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

To: jim_p who wrote (85424)	1/26/2001 12:11:58 PM
From: Big Dog	Read Replies (2) \| Respond to of 95453

Dain on ESV: ESV:SB-Avg;ENSCO INTERNATIONAL REPORTS STRONGER-THAN-EXPECTED 4Q00 RESULTS Operating earnings were in line with our expectations. The reported result of $0.31 beat our estimate due to a one-time insurance settlement that added approximately $0.02 to the quarter. Higher utilization accounted for the remainder of the increased earnings. We had anticipated much of the recovery in the GOM... ESV operates 22 jackups in the GOM. ESV's GOM jackups saw dayrates increase approximately $6,500 in Q4, which is in line with our expectations. Dayrates are continuing to strengthen in Q1, with new fixtures for 250 feet ILC's in the upper $40,000 range, the upper $50,000's for 300 feet ILC's and the mid-$50,000's to mid-$60,000's for 350 feet and 400 feet rigs. Additionally, the quarter benefited from approximately 25 days of the new semisubmersible ENSCO 7500. Dayrates for PSV's and AHTS also improved during the quarter. New work for standard PSV's is in the $6,500-$7,500 per day range. The stretched PSV's are commanding rates of $7,900 to $8,500 per day and the next one due out in March should command a rate near $9,000 per day. The AHTS market is similarly strong. ...but the North Sea is recovering faster and harder than we had anticipated. ESV operates a fleet of eight jackups in the North Sea, including two harsh environment rigs. The Company recently purchased a 25% interest in a harsh environment jackup currently under construction and due out early 2002. We believe the North Sea is a likely market for this rig. We had expected a seasonal slowdown in winter in the North Sea to put pressure on new fixtures in the short term. A major recovery was anticipated in spring as the work program filled out. We had assumed that standard jackups could see dayrates in the low $70,000 range by late year as the market appeared undersupplied. Recent fixtures indicate that operators have begun to notice the mid-year rig shortage and are currently bidding up equipment. ESV received a contract on the ENSCO 80 for approximately $65,000 per day, which is comparable to recent fixtures in Holland in late December and much greater than the $50,000s in the United Kingdom. The harsh environment ENSCO 101 (in the shipyard for leg repairs) recently received a contract at approximately $100,000, where similar rigs have been working at standard jackup rates. While the ENSCO 100 is committed at a lower rate (in the low $40,000 range), it is an old fixture for work that a standard jackup could do. The North Sea jackup market has five to six less rigs than at the peak of 1997-1998 as many rigs left the region for more lucrative markets. Inquiries are robust. Shell apparently is looking for as many as five additional jackups. There are only four jackups idle, all are currently in the shipyard and one has not worked since late 1998. Standard jackups moved into the high $90,000 range last cycle when the shortage hit, and commodity prices were not this high. Many of the rigs qualified to work in the North Sea are commanding attractive cash flows in other markets. As a result, it will take much higher cash flow potentials to bring them back. With fewer rigs and a looming shortage across the Atlantic basin, the chance to hit or exceed the rates of last cycle appears good. Each incremental $10,000 of average dayrates in the North Sea adds $0.14 to ESV's annual EPS. Other international markets have yet to see the same supply concerns. ESV operates rigs in Venezuela, the Middle East, and Southeast Asia. While there are early signs that PDVSA (Venezuela's state oil company) is beginning to increase its budget, ESV does not expect a material upturn for its barge rigs in that market until the second half. Three of its nine units are currently working. ESV's seven jackups in Southeast Asia and the Middle East are seeing signs of firming demand, but again, it appears that the real leverage is likely to be later this year. The 300 foot ILC ENSCO 52 in Southeast Asia is expected to be down for much of early 2001. ESV has a large upgrade program planned for 2001 with a capital budget of $125 million earmarked for enhancing the capabilities of a number of its rigs. This will cause slightly more downtime in the fleet than we had previously estimated in 2001. These upgrades account for most of our $0.05 decrease to our 2001 estimate but have added most of the $0.10 increase to our 2002 forecast. The balance sheet remains pristine with debt/total cap at a conservative 20%. We believe ESV is well positioned to continue to grow its earnings power through acquisitions, upgrades and select newbuilds. Stock Opinion During the last cycle (1996 through early 1998), most of the offshore drillers traded to 7.5x replacement cycle EBITDA as the global shortage of drilling equipment became apparent to investors. We believe the shortage could be worse this time around due to tighter commodity markets. With the West African, GOM, and North Sea jackup markets all apparently headed to full capacity this year, we believe investors will once again begin to discount replacement economics in the valuations of these companies. Due to a predominantly short-term contract structure, we believe ESV is one of the companies best positioned to demonstrate the earnings leverage as dayrates reflect the market tightness. Our replacement cycle EBITDA estimate for ESV is $1037.1 million, equating to a potential value of $54 for the stock. This is equivalent about 16x estimated 2002 EPS, and our 2002 EPS is still a ways from replacement levels. Company Description ESV is one of the world's largest jackup drilling contractors, with a fleet of 37 jackups in the GOM, North Sea, Middle East and Southeast Asia. The Company also has a fleet of nine barge rigs in Venezuela, seven platform drilling rigs, one deepwater semisubmersible and a large fleet of PSV's and AHTS's supporting offshore operations.

To: jim_p who wrote (85424)	1/26/2001 12:31:42 PM
From: SliderOnTheBlack	Read Replies (1) \| Respond to of 95453

jimp - give us a list of low PE,high cash & low debt techs ? ... curious as to what you like here ? COMS attracted me earlier in DEC, but I resisted (VBG) - played only FDRY for a bounce, did have some INTC - that traded basically flat here & a couple of 2 day flips; but I don't think I was ever more than 3-4% long in tech after often being 15-20% short tech - which paid very well. I' now squareed/netural; not long, or short anything in tech; but ADCT intrigues me; held thru the April-May NAZ crash last year like a rock & really got killed here - FDRY was cheap here on its blow off; but nothing much attracts me long in tech here... I'm playing coy for sub NAZ 2000 (VBG)... my best long trade in tech was when I went long the QQQ's as a prior day hedge as I closed out my shorts; I liked the QQQ's as I worry about too many sympathy selloffs ala ~ the PMCS story here...or, down -30% opens... Man; I'd be putting that DCB Tech money in the register here for the following reason - The story is simple in tech: Even those that are hitting estimates - CAN NOT OFFER ANY GUIDANCE FOR 2nd HALF 2001. And "that aint investing - that's gambling imho"... I think there is going to be a PLETHORA of PMCS-esque stories yet to come off of Q-1 tech earnings reporting... and I want to lower, or cancel my GTC order for $27 CSCO here (VBG). I look at the NAZ chart and still clearly see a Bear Trend; merely a 500pt up DCB soon to be followed by another 700pt downward stairstep trend imo...this looks & feels like the same thing we've seen since last fall. Euphoria briefly returns on the 500 point DCBs only to see the return of gloom & doom on the ensuing 700 point retraction and untill tech shows something fundamental; I wouldn't be buying based on Fed Cuts... Fed Cuts won't make Co's buy CSCO products & cut rate/0 % financing hasn't helped computer sales... ? I'm hoping some tech money rotates into the BTK as I am a "Big SHORT" on a rally to BTK 700-725. I think the BTK see's 400 before year end...still too speculative, too MO-MOish... I think 2001 is going to be a humbling market environment. The XAU will outperform the OSX, the XNG , the XOI, the DOW, the S&P and the NASDQ ...and we'll see the words "RECESSION" on the covers of Barrons, Newsweek & TIME by the end of summer....