North to the future: Miller Energy Resources Inc. (NYSE: MILL) is leaving behind the Lower 48 for Alaska.
The company, based in Knoxville, Tenn., is set to leave its Tennessee assets in the Appalachian Basin, including the Mississippian Lime and Chattanooga Shale, in order to become a pure play E&P focusing on its more than 600,000 lease acres in Alaska.
Miller is the largest owner and operator of wells in Tennessee, the company said on its website. The company holds more than 46,000 lease acres producing from the Fort Payne/Mississippi Formation. The acreage produced about 248 barrels of oil equivalent per day (boe/d) as of Dec. 31. More than 90% of current net oil production is hedged.
Miller is selling its Tennessee assets through PLS Inc., which has been retained to manage the negotiated sale.
The sale is comprised of roughly 44,800 net acres in the Appalachian Basin's Mississippi Lime and Chattanooga Shale plays. The acreage is mostly HBP and located in Scott, Morgan, Fentress and Campbell counties.
Miller currently operates about 600 wells which produce an estimated 57 barrels per day of oil and 400 thousand cubic feet per day net. The proved developed producing PV-10 value was nearly $4.7 million as of April 30.
Geologic objectives include Fort Payne, Mississippi Lime and Chattanooga Shale. Miller has identified more than 25 horizontal drilling targets for the Mississippi Lime. Additional behind pipe potential and deepening potential exist in a majority of the wellbores.
The company thinks there is a tremendous value in implementing an ongoing workover and recompletion program.
Recommended reworks include upgrading and replacing lift systems and acid stimulation, etc.
Offers are due by Sept. 24. For information contact Brian Green, PLS vice president, at 713-600-0119.
Until a definitive agreement is executed, Miller will continue to conduct business as usual in Tennessee.
In Alaska, the company has built interests in fields in the Cook Inlet and North Slope and acquired offshore and onshore processing and production facilities and a modern offshore energy platform.
The Cook Inlet is an attractive drilling area because of generous tax credits associated with exploration and production. Credits allow 20%-65% of development costs to be reimbursed by the state and can be applied against tax liability or converted to cash. Proceeds are generally received within four to six months following an application.
Most recently, the company announced an Aug. 11 successful bid in an auction held by Alaska for 168,000 acres located on the Iniskin Peninsula.
Miller said the region has good potential for oil and gas and expects to receive the license from the State of Alaska by the end of August. The Iniskin peninsula is located on the west side of the Cook Inlet, about 125 miles southwest of Anchorage and about 50 miles northwest across Cook Inlet from Homer. Oil was first discovered there in 1853.
The company lists its total 1P reserves at 11.7 thousand barrels of oil equivalent with a PV-10 value of $447.6 million.
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