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Gold/Mining/Energy : Big Dog's Boom Boom Room -- Ignore unavailable to you. Want to Upgrade?

To: Frank who wrote (37)	3/20/2001 9:13:56 AM
From: rolatzi	Read Replies (2) \| Respond to of 206338

Texas oil (-8%) and natural gas (-6%) production is down in January compared to the previous year. Where is the flush production and the results of increased drilling? rrc.state.tx.us

To: Frank who wrote (37)	3/20/2001 9:20:00 AM
From: Big Dog	Respond to of 206338

Frank, Accidents are rare. (Thankfully.) $110 million is about right when you toss in construction interest expense and project management expense. MARAD provides loan guarantees to encourage construction in the US. It's our way of giving an incentive not to go to the East. MARAD loan guarantees provide up to 87 1/2% financing with an interest rate that is about 100 basis points above the equivalent treasury. That means right now you can get money at about 6%. The MARAD-backed debt carries the full weight of the US govt. And the debt is secured ONLY by the asset. If the outfit goes belly up, the govt owns the rig and the company owes nada. Vessels can not be more than 25% foreign owned. This MARAD facility is one reason FGH will have an advantage. There are really only two yards in the US that can build rigs, FGH and AmFels. So if you want MARAD guarantees....who ya gonna call? (Hint: AmFels is almost fully booked.) Sometimes a company will prefer to use other financing, or will just get a better deal than MARAD outside the US. In fact, Chiles chose to NOT use MARAD financing on its first two rigs. It went to the bond market and did a 'junk bond' offering. (One of only three that was done back in the prior boom in this sector, the other two being Northern Offshore and Petrodrill.) I think Chiles later converted that to MARAD, but I'm not sure. MARAD guarantees can also be obtained for expanding/improving shipyards...which is how FGH got some of its cake for expansion...think Trent Lott helped??? MARAD plays an important role in ship financing in the US and does a good job supporting the industry. big