Miller Energy Resources (MILL) 10-K 2010 FY Annual report

EXHIBIT 99.1

COOK INLET ENERGY

ESTIMATED FUTURE RESERVES

AND INCOME

AS OF APRIL 30, 2010

SEC PARAMETERS

RALPH E. DAVIS ASSOCIATES, INC.

HOUSTON, TEXAS

SECURITIES AND EXCHANGE COMMISSION

DEFINITIONS OF RESERVES

The following information is taken from the United States Securities and Exchange Commission:

PART 210—FORM AND CONTENT OF AND REQUIREMENTS FOR FINANCIAL STATEMENTS, SECURITIES ACT OF 1933, SECURITIES EXCHANGE ACT OF 1934, PUBLIC UTILITY HOLDING COMPANY ACT OF 1935, INVESTMENT COMPANY ACT OF 1940, INVESTMENT ADVISERS ACT OF 1940, AND ENERGY POLICY AND CONSERVATION ACT OF 1975

Rules of General Application

§ 210.4-10 Financial accounting and reporting for oil and gas producing activities pursuant to the Federal securities laws and the Energy Policy and Conservation Act of 1975.

Reserves

Reserves are estimated remaining quantities of oil and gas and related substances anticipated to be economically producible, as of a given date, by application of development projects to known accumulations. In addition, there must exist, or there must be a reasonable expectation that there will exist, the legal right to produce or a revenue interest in the production, installed means of delivering oil and gas or related substances to market, and all permits and financing required to implement the project.

Reserves should not be assigned to adjacent reservoirs isolated by major, potentially sealing, faults until those reservoirs are penetrated and evaluated as economically producible. Reserves should not be assigned to areas that are clearly separated from a known accumulation by a non-productive reservoir (i.e., absence of reservoir, structurally low reservoir, or negative test results). Such areas may contain prospective resources (i.e., potentially recoverable resources from undiscovered accumulations).

Proved Oil and Gas Reserves

Proved oil and gas reserves are those quantities of oil and gas, which, by analysis of geoscience and engineering data, can be estimated with reasonable certainty to be economically producible—from a given date forward, from known reservoirs, and under existing economic conditions, operating methods, and government regulations—prior to the time at which contracts providing the right to operate expire, unless evidence indicates that renewal is reasonably certain, regardless of whether deterministic or probabilistic methods are used for the estimation. The project to extract the hydrocarbons must have commenced or the operator must be reasonably certain that it will commence the project within a reasonable time.

(i)

The area of the reservoir considered as proved includes:

(A)

The area identified by drilling and limited by fluid contacts, if any, and

(B)

Adjacent undrilled portions of the reservoir that can, with reasonable certainty, be judged to be continuous with it and to contain economically producible oil or gas on the basis of available geoscience and engineering data.

(ii)

In the absence of data on fluid contacts, proved quantities in a reservoir are limited by the lowest known hydrocarbons (LKH) as seen in a well penetration unless geoscience, engineering, or performance data and reliable technology establishes a lower contact with reasonable certainty.

(iii)

Where direct observation from well penetrations has defined a highest known oil (HKO) elevation and the potential exists for an associated gas cap, proved oil reserves may be assigned in the structurally higher portions of the reservoir only if geoscience, engineering, or performance data and reliable technology establish the higher contact with reasonable certainty.

(iv)

Reserves which can be produced economically through application of improved recovery techniques (including, but not limited to, fluid injection) are included in the proved classification when:

(A)

Successful testing by a pilot project in an area of the reservoir with properties no more favorable than in the reservoir as a whole, the operation of an installed program in the reservoir or an analogous reservoir, or other evidence using reliable technology establishes the reasonable certainty of the engineering analysis on which the project or program was based; and

Page 2

Securities and Exchange Commission

§ 210.4-10   Definitions (of Reserves)

Modified, Effective 2009 for Filings of 12/31/2009 and Thereafter

(B) The project has been approved for development by all necessary parties and entities, including governmental entities.

