785968--7/28/2010--MILLER_PETROLEUM

related topics

{gas, price, oil}

{loss, insurance, financial}

{acquisition, growth, future}

{stock, price, share}

{regulation, change, law}

{condition, economic, financial}

{investment, property, distribution}

{regulation, government, change}

{cost, regulation, environmental}

{control, financial, internal}

Risks Related to Our Business We have a history of operating losses and our net income in 2010 and 2009 are both the result of one-time acquisition gains. Our revenues are not currently sufficient to fund our operating expense and there are no assurances we will develop profitable operations. Our development and exploration operations require substantial capital, and we may be unable to obtain needed capital or financing on satisfactory terms, which would prevent us from fully developing our business and substantially increasing our revenues. We have failed to timely file a registration statement related to our March 2010 unit offering and are subject to registration rights penalties which are payable in cash. Cook Inlet Energy s operations are subject to oversight by the Alaska DNR and the Cook Inlet Energy oil and gas leases could be terminated if it fails to uphold the terms of the Assignment Oversight Agreement. If these leases were terminated, we would be unable to continue our operations as they are presently conducted and could be liable for significant additional costs associated with decommissioning the Osprey platform. Oil and gas prices fluctuate due to a number of uncontrollable factors, creating a component of uncertainty in our development plans and overall operations. Declines in prices adversely affect our financial results and rate of growth in proved reserves and production. The global economic crisis may have impacts on our business and financial condition that we currently cannot predict. Estimates of oil and natural gas reserves are inherently imprecise. Any material inaccuracies in these reserve estimates or underlying assumptions will affect materially the quantities and present value of our reserves. Approximately 74% of our total estimated proved reserves at April 30, 2010 were proved undeveloped reserves. In addition, there are no assurances that probable and possible reserves will be converted to proved reserves. There are no assurances that we will be able to extend the Susitna Basin Exploration License. The present value of future net cash flows from our proved reserves will not necessarily be the same as the current market value of our estimated natural gas, crude oil and natural gas liquids reserves. Our industry is subject to extensive environmental regulation that may limit our operations and negatively impact our production. As a result of increased enforcement of existing regulations and potential new regulations following the Gulf oil spill, the costs for complying with government regulation could increase. The effects of future environmental legislation on our business are unknown but could be substantial. Should we fail to comply with all applicable FERC administered statutes, rules, regulations and orders, we could be subject to substantial penalties and fines. Our business depends on oil and natural gas transportation facilities, most of which are owned by others. Our business involves many operating risks that may result in substantial losses for which insurance may be unavailable or inadequate. Our Cook Inlet Basin leases and our Osprey Platform are located in a region of active volcanoes and we could be subject to the adverse impacts of natural disasters. We may be subject to certain conflicts of interest related to Miller Energy Income 2009 -A, LP which may not be resolved in a manner favorable to our company. Certain of our outstanding warrants contain cashless exercise provisions which means we will not receive any cash proceeds upon their exercise. A large portion of our outstanding common shares are restricted securities and we have outstanding options, warrants and purchase rights to purchase approximately 47% of our currently outstanding common stock. The impacts of non-cash gains and losses from derivative liability accounting in future periods could materially impact our financial results.

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785968--7/28/2010--MILLER_PETROLEUM_INC