out of the bankruptcy of California-based Pacific Energy Resources Ltd.
Since that time, Cook Inlet Energy has worked aggressively to restore production and to drill new wells.
Miller Energy now has production of just over 4,000 boe per day, mostly from Cook Inlet with a dab in Tennessee.
On Dec. 10, Miller reported results for the second quarter of its fiscal year 2014, which ended Oct. 31.
The numbers included about $18.7 million in oil and natural gas sales for the quarter, with an operating loss of $4.3 million. The company showed long-term debt of about $74 million.
Miller said it expects to reach production of at least 6,000 boepd by May 1.
Factoring into that goal is the pending purchase of the North Fork gas field on the Kenai Peninsula.
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