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: articwarrior who wrote (40813)	3/25/1999 9:50:00 AM
From: JungleInvestor	Read Replies (1) \| Respond to of 95453

Now that FLC has their financing completed (spelled "junk bonds") and S&P gave them a "stable" rating, I've added it back to my portfolio (consisting of PZE and GIFI) yesterday. Its high leverage gives it tremendous upside potential, and the higher price of oil reduces risk. S&P affirms R&B Falcon ratings March 23, 1999 4:41 PM EST (Press release provided by Standard & Poor's) NEW YORK, March 23 - Standard & Poor's today affirmed its ratings on R&B Falcon Corp., and its wholly owned subsidiary Cliffs Drilling Co. (see list below). The ratings were removed from CreditWatch, where they were placed Feb. 25, 1999. The outlook is stable. At the same time Standard & Poor's assigned its single-'B'-plus rating to R&B Falcon Corp.'s $200 million senior unsecured notes issue due 2006 which was marketed in conjunction with the above transaction. Standard & Poor's also affirmed its double-'B'-minus rating on RBF Finance Co.'s $400 million seven-year senior secured guaranteed notes issue due 2006 and $400 million 10-year senior secured guaranteed notes issue due 2009. The notes are guaranteed by R&B Falcon Corp. Proceeds of these issues will be used to retire certain existing debt, meet current-year debt maturities, and establish sufficient liquidity to cover all capital spending requirements through completion of its drilling vessel construction program. Standard & Poor's regards R&B Falcon Corp., Cliffs Drilling Co., and RBF Finance Co. as one economic entity. The ratings reflect R&B Falcon's position as an oil and gas drilling company with a large, well-diversified drilling rig fleet which affords relatively good revenue and cash flow visibility, offset by an ambitious, debt-financed expansion program, an aggressive capital structure, and the financial risk inherent in the contract drilling industry. With the addition of this offering, plus certain project financings anticipated later in the year, R&B Falcon's pro forma total debt total capital could rise to the mid-70% area from the low-60% area at year-end 1998. The ratings also reflect increased risks posed to the more highly leveraged company by deteriorating conditions in the worldwide energy contract drilling industry. As the slump in commodity prices wears on, many oil and gas exploration and production companies have announced substantial cuts to their 1999 capital budgets. Standard & Poor's expects overall spending in 1999 could drop below 1998 levels by at least 25%. As a result, there is likely to be further weakening of demand for off-shore drilling, which could in turn induce additional erosion of rig day- and utilization rates. Over the past year, these rates have fallen precipitously in nearly all regions, with the shallow water U.S. Gulf of Mexico -- where R&B Falcon has a large commodity jack-up rig position -- currently experiencing cash break-even day-rates. Recovery in the sector is expected to lag any rebound in commodity prices by a couple of quarters. Presently, R&B Falcon's revenue visibility remains relatively good, with about $2.6 billion of future revenues currently under contract. All but one of the company's new-build vessels have signed, competitive rate drilling contracts. However, the construction program has met with unexpected delivery delays and cost overruns, which raises the company's exposure to additional penalty costs on the remainder of the program. Indeed, the company potentially faces cancellation of its contract for the Peregrine VII due to late delivery. Additionally, weak market conditions heighten the company's vulnerability to re-pricing of existing drilling contracts. While R&B Falcon is not anticipated to generate free cash flow until the new ships commence operations, profitability and cash flow protection measures should remain weak for the revised rating category, with earnings before interest, depreciation, and amortization (EBITDA) interest coverage in the 2 times (x) area over the next two years, versus the mid-4x area at year-end 1998. The company's capital structure is expected to remain very aggressive over the next several years, with only moderate improvement primarily resulting from earnings retention. OUTLOOK: STABLE Completion of R&B Falcon's construction program should substantially augment contracted revenues and cash flow, positioning the company to reduce debt and better weather market downturns. Still, the extent of additions to the aggregate supply of offshore drilling rigs remains a material risk factor for the industry and limits the extent of potential ratings improvement, Standard & Poor's said. OUTSTANDING RATINGS AFFIRMED AND REMOVED FROM CREDITWATCH Rating R&B Falcon Corp. Corporate credit rating BB- Senior secured debt BB- Senior unsecured debt B+ Cliffs Drilling Co. Corporate credit rating BB- Senior unsecured debt BB-

To: articwarrior who wrote (40813)	3/25/1999 9:53:00 AM
From: freddie	Read Replies (1) \| Respond to of 95453

While traveling yesterday, I caught the tail end of a subject called "Why are we in Kosovo" on Phila. talk radio. The host has a good track record and has been the champion of the little people. His research and contacts say that Margaret Thatcher brokered a mineral rights deal in Yugoslavia (when that was done--I don't know) because Trillions of gallons of oil are in the Adriatic Sea. Yes----he said Trillions. This is part of what he calls "follow the money" as to the why's and wherefor's of international politics and our presence in Kosovo. Can't offer more than that, but will call him to get a better synopsis of what he talked about yesterday. Maybe Doug Fant knows of something he heard about this. Trillions of gallons of oil that have yet to be tapped is mind boggling. Could it be possible? freddie