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Gold/Mining/Energy : Trico Marine Services (TMAR) -- Ignore unavailable to you. Want to Upgrade?

To: Grommit who wrote (674)	8/17/1998 9:50:00 AM
From: D.J.Smyth	Read Replies (1) \| Respond to of 1153

i'll give you some calculations when i have a spare minute; but again it doesn't add relative to their past. they're using some bleak projections for all of 1999 relative to oil price/gas price/day rates/tmar's expenses. tmar made $1.20 when they had 25 boats. they now have nearly 100. tmar employees, i'm told, are continuing to buy stock down here. i sware they're using a calculator made in uganda. i don't know.

To: Grommit who wrote (674)	8/19/1998 2:18:00 PM
From: D.J.Smyth	Read Replies (1) \| Respond to of 1153

working with $.29, their assumption for the 4th quarter: assuming the following: $4500 day rate in gulf for supply boats, 82% utilization (according to them utilization will be "above 80% in the 4th quarter given that more ships will come off drydock after double hulling, etc.) $13000 day rate for north sea, 92% utilization (not expected to change) $6072 day rate for lift boats (not expected to change as short supply of lift boats continue in the gulf), utilization at 100% according to them as two lift boats in drydock will come into use in the 4th quarter, one in the third, and one in the 4th for a total of 6 for full utilization $2081 for crew boats, with current utilization of 91%. revenue would equal $42,722 million. using current assumption of gross profit, earnings at $.42. you'd need to lower profit from 21% to 6% to arrive at $.29. the proability of 6% gross profit is slim to none as (a) loan situation slightly changes in the 4th quarter which will be accretive to earnings and (b) TMAR increases current crew about 15% above current. this is false assumption since current crew is being held on in anticipation of increased vessel use in the 3rd and 4th quarters. it is more likely that current crew would decrease in size as revenue shrinks to reflect market situation. this would, in effect, be caused by decreased utilization, but earnings would remain around $.42 as decreased costs would have the affect of keeping net profit at around 21% (which is historically conservative) to come up with their $1.29 for next year, you need to assume (a) keeping ALL the current crew fully employed, (b) vessel utilization on lift boats at 50%, (c) utilization on supply boats at 65%, (d) utilization of north sea at 80%, (e) utilization of crew boats at 80% (f) a net profit at 18%, (g) day rates for supply boats at $4500, (h) day rates for north sea at $13500, (i) day rates on supply boats at $4500, (j) day rates on crew boats at $1900, (k) net profit margin at about 18%. this scenario would produce approximate average quarterly revenue of about $35 million VERY unlikely scenario as (a) crew would not be fully employed (as they are now) with utilization at 65% for supply boats(many boats would be permanently drydocked, people would be laid off; 60% of current boat operational costs is labor), (b) day rates at $4500 would imply oversupply of boats when in reality there continues to be an "undersupply" issue in the gulf, (c) the north sea would somehow, begin to experience a potential boat oversupply issue (this is unlikely as it takes at least two years to prepare an existing boat for the northsea waters - not not mention the time necessary to build a new vessel for these waters, then develop contracts with existing companies there) (d) to get at the above scenario you'd need to assume, i think, as well, that gas prices would become unstable (in the past two months gas prices have increased slightly due to supply/demand issues; 70% of the work in the gulf is gas related). and through all of this you must assume absolutely NO expansion/acquistions on the part of TMAR. we know they are currently aggressively surveying other markets, including an increased presence in Brazil which would make ALL the above negative assumptions more unreasonable.

To: Grommit who wrote (674)	8/20/1998 10:57:00 AM
From: D.J.Smyth	Read Replies (1) \| Respond to of 1153

according to TMAR, they now expect day rates to average about $6K in the fourth quarter with utiliztion on a fully employed basis at about 70%; not considering any permanent drydocking of a few older boats to lower costs. people are confusing what TDW is doing to drive the market price lower in the gulf (to shake out the small 10 boat players and accelerate the scrapping of boats) and what TMAR is doing overall. Johnson Rice (Agular) believes supply boat rates will average around $4K a day all of 1999 with a 65% utilization in the gulf only. both are hypothetically difficult to accept. if supply boat rates do dip to around $4500 quarterly average (as TDW is currently charging for some of their older shallow water rates)utilization will remain higher throughout 1999 as the number of boats able to operate at that level becomes fewer. TMAR's average cost of oeperation in the gulf for supply boats in the gulf is still around $2000 a day. TMAR works the deep water in the gulf where day rates are higher than the shallow water rigs. keep that in mind. i'm making these notes to myself - why not publically. none of Agular's comments take into affect any potential further expansion into Brazil in 1999