Silicon Investor (SI) -- The First Internet Community

STOCKTALK

We've detected that you're using an ad content blocking browser plug-in or feature. Ads provide a critical source of revenue to the continued operation of Silicon Investor. We ask that you disable ad blocking while on Silicon Investor in the best interests of our community. If you are not using an ad blocker but are still receiving this message, make sure your browser's tracking protection is set to the 'standard' level.

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

To: marc chatman who wrote (56145)	12/6/1999 3:33:00 PM
From: marc chatman	Respond to of 95453

I caught some of the RIG conf. call this morning. I don't have a lot of notes, as I was tuning in and out, but it was pretty interesting. 1. At roughly current prices, the new RIG would be the 4th largest oil service company in market cap., after SLB, HAL and BHI. (Perhaps it will go into the S&P, Diana, although I don't know whether the Cayman status precludes this). 2. Estimated effective tax rate will be 20-25%, although there are many factors which could cause this to vary. 3. Near term (current quarter) earnings estimates should come down to near break-even, from the .30 shown by First Call. 4. The new RIG will have 25% of all deep water rigs (rated at depths of 3000 ft or greater). 5. The new RIG will have incredible operating leverage (i.e, earnings leveraged to day rates). They gave some example of how increases in the average rate of $10k will affect earnings; I think they said .65/share, but I am not sure as I wasn't listening closely. 6. RIG may at some point offer to E & P's contracts for use of RIG's fleet -- in other words, a contract would permit use of different rigs in different locations around the world, rather than one rig at one location. This is in the "drawing board" stage and may not come about for quite some time, if at all. 7. RIG gave the usual litany of reasons why this is the time to buy its shares -- (i) E&P's increasing cap-ex, with majors primarily to focus on large deep water projects; (ii) demand for oil expected to grow 1 1/2% this year, and 2% for the next couple of years; (iii) existing fields being depleted; (iv) OPEC resolve is causing inventories to drop; and (v) better technology increases rate of depletion of existing fields (this one didn't make sense to me). 8. RIG expects to see a shortage in deep water rigs in 3-5 years, depending on a number of factors, of course. (My comment -- perhaps this is the reason for FGH dropping; who wants to wait 3-5 years?) That's about all I got. There was a lot I missed. It sounds like RIG will be a real powerhouse. I suppose it will perform quite well if the oil boom lasts a few years.