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

To: Shelia Jones who wrote (22118)	5/15/1998 3:18:00 PM
From: mc	Read Replies (1) \| Respond to of 95453

Shelia, thanks for the thought out response about MDCO. It's greatly appreciated, as is the Clinton joke - that was a good one. With a great projected growth rate, a nice balance sheet, and a p/e of 18 currently, how much more downside potential do you think MDCO has? I understand there was speculation about a takeover but even without that it looks like it may be getting cheap at these levels. Good luck, Gary

To: Shelia Jones who wrote (22118)	5/15/1998 7:44:00 PM
From: Elmer	Read Replies (1) \| Respond to of 95453

FWIW: Currently, MDCO is my favorite offshore driller. Why? 1) I don't think the market is giving MDCO credit for the big transition it is undertaking. By 1999, almost 50% of its cash flow will be coming from the deepwater. It seems like most people still view MDCO as just a shallow GOM driller. If 50% of its CF will be coming from the deepwater, doesn't that deserve at least some of the higher deepwater type of multiple? 2) Solid Balance Sheet. MDCO has the capacity to significantly increase its earnings estimates for 99 and 00 with new deepwater rig conversions or purchases. With deepwater dayrates continuing to escalate this presents MDCO with some huge earnings upside. 3) Higher growth rate than its peers. MDCO is expected to grow EPS 43% this year and 67% next year versus approximately 30% and 41%, respectively for its peers (From Yahoo). On top of this, I think there is more upside to MDCO's numbers than the group. One deepwater rig addition does quite a bit for a company of this smaller relative size. Doesn't this higher relative growth deserve a higher multiple? 4) The shallow water GOM dayrates are holding fairly firm driven by good natural gas prices. It is possible this could change given that the premium jackups are coming into this arena to find work. However, I am betting that the premium jackup dayrates came down to get to a more appropriate markup to the under 250 ft. jackups and the dayrate impact on the shallow jackup operators will be minimal. 4) New Mgmt. team is really changing the profile of this company in a very favorable way. 5) Hopefully, a cushion exists for the stock price given the possibility of a takeover. Just like any stock, MDCO does have some negatives, but at these prices, I think MDCO is one of the better buys out there. Just My Opinion, Elmer