Exhibit 10.47

CONTRACT OF CONSTRUCTION AND SALE FOR

ONE, 2000 H.P. OFFSHORE WINTERIZED SCR DRILLING RIG

This Contract of Construction and Sale (the “Contract”), entered into as of this
the 12th day of June, 2011 (the “Execution Date”) by and between Miller Energy
Resources, Inc. (“Buyer”), a Tennessee Corporation, with its registered offices
at 3651 Baker Hwy, Huntsville, TN  37756, and Voorhees Equipment and Consulting,
Inc. (“Seller”), a Texas Corporation with its registered offices at 1011 Highway
6 South, Suite 115, Houston, Texas 77077.  Buyer and Seller are hereinafter
referred to as “Parties” and individually as a “Party”.

RECITALS

A.  Seller is in the business of constructing custom oil and gas drilling rigs.

B.  Buyer is an oil and gas exploration company doing business in the Cook Inlet
of Alaska.

C.  Buyer owns an offshore platform for which it needs a custom drilling rig.

D.  Buyers wishes for Seller to construct for, and sell to, Buyer a custom rig.

NOW, THEREFORE, for and in consideration of the premises, the mutual promises
hereinafter stated, and other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the Parties agree as follows:

1.  The Rig To Be Constructed.  Buyer hereby agrees to purchase from Seller, on
the terms set forth in this Contract, one (1) Drilling Rig Model 1320 National
Offshore Winterized SCR Rig Package (the “Rig”) to be constructed in accordance
with the Specifications attached hereto as Exhibit A (the “Specifications”).
 The Specifications have been initialed by representatives of each Party to this
Contract, and in the event of any conflict or inconsistency between this
Contract and the Specifications, this Contract shall prevail.  Seller hereby
agrees to commence and to prosecute diligently the construction and delivery of
the Rig in accordance with the Specifications and the other terms and provisions
of the Contract.

2.  Price and Payment Terms.  The agreed purchase price of the Rig is
$17,927,770.45 (the “Purchase Price”).  All monetary amounts are in U.S.
Dollars.  The Purchase Price is inclusive of all sales taxes and similar levies.
 The Purchase Price shall be payable in three equal progress payments, along
with an initial deposit, as follows:

2.1   Initial Deposit.  Within two business days of the execution of this
Contract, Buyer shall make a deposit in the amount of $1,000,000.00, by wire
transfer to the account of Seller (the “Initial Deposit”).

2.2   First Progress Payment.  An initial progress payment equal to
$5,975,923.48 to be applied to the Purchase Price shall be paid within 14
calendar days of the Execution Date.  The Initial Deposit shall be applied to
this first progress payment (the “First Progress Payment”) so long as the First
Progress Payment is timely made. In the event Buyer does not make the First
Progress Payment on time, the INITIAL DEPOSIT WILL BE FORFEITED TO SELLER AS
LIQUIDATED DAMAGES AND NOT AS A PENALTY AND THIS CONTRACT WILL BE TERMINATED.

2.3   Second Progress Payment.  A progress payment equal to $5,975,923.48 of the
Purchase Price shall be paid by Buyer __30__ days after the First Progress
Payment.

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2.4   Third Progress Payment.  A progress payment equal to $5,725,923.48 of the
Purchase Price shall be paid by Buyer upon full shipment of the Rig.

2.5   Bonus Payments.  In addition to the Purchase Price, the Seller may earn
the following bonus payments, if the following conditions are met:

a. Shipping Bonus.  If Seller ships all of the components necessary to construct
the Rig from Seller’s yard in Houston on or before 60 days from Seller’s receipt
of the First Progress Payment, then Buyer shall pay to Seller a Shipping Bonus
in the amount of $250,000.00.  The Shipping Bonus shall be paid, via wire
transfer to Seller, within 2 business days of the time Seller informs Buyer in
writing that the necessary components have been shipped.

b. Assembly/Setup Bonus.  If Seller fully completes the assembly and/or setup of
the Rig on the Osprey platform on or before 60 days from delivery of the
necessary components to Buyers receiving facility in Nikiski Alaska, then Buyer
shall pay to Seller an Assembly Bonus in the amount of $250,000.00.  The
Assembly Bonus shall be paid; via wire transfer to Seller within 2 business days
of the time Seller informs Buyer in writing that the assembly and/or setup is
complete.

2.6.  Increases or Decreases in Price.  Any change in the Purchase Price can
only be made by a written change order signed by both Parties, in accordance
with Section 3 below.

