2 Natural Resource Companies Respecting Nature's Beauty

NEW YORK (TheStreet) -- The subject of mining the earth's natural resources while attempting to be good stewards of nature is not recommended for dinner parties.

Unless you like a heated debate, stick with the weather but don't despair. Having just returned from Alaska to examine the operations of a small energy resource company, I was encouraged.

In examining its operations and leadership attitudes I was struck by the fact that natural resource companies can, if they want to, respect the balance of nature.

The company I visited and carefully examined is a small-cap, high-growth oil and natural gas exploration, production and drilling company. What I saw and heard with my own eyes and ears was impressive.

Miller Energy Resources ( MILL) and its wholly owned Alaskan operating subsidiary, Cook Inlet Energy, have three drilling operations in the Cook Inlet and the company told me and other analysts they're "on schedule".

One of its drilling operations referred to as "RU-1" has been drilled to a total depth (TD) of over 15,000 feet. I and a small group saw it and walked through MILL's Kustatan Production Facility (KPF).

We received a thorough explanation of all its detailed features by one of its operational managers, Frank Wara, and I learned first-hand that the process of drilling for oil and gas is costly and complicated.

This reminded me of what I call "The Great Dilemma." We all want abundant, inexpensive supplies of these vital energy sources, but we don't want the environment to be damaged in the process.

For example, I examined the company's impressive onshore and nearly completed drilling rig with the memorable name "Sword #1". It's been drilled more than half way to a TD of approximately 10,156 feet and the company has set and cemented in place a 9 5/8-inch casing string to make headway.

Objective well log analysis of Sword #1 produced significant gas hydrocarbon potential in a sand section covering a 200 foot interval from a measured depth of 8,268 feet with over 600 units of gas.

The rig crew company working the well, Patterson-UTI Energy ( PTEN) is in the process of switching from water-based drilling mud to oil-based and will resume drilling shortly. The efforts look quite promising.

PTEN was hired by MILL because of its expertise in onshore contract drilling services to major and independent oil and natural gas operators in the United States and Canada. This was one of the first Alaskan projects for PTEN.

From my perspective they were doing a world-class job of responsibly completing the drilling rig with minimal impact to the surrounding environment. The Cook Inlet area is a beautiful natural habitat.

It's home to many Alaskan wildlife species. Grizzly bears, black bears, moose, beavers and bald eagles abound. I was able to spot some animals and the MILL team expressed great respect for them.

MILL's 3 onsite wells and drilling rigs have enormous capacity and potential. Also MILL operates a state-of-the art Osprey offshore oil platform which one of my colleagues visited and I flew over.

The Osprey oil platform clearly is one of the most modern in that area located in only 60 feet of water. As jack-up rigs work it can be moved around and was designed to complete upward of 34 wells.

The offshore operation transfers the crude oil it discovers via a sub-sea, carefully maintained pipeline to its KPF. Energy flows, pressures, and the integrated functions were carefully monitored by a computer- based, system-wide program that we also had the opportunity to view.

Chief Operating Officer David Hall knows the details of Cook Inlet Energy and its well-maintained facilities. In personal interviews and in a meeting before all attendees he summed up his views.

"Operationally we are right on schedule and proving...our geological thesis," he stated. "The log results from our drilling activities are providing crucial data and indicate that we have moved towards the right targets.

"Not only should these new wells provide the incremental production increases we are looking for but also prove very impactful in identifying developmental runway and increases to reserve potential."

MILL uses its natural gas production to generate the electricity needed for its operations and sells the rest to a consortium that supplies natural gas to the city of Anchorage. In addition it strives to qualify for tax breaks offered by the State of Alaska for responsibly producing and distributing natural gas.

It was plain to see that Miller Energy is on to something big, and that's why it's accumulated over 600,000 net acres of land and leases in Alaska. MILL, which has offices and some operations in Tennessee, also maintains 42 miles of pipeline.

