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: Braddock Bull who wrote (32412)	12/3/1998 8:12:00 PM
From: John Carpenter	Read Replies (2) of 95453

FLC with its very high debt load, is in poor shape to ride out a protracted downturn. The cost overruns and cancellations on some of the newbuilds have been well documented. I asked the company why they bought shallow water CDG and they said it was trading below replacement value. I responded that I thought that this shallow water acquisition would lower the PE multiple afforded the merged company, while making the company more vulnerable during a downturn, by virtue of CDG's shallow jackup fleet. Even FLC's best rigs(semis acquired from the R&B merger) operate in the U.K. North Sea, not the Norwegian North Sea where the greatest market strength is. I need not mention FLC's huge barge and jackup exposure. Just look at the 3rd quarter's EPS, they failed to meet even the numerous lowered downward revisions.

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