Miller Energy Resources
Scott M. Boruff
TWST: Please begin with a brief introduction to Miller Energy Resources, including a few key highlights from its history and an overview of its two primary projects.
Mr. Boruff: Miller Energy (MILL) is headquartered in Knoxville, Tenn., and is about a 45-year-old company. We've been public about 14 years. I became CEO in August of 2008, and we were a pink sheet company - we went through some savvy acquisitions and some management add-ons, and we were able to go from the pink sheets to the New York Stock Exchange in less than three years. It's been a fun ride.
We've done about four acquisitions. We sold some assets right when I came on board in Tennessee, and kind of recapitalized the company with those assets. We sold 30,000 acres for $20 million. And then, six months later, we bought two companies in Tennessee, and we bought back about 35,000 acres for less than $1 million.
Then you roll forward a year later, and in every company there is always a turning point that makes you who you are. From our investment banking background and experience in the past, we looked at several deals every month, but we acquired the bankrupt assets of Pacific Energy Resources in 2009, where we basically sat in the bankruptcy court for about four months trying to figure out how to make this deal work. Because there is always something wrong with a deal and your job as a CEO is to figure out what's wrong, because these assets went bankrupt twice before so you want to avoid making the same mistakes, we were able to identify some undesirable assets and get the bankruptcy court to consent to a sale of the business without those undesirable assets. And that has made all the difference for us.
We've grown production from eight barrels a day when I took over to - we've been as high as 1,500 barrels a day in production. This year, we're hoping to grow again from - we're giving guidance on January through January ending out the year at 5,000 barrels a day, so we plan to grow another 400%, 500% again. So it's an exciting story.
TWST: For the most recent quarter reported, ending October 31, revenues at Miller Energy Resources were up 63%, which you attributed to the success of the new wells the company reworked in Alaska. Please tell us more about what's going on there. How much of the increase was prices and how much was increased sales and how much more value do you expect those wells to deliver?