(v) Existing economic conditions include prices and costs at which economic producibility from a reservoir is to be determined. The price shall be the average price during the 12-month period prior to the ending date of the period covered by the report, determined as an unweighted arithmetic average of the first-day-of-the-month price for each month within such period, unless prices are defined by contractual arrangements, excluding escalations based upon future conditions.

Reasonable certainty.If deterministic methods are used, reasonable certainty means a high degree of confidence thatthe quantities will be recovered. If probabilistic methods are used, there should be at least a 90% probability that the quantities actually recovered will equal or exceed the estimate. A high degree of confidence exists if the quantity is much more likely to be achieved than not, and, as changes due to increased availability of geoscience (geological, geophysical, and geochemical), engineering, and economic data are made to estimated ultimate recovery (EUR) with time, reasonably certain EUR is much more likely to increase or remain constant than to decrease.

Reliable technology.Reliable technology is a grouping of one or more technologies (including computational methods)that has been field tested and has been demonstrated to provide reasonably certain results with consistency and repeatability in the formation being evaluated or in an analogous formation.

Probable Reserves

Probable reserves are those additional reserves that are less certain to be recovered than proved reserves but which, together with proved reserves, are as likely as not to be recovered.

(i)

When deterministic methods are used, it is as likely as not that actual remaining quantities recovered will exceed the sum of estimated proved plus probable reserves. When probabilistic methods are used, there should be at least a 50% probability that the actual quantities recovered will equal or exceed the proved plus probable reserves estimates.

(ii)

Probable reserves may be assigned to areas of a reservoir adjacent to proved reserves where data control or interpretations of available data are less certain, even if the interpreted reservoir continuity of structure or productivity does not meet the reasonable certainty criterion. Probable reserves may be assigned to areas that are structurally higher than the proved area if these areas are in communication with the proved reservoir.

(iii)

Probable reserves estimates also include potential incremental quantities associated with a greater percentage recovery of the hydrocarbons in place than assumed for proved reserves.

Possible Reserves

Possible reserves are those additional reserves that are less certain to be recovered than probable reserves.

(i)

When deterministic methods are used, the total quantities ultimately recovered from a project have a low probability of exceeding proved plus probable plus possible reserves. When probabilistic methods are used, there should be at least a 10% probability that the total quantities ultimately recovered will equal or exceed the proved plus probable plus possible reserves estimates.

(ii)

Possible reserves may be assigned to areas of a reservoir adjacent to probable reserves where data control and interpretations of available data are progressively less certain. Frequently, this will be in areas where geoscience and engineering data are unable to define clearly the area and vertical limits of commercial production from the reservoir by a defined project.

(iii)

Possible reserves also include incremental quantities associated with a greater percentage recovery of the hydrocarbons in place than the recovery quantities assumed for probable reserves.

(iv)

The proved plus probable and proved plus probable plus possible reserves estimates must be based on reasonable alternative technical and commercial interpretations within the reservoir or subject project that are clearly documented, including comparisons to results in successful similar projects.

(v)

Possible reserves may be assigned where geoscience and engineering data identify directly adjacent portions of a reservoir within the same accumulation that may be separated from proved areas by faults with displacement less than

Page 3

Securities and Exchange Commission

§ 210.4-10   Definitions (of Reserves)

Modified, Effective 2009 for Filings of 12/31/2009 and Thereafter

formation thickness or other geological discontinuities and that have not been penetrated by a wellbore, and the registrant believes that such adjacent portions are in communication with the known (proved) reservoir. Possible reserves may be assigned to areas that are structurally higher or lower than the proved area if these areas are in communication with the proved reservoir.

(vi) Pursuant to paragraph (a)(22)(iii) of this section, where direct observation has defined a highest known oil (HKO) elevation and the potential exists for an associated gas cap, proved oil reserves should be assigned in the structurally higher portions of the reservoir above the HKO only if the higher contact can be established with reasonable certainty through reliable technology. Portions of the reservoir that do not meet this reasonable certainty criterion may be assigned as probable and possible oil or gas based on reservoir fluid properties and pressure gradient interpretations.