2.7  Acceptance Procedure.  The Buyer or its representative shall have the right
to inspect the Rig for its conformity to the Specifications.  The Buyer may
select an inspection agency (the “Inspection Agency”), to confirm that the Rig
is built as ordered and in compliance with the Specifications.  If the
Inspection Agency determines that the Rig complies with the Specifications, the
Inspection Agency shall issue a Certificate of Acceptance in accordance with
Section 6 hereof.  If the Inspection Agency identifies any defects in materials,
workmanship or other non-compliance with the Specifications, the Inspection
Agency shall provide Buyer and Seller with a written statement accurately
describing such defects or non-compliance.  Seller must correct, to the
satisfaction of the Inspection Agency, all such defects or noncompliant issues.

In addition to the test and inspection required in this Section 2.7, the Rig
shall also be tested during installation and if any equipment or parts are found
defective, the same shall be replaced free of all costs to the Buyer at site as
quickly as such replacement parts may be obtained and delivered.  Nothing in
this Section 2.7 shall in any way release the Seller from any warranty or other
obligations under this Contract.  The final payment of $250,000 to Seller shall
be due upon final acceptance of the Rig.

2.8  Final Delivery.  Seller shall use its best efforts to cause the final
delivery of the Rig to the dock in Kenai within _90_days from the date of
receipt of the First Progress Payment.  Such delivery schedule contemplates 30
days for transit.  Time is of the essence of this Contract.  However, Buyer and
Seller acknowledge that it is impossible to guarantee completion and Final
Delivery by a particular date as the availability of parts and labor is
unpredictable and Buyer and Seller therefore agree that in the event Seller
anticipates delays on the final delivery, the Buyer will be informed
immediately.  Upon such notification and at the Seller’s request, Buyer shall
execute a written agreement, which shall not be unreasonably withheld, to extend
the final delivery.  It is estimated by the Parties that the Rig may be
completely assembled and set up within 150 days, if shipment is made 60 days
after the First Progress Payment, transit takes 30 days, and assembly and setup
requires another 60 days.

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2.9  Method of Payment.  Payments shall be by wire transfer to the account of
Seller in Houston, Texas, in accordance with the wire instructions furnished to
Buyer in writing by Seller.   

3.  Change Orders.  Buyer and Seller must mutually agree in a writing signed by
both Parties with respect to any alterations, deletions or additions to the
Contract or the Specifications.  No change shall be performed unless and until a
written change order, including any adjustments in the Purchase Price and final
delivery, is received by Seller.  Buyer shall provide Seller with sufficient
detail to enable Seller to evaluate properly the impact of the change order on
both the Purchase Price and the Final Delivery.

4.  Ownership.  Title to certain components of the Rig shall vest in Buyer in
stages upon payment to Seller and shall reflect one third (1/3), with each
respective payment, of the  Rig value, F.O.B. Kenai, Alaska,. Upon Seller’s
receipt of each progress payment, Seller shall issue a detailed bill of sale
transferring ownership of the equipment described in the bill of sale to the
Buyer.  Neither Buyer nor Seller shall place or create, or permit to be placed
or created, any liens, charges or encumbrances or security interest as to, or
pledges of, the Rig, and any lien, charge, encumbrance or security interest so
placed or created shall be promptly released with ten (10) days of such, by the
Party placing or permitting same to be placed; provided however, that any
interim lender to Buyer may obtain a lien, claim or ownership in the Rig as
progress payments are made and may obtain and hold a collateral assignment of
Buyer’s rights under this Contract.  Seller hereby waives any mechanic’s or
materialmen’s lien it may have against the Rig with respect to any portion
thereof paid for and owned by Buyer.  If requested by Buyer, Seller shall obtain
the written consent of its secured creditors to the ownership of the Rig and
related items by Buyer or its lender during the time the Rig and related items
are part of Seller’s work in process.

Seller agrees to promptly execute and deliver all bills of sale or other
conveyance documents requested by Buyer to effectuate the intent of this Section
4.

5.  Insurance.  As soon as practical after signing of the Contract, Seller shall
obtain at its own cost and expense, and furnish Buyer with documentation
evidencing the following insurance:

5.1 Products Insurance.  Seller shall provide proof of insurance in an amount of
not less than $1,000,000 for products at its facility covering the period of
construction.  If Buyer requires to be named as an additional insured, Buyer
shall pay the cost of such designation.

