ANCHORAGE, AK -- (Marketwired) -- 06/27/13 -- Miller Energy Resources, Inc. (the "Company" or "Miller") (NYSE: MILL), announced today that through its wholly-owned Alaskan operating subsidiary, Cook Inlet Energy, LLC ("CIE"), the Company has secured a new commercial gas sales agreement. The terms of the agreement allow for CIE to sell natural gas on a discretionary basis in amounts up to 10 Mmcf per day. The new agreement will remain in effect until the end of March 2014 and replaces the prior gas sales agreement that the Company announced last month. The remaining terms of the agreement are confidential and the Company is in negotiation for a long-term agreement which it expects to have finalized by the end 2013.
The Company also spudded its Olson Creek #1 well on June 25, 2013 employing its own drilling Rig-34. Plans involve drilling to a measured depth of 2,000 feet and setting the first string of 7-5/8" casing followed by drilling to a final measured depth of 7,500 feet at which point the remaining 5 1/2" casing string will be set. The well will be logged, perforated and flow tested over the next 40 to 60 days.
"We have always been excited about the opportunities offered to us by the Olson Creek prospect," said Scott M. Boruff, CEO of the Company. "We strongly believe that this new well will enhance our gas production in the Cook Inlet. The terms of new gas sales contract will also allow us to take immediate advantage of that production and provide the company with flexibility for growth."
The Olson Creek prospect is northeast and on strike with the production from Aurora's Three Mile Creek Field. Other nearby fields include Beluga River (1.2 Tcf gas), Lewis River (21 Bcf gas), Pretty Creek (12 Bcf gas) and Lone Creek, each of which encountered numerous reservoirs within the objective section. Multiple prospective zones are present within the Olson Creek prospect area and the planned well will be situated to evaluate the structure. Upon success it is expected that 24 wells would be required to fully develop the field. Estimated potential for each well is up to 3.5 Bcf gas and the potential reserve size for the field is approximately 84 Bcf gas. CIE will also install a gas gathering pipeline to connect the field to the existing Cook Inlet gas transmission system.
About Miller Energy Resources
Miller Energy Resources, Inc. is an 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 Mississippian Lime and 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.
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