Oil and gas exploration in Alaska has never been for the faint of heart.

Near the state’s first oil field a blizzard in 1910 wrecked the vessel Portland. The ship had started the Klondike Gold Rush of 1897 by delivering gold to Seattle, Wash. In 1933, Alaska’s first refinery fire made a ghost town out of Kattala, Alaska.

Miller Energy Resources Inc. (MILL) took a step into that wilderness last year, intensifying its presence in Alaska.

Now it is making plans to sell assets after divesting its Tennessee oil and gas assets for $4.2 million and re-focusing as an Alaskan pure play.

After being hit with commodity prices and scrutinized for possible bankruptcy, the company said July 29 that it’s repositioning its capital to gain liquidity and optimize value and growth potential from its core asset base.

"As with a number of E&P companies, continued soft oil prices have challenged our business," said Carl F. Giesler, Miller's CEO. “That impact has been exacerbated by past capital, financing and drilling decisions that, at least in retrospect, left us poorly positioned for such market conditions.”

After its fiscal fourth-quarter 2015 move to Houston from Knoxville, Tenn., Miller’s management and board are now working to restructure its capital and potentially sell noncore assets.

The company’s goal remains the same: develop its core Cook Inlet assets in a safe, disciplined and return-focused manner; and to stream-line its cost and organizational structure.

Giesler also said that while he understands speculation about the company’s finances, “we don't intend to file for bankruptcy, given our current circumstances."

The company has several momentum changers at hand.

Miller has signed a commencement agreement with a private financing source for a $165 million loan that would largely pay off the company’s debt. The loan is under review for due diligence and legal requirements.

It is also considering several offers for its assets.

One scenario would see Miller part with assets it closed in December in a $9 million merger with Savant Alaska LLC.

Miller bought Savant’s 67.5% working interest in the Badami Unit, 100% ownership in nearby leases, and midstream assets located in Alaska’s North Slope. The deal added 600 net barrels of oil per day (bbl/d) to the company’s production.

The company is also exploring a sale lease back financing for the company's rigs.

In 2014, the company also bought a $7 million rig and entered into a $3.2 million capital lease to finance the purchase and future modifications of another rig. As of June, the company had four rigs collectively valued at $53 million.

"We believe that, with the offers and options we have available to us, no one else should count us out," Geisler said.

Despite the timing, Miller’s move to Alaska hasn’t been all bad.

Alaska’s tax system is remarkably advantageous to operators since the government relies on production tax revenue for 90% of its operating budget.

The tax credits have historically reimbursed Miller’s drilling and completions (D&C) costs and carried-forward annual loss credits in the Cook Inlet area by 35-65%. In March, the company received $21 million in cash for the credits, which are available regardless of a well’s success.

As of April 30, Miller had state tax credits receivable, net of $41.5 million outstanding. Miller has already collected $9.3 million in cash and expects to receive at least $23.7 million in cash by the end of August.

The company has bumped up revenue and production since moving north.

Annual revenue was $85.3 million for fiscal 2015, up 21% from $70.6 million.

The company has also increased production since its move. Adjusted EBITDA was $78.6 million in fiscal 2015, up about 108% from $37.8 million in 2014.

Miller also entered a gas-supply contract with an Alaska utility for up to 12 million cubic feet per day (cf/d) that pays $6.50/Mcf through 2016.

Contact the author, Darren Barbee, at dbarbee@hartenergy.com.