Miller Energy Resources Acquires More Than $300 Million Alaskan Oil and Gas Assets
December 16 2009 - 10:34AM
PR Newswire (US)
Increases Reserves by 32 times Acquires Proved Reserves at $0.35
per BOE HUNTSVILLE, Tenn., Dec. 16 /PRNewswire-FirstCall/ -- Miller
Transaction - Alaska Miller Petroleum, Inc. dba Miller Energy
Resources ("Miller"), (OTC Bulletin Board: MILL.OB) announced today
that it has acquired certain former Alaskan assets of Pacific
Energy Resources ("Pacific Energy") through a Chapter 11 U.S.
Bankruptcy proceeding in Delaware. Miller has acquired total
reserves of over 13.2 million barrels of oil and 15.5 BCF of
natural gas, including total proved reserves of 5.6 million barrels
of oil and 3.7 BCF of Natural Gas. The discounted net present value
of the Alaska reserves that Miller has acquired is over $325
million dollars, including $119 million dollars of proven reserves,
$185 million of probable reserves and $23 million in possible
reserves. In addition, Miller has acquired onshore and offshore
production and processing facilities, an offshore energy platform,
over 600,000 net acres of land with thousands of acres of 3-D
geologic seismic data, miscellaneous roads, pads and facilities all
of which originally cost almost $300 million to build and install
over the last 5 years. Miller will operate the facilities through
its 100% owned subsidiary, Cook Inlet Energy LLC ("Cook") , which
has been approved by the State of Alaska as the long-term operator
for the Alaskan oil and gas wells. Miller has hired through Cook,
the operating team who had overseen the operations of these assets
from early 2000 until the present. Acquisition Details Miller
Energy Resources paid a total of $2.25 million dollars for the
Alaskan oil and gas assets, and an additional $2.22 million dollars
for contract cure payments, bonds and other local, federal and
State of Alaska requirements to operate the facilities. Miller's
acquisition multiples of the Purchase/Reserves is $0.35 per Proved
MBOE and $0.06 per Proved MCFE. Including Proved, Probable and
Possible Reserves makes the acquisition multiples of this purchase
only $0.14 per BOE and $0.023 per MCFE. The Alaska assets and
reserves provide Miller with target reserves and production in the
Cook Inlet region of Alaska located approximately 65 miles
southwest of Anchorage, Alaska. These assets include, but are not
limited to West McArthur River Unit, the Redoubt Unit, the Kustatan
Field, the Kustatan Production Facility, the West Foreland Field,
the Three Mile Creek Field, the Sabre Field, the Valkyrie Field,
and certain other leases and rights-of-way, platforms, wells,
equipment and other property in the Cook Inlet region The
acquisition increases Miller's total reserves 32 times, from 0.504
MMBOEs to 16.330 MMBOEs, and increases the Net Present Value
(discounted at 10%) of Revenue of Miller's Oil and Gas Reserves
from $4.99 million dollars (before the acquisition) to $331.13
million dollars at closing, an increase of 66 times. Miller has
increased its acreage from 54,506 net acres (pre-acquisition) to
656,506 net acres at closing. Similarly, the acquisition improves
Miller's Balance Sheet - For more information about the impact of
the acquisition, please go to http://www.millerenergyresources.com/
The Alaska assets that Miller acquired from Pacific Energy were
originally acquired from Forest Oil Corp. in 2007 for $464 million.
In 2009, Pacific Energy declared bankruptcy and later abandoned its
assets in Alaska in September 2009. In October 2009, Miller entered
into an agreement to acquire the majority of Pacific Energy's
Alaskan assets. In November 2009, the U.S. Bankruptcy Court
approved the sale and the acquisition closed on December 11, 2009.
Also on December 10, 2009, Miller Petroleum, Inc. acquired 100% of
the membership interests in Cook Inlet Energy, LLC, an Alaska
limited liability company from its members. As consideration,
Miller issued the sellers, who were unrelated third parties, stock
warrants to purchase three million five hundred thousand
(3,500,000) shares of Miller common stock, plus $250,000 and
certain expense related to the acquisition. Also, in a related
transaction, Miller issued a 6% Convertible Secured Promissory Note
program ("Note") raising approximately $3 million dollars. The
offering was oversubscribed. Miller utilized the proceeds from this
offering to provide acquisition and working capital. The Note
contains a convertible feature has the right to convert into shares
of Miller's Common Stock at a 10% discount on the date of issuance.
