Miller Energy Resources Inc. dropped two significant announcements recently.
First, the company said a newly completed sidetrack well had boosted production from its West McArthur River unit in Alaska's Cook Inlet basin by 50 percent.
Second, Miller said it was engaged in "strategic discussions" to sell its assets in Tennessee, where the company is headquartered.
The company said it was implementing "an internal restructuring and cost reduction program" meant to cut annual expenses by up to $5 million.
"The targeted reduction is aggressive but we think appropriate and achievable, driven in large part by the elimination of our Tennessee operations and the favorable resolution of several outstanding lawsuits and the recent proxy contest," Scott Boruff, Miller's chief executive, said in a June 24 press release.
Miller is a publicly traded company listed on the New York Stock Exchange. Recently, it settled with dissident shareholders who had criticized senior management.
Minor Tennessee production
Miller has operated in Alaska since late 2009 through its Anchorage-based subsidiary, Cook Inlet Energy LLC.
The company's Cook Inlet properties include the offshore Redoubt unit and Osprey platform, the West McArthur River oil field and the North Fork natural gas field on the Kenai Peninsula.
The company currently is working to close a $9 million cash deal to buy a controlling interest in the small Badami oil field on the North Slope.
Miller and its founder, Deloy Miller, have a long history of oil and gas operations in eastern Tennessee. But Tennessee wells account for only a minor percentage of the company's overall production.
"While we still believe Tennessee has significant growth potential, our capital is clearly better allocated to our Alaskan operations and the investment opportunities that exist there," Boruff said.
Company executives did not specify when they hoped to complete the Tennessee divestiture, or who might be interested in buying the assets.
Miller announced it brought a new sidetrack online June 7 in the West McArthur River unit, and the well tested at about 630 barrels of oil equivalent per day with a water cut of 63 percent.
The well, known as WMRU-2B, was sidetracked at around 7,000 feet from the unused, nonproducing WMRU-2A wellbore, which had been shut-in since 2001, Miller said. The new sidetrack was drilled to a final measured depth of 14,470 feet with the Patterson-UTI 191 drilling rig.
The sidetrack has increased fieldwide West McArthur River unit production by more than 50 percent, and the initial production rate is "substantially above what we originally anticipated," said David Hall, Miller's point man in Alaska.
"Our team has done a great job of transforming the WMRU-2B from a backup disposal well into a substantial revenue generator for Miller," Boruff said.
The Patterson rig was relocated to the West Foreland gas field, where the WF-3 well has been spudded and drilled to 8,200 feet, Miller said. The planned final depth is 13,500 feet, with the Tyonek gas sands being the primary target.
This story originally appeared in Petroleum News and has been republished here with permission.