Developed Oil and Gas Reserves

Developed oil and gas reserves are reserves of any category that can be expected to be recovered:

(i)

Through existing wells with existing equipment and operating methods or in which the cost of the required equipment is relatively minor compared to the cost of a new well; and

(ii)

Through installed extraction equipment and infrastructure operational at the time of the reserves estimate if the extraction is by means not involving a well.

Undeveloped Oil and Gas Reserves

Undeveloped oil and gas reserves are reserves of any category that are expected to be recovered from new wells on undrilled acreage, or from existing wells where a relatively major expenditure is required for recompletion.

(i)

Reserves on undrilled acreage shall be limited to those directly offsetting development spacing areas that are reasonably certain of production when drilled, unless evidence using reliable technology exists that establishes reasonable certainty of economic producibility at greater distances.

(ii)

Undrilled locations can be classified as having undeveloped reserves only if a development plan has been adopted indicating that they are scheduled to be drilled within five years, unless the specific circumstances, justify a longer time.

(iii)

Under no circumstances shall estimates for undeveloped reserves be attributable to any acreage for which an application of fluid injection or other improved recovery technique is contemplated, unless such techniques have been proved effective by actual projects in the same reservoir or an analogous reservoir, as defined in paragraph (a)(2) of this section, or by other evidence using reliable technology establishing reasonable certainty.

Additional Definitions:

Deterministic Estimate

The method of estimating reserves or resources is called deterministic when a single value for each parameter (from the geoscience, engineering, or economic data) in the reserves calculation is used in the reserves estimation procedure.

Probabilistic Estimate

The method of estimation of reserves or resources is called probabilistic when the full range of values that could reasonably occur for each unknown parameter (from the geoscience and engineering data) is used to generate a full range of possible outcomes and their associated probabilities of occurrence.

Reasonable Certainty

If deterministic methods are used, reasonable certainty means a high degree of confidence that the quantities will be recovered. If probabilistic methods are used, there should be at least a 90% probability that the quantities actually recovered will equal or exceed the estimate. A high degree of confidence exists if the quantity is much more likely to be achieved than not, and, as changes due to increased availability of geoscience (geological, geophysical, and geochemical), engineering, and economic data are made to estimated ultimate recovery (EUR) with time, reasonably certain EUR is much more likely to increase or remain constant than to decrease.

