Miller Energy Resources has had its share of troubles, but on Monday the Knoxville oil and natural gas company announced that a new sidetrack well is producing better than expected.
The WMRU-2 sidetrack well in Alaska began producing on June 7 and it’s initial seven day average production is approximately 630 barrels of oil equivalent, the company said in a news release.
The well is expected “to continue to exceed our original assessment as it stabilizes,” said David Hall, Miller’s chief operating officer.
CEO Scott Buruff said the well should be “a substantial revenue generator for Miller.”
The company’s share price was up 37 cents, or more than 7 percent, to $5.62 in early afternoon trading.
Miller is an oil and natural gas exploration and production company with operations in Alaska and East Tennessee.
The new well’s performance offers a bit of good news following recent shareholder complaints.
Early this year the company settled a lawsuit brought by a group of dissident shareholders who complained about “excessive compensation and unacceptable self-dealing” at Miller.
Click here for more on the shareholders complaint.
Miller Energy Resources platform in Cook Inlet, Alaska.
Revenues were up, but Miller Energy Resources Inc. lost more than $9 million in the quarter ended July 31, the Knoxville-based oil and natural gas company reported Monday.
Net loss attributable to common stockholders was $9.4 million, or 22 cents per diluted share, for the company’s first quarter of fiscal 2014. That compares to a profit of $200,000 in the same period a year ago.
Revenues for the recently ended quarter rose more than 56 percent to $13 million from $8.4 million in the first fiscal quarter the prior year. Revenues were up on increased production and higher oil prices. Average realized oil prices rose 5 percent to $104.57 per barrel in the first quarter compared with $99.59 in the prior year period.
The revenue increase was off set by a 44 percent increase in costs and direct expenses and “an increase in interest expense due to higher debt balances and less interest capitalized; and a loss on commodity derivatives,” the company said.
Despite swinging to a first-quarter loss, Miller CEO Scott Boruff gave an upbeat outlook based on increased production.
“We are continuing to see major increases in production in Alaska. In the second half of the first quarter, we brought our RU-2A well online, which has been our highest producing oil well to date. … (Contributing) $4.1 million to our revenues for the quarter,” Boruff said in a statement.
Progress also is being made on bringing other oil and gas wells into production, Boruff said.
Miller Energy is an oil and natural gas exploration, production and drilling company with operations in Alaska’s Cook Inlet and in Tennessee’s Appalachian Basin.
The Knoxville-based company said its Rig-35 had been approved for drilling by the Alaska Oil and Gas Conservation Commission.
The rig is in position over an existing oil well on the Osprey platform and work is underway to bring the well back into production. When production is restored to the first well, Miller plans to use Rig-35 to restore production at a second well on the Osprey platform.
“(B)ringing these two wells online will double its Alaska production,” the company said in a news release.
Miller Energy Resources shares are down more than 5 percent in trading today, following the Knoxville company’s announcement late last week of a new $100 million credit deal with Apollo Investment Corp.
The five-year agreement is secured “by substantially all of the company’s and its subsidiaries’ assets,” Miller said in a news release.
The deal includes an initial $55 million borrowing base. Miller said it will use the loan to pay off existing debt, its Series A Preferred Stock and pay for drilling new wells and reworking existing wells both onshore and offshore in Alaska.
The company also announced that veteran corporate finance manager Don Raper has joined the company as senior vice president of finance – capital markets.
The money raised from the stock offering will be used to fund immediate expenses and “help us improve the terms and speed at which we can refinance our existing credit facility,” CEO Scott Boruff said in a prepared statement.
Miller Energy Resources has received its share of online criticism in recent months – that’s what happens when you have to refile corrected financial reports and a class-action lawsuit hangs over your head.
But in a somewhat surprising turn, the Knoxville oil company has been the subject of positive online commentary in recent days.
A report posted today on the website Seeking Alpha by an anonymous contributor called Rougemont includes Miller among a group of undervalued oil stocks.
With its stock price plunging, Miller Energy Resources CEO Scott Boruff has penned an open letter to shareholders responding to a harsh report by the StreetSweeper blog.
In a nutshell, Boruff disputes the blogger’s allegations.
“Last week, Miller became the target of a short selling blog that hoped to profit from discrediting our company. In light of the recent activity and concerns, it is important to set the record straight about Miller regarding our reporting status and process, outstanding litigation, and most importantly our Alaskan asset valuation,” the letter says.
Prior to the StreetSweeper report, Miller’s share were trading for about $7. In early trading today, the stock is hovering around $3.65.
TheStreetSweeper has a particularly critical report that questions the value of the company’s Alaskan assets, among other things.
StreetSweeper also takes a jab at Miller CEO Scott Boruff’s purchase a few weeks ago of Villa Collina, a 36,720-square-foot mansion Knoxville; and his use of a company airplane for trips to the Florida beach and “to or from a small town in Delaware – located near the home of the CEO’s girlfriend …”