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

To: Gameboy who wrote (881)	10/8/1998 8:05:00 PM
From: D.J.Smyth	Read Replies (1) \| Respond to of 1153

gameboy <<HMAR and TDW are both highly profitable companies, as has been TMAR. The incredibly low earnings estimates given to TMAR - and the correspondingly low share prices - are what continue to attract me to this stock. It seems to me that it would be hard for TMAR to slip and fall; it carries practically no expectations. I like them all, though, and I have undying faith that the neverending oil glut will end and the US will be scrambling to produce all the oil it possibly can.>> this is baffling. other than tax loss selling and buying back in 30 days, i can't think of good reason to sell TMAR. TMAR's debt payments of $6.4 mil a quarter or $25.60 million a year amounts to $1.22 in earnings loss/juxtaposition a year. the debt payments will be lower in the 2nd half of next year and again lower in year 2000. Also, the Amortization of marine inspection which is $2.2 mil a quarter or $8.80 mil this year will be cut by nearly 80% next year in the 2nd quarter. They are "loading" the equation this year to make the amortization costs less NEXT year. This amounts to about $.32 savings in earnings for next year. analysts were generally assuming that TMAR would speed up the repayment of their debt and thus generate higher earnings going forward with a base earnings of $2.00 per share. these were valid assumptions with day rates at $7,500 to $8,000 a day and excess cash flow. the coastal oil market in Brazil in heating up, not down. TMAR is in good with Petrobras as they've delivered in a timely manner for them. it is doubtful that others stand to gain in the Brazilian market ahead of TMAR. TMAR stated that earnings would be $.20 to $.30 with a -$.01 for weather related problems during the quarter. if they deliver the high end, the market should reward them. even earnings of $.20 do not deserve this low stock price. i was thinking that possibly the market forsees some new, cheaper energy source for next year other than oil. but, really. how long will it take to develop that source? according to BLDPF (ballard power, hydrogen fuel cell), about ten years to begin to have a potential impact on the oil market. over 60% of oil is used as power generation. the remaing 40% is chemicals and auto. the fuel cell will not replace the power generation segment of oil for at least twenty years until it is perfected for higher power consumption. the market is thinking (a) TMAR is too weak to support their own stock, (b) earnings going forward will not generate much notice, and (c) until the oil price turns up and cap ex increases, TMAR is a dud and $4K day rates. for (a) TMAR can do many more things to support its stock than simply buying back shares. there are many ways to juggle earnings numbers for boats than is generally, commonly assumed. for (b)if TMAR commits to doing those things that will increase shareholder value by increasing net earnings (i.e., lowering labor costs, admin. costs, amortization costs of marine inspection decrease, etc.) then the market will reward them. if they hit the higher range of earnings estimates, the market will reward them even with $15 oil. for (c), cap ex expenditures decreases impact earnings for 3/4 year at most because - 1) TMAR has time to adjust to lower boat utilization expectation by drydocking, cutting costs, 2)as long as their are "X" number of rigs working, there will be "X" number of boats. if the rig count falls considerably, the price for oil goes up as less supply is feeding increasing worldwide demand - thus there will always be at least a certain mininum number of rigs worldwide to service and those rigs will require X number of boats. TMAR's boats are newer on average than TDW in the gulf and generally get contracts more readily due to breakdown probability of the older boats