After more than a month of negotiations, Miller Energy Resources Inc. filed Thursday for Chapter 11 bankruptcy protection and reorganization.
The parent company of Alaska based Cook Inlet Energy blamed the substantial decline in oil prices, a drilling plan that resulted in lower-than-expected additional production and the withdrawal of a private lender who had promised the company a more than $165 million loan to refinance its outstanding debt, according to a media release.
In August, two of its creditors — Schlumberger and Baker Hughes — filed an involuntary bankruptcy petition over more than $2.6 million in unpaid bills. Miller Energy Resources Chief Executive Officer Carl Giesler said at the time that the two debtors were looking to collect on a fraction of the more than $180 million the company had in debt.
At the time, Giesler said he was hopeful that the combination of tax credit payments owed to the company by the State of Alaska, the sale of non-core assets like the Badami field on the North Slope and now-failed negotiations with a large lender could help the company avoid restructuring.
On Thursday, Giesler said the company had reached a preliminary deal with the second lien lenders to which it owes the bulk of its debt and would be able to clear away a lot of the issues the company has faced in recent months once the restructuring is completed.
In March, VAI Inc., won nearly $7 million from Miller Energy over a contract dispute. Then, company was de-listed from the New York Stock Exchange in July after it stock price fell, and stayed, below listing standards for market capitalization. After the company announced its bankruptcy on Thursday, its stock price fell to a new 52-week low of .06 cents a share.
In August, the U.S. Securities and Exchange Commission charged the company, two of its executives and an accountant with inflating the values of the company’s Alaska oil and gas properties by more than $400 million. The SEC administrative proceeding announcement that was the “straw that broke the camel’s back,” Giesler said. The involuntary bankruptcy petition followed a day later and the company has been working to avoid bankruptcy since, he said.
Still, the bankruptcy restructuring could help the company get back on track.
“We’re going to be getting a haircut and a lot of the big strands, the dangling strands that have been tripping us up — whether they be lawsuits, regulatory actions from the SEC, etc. — those will get cleaned up and finally resolved through the bankruptcy process,” he said. “When we emerge, we will have a clean balance sheet with an appropriate amount of debt that will allow us to get back to doing what we should be doing which is safely and efficiently developing oil and gas resources for the benefit of our customers and Alaska.”
Giesler said the company’s employees will continue to work, be paid and should not expect any further layoffs. In addition, the company expects to pay its vendors and other service providers for work going forward, according to the media release.
“This is the good news for our employees and for the people we work with,” he said.
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