Strictly: Drilling and oil-field services Message Board

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Gold/Mining/Energy : Strictly: Drilling and oil-field services

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To: Teddy who wrote (6761)	1/6/1998 6:26:00 PM
From: Big Dog	Read Replies (7) of 95453

Teddy -- I'm with you, agree. Of course that don't mean beans. It would be real cool if we saw some take over attempts initiated while prices are so low. If you are looking to buy offshore rigs, they may be getting cheap by buying the company. It would be interesting to calculate what the market is pricing the rigs of these companies at. Let me try with one company. GLM Jefferies says GLM's fleet is valued at 2.113 billion (liquidation value) or 3.135 billion (replacement value). (I suspect the difference is the commission I would make if I sold the fleet... :) A value for Challenger Minerals is given at 15 million and ADTI (the turn-key division) at 200 million (I don't exactly understand this valuation, but if Jefferies gives it 200 million, then I will use that). Plus throw in cash of 191 million, working capital 28 million. Total asset liquidation value is 2.547 billion while replacement value is 3.569 billion. Less debt of 523 million gives us a Net Asset Value of 2.024 liquidation or 3.046 replacement. Divided by 172.2 million shares outstanding and we have a Net Asset Value of $11.76 per share liquidation or $17.69 per share at replacement cost. At $21 per share, GLM is selling at only 118.7% of replacement value. That is giving NO value to the earnings potential of those assets or the contracts already in place...cash flow, etc. One might think that a competitor would like to pick up all these assets that are available no other way than buying the company (not GLM in particular, but A company). They get to keep the rigs they want and sell the others to other drilling companies likely at higher prices than they paid, therefor offsetting the premium they will have to pay for buying the company. Makes sense to me. Back in the old days these are exactly the kinds of deal we did. The new breed of "investment bankers" are too fat in the belly to have creative thinking... Seems to me GLM is a good buy along with all the other companies. FYI -- the Net Asset Value of DO is $48.48 per share on a replacement cost basis...seems to me that this is higher than the price of the stock. Ok since I got started here are some other Net Asset Values (all on replacement basis) ATW -- $82.67 CDG -- $72.10 ESV -- $25.03 MDCO -- $ 22.69 NE -- $ 30.52 PDE -- $56.05 RDC -- $28.00 SDC -- $ 26.54 RIG -- $45.15 These anomolies of nature will be snuffed out just like the snail darter and the one-legged pie monster of yore. We will, in no time at all, return to basking in the glory that was snatched from us in the dark of night by ignorant and mis-guided SELLERS. And if ONE person bitches about cheerleading or other expressions of glee, may he forever be banned and heretofore exiled from the ranks of the Strictly Drilling Brotherhood. I HAVE NO FEAR !!!

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