5.2  Comprehensive Public Liability and Bodily Injury Coverage.  Seller shall
provide proof of comprehensive public liability insurance, excluding products
and completed operations, having coverage of not less than $2,000,000.

5.3  Insurance Companies.  Each of the policies described above shall be issued
by financially sound insurance carriers, and shall either on the face thereof or
by appropriate endorsement:

 

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Provide that it will not be cancelled or its coverage reduced except upon twenty
(20) days prior written notice to Buyer

 

 

 

 

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Be maintained in full force and effect until the date the Rig is delivered to
and accepted by Buyer.

6.  Periodic Inspections and Oversight.  Seller shall keep Buyer or its
designated representatives fully informed on a regular basis as to the progress
of the construction, the receipt of materials and equipment and the status of
the  Rig, including information relating to the building Schedule.

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In addition, Buyer or its designated representatives shall be entitled to access
to Seller’s facilities at all times during ordinary working hours, in order to
inspect the status and progress of the construction of the Rig.  Seller shall
answer all questions posed by Buyer or its representatives relating to the Rig
if presented in writing and in detail to Seller.  Notwithstanding the foregoing
sentence, Buyer shall be able to ask questions of any of Seller’s employees,
contractors, or subcontractors involved in the construction of the Rig, and such
individuals may answer any question so posed, on any occasion when Buyer may
visit Seller’s facilities.

The Inspection Agency through its representatives shall be entitled to carry out
inspections to confirm that the Rig is being built as ordered and in compliance
with the specifications.  The report of the Inspection Agency shall be binding
on the Seller.  As a condition to Buyer’s acceptance of the Rig, the Inspection
Agency also shall issue a Certificate of Acceptance upon its satisfaction, in
its sole discretion, that the Rig has been properly completed.

7.  Intellectual Property.  Buyer recognizes the rights of Seller to all
trademarks, patents issued to or licensed by Seller, and all proprietary designs
relating to the Rig.  Buyer shall not provide any copies to third parties of any
technical information or designs provided by Seller and shall use or disclose
such data only in connection with the operation or maintenance of the Rig.
 Seller shall provide with the Rig two (2) sets of the Rig manuals for operation
and maintenance of the Rig and related equipment.  Such manuals and handbooks
shall be written in clear and precise form in the English language to ensure
efficient installation, testing and maintenance of the Rig and all equipment
supplied.

Seller shall indemnify the Buyer against all third-party claims/actions of
infringement of patent, trademark or proprietary design rights arising from the
use of the Rig or any part thereof.

8.  Technical Support.  Seller shall commission qualified technicians or
engineers to the  Rig location for 14 calendar days to assist in the Rig set up
and start up.  Buyer will bear all expenses incurred by Seller related to
travel, lodging and meals and other expenses approved in advance by Buyer.  The
Technician fee will be $1,500.00 per day and is also payable by Buyer.  Travel
shall be economy class return ticket.  Seller will promptly respond to all
requests for technical information required to operate and maintain the Rig.

9.  Dispute Resolution.

Upon the demand of any Party, any Dispute shall be resolved by binding
arbitration (except as set forth below) in accordance with the terms of this
Contract.  A “Dispute” shall mean any action, dispute, claim or controversy of
any kind, whether in contract or tort, statutory or common law, legal or
equitable, now existing or hereafter arising under or in connection with, or in
any way pertaining to, this Contract, or other activities, transactions or
obligations of any kind related directly or indirectly to any of this Contract.
 Any Party may by summary proceedings bring an action in court to compel
arbitration of a Dispute. Any Party who fails or refuses to submit to
arbitration following a lawful demand by any other Party shall bear all costs
and expenses incurred by such other Party in compelling arbitration of any
Dispute.

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Governing Rules.  Arbitration proceedings shall be administered by the American
Arbitration Association (“AAA”) or such other administrator as the parties shall
mutually agree upon in accordance with the AAA commercial arbitration rules. All
Disputes submitted to arbitration shall be resolved in accordance with the
Federal Arbitration Act (Title 9 of the United States Code). The arbitration
shall be conducted at a location in Houston, Texas selected by the AAA or other
administrator. If there is any inconsistency between the terms hereof and any
such rules, the terms and procedures set forth herein shall control. All
statutes of limitation applicable to any Dispute shall apply to any arbitration
proceeding. All discovery activities shall be expressly limited to matters
directly relevant to the Dispute being arbitrated.  Judgment upon any award
rendered in an arbitration may be entered in any court having jurisdiction.

