Global Marine Picture Brightens
As the offshore drilling picture continues to improve, companies such as Global Marine should experience a healthy market capitalization boost as shares fly high simultaneously with oil prices and rig utilization rates. Last week, for example, ABN AMRO raised its 2000 earnings estimate on offshore oil and gas drilling contractor Global Marine Inc. to 60 cents a share from 55 cents. A day previous to the upgrade, Global Marine agreed on contract extensions for three of its rigs at significantly higher daily rental rates.
The extensions of 7 to 9 months are for jack-up rigs operating in the U.S. Gulf of Mexico and capable of drilling in water depths of 250 to 300 ft. The details are as follows:
Vessel Dayrate Increase Extension
Adriatic X $28,000 to $61,000 Nov 3 2000 to May 31 2001
Main Pass IV $18,500 to $49,000 Aug 31 2000 to May 31 2001
High Island 1 $20,000 to $40,000 Sep 17 2000 to May 31 2001
Global Marine spokesman Michael Dawson said the increased dayrates reflected the current tightness of the Gulf of Mexico market for premium jackup rigs capable of drilling in water depths of 250 ft. or greater.
"These rigs are 100 percent utilized and there are no idle rigs to put into the market. Any additional rigs would have to be brought here from somewhere else in the world," he said. Dawson said current U.S. natural gas prices of over $4 per thousand cubic feet were spurring demand for rigs that could bring additional gas supplies to market quickly.
ABN AMRO reiterated its buy rating and $32 a share price target on the company. Global Marine "remains one of our favorites in the drilling sector," analyst Asit Sen said.
Meanwhile, Lehman Bros. analyst Jim Crandell also raised his estimate of Global Marine 2000 earnings per share to $0.60 from $0.55. It noted the contract extensions at sharply higher daily rental rates.
Lehman 2000 EPS estimate raised to $0.60 from $0.55. 2001 estimate recently raised to $1.30, 2002 estimate to $2.20, 2003 estimate to $3.75. Stock recommended for purchase.