Miller Energy Resources is turning its back on emerging shale plays in its home state of Tennessee to focus all its efforts on conventional exploration in Alaska.
The Knoxville-based junior is shopping its position in the southern Appalachian basin to cut expenses and raise capital needed to accelerate operations around Cook Inlet in Alaska.
Miller holds about 46,000 acres in northern Tennessee near the Kentucky border where the company had been chasing a tight oil play in the Fort Payne formation – an analogue to the popular Mississippi Lime play in Oklahoma.
The assets are currently producing about 248 barrels of oil equivalent per day.
To date, Miller had drilled three exploration wells in the Fort Payne, which had flowed at initial production rates as high as 487 boepd.
In all, Miller plans to slash its general expenses by $3 million to $5 million.
"The targeted reduction is aggressive, but, we think, appropriate and achievable, driven in large part by the elimination of our Tennessee operations and the favorable resolution of several outstanding lawsuits and the recent proxy contest," Miller Energy chief executive Scott Boruff said.
"While we still believe Tennessee has significant growth potential, our capital is clearly better allocated to our Alaskan operations and the investment opportunities that exist there."
Miller's recent work in Alaska has focused on its 600,000 acres in the shallow-water and onshore areas around Cook Inlet, where it produces under its Cook Inlet Energy subsidiary.
In May, Miller announced it was expanding its Alaska footprint to the North Slope with the purchase of privately held Savant Alaska, which held a 68% interest in the Badami unit as part of its 24,000-acre position in the area.