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Strategies & Market Trends : Value Investing -- Ignore unavailable to you. Want to Upgrade?

To: Paul Senior who wrote (34833)	7/3/2009 12:21:16 PM
From: E_K_S	Respond to of 78702

Hi Paul - I like your idea of focusing on the offshore oil shipper/service industry. This sector is not as impacted by the wild swings in the business cycle as the dry bulk shippers. Also, the new builds hitting the market for this sector s/b less than in dry bulk. I look at the average contract term for the fleet and when they roll over and at what day rates. The longer the better. From the 2007 Hornbeck Offshore Services, Inc. (HOS) Annual Report: o "Many of the contracts we enter into for our vessels are full utilization contracts with initial terms ranging from one to five years...." o "All of our OSVs operate under time charters, including twelve that are chartered under long-term contracts with expiration dates ranging from September 2008 through June 2012.'" o "We now have 16 of our tank barges operating under time charters, including seven that are chartered under long-term contracts with expiration dates ranging from April 2008 through August 2009..." o "Our tank barge utilization increased to 92.7% for 2006 compared to 87.1% for 2005, due primarily to our continued shift in contract mix from COAs to time charters...." For years ended December 31: 2007 2006 2005 Average OSV dayrate $ 21,505 $ 19,380 $ 13,413 Therefore, the company rolls over their vessel contracts quite frequently (compared to SFL where their average Fleet contract term is 14 years). I suspect this is quite standard for the offshore/service shipping sector. This could be a positive if forward day rates are rising. The future cash flows can be significantly impacted if during any one year the company is exposed to a large number of vessel contract renewals. HOS may be front loaded with a significant number of vessel contract renewals coming due in 2008-2009. It's not clear from their 2007 annual report what has been renewed in 2008 - 2009 period and if they smoothed out their contract commitments (or even have tried to extend them). I have always liked the low PE's in this industry but dislike the leverage that some of these companies utilize. After much review, I have opted for companies that have a diversified fleet with much longer contract vessel terms. A good dividend payout is a plus too. Both FRO and SFL have structured contracts that set a fixed ROI (for each vessel under contract) plus an incentive payout bonus share for extra profits earned over the period. I particularly like the deep drill platforms and hope to start a position when Dry's spins off their deep drilling subsidiary of 4 platforms. Thank you for sharing your interest and screening for companies in this "niche" sector. The offshore oil shipper/service industry is one I have not really looked at and may be one where you buy a few shares in all three of the mentioned companies. My approach would be to take some funds I have allocated to my integrated oil holdings and spread it around in this sector. There was some discussion that the integrated oil companies may be more exposed to the Cap & Trade tax (through their refinery exposure) which would impact their future growth in earnings even though there is growth in diversified oil sector. Perhaps one could capture a bit of this growth by holding a few of these offshore shipping/service companies w/o the risk from Cap & Trade legislation. EKS

To: Paul Senior who wrote (34833)	10/31/2009 2:19:36 AM
From: Spekulatius	Respond to of 78702

TDW (41.15$). A fill for a first few shares on TDW. Earnings apparently did not meet expectations but on an absolute bases, they looked decent, especially considering the valuation. I would love to average down in this name some more, market conditions permitting. I like the size, international scope, valuation (close to book, low PE). TDW should do OK over time at the current valuation.

To: Paul Senior who wrote (34833)	7/6/2011 11:47:52 AM
From: Paul Senior	Respond to of 78702

Offshore supply vessels. Am reviewing past posts here regarding this. Not clear to me which was cheapest at the time and which subsequently performed better. finance.yahoo.com My results for Hornbeck seem to be satisfactory. Just perhaps because I bought some shares 6/10 @ $14+ area because the Hornbeck sons were buying shares at that time. The stock, now about $27-28, may still be undervalued: tangible book value (per SI) about $32/sh, and there's apparently a slow recovery by the oil companies in the GOM where Hornbeck has operated. However, with analysts' saying (per Yahoo) that forward p/e might be 23, and at stock price now where there's been insider sales, I decided I'll just cut back on my few HOS shares for now. I continue to hold all shares of my small position in TDW. finance.yahoo.com