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

To: victorw who wrote (66112)	5/12/2000 12:31:00 PM
From: Big Dog	Read Replies (1) \| Respond to of 95453

From Dain Rauscher this morning: * We know that Transocean and RB Falcon have discussed combining several times over the past several years and very recent discussions have taken place. * We see many positives and negatives to different aspects of a combination and would not be surprised to see the companies combine at some point. * We do not believe a deal is imminent and, more importantly, any imminent transaction would likely generate little near-term appreciation to FLC's stock price. Further, we would expect that any transaction would be a stock transaction and the announcement of such a deal would result in an arbitrage that would drop both stocks, with FLC likely taking the largest hit due to the disparate recent move up. RIG cancelled a marketing trip, and two investment banks have pulled estimates out of First Call. Those are compelling indicators. But all of the rig companies have talked to all of the rig companies over the past few years about consolidation. We believe a combination of the two companies would provide it with a dominant position in deepwater rigs, but it would likely have to cede the next round of rig construction to other players as oil companies try to keep the playing field level. We are not so sure that RIG wants to sit out the next construction cycle with high-technology fifth- generation semis involved.