										COOK INLET ENERGY
										VARIOUS COOK INLET PROPERTIES
										AS OF APRIL 30, 2010
										SORTED BY RESERVE CATEGORY THEN BY PV 10 VALUE
										RESERVE	LIFE		GROSS	GROSS	NET	NET	NET	SEV	AD VAL	OP	CAPITAL	CASH	DISC
	FIELD		LEASE		RESERVOIR		OPERATOR	MAJOR		CATEGORY	INDEX		OIL	GAS	OIL	GAS	SALES	TAX	TAX	COST	COST	FLOW	@ 10%
											(YRS)		(BBLS)	(MMCF)	(BBLS)	(MMCF)	($)	($)	($)	($)	($)	($)	($)
WEST MCARTHUR RIVER		WMRU  6		HEMLOCK‐SEG B		COOK INLET		OIL	PROVED PRODUCING		11.7	1,231,161		‐	982,968	‐	61,578,864	29,489	677,043	‐	‐	60,872,340	41,805,372
REDOUBT SHOAL		REDOUBT  04A		HEMLOCK CENTRAL FB		COOK INLET		OIL	PROVED UNDEVELOPED		17.3	1,321,895		‐	1,196,315	‐	72,770,288	40,675	1,090,944	2,326,535	2,300,000	67,012,132	40,711,360
REDOUBT SHOAL		REDOUBT  05A		HEMLOCK SOUTH FB		COOK INLET		OIL	PROVED UNDEVELOPED		14.5	1,124,721		‐	1,017,873	‐	62,235,480	34,608	933,013	1,979,509	2,400,000	56,888,364	37,628,652
REDOUBT SHOAL		REDOUBT  03A		HEMLOCK SOUTH FB		COOK INLET		OIL	PROVED UNDEVELOPED		14.4	1,124,721		‐	1,017,872	‐	62,257,528	34,608	933,344	1,979,509	4,600,000	54,710,064	35,910,716
REDOUBT SHOAL		REDOUBT  NORTH STEPOUT		HEMLOCK NS02		COOK INLET		OIL	PROVED UNDEVELOPED		16.1	1,191,013		‐	1,077,867	‐	65,615,496	36,647	983,683	2,096,183	4,600,000	57,898,984	34,559,560
REDOUBT SHOAL		REDOUBT  02A		HEMLOCK SOUTH FB		COOK INLET		OIL	PROVED UNDEVELOPED		15.1	1,124,721		‐	1,017,873	‐	62,078,648	34,608	930,661	1,979,509	3,500,000	55,633,872	34,546,572
WEST MCARTHUR RIVER		WMRU  9		HEMLOCK‐SEG B		COOK INLET		OIL	PROVED UNDEVELOPED		11.6	1,100,000		‐	871,721	‐	54,807,884	29,639	602,561	‐	6,000,000	48,175,680	33,807,856
REDOUBT SHOAL		REDOUBT  SOUTH STEPOUT		HEMLOCK SSO		COOK INLET		OIL	PROVED UNDEVELOPED		16.6	1,191,013		‐	1,077,867	‐	65,466,312	36,647	981,445	2,096,183	4,600,000	57,752,032	32,869,412
WEST MCARTHUR RIVER		WMRU  5		HEMLOCK‐SEG B		COOK INLET		OIL	PROVED PRODUCING		11.7	755,796		‐	603,433	‐	37,802,568	20,517	415,603	‐	‐	37,366,448	25,662,210
REDOUBT SHOAL		REDOUBT  01		HEMLOCK		COOK INLET		OIL	PROVED NON PRODUCING		17.2	699,999		‐	633,499	‐	38,404,336	19,005	575,780	1,231,999	2,000,000	34,577,548	19,714,830
WEST MCARTHUR RIVER		WMRU  8		HEMLOCK‐SEG C		COOK INLET		OIL	PROVED UNDEVELOPED		5.6	523,000		‐	401,324	‐	25,417,388	13,645	279,441	‐	6,000,000	19,124,302	15,571,347
REDOUBT SHOAL		REDOUBT  07		HEMLOCK		COOK INLET		OIL	PROVED NON PRODUCING		11.3	245,605		‐	222,272	‐	13,571,477	7,557	203,459	432,265	2,000,000	10,928,197	6,507,471
WEST MCARTHUR RIVER		WMRU  1A		HEMLOCK‐SEG A		COOK INLET		OIL	PROVED PRODUCING		2.8	80,000		‐	60,221	‐	3,823,974	1,807	42,044	‐	275,000	3,505,123	3,153,506
