Dryships Inc. Reports Financial And Operating Results

DryShips Inc. (NASDAQ: DRYS), or the Company, a global provider of marine transportation services for drybulk and petroleum cargoes, and through its majority owned subsidiary, Ocean Rig UDW Inc., of off-shore contract drilling oil services, today announced its unaudited financial and operating results for the first quarter ended March 31, 2011.

 

Drilling Segment Employment Update

 

* On May 12, 2011, the Company was awarded contracts for the Ocean Rig Corcovado and the Ocean Rig Mykonos by Petróleo Brasileiro S.A (“Petrobras”) for drilling offshore Brazil. The term of each contract is 1095 days, with a total combined value of $1.1 billion. The contract for the Ocean Rig Mykonos will commence directly after delivery from Samsung Heavy Industries in September 2011, while the contract for the Ocean Rig Corcovado will commence in direct continuation of the current contract with Cairn Energy offshore Greenland. The documents pursuant to the award are expected to be executed in the coming weeks.

 

* On May 5, 2011, the Company signed a new drilling contract for the Leiv Eiriksson with Borders & Southern Petroleum plc for performance of exploration drilling offshore the Falkland Islands. This contract replaces the previous contract with Borders & Southern plc for the Eirik Raude. The Leiv Eiriksson will perform the scheduled drilling program in direct continuation after completion of the drilling campaign for Cairn Energy offshore Greenland. The contract is for drilling two wells for a period of about 90 days, including three further optional wells. The contract value is approximately $80 million.

 

George Economou, Chairman and Chief Executive Officer of the Company commented:

 

“We are delighted to have secured two long-term drilling contracts from the biggest player in the ultra deepwater drilling market, which is a testament to Ocean Rig’s operational track record and the quality of our assets. Following these contracts we now have three of our drillships on contract to Petrobras. These two contracts are the culmination of our efforts since we entered the drilling segment three years ago. We have now secured contracts for all of our initial newbuilding drillships and doubled our backlog to over $2 billion. Ocean Rig has delivered on all its promises during the last few months by:

 

- Solidifying its balance sheet through the $500 million private placement in December 2010.

 

- Completing the financing of four of its newbuilding drillships through the $800 million Nordea facility, the restructuring of the $1.1 billion Deutsche Bank facility and the placement of $500 million of 9.5% senior unsecured notes.

 

- Increasing the backlog to over $2 billion.

 

Ocean Rig has entered into the next phase of its development and is in a unique position to capitalize on the positive ultra deepwater market fundamentals. By exercising two of our four options to build additional 7th generation drillships, Ocean Rig is now the largest pure player in the ultra deepwater sector with the most sophisticated assets available for charter at a time when oil companies are increasing their E&P spending. For DryShips the diversification in the drilling space is paying off at a particularly opportune time given the challenging drybulk and tanker markets. During the next few months we plan to take active steps to monetize DryShips’ most prized asset, its shares of Ocean Rig common stock, through a public listing in the U.S.

 

Turning to the shipping side, we are well prepared to weather the current storm. We have a good backlog on the drybulk fleet with long-term time charters. This backlog enables us not only to comfortably service our debt but also allows opportunistic acquisitions. On the tanker side we continue to take delivery of our state of the art tankers and secure the appropriate level of debt along the way. While the bulk shipping markets remain challenging we are encouraged by the high scrapping activity, the slippage in delivery and the strong demand fundamentals of drybulk commodities and oil markets.”

Source: Dryships Inc.