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Gold/Mining/Energy : Big Dog's Boom Boom Room

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To: Big Dog who started this subject	3/5/2003 11:06:10 AM
From: Big Dog	Read Replies (1) of 206184

Lehman on DO New Baroness Contract Diamond Offshore has signed the Ocean Baroness, a semisubmersible converted to fifth-generation capabilities in 2001, to a 400-day contract with an expected dayrate of $110,000. The contract is with Unocal in Indonesia and is subject to final approval by the Indonesian government. The rig is currently in the shipyard undergoing modifications designed to permit surface stack operations and is expected to be on location by March 15, 2003. We had assumed the rig would find work at $110,000 a day, however we had expected the rig to work at least 45 days during the quarter. Given the delay in contract start-up, we are reducing our 1Q03 EPS estimate to a loss of $0.01. We are maintaining our EPS estimates for the remainder of 2003 and 2004. The Ocean Baroness previously worked for Murphy E&P in Malaysia from April of 2002 (after delivery from the shipyard), through late December when the rig went back to the shipyard. Illustrating the clear weakness in the deepwater, the previous rate had been $175,000 a day. Valuation The stock is currently trading at 8.8x estimated 2004 EV/EBITDA. We maintain our $28 price target which represents 11.3x estimated 2004 EV/EBITDA.

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