Vulcan Capital Corporation served as advisor on this transaction
for Miller. Sullivan, Hazeltine, Allinson LLC served as Bankruptcy
Counsel for Miller. Miller's Reaction to the Acquisition This
acquisition marks the third and largest acquisition by Miller since
Scott M. Boruff assumed the Chief Executive position of Miller in
August 2008. "The good news just keeps coming at Miller," noted
Scott Boruff, "in the past year our shareholders have seen an
increase of over 140% on their stock in the past year. This new
acquisition should continue the strong improvement in Miller's
value for our shareholders. Miller is very pleased to have been
able to acquire these high-value Alaska energy assets at an
extremely attractive value." "The results of these acquisitions
increases our reserves by 32 fold and significantly strengthens our
balance sheet," commented Boruff, "Initial production is estimated
to be 280 barrels of oil a day. Our three month target is over 800
barrels a day with a goal of pushing production over 1,100 barrels
daily by the fourth quarter of 2010 which would generate more than
$30 million dollars annually in gross revenue for Miller." Miller's
Goals Boruff, noted the Company's immediate goals, "Our immediate
focus will now be to operate these assets with an experienced team
already on the ground in Alaska. Management believes that the
Company has, through its investment partners, the necessary capital
to build out its assets without incurring significant risk. We also
believe that based on our capital raise - just concluded, that we
have additional financial capital available to us should we need it
to expand out our operations. Beyond Alaska, Miller continues to
see great value in our Tennessee operations in the emerging
Chattanooga Shale and we expect to continue to develop this reserve
and production basin. Miller now has its feet firmly planted in two
very productive oil and gas basins in the U.S. and we expect to
grow within these regions as we exploit the resources we now have
acquired. Boruff acknowledged that the value of the acquisition was
attractive, "The average oil company acquisition in the U.S. this
year has been purchased for approximately $19.17 per Proved BOE
making our acquisition of $0.36 per Proved BOE look positive.
Similarly, Exxon's recent announced purchase of XTO Energy for
approximately $7.00 per MCF of total reserves (proved, probable and
possible as noted by Morgan Stanley) makes our purchase of total
reserves at $0.024 per MCFE look favorable. Further, XTO is a
neighbor of Miller's in Alaska." "Beyond our development of our
Alaska and Tennessee assets, we will also continue to be
opportunistic about additional energy opportunities as they present
themselves.", Boruff commented on Miller's strategy, "Miller's
veteran management team has consistently been among early
identifiers of premium energy assets, and has a record of
repeatedly developing these assets to realize their value to
shareholders' best advantage. Deal flow continues at an all time
high and additional financial partners join us daily, setting the
groundwork for a very exciting 2010 for Miller." About Miller
Miller Energy Resources is a high-growth oil and natural gas
exploration, production and drilling company operating in multiple
exploration and production projects in North America. Miller's
focus is in Cook Inlet, Alaska and in the heart of Tennessee's
prolific and hydrocarbon-rich Appalachian Basin. Miller is a
Tennessee registered company that has been in existence for over 40
years and been publicly traded for 12 years. It is the largest
owner/operator of oil and gas wells in Tennessee with over 602
wells, over 54,500 net acres of lease holdings in Tennessee and
602,000 net acres in Alaska. Company chairman, Deloy Miller has a
successful oil and gas track record spanning more than forty years
in the Tennessee Basin. Since 1967, Miller has drilled and/or
serviced over 5,200 wells. Miller is one of the United States
premier energy companies and is using its strategy of opportunistic
growth combined with prudent development and management of exiting
assets to maximize value for its shareholders. Miller is
headquarters in Huntsville, Tennessee with offices in Knoxville and
New York City. The company is traded over the bulletin board with
the symbol MILL.OB, MILL:US Statements Regarding Forward-Looking
Information This news release contains statements about oil and gas
production and operating activities that may constitute
"forward-looking statements" or "forward-looking information"
within the meaning of applicable securities legislation as they
involve the implied assessment that the resources described can be
profitably produced in the future, based on certain estimates and
assumptions. Forward-looking statements are based on current
expectations, estimates and projections that involve a number of
risks, uncertainties and other factors that could cause actual
results to differ materially from those anticipated by Miller
Energy Resources and described in the forward-looking statements.
These risks, uncertainties and other factors include, but are not
limited to, adverse general economic conditions, operating hazards,
drilling risks, inherent uncertainties in interpreting engineering
and geologic data, competition, reduced availability of drilling
and other well services, fluctuations in oil and gas prices and
prices for drilling and other well services, government regulation
and foreign political risks, fluctuations in the US dollar and
other currencies, the availability of sufficient capital to fund
its anticipated growth, fluctuations in the prices of oil and gas,
the competitive nature of its business environment, its dependence
on a limited number of customers, its ability to comply with
environmental regulations, changes in government regulations which
could adversely impact its businesses well as other risks commonly
associated with the exploration and development of oil and gas
properties. Additional information on these and other factors,
which could affect Miller's operations or financial results, are
included in Miller's reports on file with United States securities
regulatory authorities. Miller Energy Resources' actual results
could differ materially from those anticipated in these forward-
looking statements as a result of a variety of factors, including
those discussed in its periodic reports that are filed with the
Securities and Exchange Commission and available on its Web site
(http://www.sec.gov/). All forward- looking statements attributable
to Miller Energy Resources or to persons acting on its behalf are
expressly qualified in their entirety by these factors. Investors
should not place undue reliance on these forward-looking
statements, which speak only as of the date of this press release.
We assume no obligation to update forward-looking statements should
circumstances or management's estimates or opinions change unless
otherwise required under securities law. DATASOURCE: Miller
Petroleum, Inc. CONTACT: William "Bill" Goodwin, Investor
Relations, Miller Energy Resources, +1-423-663-9457, Fax:
+1-423-663-9461 Web Site: http://www.millerenergyresources.com/
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