Its newest "neighbor" in Alaska is a well-known company, and I'm told it has approximately 2 million net acres of land in its control in the giant state. I'm referring to Apache Corporation ( APA).

This energy giant with a market cap of more than $32 billion had a close call on Tuesday. It shut down an oil platform in the Gulf of Mexico to repair a snafu that caused a very small release of condensate.

The "release" was apparently very minor and amounted to less than an ounce, according to a filing Apache submitted to the U.S. National Response Center. APA also disclosed the discharge was from an exploration and production platform near Grand Isle, La.

It underscores the "Great Dilemma" that both behemoths like Apache and much smaller companies like MILL face. Will energy and natural resource companies take good care of nature?

As a side note to this question, I read that Australia's infamous mining industry has a new plan to build the world's largest coal mining complex, and then build a shipping lane to that port straight through one of the greatest ecological treasure on earth, the Great Barrier Reef!

You can read the the tragic details here and hope the Australian government stops it.

By comparison, what I personally witnessed in Alaska looks tame. You can learn more about Miller Energy by visiting its dynamic Web site. Judge for yourself how concerned it is for the natural environment it explores in.

When it comes to Apache Corp. its attitude towards nature and the environments is discussed on its user-friendly Web site page titled "Sustainability -- One World Fits All".

Let's hope APA takes seriously its own pledge: "Apache derives its benefit from the Earth and therefore we take our environmental responsibility very seriously." I, for one, would like them to elaborate more.

In discussing MILL's future with CEO Scott Boruff I realized MILL is a company with potential to be another APA if all goes well with its plans. Boruff works with a financially savvy group of officers and board members who evidently have some of their money invested.

This includes President David Voyticky, who impressed me as being careful and conservative about the company's growth plans and balance sheet. But it's Boruff and Board Chairman DeLoy Miller who have the most at stake concerning the company's future.

As of the date of the last filing, which goes back to the summer of 2012, Boruff owns 4,240,728 shares and Miller (yes, the company's namesake) owns 2,096,367 shares. Their money and net worth is where their hearts are.

The largest institutional investor is River Road Asset Management, which, as of March 31, 2013, owned more than 7% of the outstanding shares of MILL worth nearly $11.3 million dollars. The Vanguard Group owned nearly 2% of the shares, or around $3.174 million worth of stock.

Do your own due diligence whether you're considering an investment in a small resource company like MILL or a huge one like APA. Keep in mind that smaller companies' stocks are much more volatile and longer-term investments.

If you're a shareholder of any natural resource company, hold that company to a high standard of respecting and protecting nature and the environment. We all benefit if that standard is upheld.

To learn more about the threat to the Great Barrier Reef check out this colorful and secure site about this alarming issue.

One way or another, individuals and companies depend on Mother Nature. As the old margarine commercial used to remind us, "It's not nice to fool with Mother Nature."

At the time of publication the author had no position in any of the stocks mentioned.

This article was written by an independent contributor, separate from TheStreet's regular news coverage.

Marc Courtenay is the founder and owner of Advanced Investor Technologies, LLC, as well as the publisher and editor of www.ChecktheMarkets.com.

Courtenay holds a Master's of Science degree in Psychology from California Polytechnic State University, and is a former senior vice-president of Investments for two major brokerage firms. He's been a fiercely independent investment "investigator" and a consulting contributor to the investment publishing world for over 30 years. In addition to his role as an investment publisher and analyst, he serves as a marketing consultant to the investment media industries.

In his role as a financial editor, he specializes in unique investment strategies, overlooked stock investments, energy and resource companies, precious metals, emerging growth companies, the prudent use of option strategies,real estate related opportunities,wealth preservation, money-saving offers, risk management, tax issues, as well as "the psychology of investing". Because of his training and background in Clinical Counseling and Psychology, he enjoys writing about investor behavior, the ¿herd mentality, how to turn investment mistakes into investment breakthroughs and the stock market's behavioral trends and patterns.

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