Miller Energy Resources Inc. (NYSE: MILL) has signed a binding agreement to acquire Savant Alaska LLC for $9.0 million in cash. Once the transaction is completed, Savant would become a wholly owned subsidiary of Miller. The transaction is expected to close by August, following regulatory approval, with a May 1 effective date.
Through Savant, Miller would own a 67.5% working interest in the Badami Unit, with ASRC Exploration LLC remaining as a 32.5% working interest partner. Miller would also obtain a 100% working interest in nearby exploration leases. The Badami Unit has seven State of Alaska leases consisting of 17,200 gross acres in the Alaska North Slope and eight wells currently producing 1,100 BOPD gross, 600 BOPD net to Savant.
These assets would bring 1,100 BOPD gross and 600 BOPD net of current production and ownership of midstream assets located in the Alaska North Slope, with a design capacity of 38,500 BOPD and 25 miles of pipeline. Miller estimates that the acquisition will add approximately $6 million of PDP PV-10 (based on internal assessments by Savant) with significant additional drilling opportunities. The company has initial plans to drill two sidetrack wells at an estimated cost of $15 million per well ($10.1 million net to Miller’s working interest).
"The acquisition of Savant will significantly expand Miller Energy's Alaskan asset ownership, complementing our existing Cook Inlet operations and providing us with additional wellbore diversification," said Scott M. Boruff, Miller's CEO. "This transaction increases our profile in the Alaskan oil and gas community, and gives us a credible foothold in the world-class North Slope resource play, including existing production, a developmental runway, and substantial mid-stream assets.”