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Miller Energy Completes Unprecedented Horizontal Well In Tennessee

Miller Energy Resources (“Miller”) (NYSE: MILL) announced today that, on Saturday, January 12, it had tested water free oil production from the company’s CPP-H-1 well. The CPP-H-1 well is the first successful horizontal well drilled and completed in the Mississippian Age Fort Payne formation in North America.

The well tested at a restricted rate of 487 BOE per day on a ¾” choke. The rate was restricted in order to conserve as much reservoir energy as possible. A breakdown of the initial production test consists of 365 BOPD, 730 MCFGPD, and 0 BWPD. The company plans to begin producing the well as soon as Miller Energy Receives EPA permission to begin reinjecting the produced gas in order to maintain reservoir pressure. The Fort Payne reservoirs are solution gas drive reservoirs, and management feels that it is critical to maintain reservoir pressure in order to maximize oil production.

Based on the initial flow tests, the company expects this will be a very strong and commercially successful well. Although this well represents an unprecedented achievement, based on what is known about the formation, the geology and the initial reservoir pressure, Miller expects that the well will produce in the range of 200 to 225 BOEPD once reinjection has started and full production has begun. The company plans to provide regular updates to the public as more results come in on this well.

Miller has also recently spudded its second Fort Payne well, and expects similar results from that new well, once complete. Two additional horizontal well sites in Tennessee have been designated for development in the near term. At present, the company has identified 25 sites on which similar horizontal wells may be developed on approximately 40,000 acres held by Miller under lease or by production in the state. The company has previously recovered approximately 9% of the oil believed to exist on its acreage and expects that future horizontal wells will significantly increase this recovery factor.

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