|
Miller’s new well falls short of hopes RU-9 drilled from Osprey platform in Alaska’s Cook Inlet; company reports closing sale of legacy assets in home state of Tennessee Wesley Loy For Petroleum News
Miller Energy Resources Inc. is reporting somewhat disappointing results from a new well drilled off its Osprey platform in Alaska’s Cook Inlet.
On another front, the company recently wrapped up the sale of its legacy oil and gas assets in Tennessee. That makes Alaska nearly the sole concern for Miller.
“Tennessee is where our company got its start, and we think our buyer will have great success there,” Carl Giesler, Miller’s chief executive, said in a Nov. 21 press release. “At the same time, this sale was the right strategic move for us. It allows us to focus our efforts as well as the market’s attention on our substantial Alaskan oil and gas resources and related infrastructure.”
$3.3 million sale Miller didn’t name the buyer of its Tennessee assets. The deal closed on Nov. 20.
The sale price was about $3.3 million in cash, the company said.
“Miller expects the sale of its Tennessee operations will reduce costs and increase the company’s cash flow by approximately $800,000 per year,” Miller said.
Miller is based in Knoxville, Tennessee, and trades on the New York Stock Exchange.
It operates in Alaska via its Anchorage-based subsidiary, Cook Inlet Energy LLC. The company’s producing properties in Alaska include the Osprey platform in the offshore Redoubt unit, the West McArthur River oil field and the North Fork natural gas field. The company also is in the process of acquiring Savant Alaska LLC, which will give Miller control of the small Badami oil field on Alaska’s North Slope.
Miller said its overall production is currently about 4,200 barrels of oil equivalent per day net.
The company is awaiting final regulatory approval for the Savant acquisition, which is expected to boost Miller’s net production by about 600 barrels of oil per day.
RU-9 well disappoints In the Nov. 21 press release, Miller announced its new Osprey platform well, known as RU-9, had entered production.
Output from the well reached about 100 barrels of oil per day prior to an electrical failure, Miller said.
Production to date from RU-9 “has not met our expectations given earlier tests,” Giesler said. “Going forward, we will refocus our drilling program on lower-risk development opportunities at our North Fork, Redoubt and, after the closing of our Savant acquisition, Badami fields in order to grow steadily our production and cash flow.”
Miller had high hopes for RU-9. In February, prior to drilling, the company said the well was “intended to capture oil reserves from a large four-way structure located approximately 2.5 miles southwest of the Osprey platform.”
Impact of oil price decline With lower oil prices, Miller’s stock has tumbled. The shares closed Dec. 2 at $1.62, down 50 percent from the Nov. 24 close of $3.24 and 75 percent off the July 3 close of $6.40.
The company on Dec. 1 issued a press release reminding investors that Miller has hedged more than 90 percent of its current oil production.
“Miller has approximately 390 MBbls hedged at $98.71 for the remainder of fiscal 2015, approximately 788 MBbls at $95.36 for fiscal 2016 and approximately 233 MBbls at $93.97 from May 2016 through December 2016,” the press release said. “The company also notes that it sells the majority of its gas under long-term contracts priced at approximately $7 per Mcf.”
Miller has scheduled a Dec. 10 conference call to discuss quarterly financial results and plans for a “lower-risk, more gas-focused” drilling program.
“Based on its oil hedge profile, long-term gas contracts and lower-risk, more gas-focused drilling plan, the company believes it has sufficient liquidity if oil prices remain at current levels for the foreseeable future,” Miller said.
| 