SOURCE: Miller Energy Resources

Miller Energy Resources

July 15, 2013 08:00 ET

Miller Energy Resources Announces a 21-Day Average Production Rate of 1,314 BOPD From Its RU-2A Well

ANCHORAGE, AK--(Marketwired - Jul 15, 2013) - Miller Energy Resources, Inc. ("Miller Energy," "Miller" or the "Company") (NYSE: MILL) announced today that its wholly owned Alaskan operating subsidiary, Cook Inlet Energy, LLC, reported a 21-day average production rate for the RU-2 Sidetrack (RU-2A) of 1,314 barrels of oil per day with a water cut of 15%. The average daily oil production has increased and the water cut has decreased during the first three weeks of production from the initial 24-hour production rate (IP) of 1,281 barrels of oil and water cut of 19%. The Company has not made any adjustments to the speed of the electric submersible pump during this time.

"We are very excited about the initial production data gathered from RU-2A," stated Scott M. Boruff, CEO of Miller Energy. "Not only does the added production continue to validate our investment in the Cook Inlet, but the oil/water ratio and natural increases in bottom hole flowing pressure substantiate the theories we have developed from studying our other re-entry wells. These active case studies give Miller a strong indication that the recovery rates from the Redoubt Shoals will continue to improve and behave similarly to adjacent productive fields. The Company expects that further development of our planned sidetracks and the additional data compiled will lead to a significant increase in the reserve estimate for the field."

The first three weeks of production data and bottom hole flowing pressure for RU-2A are very similar on a percentage basis to the post work over data from the Company's RU-7 oil well. RU-7 was the first re-entry that the Company brought back online from its Osprey platform at an initial production rate of 250 BOPD in July of 2011. The RU-7 well is currently producing 200 BOPD and has declined from its announced initial production at an annual rate of 12% compared to the 30 BOPD and 27% decline rate experienced by the previous operator. RU-7 has shown an increase in bottom hole flowing pressure from approximately 1,200 psi, as reported by the previous operator, to more than 2,200 psi for the last 2 years after Miller's re-work of the well. During the last three months of production under the previous operator, the RU-2 well had bottom hole flowing pressures of less than 1,000 psi with a 10% oil cut and less than 100 BOPD, compared to Miller's current 2,350 psi at an 85% oil cut and 1,314 BOPD.

During the last year, Miller has restored production from the Redoubt Shoals Field to over 1,900 BOEPD. By addressing the poor completion designs used by the previous operator, Miller has increased production from each of the wells it has brought back online. Miller is continuing on its plan for development of re-entry wells in the Redoubt Shoals Field along with developing the Company's other Alaskan assets and currently has three rigs working.

About Miller Energy Resources

Miller Energy Resources, Inc. is an oil and natural gas exploration, production and drilling company operating in multiple exploration and production basins in North America. Miller's focus is in 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. The company's common stock is listed on the NYSE under the symbol MILL.

Statements Regarding Forward-Looking Information

Certain statements in this press release and elsewhere by Miller Energy Resources¸ Inc. are "forward-looking statements" within the meaning of the Private Securities Litigation Reform Act of 1995. These forward-looking statements involve the implied assessment that the resources described can be profitably produced in the future, based on certain estimates and assumptions. Forward-looking statements are based on current expectations, estimates and projections that involve a number of risks, uncertainties and other factors that could cause actual results to differ materially from those anticipated by Miller Energy Resources, Inc. and described in the forward-looking statements. These risks, uncertainties and other factors include, but are not limited to, the potential for Miller Energy to experience additional operating losses; high debt costs under its existing senior credit facility; potential limitations imposed by debt covenants under its senior credit facility on its growth and ability to meet business objectives; the need to enhance management, systems, accounting, controls and reporting performance; uncertainties related to the filing of its Form 10-K for 2011; litigation risks; its ability to perform under the terms of its oil and gas leases, and exploration licenses with the Alaska DNR, including meeting the funding or work commitments of those agreements; its ability to successfully acquire, integrate and exploit new productive assets in the future; its ability to recover proved undeveloped reserves and convert probable and possible reserves to proved reserves; risks associated with the hedging of commodity prices; its dependence on third party transportation facilities; concentration risk in the market for the oil we produce in Alaska; the impact of natural disasters on its Cook Inlet Basin operations; adverse effects of the national and global economic downturns on our profitability; the imprecise nature of its reserve estimates; drilling risks; fluctuating oil and gas prices and the impact on results from operations; the need to discover or acquire new reserves in the future to avoid declines in production; differences between the present value of cash flows from proved reserves and the market value of those reserves; the existence within the industry of risks that may be uninsurable; constraints on production and costs of compliance that may arise from current and future environmental, FERC and other statutes, rules and regulations at the state and federal level; the impact that future legislation could have on access to tax incentives currently enjoyed by Miller; that no dividends may be paid on its common stock for some time; cashless exercise provisions of outstanding warrants; market overhang related to restricted securities and outstanding options, and warrants; the impact of non-cash gains and losses from derivative accounting on future financial results; and risks to non-affiliate shareholders arising from the substantial ownership positions of affiliates. Additional information on these and other factors, which could affect Miller's operations or financial results, are included in Miller Energy Resources, Inc.'s reports on file with United States Securities and Exchange Commission including its Annual Report on Form 10-K, as amended, for the fiscal year ended April 30, 2012. Miller Energy Resources, Inc.'s actual results could differ materially from those anticipated in these forward-looking statements as a result of a variety of factors, including those discussed in its periodic reports that are filed with the Securities and Exchange Commission and available on its Web site (www.sec.gov). All forward-looking statements attributable to Miller Energy Resources or to persons acting on its behalf are expressly qualified in their entirety by these factors. Investors should not place undue reliance on these forward-looking statements, which speak only as of the date of this press release. We assume no obligation to update forward-looking statements should circumstances or management's estimates or opinions change unless otherwise required under securities law.

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