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Miller Energy Resources Operational Update

Miller Energy Resources (“Miller”) (NYSE: MILL) released an update today on its operations both in Alaska and in Tennessee.

Alaska Rework Update

The workover on RU-3 went as planned to a true vertical depth of 11,400 feet. The use of nitrogen was implemented to help facilitate the removal of fluids from the wellbore and two Tyonek gas intervals. We have determined that additional fluid recovery via tubing by annulus packers was needed to efficiently recover all workover fluids. Once completed, we expect to be able to bring gas production online from RU-3. To maximize rig time while we await the packers’ arrival, we have moved Rig 35 over RU-4, nippled up and tested the BOP stack, and begun reworking the well. We anticipate this rework will take 7-10 days to complete. RU-4 previously tested at a gas flow rate of 1.4 mmcf per day. Our plans beyond completion of RU-4 are to skid Rig 35 back over Leg 2 to pull out the used up ESP in RU-7 and replace it with a new ESP pump. We expect this move will restore the previous production of RU-7. New additional perforations have been identified in the RU-7 crude oil well, and with the additional perforations, we anticipate an increase to the previously producing flow rate. Together, we believe that the new ESP pump in RU-7 will restore approximately 450 bbls/day of oil production, between RU-7 and RU-1. While the rig is being skidded over to Leg 2 for the RU-7 ESP change, the packers will be installed on RU-3. After we complete these tasks, Rig 35 will be skidded back to Leg 3 to begin the sidetrack of RU-2. RU-2 was a previously producing oil well, and we anticipate being able to restore this oil production to over 600 bbls/day.

Tennessee Drilling Update

Drilling on our first Mississippian Lime horizontal well, CPP-H-1 at Skull Creek was completed on December 23, 2012. This well was drilled to a true vertical depth of approximately 1,600 ft., and was drilled horizontally to a length of 2,300 ft., as originally planned. Our next step is completion, which will involve a 10 stage foam frac. We expect this process to begin on January 11, 2013, as our completion subcontractor arrives on site. Once fracing and cleanup is completed the well will be put in production. This process should take approximately 4 to 7 days. The results to date are very encouraging as we encountered significant shows of both oil and gas the entire length of the horizontal. This not only bodes well for this particular well, but for our belief that the Ft. Payne “reef” holds prolific oil reserves throughout our leasehold position that can be extracted using horizontal drilling techniques. Our rig has been moved to our next drilling location, Gunsight V-30, and drilling on this vertical oil well commenced on January 7, 2013. Our next horizontal Mississippian Lime prospect will be on the Maynard H-1, tentatively scheduled to begin the third week of January 2013.

Stock quotes in this article: MILL 

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