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

To: Douglas V. Fant who wrote (18775)	4/11/1998 8:34:00 PM
From: Big Dog	Read Replies (1) \| Respond to of 95453

The Dog is back. Many thanks to Teddy for keeping me up to date during the week! I'm a bit under the weather today...must have been too many oysters...so I can't write much. Just a couple of notes for now. I have not read or heard much about this Simmons report. But from what I gather, they are saying the day rates are softening for the extra-large jackups (350-ft plus). This is true. This is not of great concern however. First, the population of jackups this size is quite small, so it doesn't affect too many rigs. Plus it's only in the GOM -- not the North Sea or other areas. These rigs only work at their maximum day rates when they can work at near maximum capacity. When they dip down to the sub-300-ft. water depths they have to compete with a larger population of rigs and therefore accept a lower rate. Luckily, like I said before, there aren't that many of these rigs so the impact on supply in the lower water depths won't be much affected either. Maybe it's just that there is a window of weakness for these larger jackups at this moment. Perhaps one of our statistics guys can give a breakdown of how many of these rigs are in the GOM and who owns them. My sources say day rates in all other areas are firm and demand is strong. Again, I didn't read the Simmons report so I'm not sure of the specifics in the report. I did meet the head of Simmons research dept. last week and have agreed to a subsequent meeting in Houston to explore areas of cooperation between our companies. FGII -- WOW !!! I visited the Pres and Exec VP, the Pascagoula yard, and the new yard. All I can say is WOW!!! This is a first class operation. They are busier than a one-legged man in an ass kicking contest. If you don't buy this stock...shame on ya. Note: Noble did or is doing six EVA conversions. Is it just a coincidence Halter got the first one and FGII got the next FIVE ??? If you guys think I was strong FGII in the past, you ain't seen nothing. (...and back not too long ago when I had a rig at their yard, they didn't even have a dedicated fax line. I luv da oil bidness.) Ok, I gotta go back to bed...Ionly read the last 50 messages, so if there was anything asked of me before that, I didn't see it. big

To: Douglas V. Fant who wrote (18775)	4/11/1998 9:07:00 PM
From: wggm	Read Replies (2) \| Respond to of 95453

Simmons has been a huge bull on this sector for a long time. I believe I read somewhere that they are based in Texas and specialize in the energy sector. The report cites "recent new contracts and bids" to support its lower day rate predictions. I am not in the industry so I can't refute comments made to the effect that these are only predictions and with demand so high and supply so low, why would contractors take 20% hits on new contracts, etc. I only know that other analysts have spoken in terms of a few thousand dollars when predicting softer day rates, not the ten thousand that Simmons does. Their earnings estimate for ESV in fiscal 1999 is now $2.96, substantially lower than concensus. I don't believe that this kind of softening is reflected in most analyst's estimates (certainly not for ESV) although it might be in the price of the stocks. I am thinking about liquidating my ESV position on Monday (I may switch into FLC). I think it says a great deal about the rationale for investing in this sector (ie. huge shortage of rigs) if day rates can drop this dramatically, even temporarily, when oil and natgas prices are at levels which make drilling profitable. If there is anyone in the industry with first hand knowledge about current rig contracts that can either confirm or refute Simmons, I would love to hear from them.