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

To: VLAD who wrote (33384)	12/23/1998 1:18:00 AM
From: SliderOnTheBlack	Read Replies (5) \| Respond to of 95453

FLC - << ie: DLJ's comments... No principal payments till 2002 and we forecast 1999 ebitda of $493mm (with no newbuild/conversion rev) vs $155mm in interest plus maintenance---upside leverage tremendous >> Leverage is not a dirty word; borrowing money at a 20 year low in interest rates and buying assets (read CDG) at a market bottom is great timing and good business imho. These guys are the savy ''Money-Men'' of the Oilpatch. Their financial acumen is well respected by the Street. No one is giving them credit for what CDG will do to the cash flow. When we return to normalacy - CDG will literally pour cash to the bottom line. They comfortably have 24 months before their leverage will be a problem. The newbuilds coming online one after another; will in my opinion - be brilliant timing, as they will be hitting when the GOM rebounds and companies will be falling all over themselves to contract these deepwater drillships... When crude rebounds - every E&P company in the world will not only ''want'' to accelerate drilling; they will ''have'' to... we are set up for a classic snap back in not just crude oil prices, but in dayrates as well; not overnight, but well within the timeframe that FLC is well prepared for. ...company is able to borrow hundreds of Millions of $ on an unsecured basis - does this sound like a company that is any where near bankruptcy ? The Street has selected FLC as the ''short D'Jour'' and has taken a ''sell now & ask questions later'' policy on the Mobil Jack Bates Rig cancellation - a buying opp imho. Sure FLC is a ''risk/speculative'' play; but the upside so vastly dwarfs the downside - that this is ''the'' speculative play in the entire oilpatch. They have tremendous upside; $4.00 EPS is very conservative and is used in many analyst models with the newbuilds; with $16 +/- crude and at a PE of 18 = $72 per share potentially, in a positive crude oil enviroment within 24-36 months. Given the total market crash, a 27 year low in the commodity markets, the alarms from LTC, dramatically mild Winter weather, Clintons Impeachment, International Financial turmoil, collapse of Russia, Brazil's problems, Japan's fall and Currency collapses etc. Crude Oil has had the epitome of a historic blip - the confluence of these types of events in a short, compacted timeframe may never again occur in our lifetimes - coorespondingly; this opportunity may never occur either - for those who can see the light... The only ''bet'' or ''question'' here - is has anything permanently, or fundamentally changed with Oil ? Is Global demand longterm, going to increase or decrease ? - I think we all know the answer to that... so do 1 Billion Chinese and 500 Million in India who are riding bicycles today and heating their homes with coal or wood... Does anyone really question Japan's ability to rise again, or the effect of their dramatic infusion of liquidity ? Does anyone really think that Europe at the dawn of the EU and the Internationally coordinated Rate Cuts will not dramatically increase Global demand for crude from todays levels ? Does anyone think that we will never again see a normal Winter ?