Ensco International Inc. (ESV) Message Board

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Gold/Mining/Energy : Ensco International Inc. (ESV)

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To: Steven Dopp who wrote (895)	3/15/1998 7:18:00 PM
From: Czechsinthemail	Read Replies (1) of 2005

Steven, I will only add one other comment regarding ROE for RIG and ESV. Because a higher proportion of RIG's contracts are long, multi-year contracts, during periods of rising dayrates there is a lag period in the realization of those higher dayrates until the contracts rollover. Hence shorter-term contracts are likely to show faster growth sooner, longer-term contracts are likely to show faster growth later. Add to this, RIG's major additions of deepwater drilling rigs over the next several years. As dayrate growth begins to slow, I think you will see the two companies' rates of return begin to converge. I would take some exception to Paul's view that analysts' forward estimates are useless. I would characterize them as imperfect, but generally much more accurate for offshore drilling companies than other industries. In some ways they provide an important counterbalance to historically-based analysis, particularly when company or industry fundamentals are changing. There are all kinds of things that reflect their reliability including how frequently they are revised, the guidance analysts receive from the companies, and the smarts of the analyst. Baird Baird

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