Miller Energy Resources Inc. (NYSE: MILL) provided an update on its RU-5B, Sword No. 1 and RU-D1 wells in Alaska, the company said in a press release Oct. 31.
The company's wholly owned Alaskan subsidiary, Cook Inlet Energy, successfully completed sidetracking the RU-5B well in mid-October and has brought the well online. The Sword No. 1 well reached final drilling depth on Oct. 23 and final casing string has been successfully set. The company has also successfully completed the RU-D1 disposal well. For the quarter ending Oct. 31, the company reports record oil sales with over 200,000 barrels sold, about double the amount from the previous quarter.
Prior to the sidetrack drilling procedure, RU-5 had reportedly produced 100% water. The RU-5 sidetrack reached a final measured depth of 15,750 feet. The company engineered and performed a completion on the well, beginning production and the clean-up process in mid-October. The new well is currently producing 250 barrels per day (bbl/d) of oil and the company is seeing oil cuts continually improve on a daily basis. As a whole, the Osprey platform is currently producing over 2,500 barrels of oil equivalent per day (BOE/d).
Following completion of the RU-5B sidetrack, Rig-35 was skidded to the RU-D1 disposal well location and a work-over successfully completed. This well will allow for additional disposal capacity on mud and cuttings generated from future wells. Rig-35 is currently being relocated from Leg-3 to Leg-2 of the Osprey platform in preparation to drill the company's new grassroots well, RU-9, which targets the Southern Step Out of the Redoubt Shoal structure. RU-9 is intended to achieve oil reserves from a large four way structure located 2.5 miles southwest of the platform. The company expects to spud the RU-9 well before end of 2014.
After reaching a final drilling measured depth of 18,475 feet on the Sword No. 1 well, drilling crews successfully set final 5 inch casing string, cemented casing in place and are currently in the process of preparing to perform completion. During drilling the well encountered eleven third party reported hydrocarbon shows that include shows in the Tyonek gas sands, the Tyonek-G which is thought to be oil bearing and the Hemlock oil zone. With many identified potential zones behind pipe, the company plans to initially perforate 168 feet in the liquid hydrocarbon zones and 66 feet in the gas-bearing zones. Third party reserve reports show 950,000 barrels of oil based on only 43 feet of net pay. The completion on Sword No. 1 has been designed with the flexibility to allow for testing and production through multiple different oil and gas targets. Over the next several months, the company plans to initially test and produce the Hemlock formation followed by the shallower zones and will announce results once completion procedures have been performed. The rig employed for the Sword No. 1 well will be moved and begin work on the company's next target, WMRU-8.
With the approval of the Otter Unit by the State of Alaska as a result of the company's appeal efforts, drilling activity was suspended on Olson Creek well No. 1 in order to free up Rig-34 for mobilization back to the Otter Unit to resume a time sensitive work commitment. The company plans to commence operations to deepen the Otter No. 1 well in November.
"We are very pleased with the results from all current operational efforts," Scott Boruff, Miller's CEO, said in the release. "We have consistently increased production on the Osprey platform to significant levels. Our team will continue to utilize data gathered from our efforts to execute as we develop the full potential of Miller Energy's assets. Based on log results, our Sword well has extraordinary potential and we believe it could double the reserves currently reported for the West McArthur Field while providing us a launch pad for drilling into Sabre, which is an even larger identified prospect."
Miller Energy Resources Inc. is an independent energy company engaged in the exploration, development, and operation of oil and gas wells in Tennessee and Alaska. The company is headquartered in Knoxville, Tenn.