Arbitrator Qualifications and Powers; Awards.  Arbitrators must be active
members of the Texas State Bar with expertise in the substantive laws applicable
to the subject matter of the Dispute. Arbitrators are empowered to resolve
Disputes by summary rulings in response to motions filed prior to the final
arbitration hearing. Arbitrators (i) shall resolve all Disputes in accordance
with the substantive law of the state of Texas, (ii) may grant any remedy or
relief that a court of the state of Texas could order or grant within the scope
hereof and such ancillary relief as is necessary to make effective any award,
and (iii) shall have the power to award recovery of all costs and fees, to
impose sanctions and to take such other actions as they deem necessary to the
same extent a judge could pursuant to the Federal Rules of Civil Procedure, the
Texas Rules of Civil Procedure or other applicable law. Any Dispute in which the
amount in controversy is $5,000,000 or less shall be decided by a single
arbitrator who shall not render an award of greater than $5,000,000 (including
damages, costs, fees and expenses). By submission to a single arbitrator, each
Party expressly waives any right or claim to recover more than $5,000,000. Any
Dispute in which the amount in controversy exceeds $5,000,000 shall be decided
by majority vote of a panel of three arbitrators; provided however, that all
three arbitrators must actively participate in all hearings and deliberations.
 In the event of an arbitral panel consisting of three arbitrators, each Party
shall select one arbitrator.  The Party-chosen arbitrators shall select the
third arbitrator.

Judicial Review.  Notwithstanding anything herein to the contrary, in any
arbitration in which the amount in controversy exceeds $10,000,000, the
arbitrators shall be required to make specific, written findings of fact and
conclusions of law.  In such arbitrations (i) the arbitrators shall not have the
power to make any award which is not supported by substantial evidence or which
is based on legal error, (ii) an award shall not be binding upon the Parties
unless the findings of fact are supported by substantial evidence and the
conclusions of law are not erroneous under the substantive law of the state of
Texas, and (iii) the Parties shall have in addition to the grounds referred to
in the Federal Arbitration Act for vacating, modifying or correcting an award
the right to judicial review of (a) whether the findings of fact rendered by the
arbitrators are supported by substantial evidence, and (b) whether the
conclusions of law are erroneous under the substantive law of the state of
Texas.  Judgment confirming an award in such a proceeding may be entered only if
a court determines the award is supported by substantial evidence and not based
on legal error under the substantive law of the state of Texas.

Miscellaneous.  To the maximum extent practicable, the AAA, the arbitrators and
the Parties shall take all action required to conclude any arbitration
proceeding within 180 days of the filing of the demand with the AAA.  No
arbitrator or other party to an arbitration proceeding may disclose the
existence, content or results thereof, except for disclosures of information by
a party required in the ordinary course of its business, by applicable law or
regulation, or to the extent necessary to exercise any judicial review rights
set forth herein or to the extent such information becomes publicly available
other than as a result of a breach of this Section 9.  This arbitration
provision shall survive termination, amendment or expiration of the Contract or
any relationship between the parties.

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10.  Export – Import.  To the extent that this paragraph is applicable to the
transport of the Rig to its final location in the Cook Inlet of Alaska, Seller
shall co-operate with Buyer to obtain all required licenses or permissions to
export the Rig.  Seller represents that there are no legal impediments or
prohibitions that would prevent such export from the United States.  Buyer shall
be responsible for all required import licenses or permissions.  Buyer shall
bear the cost of all import licenses, duties, taxes or other charges.

11.  Warranty.  Seller shall provide the warranties for the Rig items, including
“passing through” all warranties it receives from its vendors, sub-Contractors
and material-men.  Such warranties continue until three (3) months from final
acceptance of the Rig for the mast and substructure. Rebuilder warranties shall
also pass through and shall not exceed the rebuilder stated warranty or 3
months, whichever is less.

12.  Miscellaneous.  The following miscellaneous provisions shall apply:

12.1 Survival of Representations and Warranties.  The representations and
warranties made by Seller in this Contract shall not be deemed waived or
otherwise affected by any investigation or due diligence effort made by any
other Party hereto.  Each representation and warranty shall survive the closing
of this Contract, and continue in full force and effect for a period of one year
from the date of this Contract.

