Miller Energy Resources To Buy North Fork Unit, Natural Gas Field In Cook Inlet

(RTTNews) - Miller Energy Resources Inc. (MILL) announced Monday that its wholly-owned subsidiary, Cook Inlet Energy, LLC or CIE has entered into a definitive agreement to purchase the North Fork Unit and all affiliated assets from Armstrong Cook Inlet, LLC and the other working interest owners in the unit for $59.975 million in cash and $5.0 million in Miller's Series D Preferred Stock.

The companies expect to close the transaction, subject to necessary governmental and regulatory approvals, in the first quarter of calendar 2014.

The sale will be effective as of closing and includes 6 natural gas wells, 15,464 acres, and production and processing equipment. The North Fork Unit and gas field is located on the southern Kenai Peninsula, east of the community of Anchor Point. The transaction will also include the acquisition of Anchor Point Energy, LLC or "AP Energy", the owner and operator of 9 miles of twin 4 inch natural gas transmission pipelines and a multi-year natural gas sales contract. The acquisition of AP Energy will occur upon receipt of necessary regulatory approvals and is expected to occur after the closing on the North Fork Unit.

Current production in the North Fork Unit is about 7.0 MMCFD (1,167 BOEPD) and is expected to increase as CIE assumes operations, performs well optimizations, and commences full field development of up to 24 additional wells. Included in the acquisition is a multi-year firm natural gas sales contract with ENSTAR, the largest natural gas utility in Alaska. There is approximately 4.8 BCF remaining of a 10.0 BCF commitment to ENSTAR at a price of about $7.00 per MCF.