MEXP announces amended credit facility.
News October 15, 11:50 Eastern Time
MILLER EXPLORATION COMPANY ANNOUNCES AMENDMENT TO CREDIT FACILITY AND OPERATIONS ACTIVITY
TRAVERSE CITY, Mich., Oct 15, 1999 /PRNewswire via COMTEX/ -- Miller
Exploration Company (Nasdaq: MEXP) (the "Company" or "Miller") today
announced the pending amendment of its credit agreement, creation of a
multi dome joint venture in the Mississippi Salt Basin and ongoing
operations activity.
LIQUIDITY AND CAPITAL RESOURCES The Company and its senior lender have
agreed in principle to execute a third amendment to the Company's
secured lending facility. The parties have agreed to extend the
expiration date of October 15, 1999 of the current facility until
October 31, 1999 in order to provide sufficient time to draft
definitive documentation.
The Company has reviewed various financing alternatives to increase its
liquidity and has presently determined that a large infusion of private
or public equity could result in unacceptable dilution to the Company's
existing shareholders. The Company noted that while a number of equity
and subordinated debt financing alternatives are available in today's
market, management continues to be sensitive to the dilutive effect of
such actions to the existing shareholder base and have recently focused
on internally generated financing alternatives. Kelly Miller, President
and CEO, stated, "We feel that substantial progress has been made on
our plan to increase the Company's liquidity while minimizing dilution
to the greatest extent possible and, most importantly developing plans
to accelerate the drilling and development of the Mississippi Salt
Basin projects that now have the benefit of 3-D seismic." The plan
involves the following key elements:
I. Continued Cost Reductions
II. Amended Credit Facility
III. Accelerated Exploration Program
IV. Asset Rationalization
I. CONTINUED COST REDUCTION
The Company has reduced general and administrative costs through salary
and benefit reductions and the consolidation of certain functions which
have been eliminated in Traverse City and consolidated within the
Houston, Texas and Jackson, Mississippi offices. Total current
annualized general and administrative cost savings are anticipated to
be approximately 25% of 1998 general and administrative costs.
The Company is also realizing continued operating cost savings in its
Mississippi operations. Lease operating costs are currently below $.20
per Mcfe produced and have been reduced approximately 33%. Cost
reductions in large part are attributable to cost conscious field
operatorship together with the sale of certain non-strategic higher
unit cost properties. The Company's unit operating costs are now among
the lowest in the industry. Drilling and completion costs for 1999
exploration activities are also significantly lower than those realized
by the Company in Mississippi during prior years.
II. AMENDED CREDIT FACILITY
On October 14, the Company's senior lender extended the term of the
existing second amendment to the Company's Credit Facility until
October 31, 1999. The purpose of the extension is to allow time for
finalizing documentation for the third amendment to the Credit
Facility.
The terms of the third amendment include a revised principal payment
plan and an extension of the redetermination date to April 15, 2000.
The other significant terms are as follows: (i) a revision or waiver of
certain negative covenant provisions through September 30, 2000, (ii)
required principal payments totaling $7 million between October 15,
1999 and February 29, 2000, (iii) outstanding borrowings continue to
bear interest at prime rate plus 3.5%, (iv) a requirement to submit a
revised reserve report to the Bank by April 1, 2000 for redetermination
of the borrowing base, (v) maturity date of the Credit Facility
rescheduled to January 1, 2001, (vi) payment of a fee equal to 2% of
the then outstanding principal balance at April 15, 2000 be paid to the
Bank.
All principal and interest obligations under the Credit Facility are
currently expected to be satisfied through available cash flows,
additional property sales or other financing sources, including the
possible issuance of equity securities, as well as identifying
additional sources of debt financing. There can be no assurance that
the Company will issue additional equity securities or that the Company
will obtain additional sources of debt financing or that the terms of
any such debt financing will be on more favorable terms than that which
currently exists.
III. ACCELERATED EXPLORATION PROGRAM
Mississippi Salt Basin:
The Company is in final stages of documentation of a multi-dome joint
venture agreement and drilling program which will allow the Company to
diversify, monetize and participate in an accelerated exploration
program. The Company expects to retain an average working interest of
23% after casing point. It is anticipated that in the fourth quarter
the Company will have three (3) wells drilling , Centerville Dome --
(Campbell #1 is currently drilling), in addition to Kola Dome --
(Langston #1) and Richmond Dome. These wells will be drilled to an
anticipated total depth of 18,150', 18,500', and 17,650' respectively.
