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Gold/Mining/Energy : American Eco (ECGOF, ECX on Toronto exchange)
ECX 1.915+3.2%3:59 PM EST
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To: Duncan who wrote (1770)2/26/1998 3:12:00 AM
From: Michael T Currie  Read Replies (1) of 2841
 
> There is a current need for 450 drilling rigs on an international basis, and Davie believes it can build 3.5 per year at $150-$200 million per rig.

Let's clear this one up right now. There may well be a need for this many rigs worldwide, but only 10-20 or so (my estimate) for the deep water semisubmersibles that cost this sort of money. These are fully mobile units that generally drill exploration wells and then move on. M.M. was probably referring to production units, which can be either fixed (steel jackets with topsides, tension leg platforms, drillships) or mobile (FPSO's = Floating Production and Storage Offloading). I would question the number for either of these also unless this was a projection for at least the next 5-10 years down the road.

Many of the major shipyards are in the Far East, where (assuming the economies survive), oil companies will be paying for new builds in depreciated currency. I am involved in a project right now that is dealing with this very situation. American Eco/Davie will have to compete in a pretty rough environment, although at the moment yard space is tight. They need to get out there and bid aggressively.

I am a shareholder and feel very good about my investment, but I don't want anyone to go overboard in his/her expectations.

Mike
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