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

To: BigBull who wrote (51408)	9/19/1999 4:16:00 PM
From: BigBull	Read Replies (1) \| Respond to of 95453

"Laggard" stocks showing recent and strongly positive money flow. E$P's moneycentral.msn.com moneycentral.msn.com moneycentral.msn.com moneycentral.msn.com And yes, I expect RRC to join the party soon. I've changed my mind, I'm buying more IIR tmw, not CRK. I think it has abetter chance of doubling. JMVVHO OS moneycentral.msn.com moneycentral.msn.com moneycentral.msn.com Note: I own every single one of these stocks, and this is one of the reasons why. If you think I'm hyping - or am wholly unscrupulous - then please - avail yourself of the NEXT button and never read my posts again.

To: BigBull who wrote (51408)	9/19/1999 5:17:00 PM
From: SliderOnTheBlack	Read Replies (2) \| Respond to of 95453

Big Bull; re: FGI questions... I hear what you're saying. I think over time; everyone realizes that the offshore Rig Construction "Yard of Choice" is going to be profitable. That they are "the yard of choice" - or that they will not be successfull, or profitable over a long period of time; is not the point. Perhaps; there will even be another Offshore Boom comparable to what FGI saw in 1997 - and is still working off... but, not in the next year, or maybe even two. One of the sharpest, coldest, most unemotional traders that I have made contact with; hit me between the eyes of late concerning FGI. Bull; While your two questions get right to the heart of the matter; so did his question to me about FGI: 1. What did the Oil Majors do in the Offshore GOM Leases, and what was their position Internationally - the North Sea, West Africa etc leading up to 1997's Offshore Rig Construction Boom - and what was their attitude toward Cap Ex spending ? answer: They set records in the Offshore Lease Sales & Cap Ex Spending in Deepwater soared ! - pouring new money & orders into FGI's coffers. 2. What happened in this most recent round of Offshore Lease Sales - and what is the sentiment of the Oil Majors on Cap Ex spending here; what prospects are they selling & trimming, or putting on the back burner here ? answer: The basically failed to show up for, or participate in the Offshore Lease Sales - and the Cap Ex spending; or lack therof - is allready cut in stone, with cuts in deepwater spending leading the way. ... to determine FGI's "NEARTERM" future (and that is ALL I am talking about - the next 3-6-9 mos. of shareprice activity) - look to the Offshore Lease Sales... and worldwide offshore activity. Both the Oil Majors and Major Independants have a full portfolio of Offshore prospects. PGO for example saw the trend early - and made one of the saviest management moves in the Oilpatch - diversifying from being a deepwater seismic pureplay - to moving into the FPSO market. For the next 6-9 even 12, to perhaps 18 mos. Major offshore Rig Construction has no realistic chance of duplicating anything near the numbers from 1997. There is plenty of new technology, Offshore Rig-wise to satisfy the needs of Big Oil & the Independants - and their "Drilling Portfolio" for the next 12+ mos. even in the most optimistic of views. As far as the comments of there being plenty of refurb, repair, retro fitting etc. to tide FGI over... That is exactly correct ! - there is enought to "tide them over" - to keep them profitable; but - NOT nearly enough for them to produce the backlog, revenue and earnings numbers to support ANYTHING near the shareprices of the'97 - '98 boom. The analyst reports and projections that I see - are based upon the Offshore Activity & more importantly the Cap Ex Spending budgets of Big Oil & the Major Independants. There simply is no where near the level of Cap Ex Spending available that there was during FGI's prior boom. And equally important; even with increases in Cap Ex spending in response to the sustainability of Oil Prices - Big Oil & the Independants are on record for pursuing other more cost effective areas - there is nothing near the former $ being spent on new Offshore Rig Construction. Regardless of the age of the fleet - there is plenty of new technology and capacity to handle the next 12 to even 18 mos. of Offshore Development. Surely, there will of course be new Offshore Rig Construction; but not at the level to support the $20's, $30's, $40's of FGI of old. If the Street saw anything even remotely close to the former levels of Cap Ex Spending in Offshore Rig Construction - we would be looking at $25-$28 FGI here- and arguing about how soon it would be back to $40+ - not looking at $10 FGI ... As to the "age of the fleet" arguement; that same arguement has been used in relationship to the land rig fleet for years - to no avail. I think PTEN is still using the original rig once used on Spindletop (VBG)... The "age" of the fleet arguement will have litle "cureative" impact on the major backlog decline of FGI - they need the $ size of those new Offshore Rig projects; that just are no longer out there, anywhere near the degree that they were... It's all about - "The Pie has shrunk" - Stupid ! ...too much capacity, too little Cap Ex Spending Available, too many Offshore Prospects allready sitting & waiting - with the Rigs allready in the marketplace at falling dayrates... Rising Dayrates - do NOT forget that part of the equation ! Folks, we have a long, long way to go "Dayrate-wise" before the profitability and feasability of a "substantial" new round of Major Offshore Rig Construction becomes viable at significant levels once again. Also; the pricing & margin pressure in this subsector will not ease anytime soon - witness the competition from European & especially the Asian/Korean yards (Hyundai etc)... Bull; I am not being critical of your questions at all; as these have been the "pat" answers on FGI's weakness here of late. But, in all due respect - these are just euphemistic response questions; as the age factor - is irrelevant if dayrates dictate the unprofitability of new construction. Then - lower revenue repairs, even with their higher margins - do not replace the total profit dollars generated by the major newbuild projects. Then; we have the Streets sentiment toward ANYONE taking on the substantial debt of these newbuild projects of late. Cost a few exec's their jobs, affected the bonds, financing rates, shareprices and all most potentially the survivability of a few of these companies of late. I don't see that sentiment changing ANYTIME real soon... Bottomline: there is a valid reason that the Rig Const & Major Fab subsector is a major laggard - the "pie has shrunk"... There will come a time; when the Rig Const & Major Fab companies are a great laggard play... but, Laggard Plays - are best when you can get in when the fundamentals are rising into the face of lagging, or even falling shareprices. ie: the small cap E&P's - they have the rising fundamentals of rising commodity prices, they are reducing debt - and yet in many ,many cases; their shareprices do not as yet reflect this. FGI and the fab's will be the play; when Offshore Drillers dayrates rise to levels supporting the profitability of New Offshroe Rig Construction... Quite simply; when you begin to see $30 FLC, of $55 RIG - then and only then; will you see $25-$30+ FGI... ... and again; the rising fundamentals of construction & fab; are in the shallow water & Nat Gas, or Utility & Pipeline oriented niches. Own MDR, or GLBL here imho... FGI's time will come again; but it isn't here yet - and imho; it isn't around the corner either... Wait untill it is around the corner... as Laggards aren't the plays; untill the catalyst driving fundamentals start to turn; ie: Offshore Dayrates for the RIG's DO's & FLC's of the world... watch Offshore Dayrates for your "early BUY FGI indicator" imho. Offshore Lease Sales & Offshore Dayrates will determine FGI's nearterm future...Simply too early for a major laggard play; and way, way too many other better short term plays.