Miller Energy Resources Receives Tariff Settlement Approval
HUNTSVILLE, Tenn., Nov. 29, 2010 /PRNewswire/ -- Miller Petroleum, Inc. dba Miller Energy Resources ("Miller") (Nasdaq: MILL) a high growth oil and natural gas exploration, production and drilling company announced today that the Regulatory Commission of Alaska ("RCA") has approved a pipeline tariff settlement between Miller's Alaskan subsidiary, Cook Inlet Energy, LLC ("CIE"), and the Cook Inlet Pipe Line Company ("CIPL"). CIPL, a subsidiary of Chevron Pipeline Co., operates a 42-mile pipeline on the west side of Cook Inlet, and is the sole means by which CIE can export its oil production.
The settlement will be effective on November 29, 2010 and reduce transportation costs for all CIE production by $6.57 per barrel to a rate of $8.00 per barrel for the remainder of 2010. It is anticipated that this reduction will save CIE approximately $175,000 per month at current production levels. In February 2011, a true-up will occur that will adjust the per barrel rate for 2010. Management expects the true-up to result in a refund to CIE of approximately $1.5 million, which will be paid shortly after the true-up occurs.
The settlement also lays out a methodology for determining CIE's future pipeline transportation rates. The rates to be paid by CIE to CIPL during calendar years 2011 through 2014 shall be determined by dividing the agreed annual CIPL revenue requirement of $17.28 million for each year of the term of the Settlement Agreement by the forecasted total annual CIPL throughput. CIE has committed to pay for transportation of a minimum of 260,063 barrels of production in 2010 and 346,750 barrels in each of the years 2011 through 2014. Each February, a "true-up" adjustment for the previous year will be made by dividing the $17.28 million revenue requirement of the pipeline by the actual number of barrels put through the line to determine the actual rate due to CIPL. Overpayments by CIE up to $250,000 will be credited against future shipments, while any overpayment above $250,000 shall be repaid to CIE in cash. In the event that CIE had underpaid CIPL for the previous year, payment of that shortfall would be made after the annual true-up.
"This tariff reduction approval was one of the key initiatives this quarter. At current production levels the cost savings are meaningful to the bottom line and will be even more significant as we continue to ramp up our production in Alaska, " said Scott M. Boruff, Miller CEO. "Resolving this issue was an extensive process. I would like to thank our team in Alaska, led by David Hall, as well as all the other parties involved for their hard work, which led to this positive outcome. It is another example of excellence at Miller as we continue to build long term value for our shareholders."
About Miller
Miller Energy Resources is a high growth 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 prolific and hydrocarbon-rich Appalachian Basin including the Chattanooga Shale. Miller is headquartered in Huntsville, Tennessee with offices in Anchorage, Alaska and Knoxville, Tennessee. The company's common stock is listed on the NASDAQ Stock Market under the symbol MILL.
Statements Regarding Forward-Looking Information
Certain statements in this press release and elsewhere by Miller Energy Resources 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 and described in the forward-looking statements. These risks, uncertainties and other factors include, but are not limited to, adverse general economic conditions, operating hazards, drilling risks, inherent uncertainties in interpreting engineering and geologic data, competition, reduced availability of drilling and other well services, fluctuations in oil and gas prices and prices for drilling and other well services, fluctuations in the US dollar and other currencies, the availability of sufficient capital to fund its anticipated growth, fluctuations in the prices of oil and gas, the competitive nature of its business environment, its dependence on a limited number of customers, its ability to comply with environmental regulations, changes in government regulations which could adversely impact its businesses well as other risks commonly associated with the exploration and development of oil and gas properties. Additional information on these and other factors, which could affect Miller's operations or financial results, are included in Miller Energy Resources' reports on file with United States Securities and Exchange Commission including its Annual Report on Form 10-K for the fiscal year ended April 30, 2010. Miller Energy Resources' 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.
Web Site: http://www.millerenergyresources.com
SOURCE Miller Petroleum, Inc.
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