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Gold/Mining/Energy : Strictly: Drilling and oil-field services
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To: Grommit who wrote (6366)12/31/1997 12:41:00 PM
From: Czechsinthemail  Read Replies (3) of 95453
 
Grommit,
If you are interested in deep drillers, there are different ways to play it. RIG is somewhat more leveraged with more debt and newer rigs, so they may have more upside. IMHO, the stock is higher priced and discounts some of the future good news. RB/FLC looks good, but you buy into their drilling projects for their own account, which so far has been a series of expensive dry holes. NE has perhaps the best deepwater momentum at this point due to their conversions and a very high percentage of contracts up for renewal this quarter and next. It has a strong balance sheet and also is more internationally spread than some of the other drillers. I like SDC for similar reasons to NE, plus I think it has the potential for greater fund accumulation. Even among oversold and underappreciated companies, I think SDC has been oversold and underappreciated. Since they have one of the best management teams, I think they should do better than average going forward. SDC is more thinly traded, so it is likely to have wider swings up and down. I own NE and SDC, so that's where my bias is.

RE the boats: I expect they will do well, but there are a couple of cautions. One is that it is easier/faster/cheaper to build new supply boats than deep drilling rigs; eventually that will balance supply/demand and have a dampening effect on their dayrates. The other is that the new design rigs generally have greater deck capacity to carry more pipe and supplies--hence reduced need for as many supply boat trips.
Good luck to you, and I hope you're still in ALNK--it's up big today after a strong day yesterday.
Baird
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