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Gold/Mining/Energy : Strictly: Drilling and oil-field services
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To: BigBull who wrote (67412)6/1/2000 9:21:00 AM
From: Meridian  Read Replies (2) of 95453
 
TMAR has plenty of potential. The drivers are:

1. More deepwater rigs working in GOM and Brazil and w. Africa (later two markets will draw boats out of GOM and allow dayrates to increase faster than people think). In addition, it takes more boats/rig the deeper they are. And dynamically positioned rigs need more gasoline, which translates to either more boat runs or more boats required.

2. The fleet is old w/ lots of older boats stacked. Takes $$$ to recertify old stacked boats to coastguard specifics. Psychology will be to keep older boats off market because they'll command poor dayrates relative to newer boats. This will lead to attrition of the fleet. Risk - older boats will come back if dayrates are high enough to justify recertification spending. (in this case TMAR will be in the $20's)... not much of a risk, eh?

3. TDW has the power to consolidate the market such that the industry does not need 90% utilization before dayrates move sharply higher. Maybe 85%. Similar to land rigs where NBR and GW control the deep rigs and have hugely consolidated that market. We don't need nearly the utilization that we did in '97 in order to move dayrates.

Lastly, I think TMAR is still trading at below book. Looks good to go, as laggards do.
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