Production Growth: The successful drilling program in Alaska, coupled with an acquisition, helped Miller grow production by 147% in the second quarter of this fiscal year over the same period of the prior fiscal year. Miller reached daily gross production of approximately 4,015 boepd at the end of November 2013.
Continuing Losses: Although production has grown since 2012, Miller is losing money quarter after quarter. It recorded a net loss of $8.3 million for the second quarter of fiscal 2014.
Company |
EV ($million) |
Production |
EBITDA |
EV/Production |
EV/ |
Miller Energy |
390 |
4,015 |
20 |
97,136 |
19.5 |
Renegade Petroleum |
470 |
7,600 |
88 |
61,842 |
5.34 |
Arsenal Energy |
150 |
4,400 |
40 |
34,091 |
3.75 |
Petroamerica Oil |
170 |
6,312 |
135 |
26,933 |
1.26 |
Alaska's Favorable Tax Policy: The Alaska Clear and Equitable Share and the Cook Inlet Recovery Act programs are part of the existing favorable tax policy in Alaska, and allow producers to recover up to 40% of qualified expenditures on certain costs incurred in connection with their Alaska energy projects.
Commodity Volatility: Miller is a junior producer that doesn't have the financial resources to weather any sustained downturn in oil prices. Moreover, the company only has a portion of its oil production hedging, thus a prolonged drop in oil prices will negatively affect Miller's top and bottom lines.
I won't personally be buying Miller, because the stock is richly valued at current levels. Miller's peers have more compelling metrics, offering more upside potential to investors.