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Gold/Mining/Energy : Offshore Drilling

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To: JGreg who wrote (9)	9/16/1996 10:16:00 AM
From: Bill Hyres	of 15

Goodmorning Greg, Thankyou for the elaboration on the jackup rig. It is very interesting. In regards to replacement values I confused two ideas in my original post. Yes the CEO was correct that the current day rates do not justify the purchase of new rigs yet. The day rates will need to go higher before we see a demand for new construction on new rigs. The point of drillers ttrading at a discount was in reference to a different report. According to the report I am reading GLM, this report is old at 8/9/96, was then trading at 14.25 per share. The report then states that GLMs Total Cap. Value is 2567.6 million while their Appraised Replacement Value is 2200.0 million. 2567.6/2200.0 = 116.7%. Comparing this same figure to other drillers GLM has obviously been the darling of this industry. Now this is only one valuation and I have others to look at before we decide which stock to buy and certainly I am using this only as an entry point into this market. GLM shows plenty of long term strength along with the others. Thanks again for your response on jackup rigs. Gotta get to work. bill

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