Energy Companies To Watch

A SPECIAL REPORT FROM THE PUBLISHER OFSPRING 2014

ONEONONE

Describe the strategy that drives the company,and how you will implement it this year.We are focused on development and step-outdrilling in Alaska close to our existing infrastructure.We have a team that has operated in the Cook Inletfor more than 20 years. We will continue to imple-ment our strategy in the coming year by drillingPUD and step-out targets identified by previous welltests and 3-D seismic.

How have high oil prices and low gas prices af-fected your business?One of the many benefits of operating in Alaska,in addition to attractive state drilling rebates, isthat both the oil and natural gas markets havebeen strong. Prior to this year we have focused on

oil drilling where we receive ANS-based pricing(which is similar to Brent pricing). This year weclosed a gas-focused acquisition with a fixed con-tract at $7 per thousand cubic feet (Mcf). The development of our existing oil assets and the pur-chase of natural gas-focused assets are indicativeof the strong commodity markets in Alaska anddemonstrate management’s commitment to invest-ing in projects with exceptional rates of return,whether gas or oil. Going forward, we anticipatethat our production will be approximately 80% oiland 20% gas.

Will you expand into any new basins or plays?Why or why not?Our core area of expertise is in Alaska where our

capital budget is focused, andalso in Tennessee, where we aredrilling horizontal wells. We areprimarily focused on expandingin Alaska; however, we are always looking at acquisitions inother areas where we might findopportunities with strong rates ofreturn and that require a rela-tively low upfront purchase price.

Which projects will yield thebest return for the companythis year?Given that we currently receive 35% to 60% of everydollar we spend drilling inAlaska back from the state, andbecause we already have sub-stantial infrastructure in place,

MILLER ENERGY RESOURCES INC. NYSE: MILL | MILLERENERGYRESOURCES.COM

SCOTT M. BORUFF has served as a director and CEO since August 2008. Prior tojoining Miller, Boruff was a licensed investment banker. He was a director from 2006 to2007 of Cresta Capital Strategies LLC, a New York investment-banking firm that closedtransactions totaling $150 million to $200 million. He specialized in structuring of directfinancings, recapitalizations, M&A, and strategic planning with an emphasis in oil andgas. He was a commercial real estate broker for more than 20 years. Boruff holds a BSin business administration from East Tennessee State University.

Oil and Gas Investor | OneOnOne: Energy Companies to Watch | Spring 2014

Miller Energy’s Osprey Platform is part of its Cook Inlet midstream infrastructure.

our Alaska projects will undoubtedlyyield the best rates of return.

What is your projected budget forthe current year and how does itcompare to prior years? What arethe primary drivers?We expect to spend somewhere in therange of $180 million this year, of whichwe expect to receive a meaningful por-tion back from the state. Our capitalbudget has been accelerating every yearas we continue to add great drilling proj-ects in which to deploy capital. In theprocess, we have been able to secure expanded financing at lower interestrates, with world-class capital partnerssuch as Apollo and Highbridge.

Are you constrained by midstreamcapacity?Not for the foreseeable future … our midstream assets include our Osprey Platform, and our process-ing facilities at Kustatan and West McArthur River.These were built by a prior owner at a cost of morethan $300 million and they are state-of-the-art facil-ities. Our midstream infrastructure has the capacityto support many times our current production leveland is a great competitive advantage for Miller.

Do you foresee any acquisitions this year?Yes—in fact, we have several letters of intent out forassets in Alaska and have also acquired additionalacreage in Tennessee. We expect to continue to acquire additional assets throughout this year andinto the foreseeable future.

How much are you hedged?We have hedged more than 2,000 barrels of oil perday in the near term at prices from $108 to $94, details of which can be found in our SEC filings andpresentations. We have hedged with straight swapsagainst Brent crude to date. We like to hedge a highportion of our net production to insure our cashflow against commodity price movements. Our gasis effectively 100% hedged as it is sold under a fixedcontract at $7/Mcf.

What is the greatest challenge you face this year? Our greatest challenge perennially has beenmanaging costs as we execute our drilling plan.That said, state tax credits mitigate any increasesin capex and we have learned to be increasinglyefficient as we drill. For example, in our nextWest McArthur River project, we intend to use an existing wellbore (WMRU-2A) to mini-mize costs to access a new development drillinglocation. The message here is that, with eachwell we drill, we gain additional informationand experience that we put to immediate workin subsequent efforts.

What is the one thing you want investors toknow?With its exceptional assets and the unusually favorable regions in which we operate, Miller is anestablished company with a long operating history.We’re very proud of our success to date, but wethink the best is yet to come.

Any final comments or thoughts?We appreciate the chance to share some detailsabout our company, and if anyone would like addi-tional information, they are welcome to visit ourwebsite at millerenergyresources.com.

IR Contact: Derek Gradwell. 512-270-6990. dgradwell@mzgroup.us

The Kustatan Production Facility in Alaska is a state-of-the-art midstreamasset that Miller Energy purchased.

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