Exploratory tests are also being planned for other domes that have 3-D
seismic, offering the Company lower risk exploratory tests, yet a
continued exposure to higher potential opportunities.
The Company continues to exploit the multiple pay potential existing on
the domes and anticipates drilling to test the deeper objective of the
Cotton Valley, as well as a potential Smackover test. The Company
expects to issue a joint press release upon the completion of
documentation and execution of a formal multi-dome agreement with the
new joint venture partner.
Blackfeet Project, Glacier County, Montana:
The Blackfeet project continues to offer considerable potential in its
multiple play types that exist in the western portion of the
Reservation. Three (3) wells have been drilled to targeted depths and
are in the initial testing stage. Should the testing prove successful,
it is anticipated further drilling will take place in the immediate
area to further determine the field potential and reservoir boundaries.
The Company also recently received verbal approval from the Blackfeet
Tribe to extend the drilling commitment date from February 26, 2000 to
July 1, 2000. Although it is possible that the drilling will commence
prior to February 2000, this will allow the Company and its partner the
additional time necessary to complete the proposed seismic program.
IV. ASSET RATIONALIZATION
The Company has been engaged in a comprehensive review of undeveloped
assets (leasehold) and non-strategic producing properties. As
previously reported, the Company has sold certain of its non-strategic
producing properties and sold a fractional interest in certain high
working interest leasehold in the Mississippi Salt Basin properties
resulting in combined proceeds of $13.5 million. The majority of these
proceeds ($11.5 million) were used to retire secured debt.
OPERATING UPDATE
The previously completed Heffelfinger well in Hillsdale County,
Michigan has been connected to sales and is producing approximately 3.0
Mmcfd of gas and 40 barrels of natural gas liquids per day.
The Allar #6 well is now flowing to sales at approximately 4.0 Mmcfd
and 90 Bopd. Allar # 6 is located at Midway Dome in Mississippi and was
completed on August 29, 1999. The Company owns a 59.6% working interest
in this property.
The Horne #1 well is anticipated to begin production on or about
November 1, 1999. The Company believes that it may initially produce
this well up to 200 Bopd. The liquids produced from this well will
receive a discounted price due to lower gravity and is currently being
sampled for price quotation. The Company owns a 45% working interest in
this property.
The Company's net daily production is approximately 27.5 Mmcfe. Miller
is an independent oil and gas exploration and production company with
established exploration efforts concentrated primarily in two regions:
the Mississippi Salt Basin and the Blackfeet Indian Reservation of
Northwest Montana. Miller emphasizes the use of 3-D seismic data
analysis and imaging, as well as other emerging technologies, to
explore for and develop oil and natural gas in its core exploration
areas. Miller is the successor to the independent oil and natural gas
exploration and production business first established in Michigan by
members of the Miller family in 1925. Miller's common shares trade on
the Nasdaq under the symbol MEXP.
Except for the historical items herein, the matters discussed in this
press release are opinions, forward looking statements, assumptions,
and estimates that are subject to a wide range of risks and
uncertainties, and there is no assurance that our goals, estimates and
expectations will be realized. Any number of important factors could
cause actual results to differ materially from those in the forward
looking statements, including but not limited to the volatility of oil
and gas prices and changes in oil and gas drilling and acquisition
programs, operating risks, production rates, reserve replacement,
reserve estimates, the effect of our hedging activities, the actions of
our customers and competitors, government regulations, changes in
general economic conditions, and the state of domestic capital markets
and other uncertainties more fully described in the Company's Annual
Report on Form 10-K for the year ended December 31, 1998 as filed with
the Securities and Exchange Commission.
SOURCE Miller Exploration Company
(C) 1999 PR Newswire. All rights reserved.
prnewswire.com
CONTACT: Kelly E. Miller, Pres. & CEO, kmiller@mexp.com, or Deanna
Cannon, V.P. of Finance, dcannon@mexp.com, of Miller Exploration Company,
231-941-0004, or fax, 231-941-8312
WEB PAGE: mexp.com
GEOGRAPHY: Michigan
Montana
Texas
Mississippi
INDUSTRY CODE: OIL
SUBJECT CODE: JVN
FNC
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