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Strategies & Market Trends : Bankruptcy Predictor Model -- Ignore unavailable to you. Want to Upgrade?

To: Razorbak who wrote (102)	3/20/1999 1:03:00 PM
From: Mad2	Read Replies (2) \| Respond to of 477

Going through their 10Q HMAR provides the raw information needed to judge what's behind the numbers. Specifically declining day rates and declining utilization of their equipment. Revenues have improved due to accquisition of equipment resulting in a highly leveraged situation. Should the experts prove correct (that the rise in oil is temporary) and the major oils continue to cut their E & P budgets, HMAR could run into serious trouble as is indicated by their numbers. On the other hand share price of leveraged outfits like this can rise dramatically IF the situation with E&P turns around but at this time it seems a bit early to try and place a bet like that on HMAR. With HMAR I think the question is how long they can survive as in a protracted soft market for their services, the market value for their assets is PROBABLY well below book and may not be enough to satisfy their creditors. A much better play is to find someone with the financial strength to buy assets on the cheap. Your Altman calculation is a quick way to sort out those companies that have the staying power to survive and perhaps accumulate assets on the cheap. We'll have to see how this OPEC accord plays out and what comes out of the majors in terms of E&P spending. When I get a chance I'm going to start running the "Z" on the driller's Mad2