WEST MCARTHUR RIVER		WMRU 7A		HEMLOCK‐SEG A		COOK INLET		OIL	PROVED PRODUCING		9.9	61,183		‐	48,494	‐	3,048,848	1,649	33,519	‐	‐	3,013,681	2,206,829
WEST FORELAND		WF 1 (9200‐9400)		WF#1 9200 & 9400` SAND		COOK INLET		GAS	PROVED PRODUCING		9.3		‐	790,733	‐	637,928	3,088,212	‐	12,353	1,068,480	‐	2,007,379	1,598,020
RAPTOR		RAPTOR 1		TYONEK		COOK INLET		GAS	PROVED UNDEVELOPED		10.7		‐	3,819,000	‐	3,341,625	16,176,808	‐	177,945	577,500	10,600,000	4,821,363	1,470,797
WEST FORELAND		WF 2 LONG STRING		WF#2‐9200` SAND		COOK INLET		GAS	PROVED PRODUCING		8.2		‐	460,376	‐	371,412	1,798,004	‐	7,192	633,080	‐	1,157,732	945,785
THREE MILE CREEK		THREE MILE CREEK 1		BELUGA/TYONEK		COOK INLET		GAS	PROVED PRODUCING		3.8		‐	254,313	‐	65,262	315,932	‐	12,637	81,000	‐	222,295	202,910
THREE MILE CREEK		THREE MILE CREEK 3		BELUGA/TYONEK		COOK INLET		GAS	PROVED UNDEVELOPED		4.8		‐	1,482,168	‐	380,354	1,841,293	‐	73,652	99,000	1,350,000	318,642	180,375
KUSTATAN		KUSTATAN FIELD #1		TYONEK		COOK INLET		GAS	PROVED PRODUCING		3.3		‐	5,639	‐	4,906	23,749	‐	95	10,000	‐	13,654	11,223
THREE MILE CREEK		THREE MILE CREEK 2		BELUGA/TYONEK		COOK INLET		GAS	PROVED PRODUCING		0.7		‐	17,257	‐	4,428	21,438	‐	858	14,400	‐	6,181	6,052
WEST FORELAND		WF 2 SHORT STRING		WF#2‐8500` SAND		COOK INLET		GAS	PROVED PRODUCING		0.2		‐	1,640	‐	1,346	6,515	‐	26	2,000	‐	4,489	4,455
REDOUBT SHOAL		REDOUBT  05		HEMLOCK		COOK INLET		OIL	PROVED PRODUCING		0.0		‐	‐	‐	‐	‐	‐	‐	‐	‐	‐	‐
KUSTATAN FACILITY		KUSTATAN FACILITY EXPENSES				COOK INLET		OIL	PROVED		15.7		‐	‐	‐	‐	‐	‐	‐	21,620,000	‐	(21,620,000)	(11,226,233)
REDOUBT SHOAL		FIXED OPERATING COSTS		OSPREY PLATFORM		COOK INLET		OIL	PROVED EXPENSES		9.7		‐	‐	‐	‐	‐	‐	‐	25,853,000	‐	(25,853,000)	(17,656,712)
WEST MCARTHUR RIVER		FIXED OPERATING COSTS		HEMLOCK		COOK INLET		OIL	PROVED EXPENSES		11.7		‐	‐	‐	‐	‐	‐	‐	46,760,000	‐	(46,760,000)	(28,220,450)
											253.5		11,774,828	6,831,125	10,229,599	4,807,260	652,151,042	341,100	8,967,296	110,840,152	50,225,000	481,777,500	311,971,914
REDOUBT SHOAL		REDOUBT  SOUTH STEPOUT		HEMLOCK SSO		COOK INLET		OIL	PROBABLE UNDEVELOPED		16.3	1,191,013		‐	1,077,867	‐	65,541,360	36,647	982,571	2,096,183	4,600,000	57,825,960	33,704,180
REDOUBT SHOAL		REDOUBT  09		HEMLOCK NORTHERN FB		COOK INLET		OIL	PROBABLE UNDEVELOPED		13.1	847,012		‐	766,546	‐	46,688,640	26,063	699,939	1,490,741	4,600,000	39,871,900	23,155,658
REDOUBT SHOAL		REDOUBT  13		HEMLOCK NORTHERN FB		COOK INLET		OIL	PROBABLE UNDEVELOPED		13.3	847,012		207,518	766,546	187,804	47,545,376	26,063	712,790	1,490,741	4,600,000	40,715,792	23,104,140
