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

To: Thean who wrote (19295)	4/16/1998 11:10:00 AM
From: Jeffrey Beckman	Read Replies (2) \| Respond to of 95453

Exxon is soaring. Must have perfected their oil alternative (g).

To: Thean who wrote (19295)	4/16/1998 11:20:00 AM
From: Czechsinthemail	Read Replies (1) \| Respond to of 95453

ESV's cautious statement simply acknowledges the sensitivity of dayrates in the Gulf, which has already been discussed extensively. What I think gets missed is that ESV's results, while likely to be more sensitive to oil price levels than the deep drillers, nonetheless continue strong. Their 1st quarter results occurred in a low price oil environment. Going forward, even with modest softening of rates for a quarter or two, ESV's earnings comparisons will likely remain strong through the year simply because jackup rates have increased so dramatically. If we see a strengthening of oil prices, ESV and the jackup drillers will reflect the benefit of it much more than the deep drillers. Since the long-term trends point that way, I think it enhances the relative long-term potential for ESV. With trailing earnings now at $2.00, ESV trades at a bargain PE that pretty much discounts a heavy drying up of drilling demand. It does not really reflect much growth potential. If you compare ESV's earnings report with DO's you can see how much stronger ESV's results were. Though the stock price may continue to reflect oil price fears, ESV's actual earnings will likely continue to show impressive growth throughout the year. I think the company's appreciation potential is greater than for many of the deep drilling brethren simply based on relative valuation. If you expect oil prices to strengthen (as I do), ESV will reflect the benefit of it more dramatically. Baird