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Gold/Mining/Energy : Strictly: Drilling and oil-field services -- Ignore unavailable to you. Want to Upgrade?

To: tdl4138 who wrote (46969)	6/26/1999 9:39:00 AM
From: Crimson Ghost	Respond to of 95453

Global Marine recommended in BARRON'S ROUNDTABLE. Q: Next case. A: Global Marine is an offshore contract driller for oil and natural gas. Even when oil prices collapsed in 1997 and 1998, and day rates on rigs fell, they still had the highest gross operating profit margins in their business. Their return on equity is high and their balance sheet is in pretty good shape. Net debt-to-equity right now is 65%, $700 million in net debt against $1.078 billion of equity. Even with depressed earnings in the first quarter of 1999, they had an outstanding debt-coverage ratio. Their debt will peak at around $900 million in the first quarter of 2000, and should fall to $600 million by yearend 2001. Next year they'll have positive free cash flow of $170 million. Q: How depressed are earnings? A: They've been lower year-on-year for three quarters in a row. I see 55 cents a share for all of 1999 against $1.27 last year, on revenues of $835 million versus $1.16 billion. The price of West Texas intermediate crude oil fell to $10.73 a barrel late in 1998 from $25 early in 1997, then rallied to $18.98 before slipping below $18. I think it will stay above $16. Their operating leverage is phenomenal. Every $10,000-per-day increase in day rates for their fleet equals 50 cents a share fully taxed. Their customers, the exploration and production companies, do their E&P budgets only once a year. They'll see if the oil price holds at 16-17 before they complete their 2000 budgets. There probably won't be increased drilling at current prices until the second quarter of next year. That caveat aside, you have to buy drilling stocks on anticipation of more activity at higher rates. Q: What is their earnings outlook? A: I could see $1.10-$1.50 a share in 2000. Their earning power is $3-$3.25. I also did a study of the break-up value of their 33 rigs. They have 23 jack-ups, seven semi-submersibles and three deep-water ships. They're worth, after deducting debt and deferrals, $22.50 a share. So you have a stock at 15, trading at two-thirds the knock-down value of its fleet.

To: tdl4138 who wrote (46969)	6/26/1999 10:33:00 AM
From: Roebear	Read Replies (1) \| Respond to of 95453

td14138, Don't know if you are familiar with this site (well thought of on SI) but here is a good OSX chart: securitytrader.com Also, if a member or if you peruse the free trial, check out FGI chart in the trading room. Near the bottom of the trading room page under Long Term. I well understand your position on FGI, but I am taking a "trading break" over the summer and wanted some FGI to hold LT into late 99-00. Also a consideration was the LT hold would not correlate directly to the SP/DJIA, on that especially, opinions welcome... Best Regards, Roebear