New acreage adds to Alaska oil potential for Miller Energy

Source: Miller Energy Resources

Miller Energy Resources (“Miller”) (NYSE: MILL) announced that it expanded its development potential in the Susitna Basin of Alaska with the addition of an oil and gas exploration license for 45,764 acres. The new acreage is located south of the Company’s existing Licenses No. 2 and No. 4 in the Susitna Basin of Alaska. With the addition of License No. 5, Miller Energy controls nearly 700,000 acres of State of Alaska oil and gas lands, the largest number of acres under lease and license by any company for oil and gas exploration on state lands.

“The addition of the new license in the Susitna Basin strengthens our position in a key area of south central Alaska that is located north of Anchorage,” stated Scott M. Boruff, Chief Executive Officer of Miller Energy Resources. “We believe our extensive acreage in the Susitna Basin holds excellent potential for Miller, especially for natural gas that sells for a premium in Alaska. The area is adjacent to the well-proven, prolific oil and gas bearing Cook Inlet Basin that has produced over one billion barrels of oil and seven trillion cubic feet of natural gas.

“We elected to pursue the new license in the Susitna Basin based on its proximity to our existing acreage and the potential to leverage our onshore drilling program in this area. We are currently evaluating the acreage and developing a work program,” concluded Mr. Boruff.

Cook Inlet Energy, LLC, a wholly owned subsidiary of Miller, was issued the license for the new acreage in the Susitna Basin. The initial term of the license is five years. The license’s work commitment requires Cook Inlet Energy to perform exploration work with qualifying direct expenditures totaling a minimum of $250,000 over the five-year term. Upon timely completion of the work commitment, Cook Inlet Energy will have the option to convert any or all of the remaining license acreage to oil & gas leases with a five-year term and a royalty rate of 12.5% and a $3.00/acre annual rental rate.

As part of the license agreement, Miller incurred a one-time license fee of $1 per acre ($45,765) and posted an initial performance bond of $50,000. An annual performance bond is required until the total work commitment is fulfilled.

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