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Gold/Mining/Energy : Ensco International Inc. (ESV) -- Ignore unavailable to you. Want to Upgrade?

To: diana g who wrote (948)	3/26/1998 9:59:00 PM
From: Douglas V. Fant	Respond to of 2005

dianaG., ESV has underperformed probably because ESV specializes in shallow-water jackup rigs, while everyone perceives deepwater as the place to be. The reality is that shallow water will see as much action as deep water in terms of drilling, albeit at lower day rates. But then it costs less to equip and maintain a shallow water rig- and the risk are lower too. So I think that ESV will do fine.... Sincerely, Doug F.

To: diana g who wrote (948)	3/27/1998 11:02:00 AM
From: Czechsinthemail	Read Replies (1) \| Respond to of 2005

diana, In addition to what Doug offered, I would add one more tidbit. ESV got a big boost around their last earnings announcement from a glowing review and earnings upgrade from the analyst and Salomon Smith Barney. SSB recently revised the earnings estimate downward to about the consensus average estimate, apparently around concerns that lower oil prices would slow the company's growth. Since then, the oil producer's agreement has emerged and prospects for higher oil prices have buoyed the prices of many drillers. But ESV less than others. My guess is that all of this will be remedied around the time of the next earnings announcement, because ESV should have a strong report, plus better prospects looking forward, positive earnings revisions, upgrades, etc. One other factor that may have tarnished ESV is their participation in marine transport. Though it is a very small part of their overall business, people may have assumed it would be a major negative and avoided the stock. All this being said, I think ESV is perhaps the best current value among the offshore drillers. At a certain point, market action reinforces perceptions and stocks are down because they're down because they're down (or vice versa). FLC around the time of their earnings announcement would be another good example. Eventually, people rediscover the companies particularly if their earnings potential has bee underestimated. good luck, Baird