REDOUBT SHOAL		REDOUBT  14		HEMLOCK NORTHERN FB		COOK INLET		OIL	PROBABLE UNDEVELOPED		13.6	847,012		‐	766,546	‐	46,583,168	26,063	698,357	1,490,741	4,600,000	39,768,004	22,020,252
REDOUBT SHOAL		REDOUBT  NORTH STEPOUT		HEMLOCK NS02		COOK INLET		OIL	PROBABLE UNDEVELOPED		23.3	838,264		‐	758,629	‐	45,046,184	25,793	675,306	1,475,344	‐	42,869,732	19,219,020
SABRE		SABRE 1		G SAND		COOK INLET		OIL	PROBABLE UNDEVELOPED		11.7	1,152,500		‐	697,839	‐	43,840,252	23,727	481,982	1,904,981	13,020,000	28,409,566	18,108,768
SABRE		SABRE 2		G SAND		COOK INLET		OIL	PROBABLE UNDEVELOPED		13.5	1,152,500		‐	697,839	‐	43,611,640	23,727	479,467	1,943,480	10,220,000	30,944,966	18,075,952
WEST MCARTHUR RIVER		WMRU 7A		8500' GAS		COOK INLET		GAS	PROBABLE NON‐PRODUCING		8.6		‐	6,340,000	‐	5,034,908	24,373,988	‐	268,114	‐	2,000,000	22,105,874	15,635,683
SWORD		SWORD 1		G SAND		COOK INLET		OIL	PROBABLE UNDEVELOPED		14.9	1,106,500		‐	639,004	‐	39,907,092	21,726	438,739	1,983,058	10,220,000	27,243,568	15,406,769
SABRE		SABRE 3		BELUGA‐STERLING		COOK INLET		GAS	PROBABLE UNDEVELOPED		11.9		‐	5,769,999	‐	3,493,734	16,913,166	‐	186,045	442,750	10,220,000	6,064,371	1,902,775
THREE MILE CREEK		THREE MILE CREEK 2		BELUGA/TYONEK		COOK INLET		GAS	PROBABLE NON PRODUCING		5.7		‐	773,382	‐	198,465	960,770	‐	38,431	108,000	75,000	739,340	617,549
THREE MILE CREEK		THREE MILE CREEK 2		BELUGA/TYONEK		COOK INLET		GAS	PROBABLE NON PRODUCING		8.0		‐	757,698	‐	194,440	941,286	‐	37,651	50,400	75,000	778,235	432,276
THREE MILE CREEK		THREE MILE CREEK 1		BELUGA/TYONEK		COOK INLET		GAS	PROBABLE NON PRODUCING		5.4		‐	543,211	‐	139,399	674,830	‐	26,993	36,000	75,000	536,836	362,249
COSMOPOLITAN		HANSEN OFFSET 1		STARCHKOF/HEMLOCK		PIONEER		GAS	PROBABLE UNDEVELOPED		13.9	482,718		‐	2,414	‐	150,977	‐	604	‐	‐	150,373	99,768
COSMOPOLITAN		HANSEN OFFSET 1		TYONEK		PIONEER		GAS	PROBABLE UNDEVELOPED		21.8		‐	2,618,001	‐	13,090	63,369	‐	253	‐	‐	63,115	13,075
											194.9		8,464,532	17,009,808	6,173,228	9,261,840	422,842,098	209,808	5,727,241	14,512,420	64,305,000	338,087,632	191,858,114
REDOUBT SHOAL		REDOUBT  SOUTH STEPOUT		HEMLOCK SSO		COOK INLET		OIL	POSSIBLE UNDEVELOPED		16.8	1,191,013		‐	1,077,867	‐	65,415,764	36,647	980,687	2,096,183	4,600,000	57,702,252	32,324,120
SABRE		SABRE 4		BELUGA‐STERLING		COOK INLET		GAS	POSSIBLE UNDEVELOPED		13.2		‐	8,593,000	‐	5,203,061	25,188,014	‐	277,068	500,500	10,220,000	14,190,449	6,715,096
											29.9		1,191,013	8,593,000	1,077,867	5,203,061	90,603,778	36,647	1,257,755	2,596,683	14,820,000	71,892,701	39,039,216

Note:  There are differences in the addition as a result of computer program rounding of numbers.

RALPH E. DAVIS ASSOCIATES, INC.

Texas Registered Engineering Firm F-1529