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

To: Gameboy who wrote (53844)	11/1/1999 8:51:00 PM
From: Razorbak	Read Replies (1) \| Respond to of 95453

Parker Drilling (PKD) Gameboy: >>> tis a fast and ever changing world we live in. Parker's 3rd quarter earnings more accurately reflect 1st and 2nd quarter crude prices than they do current conditions. Your analysis failed to account for the fact that crude prices have been rising rapidly; third quarter crude averaged $21.71/barrel and so far fourth quarter (October) crude has averaged $22.74. The lag time for rig rates, drilling rates, etc., probably lags crude rates by 6 months and longer. Higher crude 3rd quarter and still higher crude 4th quarter means some immediate money in the pocket for Parker, but the big payoff is still on its way. Parker, and many others in this sector, have probably troughed this third quarter. The benefit of higher crude prices will show up in future quarters. The momentum is just beginning to build. With $50 million in available credit and $50 million in cash, Parker is well positioned to seize the opportunities at hand.<<< Tis a vast and ever growing cash drain, too. For the last 22 months, Parker has incurred $284 MM of capital expenditures. That's $12.9 MM/month on average, or $38.7 MM/Q. Add to that $15 MM/Q of interest expense, and you end up with approximately $54 MM/Q of outgoing cash. That'll eat through $100 MM in available credit and/or cash pretty quickly with EBITDA at present levels (i.e., $15 MM, $19 MM, and $15 MM for the last three quarters). Needless to say, the future payoff (still uncertain, and with a probability < 100%) better be quick, because the tangible cash costs of operating as a going concern (probability = 100%) still need to be covered. Ultimately, it boils down to a simple question of timing. Best of luck, regardless of your position. Razor