Miller Energy Resources Inc. (NYSE: MILL) has made changes to its senior leadership team as part of a corporate shift that will include the potential MLP-monetization of its midstream assets. Additionally, the company has signed a non-binding letter of intent to purchase substantially all the operating assets of Buccaneer Energy in Alaska.
Board and management changes
Carl F. Giesler, Jr. has joined Miller as CEO and a member of the board of directors. Scott M. Boruff is now executive chairman of the company. Giesler previously served as a managing director of investments for Harbinger Group Inc. (HGI) where he was responsible for HGI's oil and gas investments. At HGI, he helped found, structure and build, and served as chairman of HGI's private majority-owned E&P MLP. Prior to joining HGI in 2011, Giesler was the oil and gas analyst for Harbinger Capital Partners LLC, an affiliate of HGI. A CFA Charter holder, Giesler graduated from Harvard Law School and the University of Virginia.
"With Carl onboard, we will further zero-in on our operational and cost of capital improvement initiatives. We will also assess our capital deployment with a greater returns-emphasis to improve our cash flow and liquidity,” said Boruff.
"As we've noted quite a bit recently, we believe the value of our midstream infrastructure has not been fully-reflected in the company's share price. Carl's experience with MLPs will help us explore options to maximize the value of and potentially monetize our substantial midstream infrastructure," he continued.
Deloy Miller will retire as chairman of the board and resign as a director. A. Haag Sherman will join the board to fill that vacancy. Sherman co-founded and served as the CEO for Salient Partners, an approximately $17 billion asset management firm. He also has experience in oil and gas as an executive, a member of boards of directors, an entrepreneur and an investor.
The management changes, noted analysts at Casimir Capital, "all but eliminate any remaining legacy concerns shareholders could possibly have, while retaining Scott Boruff’s deal making expertise."
Intent to purchase the Alaskan operating assets of Buccaneer Energy
Miller has entered into a non-binding letter of intent to buy substantially all the Alaskan operating assets Buccaneer Energy for approximately $40 to $50 million. Buccaneer Energy has approximately 1.9 MMboe of proved reserves and produces approximately 1.7 Mboepd. The company will fund the potential purchase with its existing facilities or other borrowings. Any binding agreement and financing would be subject to the approval of the board of directors.
The deal "would exploit that company’s financial distress," said Casimir Capital analysts, "allowing MILL to buy reserves and flowing boe at attractive metrics of ~ $24/boe and $27k, respectively."
Miller Energy Resources entered the Alaska market in 2009 with the purchase of Pacific Energy assets that were originally acquired from Forest Oil Corp. in 2007 for $464 million. In 2009, Pacific Energy declared bankruptcy and later abandoned its assets in Alaska. In October 2009, Miller entered into an agreement to acquire the majority of those assets.