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By: AllPennyStocks.com
Given the volatility of the petroleum industry these days, the latest news
emerging out of Tennessee this week had to grab oil watchers by the lapels and
shake them up a bit. Due largely to its Alaskan operations, Huntsville, TN-based
Miller Energy Resources Inc. (OTCBB: MILL) enthusiastically proclaimed net
income of $271.9 million, or about $12.44 per outstanding share, for the fiscal
quarter ending in January.
In no small way are the company’s activities in the union’s 49th state
responsible for this dramatic flow of black ink. Earlier this month, MILL
announced that its Alaskan operations were producing “black gold” amounting to
800 barrels of equivalent per day (BOED). Only a couple of weeks later, MILL
announced a total pro-forma asset value approaching half a billion dollars,
including oil and natural gas reserves valued at $372 million.
MILL, in existence for 40 years and publicly traded for 12 years now, helped its
cause enormously just before 2009 ended, with the purchase of the oil and gas
assets from Pacific Energy Resources, just as the latter was about to go under.
It proved a savvy move: the sale, facilitated through a Chapter 11 Bankruptcy
proceeding, involved the transfer to Miller of onshore and offshore production
and processing facilities, an offshore energy platform, over 600,000 net lease
acres of land with hundreds of miles of 2-D and 3-D geologic seismic data,
miscellaneous roads, pads and facilities.
Miller Energy Resources is active in multiple exploration and production basins
in North America, including Alaska’s Cook Island and in the heart of Tennessee's
prolific and hydrocarbon-rich Appalachian Basin, where founder and Board
Chairman Deloy Miller was a pioneer in the highly successful 1969 and 1980
drilling booms. By the 1980s, MILL had become the largest oil and natural gas
company in the southern Appalachian region, with 18 drilling and work-over rigs
in service from New York to Alabama.
The company has benefited handsomely from going the acquisition route (case in
point, the Pacific sale). The acquisition of East Tennessee Consultants and the
assets of KY-Tenn Oil served to position MILL as the largest owner operator of
oil and natural gas wells in Tennessee.
The buying spree on which MILL has embarked, and the lucrative results of its
drilling activities, has given Mr. Miller the fiercely competitive company of
which he’s dreamed. But for years, the company dwelt in the bargain basement,
with a stock price below a dollar a share. Much of that changed in the last 52
weeks, emerging out of a cellar around 15 cents plumbed in mid-April, and
climbing to an all-time peak of $4.95 on March 15. Given that the SEC defines a
penny stock as a Company trading under $5 a share, technically, MILL remains a
penny stock, though not by much. But given its prospect for the future, and the
happy news of its present, investors may still find this stock a bargain, as
petroleum prices may soon resume their upward trek.
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