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

To: Stephen L. Smith who wrote (42278)	4/16/1999 2:11:00 AM
From: SliderOnTheBlack	Respond to of 95453

Stephen S; re: PGO ... First; I think that PGO's performance today answered most questions; buyers today were continually leaping over each others bids to get filled . PGO back in Q4 1998 announced that they would be taking Q1 charges - which would ultimately result in cost savings of $130-160 Million. Their workforce reductions were prudent and good managemnt - they did so well in advance of the soft 1st half 1999 that we are now getting acknowledged by most of the earnings reports comments. Above all; PGO continually has made prudent management moves; they have a strong degree of communcation with the Street and have strongly acknowledged shareholder value oriented mangement. Their last blow off was on the misunderstood news on their Banff FPSO delay and penalities - PGO's comments below: <<PGS wishes to express that the Company is quite satisfied with the performance of the "Ramform Banff" FPSO. With respect to delay penalties, PGS is fully aware of such penalties associated with the "Ramform Banff" project, which were taken into consideration in conjunction with the decision to upgrade the "Ramform Banff" to accommodate the production of the Kyle field. This added production should result in additional revenues exceeding $120 million. In early 1998, PGS made the conscious decision to upgrade the production capacity of the "Ramform Banff" from 60,000 barrel per day("bopd") to 95,000 bopd. This decision was then anticipated to delay the first oil date, and therefore invoke penalties built into the Conoco contract. The expected penalties were factored into the economic analysis supporting the upgrade decision. Estimated penalties have been built into the cost of the project and were accrued in the Company's balance sheet at Dec. 31, 1998..... The upgrade adds significant additional revenues and was, in my view, a solid and well thought out business decision." >> They were sold off on the news of their penalties and the delays - ignorant in retrospect...a couple of analysts picked this up and this was a great trading opp as well...their entry into FPSO's will be a solid longterm story... all in all - they have the most technologically advanced deepwater seismic vessels in the industry and will still grow revenues in 1999 over 1998 in this soft sectorwide enviroment. Seismic has allways been seasonal with strong differences in quarter to quarter revenues - they are projecting a not surprising soft 1/2 of 1999 - but imho, are a gift at this price. Company has nearly $100 Milllion in cash, moderate .45 LT debt/Capital ratio, has a $1 Billion + market cap, enjoys 15% margins, sells at .75 of book and at a near sector low of 3 times 1999 cash flow and 2.6 times 2000 cash flow - a no brainer fundamental buy imho. Their International Deepwater emphasis makes them a better value imho currently than VTS - who I also like here - but on weakness, as PGO is the better buy by a wide margin presently ....PGO sells at a lower multiple of cash flow (3.0) than the following companies for example - using 1999 #'s - FLC 7.0, PDE 4.5, GLM 8.9, IO 22.8, SLB 16.9, GLBL 11.1,TDW 7.6, ---- find me a better fundamental value... Strong analyst reports out there on PGO by the way - still more than one major brokerage holding $30 1999 target price ! was $20ish not to long ago on recent bounces... but, the real story on PGO is what they have up their sleeve down the road.... few better 2-3-4 year plays exist - do the digging on this one. As far as the worker action ? I would not expect it to be a material item to their financial situation; again a yahooish hype-job on someone expecting to short PGO today off of the Norwegian blowoff.... Also - who are you getting a $800 Million figure from on your ''unsold spec data balance'' - ???? how about a less than $10 Milion charge/write off for a ''specific survey'' - hardly $800 M - their entire sales for 1998 were$750M - someone is pulling someones chain.... again - today's action spoke volumes. Has to be one of the top 3 buys in the Oilpatch by any measure of fundamental analysis imho - a MUST OWN right here & right now - I'd be at least 50%ish in here and would definitely chase it down...perhaps sit at $11 /2 - $12 as the next entry if we see any more weakness...good luck and don't buy the spin/hype on this - buy it.