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Gold/Mining/Energy : Strictly: Drilling and oil-field services
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To: jbe who wrote (16868)3/27/1998 1:14:00 PM
From: Chuzzlewit  Read Replies (1) of 95453
 
jbe, very interesting post! I think the central valuation issue is the present value of free cash flows. Having a negative free cash flow implies the need to see it turn positive in the future as projects mature. I guess what I'm trying to say is you need to look at multi-year cash flow projections not just one year projections, and as you increase the debt to fund projects you increase the risk of the company.

So the question is: why do ESV and TDW represent such compelling values on your screen?

Well, I shied away from TDW because, as I understand it, the company is heavily involved in the supply boat business, and many feel there is a good likelihood of a surplus of these vessels this summer. If that's the perception it would certainly decrease investors' estimates of future cash flows -- say two years out.

With respect to ESV, I agree. using every criterion I can think of it looks like a compelling value.

Regards,

Paul
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