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

To: VLAD who wrote (38109)	2/24/1999 7:47:00 AM
From: Razorbak	Read Replies (1) \| Respond to of 95453

<<At $38.38/share FLC at 5 5/8 is only 14.6% of asset replacement costs. Is that some kind of joke or what!?>> No joke. Just reality. That's what happens in an over-capacity market. Used equipment prices plunge to very small percentages of actual replacement costs for new equipment. Razor

To: VLAD who wrote (38109)	2/24/1999 9:01:00 AM
From: steve harris	Read Replies (1) \| Respond to of 95453

VLAD, just an offhand comment: have you deducted their DEBT from their value? They are in debt big time. Yes?

To: VLAD who wrote (38109)	2/24/1999 9:15:00 AM
From: SliderOnTheBlack	Read Replies (3) \| Respond to of 95453

"Asset replacement costs'' ---- FLC & the rest of the story. Vlad; excellent post. Before the Nattering Naybobs (I prefer the ''y'' spelling version, as in ''nay'' votes) start screaming about ''asset values'' and misquote Big Dog's comments - of which I agree with and certainly trust... I only wish to put in ''proper'' perspective the concept of asset replacement value. First: Asset Values - lets take a Rig for example, a Rig has a new Constructions cost, it has an asset value/loan value that a bank will loan against and it has a current market value - the type of real world cash selling price that Big Dog deals in every day. The premise of what is a company worth in a ''fire sale'' requires that a ''fire sale'' enviroment exists. While a fire sale market has existed time to time, and even arguably to some degree of late - currently that enviroment exists basically for just small independants and perhaps the land based drillers. Companies like BDI and currently GW had large recent acquisitions and heavy debt loads which may have led to BDI's sale to NBR and may lead to GW's sale - or, maybe not. Their cash flow models do not compare to that of Offshore Drillers; they also do not have the locked in longterm contract base of their offshore bretheren and the financing that is available to land based drillers is not competitive, nor comparable to offshore drillers. So the direct comparison is not quite valid; neither is the extrapolation of company values drawn from individual asset sales. Should FLC's D-Day come; it will not be sold off Rig by Rig. A great case in point on debt load & earnings vs. cash flow is GW. If GW survives and it apparantly is doing just that; then quite a few amateur and professional analysts need to rethink their definition of ''fire sale'' enviroments and asset values. While Land Rigs have changed hands more often than Sammy Sosa Rookie Cards of late, and allways have - offshore Rigs are a completely different animal - and indisputably so. Sure offshore Rigs are bought and sold. But to base the value of an entire World Class Company upon the extrapolations of a one-sie, or two-sie sale of an individual Rig is not germane.... also, to assume that the valuation of a company is based solely upon it's Rig asset base is missing more than a little bit of the concept here... While Vlad published a report that has not been referred to, or to my knowledge been posted before; there are numerous other reports - the type that are proprietary research - some done by Financial Institutions that can not be posted - or at least shouldn't be if one wants to keep contacts/access to information. Let me just point out in FLC's case in a live Interview, one of the very sharpest analysts/fund managers who has specifically researched FLC said and I quote - ''Buy FLC down to zero'' and those are the specific words he used... as in "ZERO CHANCE" - nada, zip - aint gonna happen - in reference to a Bankruptcy. What is leading to FLC's selloff is not that those in the know think that FLC is going broke, but rather that their earnings will be hammered in a prolonged low crude oil price enviroment and as such; FLC presents the Deadmoney predicament. Many, many funds will sell on any and all eps disappointments; FLC is getting ''worked'' and intelligently so; being heavilly shorted by the hedge fund/traders as these Institutions trim FLC holdings. However, at these valuations, with this degree of short interest and with this leverage; FLC presents both a highly speculative short term trade and has a bottom under it imho; as a great long term value play... Rather or not, FLC is, or is not, a great investment is not my point here. My point is that individual investors often fail to recognize their distinct advantages over institutional traders. Some of these Funds/Traders/Institutions have cut in stone models that force sales due to not meeting performance standards, falling below market cap minimums, falling below liquidity - share volume floors, and other proprietary model characteristics. Companies like GIFI and UFAB fall below the market cap models of many, many Institutional Investors due to their selloff's from $40-$30 to $6-7; some companies went from mid-caps to micro-caps ! Look at the market caps of VTS currently - it has been acknowledged to have fallen below the market cap floor of more than a few Institutional holders who are now selling, how about FGI who had less than a 30% Institutional base of late ? These companies, especially when being sold off due to ''model characteristics'' offer tremendous opportunities. How often have we seen the end of month/quarter - "Window Dressing'' selloffs ? How many times have we seen the selloff into API/IEA releases ? The ''edge'' is not often there for the individual investor - but these small windows of opportunities are out there... Anyone who thinks that the way to value FLC is to take ''onesie & twosie'' sales and extrapolate an entire companies value based on that is virtually out of touch with reality. FLC will not be sold off in ''onsies & twosies'' if armagedeon arrives; it will be sold as a company... And those who do have a clue; have decades of asset valuation models on which to value FLC's sale price in a vast multitude of market enviroments and that is why ''the young gun'' said buy FLC to ''Zero'' if need be. For every share being sold of FLC here of late, it seems to be forgotten that there is also a ready, willing and able buyer ! A little hint here; Don't forget more than a few have had an inside look at FLC; just for the sake of an example; suppose someone doing Investment Banking/Bond deals etc. in the Oilpatch has reviewed FLC's situation; if this ''Institution'' does business with other Oilpatch Companies - do you think that maybe they ever have had conversations with other companies in reference to ''what price'' they would be a buyer of another company at (HELLO !)? Ever think that with all of the M&A activity of late; that somewhere out there - there is say for example-sake; a former M&A guy who is now a Hedge Fund Mgr, or Trader and Industry Insider; who also may have a clue when he says - ''BUY FLC DOWN TO ZERO IF NEED BE'' ? hmmmmmm - perhaps our ''mythicall'' trader knows the ''cash selling price'' floor, perhaps knows a prior, or standing offer ? yes, I would have to think that the premise of ''knowing'' what the cash selling price/floor is and taking that information and viewing FLC's current situation and that of other Oilpatch companies vs. the Dead Money Trap that Institutions must avoid - makes this a very savy bet - and when this mythical guy has allready seen the ''cards'' - I don't think he's really ''betting.'' This is a realworld current cash floor vs. the Dead Money Zone....play; hardly a bet when you know where the cashout price is... Yes; in the Oilpatch World there could be a long deadmoney period - and that is the absolute antithesis to any Institutional Manager and most attention span - deficit, individual momenteum investors currently; and once again, this presents an advanatage and an opportunity to the individual investor - sieze it ! FLC; why not set a limit about $5 3/8ths- $5 1/2 here as an initial entry ; sit at $4 7/8ths right below the ''margin'' takeout floor as the 2nd entry; and a final entry at $4 just in case someone discovers a cheap fuel cell battery that replaces gasoline overnight ... ...Just do it. Ciao