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Gold/Mining/Energy : Strictly: Drilling and oil-field services
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To: Broken_Clock who wrote (58347)1/12/2000 3:05:00 PM
From: SargeK  Read Replies (2) of 95453
 
Papaya King: "re: FGH

SargeK, the big ? for me regarding FGH is the dearth of info regarding the Canadian yard utilization."

That is a big question, one that I have not inquired about. Will put it on my list for future E-Mail or phone coversation to IR.

What is your take on the News Release? I clearly view it as more positive (below) than negative; but, other perspectives are welcome sans personal vindictive.

POSITIVES:

1. The new contracts of $199m are more than the backlog worked off between 2Q and 3Q/99. This may be an indication of improving market conditions in the fab sector.
2. Disputes with 2 customers while certainly NOT welcome, does NOT in my view affected the relationships the company has developed with its other customers. The Company has projects for Diamond Offshore, Noble and Ensco in their yards right now and according to IR these projects are running smoothly. These companies have experienced, professional project managers that see to it that sub-contractor work is up to snuff and schedule customer furnished parts and material to be delivered on time.
3. The long term financial instruments and lending revolvers put into place during the merger process provide significant flexibility for the company to continue its operations without undue interruptions.
4. If one looks ONLY at the Market valuation, he might assume that FGH is being held hostage by the 2 companies involved in the disputes and FGH is being held accountable for all that has gone wrong. The history of the Company and the profitable relationships they enjoy with their other customers leads me to believe they will secure outcomes favorable to themselves and those who believe otherwise will eventually be PROVEN wrong.
5. Mr. Holloway continues to do what he said he would. He is growing the company, integrating the core parts he wishes to retain for future growth and selling off non core
assets. Obviously this leads to the dismissal of redundant employees and other realignments of manpower resources. The IR has stated (and I have posted) this is being done through attrition and by utilizaton of contract labor, as varying workloads dictate.
6. Long term. There is NO DOUBT FGH will benefit from future deep water exploration (oil & gas). Because of the tremendous lead times (from the time of an inquiry to actual work in the yards to final completion of a project) takes months and years. The microscopic view of the (spot or immediate) MARKET often distorts TRUE fundamental valuations, sometimes exponentially, which I think is relevant in this Special Situation.

I am NOT attempting to change anyone's mind about anything. I am explaining WHY I will continue to invest and support the company UNLESS new information or events surface which would alter my own valuation; which to me - is the BOTTOM LINE.

SargeK

Both my sons added to their FGH positions today and were extremely pleased the opportunity presented itself. They both look forward to EARLY retirement - just like Dad. >g<



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