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Miller Energy Resources Reports First Quarter Results

Stocks in this article: MILL

Miller Energy Resources, Inc. (“Miller”) (NYSE: MILL) today reported its results for the first fiscal quarter ended July 31, 2012. Revenues for the first quarter of fiscal 2013 were $8.3 million compared to $8.9 million in the first quarter of the prior fiscal year. Net income attributable to common stockholders for the first quarter of fiscal 2013 was $0.2 million, or $0.00 per diluted share, compared to a net loss of $0.2 million, or $0.00 per diluted share, in the first quarter of fiscal 2012.

“We made significant progress during our first fiscal quarter in strengthening Miller’s financial and operational foundations to pursue our aggressive development and drilling programs in Alaska,” stated Scott Boruff, CEO of Miller Energy Resources. “We expanded our debt facility that will provide increased resources to fund our drilling program in fiscal 2013, monetized some of our mid-stream resources in Alaska and completed the installation of Rig 35 that led to its certification in late August.

“We are very excited about the deployment of Rig 35 to accelerate our development and drilling plans in the Redoubt Shoals Field, our single largest reserve base. The rig is currently reworking RU-1 on the Osprey platform and we expect to have this well back online during the second quarter. RU-1 was previously producing approximately 270 Bbls/day and we hope to increase its output after completing wellbore optimization and replacement of the electrical submersible pump,” continued Mr. Boruff.

First Quarter Highlights

  • Total revenues were $8.3 million for the first quarter of fiscal 2013 compared to $8.9 million in the first quarter of the prior year. Revenues benefited from an increase in the price of oil sold but were offset by lower production.
  • Average realized oil prices rose 4.1% to $99.59 per barrel in the first quarter of fiscal 2013 compared with $95.69 in the first quarter of fiscal 2012.
  • Net production was 77,079 BOE for the first quarter of fiscal 2013 compared with 92,008 BOE in the first quarter of fiscal 2012. The decrease in production was due primarily to a normal decline curve, fluctuation in shipping schedules, and RU-1 being off-line during the first quarter of fiscal 2013.
  • Cash flow from operations increased 28.7% to $3.6 million in the first quarter of fiscal 2013 compared with $2.8 million in the first quarter of fiscal 2012.
  • Recorded an $8.9 million gain on derivatives in the first quarter of fiscal 2013 compared with a gain of $3.8 million in the first quarter of fiscal 2012. The 2013 results included a $4.3 million realized cash gain from the termination of commodity derivative contracts, which were settled against the NYMEX WTI Cushing Index. During the first quarter of fiscal 2013, the Company also entered into several new commodity derivative contracts for comparable volume which will be settled against the Brent Crude Oil Index.
  • Invested $9.3 million in capital expenditures during the first quarter of fiscal 2013 to accelerate oil development opportunities in Alaska.
  • Sold mid-stream assets in Alaska for $2.0 million. The sale was for a generator in Miller’s Kustatan facility in Alaska.
  • Closed a new $100 million credit facility to provide funding for Miller’s development and drilling programs. The proceeds were used to pay off a previous credit facility and redeem the Series A Cumulative Preferred Stock. The remaining funds available under the credit facility will be used to increase oil production both onshore and offshore in Alaska through the reworking and drilling of new wells on the Osprey platform and the reworking of previously producing oil wells in Tennessee.
  • Mobilized Rig 34 to the Otter natural gas prospect and completed initial drill to 5,680 feet. Mud logs reported two significant hydrocarbon gas shows in the zone of interest and fracking of the Otter #1 well is scheduled for mid-September.
  • Hired Chief Accounting Officer to strengthen Miller’s accounting, financial reporting, and internal controls.
  • Received approval for Rig 35 from the Alaska Oil and Gas Conservation Commission and commenced drilling in August 2012 to rework existing wells on the Osprey platform.
  • Acquired the Tennessee assets of PDC Energy, Inc. in September 2012, increasing Miller’s interest in oil and gas wells in the Appalachian Basin of East Tennessee where Miller intends to begin drilling horizontal wells targeting the Mississippian Lime.

First Quarter Results

First quarter 2013 revenues were $8.3 million compared to $8.9 million in the first quarter of the prior year. Fiscal 2013 revenues benefited from higher realized prices for oil, offset by lower production compared with the first quarter of fiscal 2012. The decrease in production was due to a normal decline curve, fluctuation and shipping schedules, and RU-1 being off-line during the first quarter of fiscal 2013.

Costs and direct expenses rose to $13.3 million in the first quarter of fiscal 2013 from $12.6 million in the first quarter of the prior year, reflecting Miller Energy’s increased focus on exploration and production activities. Oil and gas operating costs increased to $4.0 million in the first quarter of fiscal 2013 compared with $3.8 million in the first quarter of the prior year. The higher operating costs were partially offset by lower general, administrative, depreciation, depletion and amortization expenses. General and administrative expenses were $5.3 million compared with $5.8 million in the first quarter of fiscal 2012. Depreciation, depletion and amortization expense declined to $3.1 million compared with $3.4 million in the first quarter of 2012.

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