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

To: Second_Titan who wrote (88711)	3/16/2001 8:33:18 AM
From: Big Dog	Read Replies (3) \| Respond to of 95453

From Dain on KEG: KEG:SB-Spec;CURRENT QUARTER UPDATE During the December quarter, total hours worked numbered approximately 680,000, essentially flat on a quarter-to-quarter basis. The lack of an increase was due to the loss of approximately 10 days of activity at the end of December as a result of extreme ice and snow conditions in Texas, Oklahoma, and Arkansas. On their last conference call, Key's management estimated that total hours for the March quarter would be between 690,000 and 710,000. We conservatively modeled near the low end of this range. However, there have been no weather related delays of consequence in the quarter thus far and we believe the company has added an additional 10-15 rigs to the market. This leads us to believe that the total hours worked for the quarter will likely be at the high end or above the range of management's guidance, suggesting possible upside to our estimates. In order to maintain favorable pricing trends, Key has added relatively few additional work-over rigs to the market. Despite a remaining fleet of more than 350 additional rigs that can be refurbished, Key has added relatively little additional capacity to the marketplace. During the last quarter, Key added 10 well service rigs and we expect approximately the same number of additions in the current quarter. We agree with Key's strategy of pushing pricing over adding more rigs to the market. While it is tempting to put as many rigs as possible to work in periods of strong demand, we believe that sustained pricing increases provide significantly greater long-term benefits to the industry. We are confident that the recently consolidated nature of the industry, with approximately 60% of the market now controlled by Key Energy and Nabors Industries, Inc. (NYSE: NBR; SB-Avg; $54.30), should allow for sustained price increases unlike past up cycles. Due to the continued strong outlook for its Argentina operations, Key announced late in 2000, plans to add three additional rigs to its well service operations in Argentina. One of these rigs is already working in Argentina, while the other two are currently in route and should be there by the end of the quarter. Key is currently operating at 100% utilization in this market. The land rig count in Argentina has increased by 75% from year- ago levels, indicating that demand for work-over and well servicing should continue to be very strong in this market. Overall, it appears that strong trends in pricing and activity levels are continuing in the March quarter. Consequently, we are highly confident that Key is on track to meet or exceed the current estimates. Continued strong results coupled with the continued focus on improving the balance sheet, as evidenced by the recent debt offering used to retire the term debt, should, in our opinion, result in excellent share price performance through the remainder of the year. We are reiterating our Strong Buy-Speculative rating. Stock Opinion Our price target on Key Energy of $22 is based on an 11 EV/EBITDA multiple for 2001, which is in line with its contract land. With the focus of the company to reduce debt and eventually win an investment grade debt rating, and its demonstrated progress in reaching those targets, we believe the current discount versus its peer group should narrow. Not only does the price target represent almost 85% upside from current levels, in our opinion, we continue to believe that our price target derivation multiple as well as our forward forecasts are conservative. Company Description Key Energy Services, Inc. is the largest onshore, rig-based well servicing contractor in the world, with approximately 1,400 well service rigs and 1,200 fluid hauling vehicles.

To: Second_Titan who wrote (88711)	3/16/2001 9:46:14 AM
From: whitepine	Respond to of 95453

To me, your comments are a bit ambiguous. I do Not believe they are now itching to buy Priceline. However, INTC, DELL, GLW, SUNW, etc., are not in the same class of assets. So someone bought Priceline...to buy the intellectual assets/expertise/patents of tech companies at these prices seems prudent. I don't expect they would buy them all at once, but average in. Anyway, since the US $ is not pegged to gold, why in the final analysis would anyone want our dollars for their oil? Only answer is that the final value of US dollars is the relative purchasing power in our economy. Since foreign interests can't buy massive quantities of US land, the value of the dollars they receive for oil are a reflection of a: dollar's relative x-currency exchange rate; and, b: relative value of what the dollars can buy in the domestic US economy. So, relative to 25$bbl oil, the relative value of US equities has clearly declined. Would I suggest purchase of US stocks that own valuable intellectual property rights? Of course, but that would not be the only assets I would buy. Thus, I really don't believe the incentive to lower oil prices is great. Regards, whitepine