RU-1 Oil Well Initial Production at 482 Barrels of Oil per Day
KNOXVILLE, Tenn.--(BUSINESS WIRE)-- Miller Energy Resources (“Miller”) (NYSE: MILL) announced today that it has successfully completed a work-over on the RU-1 crude oil well with newly commissioned Rig 35 on the Osprey platform in Alaska’s Cook Inlet. The work-over consisted of removing two failed electric submersible pumps (“ESP”) and several restrictive flow devices, followed by installing a new ESP. The RU-1 well has demonstrated an initial production of 482 barrels of oil per day (“BOD”), which exceeds the previous average flow rate under its previous operator from September 2007 through July 2009 of 125 BOD. This was the first project for Miller’s new Rig 35, which received state approval to operate in August.
Rig 35, a National 1320, 2000 hp rig, is designed for offshore and onshore drilling to a maximum drilling depth of 24,000 feet. Cook Inlet Energy, a wholly owned subsidiary of Miller led by David Hall, will deploy Rig 35 to redevelop RU-3, a previously producing gas well to address Alaska’s continuing gas shortage. Following these two wells, Miller will then target the RU-2, RU-4, and RU-5 wells for work-over. Through the use of advanced drill techniques and wellbore optimization, Miller expects production rates to meet or exceed historical flow rates as demonstrated on the RU-1 and RU-7 work-overs.
“The successful redevelopment of RU-1 is another significant milestone for Miller. Our fixed costs to operate the Osprey platform are covered by existing production, so each additional barrel of oil produced comes at an estimated marginal incremental cost of less than $5 per barrel. This means that each well brought online on the platform has a significant direct, positive impact on Miller’s bottom line,” said Scott M. Boruff, Miller’s CEO. “With Rig 35 working to restore production from the Redoubt Shoals Field, we expect to see major increases in our production over the next few months which will build significant long term value for our shareholders.”
About Miller Energy Resources
Miller Energy Resources, Inc. is a high growth oil and natural gas exploration, production and drilling company operating in multiple exploration and production basins in North America. Miller’s focus is in Cook Inlet, Alaska and in the heart of Tennessee's prolific and hydrocarbon-rich Appalachian Basin including the Chattanooga Shale. Miller is headquartered in Knoxville, Tennessee with offices in Anchorage, Alaska and Huntsville, Tennessee. The company’s common stock is listed on the NYSE under the symbol MILL.
Statements Regarding Forward-Looking Information
Certain statements in this press release and elsewhere by Miller Energy Resources¸ Inc. are "forward-looking statements" within the meaning of the Private Securities Litigation Reform Act of 1995. These forward-looking statements 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, Inc. and described in the forward-looking statements. These risks, uncertainties and other factors include, but are not limited to, the potential for Miller Energy to experience additional operating losses; high debt costs under its existing senior credit facility; potential limitations imposed by debt covenants under its senior credit facility on its growth and ability to meet business objectives; the need to enhance management, systems, accounting, controls and reporting performance; uncertainties related to the filing of its Form 10-K for 2011; litigation risks; its ability to perform under the terms of its oil and gas leases, and exploration licenses with the Alaska DNR, including meeting the funding or work commitments of those agreements; its ability to successfully acquire, integrate and exploit new productive assets in the future; its ability to recover proved undeveloped reserves and convert probable and possible reserves to proved reserves; risks associated with the hedging of commodity prices; its dependence on third party transportation facilities; concentration risk in the market for the oil we produce in Alaska; the impact of natural disasters on its Cook Inlet Basin operations; adverse effects of the national and global economic downturns on our profitability; the imprecise nature of its reserve estimates; drilling risks; fluctuating oil and gas prices and the impact on results from operations; the need to discover or acquire new reserves in the future to avoid declines in production; differences between the present value of cash flows from proved reserves and the market value of those reserves; the existence within the industry of risks that may be uninsurable; constraints on production and costs of compliance that may arise from current and future environmental, FERC and other statutes, rules and regulations at the state and federal level; the impact that future legislation could have on access to tax incentives currently enjoyed by Miller; that no dividends may be paid on its common stock for some time; cashless exercise provisions of outstanding warrants; market overhang related to restricted securities and outstanding options, and warrants; the impact of non-cash gains and losses from derivative accounting on future financial results; and risks to non-affiliate shareholders arising from the substantial ownership positions of affiliates. Additional information on these and other factors, which could affect Miller’s operations or financial results, are included in Miller Energy Resources, Inc.’s reports on file with United States Securities and Exchange Commission including its Annual Report on Form 10-K, as amended, for the fiscal year ended April 30, 2012. Miller Energy Resources, Inc.’s 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 (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.
For more information, please contact the following:
Robert L. Gaylor
SVP Investor Relations
Miller Energy Resources, Inc.
9721 Cogdill Road, Suite 302
Knoxville, TN 37932
Phone: (865) 223-6575
Fax: (865) 691-8209
Web Site: http://www.millerenergyresources.com
Miller Energy Resources, Inc.
Robert L. Gaylor, SVP Investor Relations, 865-223-6575
Source: Miller Energy Resources, Inc.