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

To: Redman who wrote (5760)	12/19/1997 5:57:00 PM
From: Redman	Respond to of 95453

A quick recap of what the market obviously did not see this week from street.com : The stock market may have had its doubts this week over the drillers, but the drillers themselves were busy doing deals. Here are some of the highlights: Schlumberger's (SLB:NYSE) Sedco-Forex unit has contracted for its second new-build semisubmersible rig in as many weeks. SLB confirmed a contract between its highly regarded drilling unit and Texaco (TX:NYSE) for a new rig to drill in the Gulf of Mexico. Sedco's newly designed semisubmersible, the Express 2000, is capable of drilling in waters up to 7,500 feet. Gulf of Mexico Newsletter, which first reported the deal, estimated day rates exceeding $175,000. (The companies confirmed the news Wednesday.) Last week Sedco announced it will begin a drilling program for the French oil company Elf Aquitaine offshore West Africa, an area becoming increasingly important in international drilling. * * * * * On the other side of the world, Reading & Bates (RB:NYSE) is drilling for Mobil North Sea, a unit of Mobil (MOB:NYSE), and earlier this week announced an extension of a drilling contract for its semisubmersible rig, the Jack Bates. The contract extension begins in the fourth quarter of 1998, an unusual time to be drilling in the harsh waters of the North Sea. But the Jack Bates is one of the few rigs in the world capable of drilling in this type of environment year-round. The total contract, which is for a two-year period or the completion of eight wells, will fetch Reading & Bates approximately $146.7 million. * * * * * Union Pacific Resources, (UPR:NYSE) fresh off a failed takeover attempt of Pennzoil (P:NYSE) (as originally published, this story erroneously said Pennzoil had failed in a takeover attempt at Union Pacific Resources), announced the signing of a letter of intent -- a preliminary step before a contract is signed -- for a five-year contract with Noble Drilling (NE:NYSE). Noble will drill for UPR, who has partnered up with Amerada Hess for this project, in the deepwater Gulf of Mexico. UPR is committing significant resources to exploring its prospects in the Gulf of Mexico. UPR also announced an agreement with Western Geophysical, the seismic arm of Western Atlas (WAI:NYSE), the company rumored in recent weeks to be a takeover target and whose hyperactive options activity last week drew the Big Board's attention. (When asked by the NYSE whether any corporate developments were affecting the stock, Western Atlas declined to comment, citing company policy.) Western Geophysical will provide seismic data, proven to greatly increase drilling success rates, to UPR in 1,000 deepwater blocks in the Gulf. * * * * * Global Marine (GLM:NYSE) is still negotiating over a new-build drillship. (The deepwater drillship would be the company's third.) Back in October, Global announced a bridging contract that saved them a slot in Belfast's Harland & Wolff shipyard. That bridging contract expired Dec. 1 and was extended until Dec. 16, but Tuesday morning a Global spokesman said the company is negotiating another extension. They are also looking at other international yards. Important factors in Global's decision are price, delivery, and "our confidence that price and delivery will be met," says Global's Vice President of Market Development Dave Herasimchuk. * * * * * If rigs are being built, shipyards will benefit, but only if they have the capacity to take on new business. Shipyard owner and rig builder Freide-Goldman International (FGII:Nasdaq) is in the midst of expanding its building capacity. One of the IPO success stories of 1997, FGII is about 60% finished with a new shipyard that it is touting as the most modern facility in the world. Building rigs takes a lot of space, and Freide management has a 50-year lease on 85 acres in Pascagoula, Miss. The company will basically be able to build rig components and outfit those components inside a 4,000 square foot fabrication area, then do the final assembling outside, as opposed to constructing the rig entirely outdoors. Marine Drilling (MDCO:Nasdaq) is their only contracted customer so far for the new facility, but that $90 million new contract is on top of a $200 million backlog for equipment and refurbishment at their existing facility. "Their backlog has gone from $65 million in the second quarter to $132 million in the third to $200 million at year end," says Karen Green, a research associate at Jefferies & Co. in Houston, which led the public offering in July. Green says additional contract announcements are "imminent." Chairman and CEO of Freide, J.L. Holloway, concurs. "You should hear something in a day or two." green

To: Redman who wrote (5760)	12/19/1997 6:52:00 PM
From: larry	Read Replies (1) \| Respond to of 95453

green, You are definitely not the only one who is scratching his head! Actually I am reading Jeffrey's report on MAVK. They have estimated EPS for the next three years at 1.80+, 2.66, and 4.00+ (by Sept. 1999) and I have just talke with the company and they are very very comfortable about the EP estimates. Also the company is saying the their business is going strong and are expecting to expand their business steadily in the future. Well, to summarize it in one setence. An healthy company is being traded at a forward PE growth ratio at well below 0.25! Are you kidding me?:) I think that we need a bit more patience with the market right now. larry

To: Redman who wrote (5760)	12/19/1997 7:58:00 PM
From: CrabDaddy	Read Replies (2) \| Respond to of 95453

No one is kidding you - these numbers are real. I see this sector as the safest place to be for 1998. After earnings in Jan. this sector should be flying. For the past few years I've been mostly into techs and drugs - CSCO INTC MRK WLA. The real killer for stocks is earnings disappointments - 3COM, 3M, NIKE, etc. Drag 'em out and shoot 'em. I just don't see the potential for big disappointments in this sector. At current prices, does anyone really expect some of these stocks will flat and trading with pe ratios of about 3 or 4 in two years. I think that you will start seeing the "Predictions for 1998" articles coming out with some pretty bearish comments - I also think that some of these bears wills concede in the same articles that the drillers are really gonna be piling on the earnings and that this may be the "value" industry for the next year or so. What else can are they gonna recommend? Anything with a lot of foreign exposure will be out. Amazon.com at over $50/sh MIGHT earn a dime in 2 years - get real. Deflation for the retailers is a very real possibility. (50% of earnings come in the 4th quarter and it isn't looking THAT great so far) It just makes me sick that this industry is not being recognized for what it is - The big earnings champ of 1998. I really believe we are all going to make a lot of money over the next 12-18 months. IMHO. BTW - On Wall Street Week last Friday there was a pro (don't remember the name) who was overly cautious and negative on stock returns in 1998. But when Ruke pushed her to mention an area she likes, she said that the oil services looked interesting - She volunteered two names: Parker Drilling and Noble Drilling. I think we'll be hearing a lot more of this type of commentary in the net couple months. i.e. "bearish - except for the oil services" NE, FGII, MIND, GIFI, EVI, TDW Good investing, CrabDaddy