12.2 Notices.  All notices, requests, demands, waivers and other communications
required or permitted to be made under this Contract (“Notices”) shall be in
writing and shall be made in any of the following methods: i) personal delivery
by messenger or courier, receipt acknowledged and dated, or ii) deposited in the
U.S. mails using certified or registered mail with postage prepaid and properly
addressed, or iii) by facsimile electronic transmission, receipt confirmed in
writing, or iv) federal express or other overnight courier.  Notices shall be
sent, delivered or transmitted, as appropriate, to the addresses and fax numbers
that appear above or on the signature page hereof.

Any Party may change the addresses, telephone or telefax number by serving
Notice on all other Parties.  All such notices shall be deemed effective i) if
mailed, the earlier of two days from deposit in the U.S. mails or actual
receipt, ii) if personal or Federal Express delivery, upon delivery, iii) if
facsimile, upon receipt.

12.3 Severability.  If any provision of this Contract shall be determined to be
contrary to law and unenforceable by any court of law, such provision shall be
stricken from this Contract, and the remaining provisions shall remain in full
force and effect as if the invalid or unenforceable provision had never been
contained in the Contract.

12.4 Entire Agreement/Amendment.  This Contract and the Exhibits hereto contain
every obligation and understanding between the Parties relating to the subject
matter hereof, and merges all prior discussions, negotiations and agreements, if
any, between them, and no condition, definition, understanding, warranty,
representation or agreement contained in this Contract may be contradicted by
evidence of prior, contemporaneous, or subsequent oral agreements.  This
Contract can be amended only by written instrument dated and executed by all the
Parties to this Contract.

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12.5 Counterparts.  This Contract may be executed and delivered by fax and in
several counterparts, each of which shall be deemed an original document and all
of which shall constitute one and the same instrument.  Delivery of executed
signature pages by facsimile transmission shall constitute effective and binding
execution and delivery of this Contract.

12.6  Headings.  The headings contained in this Contract are inserted only as a
matter of convenience and in no way define, limit or extend the scope or intent
of this Contract or any provision thereof.

12.7  Venue and Jurisdiction.  This Contract will be governed by and construed
under the laws of the State of Texas, without regard to the application of any
conflicts of laws principles.  

12.8  Waiver or Delay.  A waiver by any Party of any breach or default of this
Contract shall not constitute a waiver of future reoccurrences of such breach,
or other breaches.  A waiver by any Party of any terms, conditions, rights or
obligations under this Contract shall not constitute a waiver of such term,
condition, rights or obligation in the future.  No delay or omission to exercise
any right, power or remedy held by or accruing to a Party upon breach or default
by the other Party shall impair any such right, power or remedy, nor be
construed as a waiver of such breach or default, or an acquiescence thereof, or
of any further or future breach or default.  Any waiver must be in writing
signed by the Party waiving the right.  All remedies, either under this Contract
or at law or in equity, afforded to a Party shall be cumulative and not
alternative.

12.10  Further Assurances.  From time to time hereafter and without further
consideration, each of the Parties hereto shall execute and deliver such
additional or further instruments of conveyance, assignment, assumption or
transfer, and take such further actions, as the other Party may reasonably
request in order to more effectively convey the assets sold under this Contract,
or otherwise accomplish the terms and purposes of this Contract.

13. Default.  In the event that Buyer defaults, Seller shall have the  right to
sell the Rig.  If the Rig is sold at price equal or greater than the Purchase
Price, Seller shall have the right to return 90% of all progress payments made
to Seller by Buyer and regain ownership of the Rig and all parts, equipment, and
materials, at which time title to the Rig shall become vested in Seller. Buyer
will cooperate in the process of selling the Rig and will if requested by Seller
execute any and all documents necessary to effectuate a sale or to restore
Seller to full title to all components of the Rig.

14. No Assignment.  This Contract can not be transferred or assigned without the
consent of all Parties hereto, except that Buyer may assign the Contract to
collateralize loans made to Buyer to pay for the Rig.

[SIGNATURES ON FOLLOWING PAGE]

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IN WITNESS WHEREOF, the undersigned have executed this Contract as of the date
first above written.

Miller Energy Resources, Inc.

Voorhees Equipment and Consulting, Inc.

 

 

By_____/s/ Scott M. Boruff_________

By______/s/ Ron Voorhees_________

            Scott M. Boruff, CEO

            Ron Voorhees, President

 

 

 

 

Phone 865-223-6575

Phone 281-414-6051

 

 

Fax 865-691-8209

Fax 281-497-6466

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