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

To: JungleInvestor who wrote (41463)	4/1/1999 12:48:00 PM
From: dfloydr	Respond to of 95453

On the other hand, jungle investor, just a couple of days ago there was an announcement that the FLC/Vastar drilling effort has come up with a very big find in the GOM. Look through the news about a week ago for details. It would seem an odd time to cut, or an odd project to cut.

To: JungleInvestor who wrote (41463)	4/1/1999 1:01:00 PM
From: IndioBlues	Read Replies (1) \| Respond to of 95453

Well the stakes are getting higher aren't they. Remember too that MOB found a lame-ass excuse for cancelling the Jack Bates late last year. From the sounds of FLC 10K <see below>, it doesn't sound like FLC is going to roll over (maybe can't afford to let the day rate go?, but may have no other choice if the Vastar program is thrown into the mix. Any comments BigDog? I know drillers don't often sue their clients ... From 10-K: "In December 1998, Mobil U.K. Ltd. ("Mobil") terminated its contract to use the Company's Jack Bates semisubmersible rig on the grounds that two of the rig's anchor cables broke. The contract provided for Mobil's use of the rig at a dayrate of approximately $115,000 for the primary term through January 1999 and approximately $200,000 for the extension term from February 1999 through December 2000. The Company does not believe that Mobil had the right to terminate this contract. The Company has received a proposal from Mobil to recontract the Jack Bates at a dayrate of approximately $156,000 for a one or two well drilling program. The Company believes this program may last approximately six months. This proposal is without prejudice to either party's rights in the dispute over the termination of the original contract. If the Company is not successful in settling its dispute over the termination of the original contract, the Company intends to commence legal proceedings to enforce its rights under the contract. The Company believes that it will be able to find other work for the Jack Bates, but that any such work will be at lower dayrates than the $200,000 dayrate established for the extended term of the original contract."

To: JungleInvestor who wrote (41463)	4/1/1999 5:32:00 PM
From: Big Dog	Read Replies (2) \| Respond to of 95453

Tarzan Man -- You hit on something there re FLC/BP/Vastar. I can tell you that many folks thought/think that Vastar "over speced" the rig it contracted from FLC. They got a Cadillac. The combo of BP/Amoco/Arco would likely have plenty of drill power to do whatever Vastar needs to have done without taking on a 200,000 a day 3-5 year commitment. This is an excellent chance for a renegotiate and would put FLC in a delicate situation. I don't think FLC would continue to build the rig without the Vastar contract at the current rate. So the end result could very well be a cancellation of the drilling contract and the construction contract. Not good for FLC, yet it doesn't really cost them anything as I am sure there would be steep penalties (not sure what stage the contract is at today -- letter of intent?, firm contract?, etc.) What it does do is reduce FLC's earnings visibility going forward, and it further weakens the "sanctity" of the drilling contracts (assuming this is a firm contract, which I don't know if it is). Also, BP may not take in Vastar shares... Vastar runs pretty good on its own and they may not mess with them. It will be interesting to see how this plays out, but I bet a bunch of those FLC junk bond holders are sweating it about now...like I said in the ODB newsletter, the underwriter should get paid double for getting those bonds sold...what was it PT Barnum said? big loosbrock.com