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Gold/Mining/Energy : Ensco International Inc. (ESV)
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To: Grommit who wrote (1017)4/7/1998 12:28:00 PM
From: Wrig  Read Replies (2) of 2005
 
I was wondering just how much a couple idle rigs would hurt ESV's per-share earnings.

I couldn't find any forecasts for the Apr/May/Jun sales total, so I used the figure from last Oct/Dec/Nov (4Q '97): $234.8 mil.
(Actually since 2Q '98 EPS is forecasted higher than 4Q '97, this spring's sales will likely be higher than $234.8 mil.)

The Coastal/Ensco article mentioned a range of day-rate pricing for the Ensco rigs used by Coastal, from $55,000 to $73,000. So assuming one of the two unused Ensco rigs is on the low end and one on the high, Ensco would be losing $128,000 daily. For a quarter (90 days), Ensco sales would be decreased by $11.5 mil.

Then divide the sales loss ($11.5) by the total sales ($234.8). It turns out that the result of those two idle rigs would be a 4.9% decrease in quarterly sales.

Keep in mind that I've assumed those two rigs will sit IDLE for the WHOLE SPRING QUARTER. Of course that is not going to happen. Also, I used an outdated sales figure. Since the spring quarter's sales will be higher than the $234.8 mil I used, my calculations actually OVERSTATED the percentage quarterly loss.

But using a 4.9 decrease as my best guess, and translating that to forecasted 2Q'98 earnings of 62 cents, earnings could be reduced to 59 cents.

Vs. 37 cents from year-ago (2Q '97).

Doesn't it boil down to NO BIG DEAL?
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