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

To: William Nelson who wrote (1035)	4/14/1998 1:48:00 AM
From: Roadkill	Read Replies (1) \| Respond to of 2005

>>One thing I don't understand however is how eps will grow. Analysts are predicting rather impressive growth in eps, to say the least... but I wonder if that's entirely dependent on dayrate increases. I know they are building some new rigs (3-4) but that effect seems small. Also they may acquire another co. but I doubt analysts are relying on that in their calculations. Is it just all dayrates??<< It is primarily increases in day rates for rigs and supports ships. But it doesn't take a 30% increase in day rates to receive a correlative 30% increase in EPS. ESV's costs are largely fixed. Using hypothetical numbers, if it can get $70K/day per rig instead of $60K/day (~+15%), that last $10K goes straight to operating profit, and about $6K-$6.5K of that will go straight to EPS, resulting in an outsized boost to EPS. Having said that, I'm not too confident that day rates will be rising at all until the surplus gets worked out (despite ESV's concentration in natural gas, not oil). Just MHO, of course. Matt