Silicon Investor (SI) -- The First Internet Community

STOCKTALK

We've detected that you're using an ad content blocking browser plug-in or feature. Ads provide a critical source of revenue to the continued operation of Silicon Investor. We ask that you disable ad blocking while on Silicon Investor in the best interests of our community. If you are not using an ad blocker but are still receiving this message, make sure your browser's tracking protection is set to the 'standard' level.

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

To: Dragon 1 who wrote (30898)	10/20/1998 12:49:00 AM
From: SliderOnTheBlack	Read Replies (2) \| Respond to of 95453

xia qiu; GW .... The reason I think GW is a buy; is that #1 it can be bought near $1 here; for obvious reasons falling bellow $10, $5 or especially $1 puts tremendous pressure on the stock & company... It goes off the chart of many Institutional Investors and analyst coverage due to shareprice alone... It can't be margined etc. - the markets place a stigma on stocks this cheap. GW is very, very similar to BDI. They have good fleets with a high percentage of Diesel Electric Rigs that are ideal for deep land drilling. GW dominates its market niche of the Ark-La-Tex market.They are highly leveraged, with high debt coverage costs. Both have been big acquirers of late and both were under strong financial pressure. As each month goes by that Crude Oil does not return to normal prices and Rig utilization remains low, which leads to depressed dayrates which drains the cash and credit lines of GW. GW has about 126 Rigs out of a market of 1400 Land Rigs. About 120 Rigs per year go idle/retire becauseof age and obselesence.The economics - read dayrates; do not justify building new Land Rigs. If they did, GW's revenue would grow from $220 Milion to $700 Million. So the supply is dwindling year by year as dayrates do not allow for ''newbuild'' land rigs entering the market like in deepwater... so the supply & demand ratio does contract each year. GW is a logical takover candidate due to their high debt situation with the accompanying pressure on earnings. They have a premium fleet and are in the best market niche in the US. They are a good value play @ $1 1/8 or so, with a small move here on any buyout rumors and a similar 25% premium to the stock price and some cash - GW is a good play here imho. If BDI was feeling the heat - GW is seeing/feeling the ''water boil''... I don't see them lasting through Q-2 1999 - no info, just my hunch. I think there will be a lot of mergers/buyouts all through the oilpatch. This is the #1 way to lower costs for these companies. The high debt companies are hurting here... The ones that do succeed like FLC, KEG etc. will strongly benefit from the leverage, but it is not without risk... I don't see GW taking this hit and the cash/credit line drain much longer - they need a strong financial partner. Who is anyones guess ? Don't think UTI or PTEN are wanting to bite off this much here, NBR again ?