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Gold/Mining/Energy : Strictly: Drilling and oil-field services
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To: SliderOnTheBlack who wrote (60148)2/11/2000 8:51:00 PM
From: rich evans  Read Replies (1) of 95453
 
Well Slider, I listened to the VRC conference call today and a lot of what you say seems to be correct but they say it much nicer<g>. They did revs of near 600 mill in 99 but in 2000 will be running for the first two quarters at about a yearly 350 mill run rate which is mostly upgrade orders plus they do rental income. But one point they made is that during the past construction boom of rigs that 56 out fof 60 rigs made were deepwater rigs which cost a lot as you know and varco gets about 50 mill per rig. There is talk now but not much in orders coming. But they think the next construction cycle which seems at least 6 months away will be in Jackups and Platform offshore rigs Varco gets about 20-25 mill work on Jackups and 15-20 mill for Platform work. Also they indicated that they expect a lot of upgrade sales because during the previous boom everyone was devoting themselves to building the deepwater rigs an the upgrade activity was all pushed out so they think there is a pentup demand for it. This seems to correlate with one of Big Dogs old posts where he talked about this. How this all breaks out as to FGH , I'll leave to the experts.
But Varco is expecting a 6 month lull and bottom of the cycle period with pickup thereafter but more in upgrade, jackups and platforms. There apparently are deepwater rigs available from the last construction boom to handle the more conservative approach towards exploration you and Chevron talk about . Varrco will probably use their cash for a stock buyback in the future especially at these prices. I hope jackups/platfroms and repair/upgrade will do it for FGH investors. If so then I would think they will do fine but as you indicated, it looks like a 6 month wait is in store. And this conservative drilling approach seems to also be apparant in HAL projections and stock price IMO.
Rich
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