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Gold/Mining/Energy : Santa Fe International (SDC)
SDC 0.01000+5.3%Jan 5 4:00 PM EST
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To: .com who wrote (26)11/18/1997 3:31:00 PM
From: Czechsinthemail  Read Replies (1) of 54
 
Scott,

Congratulations on getting SDC at its IPO price.

My understanding is that the Kuwaitis were interested in selling off Santa Fe International but opted for the public offering when they couldn't get a price they liked. For a company wanting to buy a drilling company, that would make SDC a potentially willing target.

The sector seems to be selling off on profit-taking. Many fund managers are wanting to salt away some of their portfolio appreciation. Because the drillers have been standout performers, they become profit-taking opportunities. As long as the fundamentals remain strong, revenues and earnings will be growing at very high rates and the buyers will be back. The selloff simply gives you a chance to participate in the sector at bargain prices.
If you look at the companies based on the discount from recent highs, SDC is among the most oversold and so should have a good rebound when the buying returns. It is also one of the cheapest based on its PE relative to estimated 97 earnings.

If you are considering calls, you might look at NE, since they should have a particularly big Dec quarter due to lots of contract rollovers at higher rates and new/converted rigs coming on line. Both SDC and DO may have some selling around recent news announcements. DO has a rig expected to be out of commission through this quarter and SDC announced a termination on one of theirs. These are no big deal, but when people are looking to sell they may focus on any appearance of weakness no matter how unsubstantial.

Good luck,
Baird
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