Santa Fe International (SDC) Message Board

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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: Brian Lempel who wrote (32)	12/4/1997 1:17:00 AM
From: Czechsinthemail	Read Replies (1) of 54

Brian, My understanding is that SDC's fleet is relatively modern and technologically advanced, so they should have less capital need for replacing/upgrading. At the same time, they have a strong balance sheet with no debt. This means they should have a tremendous amount of flexibility to make additional purchases, issue debt at favorable rates, or even repurchase shares. The company is one of the best in the industry, and I think should outperform other drilling companies. On the other hand, converting rigs is not necessarily a negative. Noble Drilling (NE) is converting submersible rigs into deep drilling semisubmersibles faster and cheaper than new builds. Their rate of return on the conversions is very high, because their is more demand and consequently higher dayrates for these ultradeep drilling rigs. Since they have 8 possible conversions, it should add significantly to their profitability. Additionally, NE has many of its contracts up for renewal this quarter and next, which should accelerate their near term earnings growth. Good luck, Baird

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