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

To: Tomas who wrote (51239)	9/16/1999 9:53:00 AM
From: SliderOnTheBlack	Read Replies (2) \| Respond to of 95453

...nice to see some "passion" for a stock; ie: FGI (VBG)... As far as what FGI's nearterm prospects are; I point to 3 major points: 1. Their ever decreasing backlog & lack of new orders. 2. The total absence of Big Oil in the Offshore GOM Leases - a biggie folks !!! 3. Comments from the Banks, the Bondholders, Big Oil and the drillers themselves - like NE's President here below: ========================================================== <<HOUSTON, Sept 15 (Reuters) - A nascent recovery in offshore oil and gas drilling markets is likely to proceed quite slowly, offhore drillers told an energy conference here on Wednesday. ``We still think it is going to be nine to 12 months before market conditions improve significantly,' said Robert Campbell, President of Noble Drilling Corp. Firmer oil and natural gas prices augured well for an increase in drilling activity in 2000 and 2001, Campbell told the Dain Rauscher Wessels Energy Conference. However, significant increases were unlikely in the near term, partly as a result of post-merger ``paralysis' among major oil companies taking part in industry consolidation. Campbell said past trends suggested that utilization rates for the global fleet of offshore drilling rigs would recover gradually between now and late next year, with daily rig rental rates or ``dayrates' following in their trail by 2001.>> ======================================================== ...do you people think that the Investment community just suddenly forgot what happened to Petrobras, FLC, PDE et al ?????? Bottomline: FGI at "best" is an underperform - for 6-9-12 even 18 mos perhaps... at the very least; the Street will "demand" 2-3 reporting quarters before they put 'any' wind behind FGI's sails. No one can seriously debate the one issue that limits FGI's upside; that the "pie" - the total potential business available for offshore rig construction - has shrunk dramatically since 1997; and per all the comments from every sector of the Industry - THERE ISN'T GOING TO BE ANY RUSH TO BUILD THESE $100-200m RIGS ANYTIME SOON.... Who do you have to hear it from ? Noble's President just made it real clear... Big Oil certainly isn't investing in Offshore Leases here - let alone new offshore rigs !!!! The Street signals this common knowledge in FGI's price - its at a 52 week low - when the entire sector is at a 52 week high !!!! - wake up ! Concerning Insider Selling: at the best; you have the CEO retiring in 2 years - if he has been a seller at the prices he has been in the past - why wouldn't he sell into strength on any shareprice appreciation here, if seen ? - He'd be an idiot not too... The overhang of these massive Insider Holdings have a pure track record of selling; and with Holloways 2 year retirement - do you think there isn't a huge overhang just waiting to be dumped here ? Holloway is being smart; he's in a - 'can't win' - catch 22 situation. FGI went public at perhaps the ultimate timing point in an Industry Upturn of any company I can remember - brilliant ! There stock ran through the roof. Has anyone considered what these guys in essence have invested in their original positions in FGI - their cost basis ? The selling will never stop imho. FGI may bounce here; but it has never; nor will it in the near future- have any serious institutional support. Sell into the strength imho.... there are simply just too many better stories virtually everywhere you look... Maybe FGI bounces here $3, or sells off to $10, or even $9; but this is a $3 range bound trader imho - for 2-3 quarters at least; into the face of the sector turnaround that offers much higher upside accross the board - without the issues of the integration of HLX - with their soft margins, notorius over-runs and the enormous capacity consolidation facing them; this is a monumental management task ... add the insider selling overhang and the short position - then take a deep breath; pause - look around at the rest of the Oilpatch sector and ask yourself does FGI face more, or less hurdles than the average Oilpatch company ? Is FGI more, or less leveraged to the nearterm recovery in their subsector - than other subsectors ? Is the Street more likely, or less likely to pump FGI up immediately upon the merger, or to wait to see at least 2-3 reporting quarters before getting behind the stock ? Bottomline: Simply a shrinking Offshore Rig Construction "pie" for at least 18 mos. - add to that, too many potential unknowns ( short position, insider sales)and the Street will require FGI/HLX to "show me the money" over at least 2-3 quarters here... and that shrinking backlog...??? Too many other plays without any of these problems,in subsectors with much brighter immediate futures and more immediate leverage . My final take on FGI - Why bother ??? PS - here's another comment; from BHI <<However, Baker Hughes, whose weekly reporting on drilling rig activity has shown a steady increase, said the upturn in activity has been confined to the Western Hemisphere. It warned that the rig count in the Eastern Hemisphere is still declining. And the worldwide offshore drilling business has yet to hit bottom, said Chairman and Chief Executive Max Lukens. >> =========================================================== ...now did those comments sound like anyone was chomping at the bit; to order some more $200M Offshore Rigs ? - wake up folks... Again; I am talking about FGI in the context of the nearterm - the next 9-12 mos... comparing FGI to the rest of the Oilpatch as far as appreciation potential... perhaps in 2001 - onward; FGI becomes an outperform; but not in the nearterm - in "my" opinion.