DryShips: Ocean Rig Financing, Fleet and Contract Developments

MarineLink.com
Tuesday, September 03, 2013

DryShips Inc., a global provider of marine transportation services for drybulk and petroleum cargos, through its majority owned subsidiary, Ocean Rig UDW Inc., an offshore deepwater drilling service company, made several company announcements.

$1.35 billion bank facility
Ocean Rig announced that it has signed a supplemental agreement to amend certain provisions in its $1.35 billion Senior Secured Facility dated February 28, 2013.

Under the terms of the agreement, the existing dividend restriction of up to 50% of preceding fiscal year net income will be amended to apply on a cumulative basis from July 1, 2013 onwards (50% of cumulative net income and 100% of cumulative losses) and include a carve-out to pay additional dividends up to the higher of $150m and 5% of the Ocean Rig's net tangible assets.

Furthermore, the minimum interest coverage ratio requirement will be two times until June 30, 2015 and the maximum leverage ratio will be 6.5 times until June 30, 2014, six times until December 31, 2014 and 5.5 times until June 30, 2015.

George Economou, Chairman and Chief Executive Officer of Ocean Rig, commented, " These amendments will harmonize our restricted payment provisions and certain financial covenants with those of our other secured term loan facilities and notes."

Delivery of the Ocean Rig Mylos
Ocean Rig announced that on August 20, 2013, it successfully took delivery of its newbuilding drillship the Ocean Rig Mylos. The Ocean Rig Mylos is the first in the series of three seventh-generation ultra deepwater drillships, Ocean Rig expects to take delivery in 2013. The drillship is currently mobilizing to offshore Brazil and is expected to commence drilling operations under the three-year drilling contract with Repsol Sinopec Brasil S.A. by November 2013.

Order of seventh-generation ultra deepwater drillship
Ocean Rig announced that it has signed a contract to construct a seventh-generation ultra deepwater drillship at Samsung Heavy Industries. This seventh-generation drillship is a sister ship to the three (Ocean Rig Skyros, Ocean Rig Athena, Ocean Rig Apollo) drillships currently under construction at Samsung, and is scheduled to be delivered to the Ocean Rig in December 2015. The project value price is estimated to be approximately $600 million. Ocean Rig has at no additional consideration a fixed priced option, declarable by November 2013, for an additional drillship for delivery in the first quarter of 2016.

Economou said, "We have taken advantage of our strong balance sheet and our long-term relationship with Samsung to order at a very attractive price an additional newbuild drillship, sistership to our existing seventh-generation ultra deepwater drillships. We expect that our new drillship will be financed through a combination of available cash and debt to be secured prior to the delivery of the drillship in December 2015.”

He continued, “With all of our 2013 newbuild drillships as well as our first 2015 newbuild drillship, the Ocean Rig Apollo, already contracted to investment grade counter-parties, we are setting the stage for moderate growth going forward. We believe that the ultra-deepwater (UDW) drilling market for high quality assets will remain strong in the foreseeable future and are excited about the future employment prospects of our high quality homogeneous fleet."

Contract Extension for the Eirik Raude
Ocean Rig announced that Lukoil exercised its options for an additional two-well program under the previously announced Contract Award for Ocean Rig's semi-submersible drilling rig Eirik Raude. The revised drilling contract is for a firm six-well program and the rig is now expected to be available for employment the earliest by December 2014.

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