Miller Energy Resources, Inc. (ticker MILL) is an oil and natural gas exploration, production and drilling company operating in the Cook Inlet, Alaska and in the heart of Tennessee’s Appalachian Basin including the Mississippian Lime and Chattanooga Shale. Miller is headquartered in Knoxville, Tennessee with offices in Anchorage, Alaska and Huntsville, Tennessee.
Amending Loan Agreement
Miller Energy amended its loan agreement with Apollo Investment Corporation (ticker: AINV). The amendment increases the credit facility by $20 million, effective immediately, raising the total commitment to $100 million. The facility also amends the interest rate on new funds that are borrowed to an initial rate of 9% per annum. The original press release can be found here.
Additional terms include allowing MILL to repay any new borrowings without any penalty until January 31, 2014. On that date, the interest rate will be returned to the original 18% per annum.
“I am extremely pleased with this agreement, which reduces our borrowing costs and provides us with greater financial flexibility,” David Voyticky, President and acting CFO of Miller said in the press release. “The expansion in our available credit and the substantial reduction in the interest rate reflect Apollo’s continuing confidence and support in Miller Energy. Having successfully increased cash flow from several successful new wells over the past six months, this additional lower costing capital from Apollo, and the expectation of receiving ACEs rebates in the next several weeks, we have funded our 2014FY budget. We will only need to raise additional capital during the remainder of our 2014FY if we choose to add projects to our 2014FY CAPEX plan or choose to take advantage of favorable capital markets.”
Miller and its wholly owned Alaskan operating subsidiary, Cook Inlet Energy, are on schedule on all three of their drilling operations in Alaska. The RU-1 sidetrack was drilled to total depth and is ready for completion while the Sword #1 well and Olson Creek #1 well drilling operations are both approximately half way through. The original press release can be found here.
The RU-1A well was drilled to a final measured depth of 15,050 feet and Miller is expected to run completion operations in the next week and brought online for production. The Sword #1 well has been drilled half way to 10,156 feet. Currently the rig crew is switching from water-based drilling mud to oil-based and will resume drilling soon.
Miller’s first Olson Creek well reached a depth of 4,700 feet and is planned for a total depth of 7,500 feet. Indications show the presence of hydrocarbons in the Beluga formation, which has only just been penetrated, with gas charged coal seams. The drilling of the well will be finalized over the next three weeks.
“Operationally we are right on schedule and proving up our geological thesis,” David Hall, Miller Energy’s Chief Operating Officer said in the release. “The log results from our drilling activities are providing crucial data and indicate that we have moved on 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.”
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