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

To: SliderOnTheBlack who wrote (43908)	5/4/1999 3:11:00 PM
From: DEER HUNTER	Read Replies (2) \| Respond to of 95453

EGEO.....mucho volume for this one just came in ...in a hurry...well...here's why. Tuesday May 4, 2:31 pm Eastern Time S&P may cut Eagle Geophysical ratings (Press release provided by Standard & Poor's) NEW YORK, May 4 - Standard & Poor's placed its single-'B' corporate credit rating and single-'B'-minus senior unsecured debt rating on Eagle Geophysical Inc. on CreditWatch with negative implications. The CreditWatch placement reflects the company's declining financial flexibility as industry conditions deteriorate. Eagle Geophysical is a niche provider of land and offshore seismic acquisition services in the Gulf of Mexico, North Sea, and Argentina. In recent months, the seismic industry has been buffeted by declining expenditures by exploration and production (E&P) companies on seismic data. Margins for service providers have been compressed by reduced activity and pricing for data that has fallen almost by about 50% since 1998. Over the near term, industry conditions could progressively worsen with the entry of new capacity that was ordered when conditions were more robust. Absorption of this new capacity is not expected until E&P company have rebuilt their liquidity and have confidence that oil prices will stabilize at levels that are attractive for new exploration. The decline in seismic margins has hurt Eagle especially hard because it had initiated a debt-financed expansion and upgrade program just prior to the collapse in industry conditions. Although the program is now complete, it did suffer unexpected cost overruns. Cash flow protection measures are expected to weaken considerably in 1999, with earnings before interest, taxes, depreciation, and amortization coverage likely to average about 2.0 times or less. Liquidity currently is tight, with about $6 million available on its bank credit facility and $5 million of restricted cash on hand at the end of March 1999. Standard & Poor's believes that Eagle's management currently is pursuing transactions that may improve its liquidity. If the company is successful, Eagle's ratings may be affirmed and removed from CreditWatch. A downgrade could occur if the company's cash flow worsens and sources of liquidity diminish, Standard & Poor's said.