DryShips (DRYS) Sees Q3 EBITDA of $265-$300 Million; Announces Latest Developments

DryShips Inc. (NASDAQ: DRYS) and through its majority owned subsidiary, Ocean Rig UDW Inc. ("Ocean Rig"), of offshore deepwater drilling services, today announced the following:

• Ocean Rig has agreed to provide DryShips with $120m of immediate liquidity through a short-term unsecured loan. The proceeds will be used, if needed, to repay its 5% Convertible Notes maturing on Dec. 1, 2014.
• Ocean Rig has declared its third consecutive quarterly cash dividend with respect to the quarter ended September 30, 2014, of $0.19 per common share, to shareholders of record as of October 31, 2014, and payable on or about November 11, 2014.
• Ocean Rig has been awarded extensions of the drilling contracts for its two ultra deepwater drillships the Ocean Rig Corcovado and the Ocean Rig Mykonos by Petrleo Brasileiro S.A. ("Petrobras") for drilling offshore Brazil. The contracts extensions are subject to partner approvals. The term of each extension is for 1,095 days with a total combined revenue backlog of over $1.1 billion, excluding reimbursement by Petrobras for contract related equipment upgrades. The new contracts will commence in direct continuation from the end of the current agreements with Petrobras, in Q1 and Q2 of 2015.
• Ocean Rig signed an amendment with Total E&P Angola to extend the date by which Total E&P Angola should exercise the option to extend the term of the contract for two additional one-year periods. The first option is now exercisable until February 27, 2015 and the second option exercisable within one year after the date of exercise of the first option.
• DryShips expects its third quarter EBITDA to be within the range of $265 million to $300 million.

(Consensus Q3 EBITDA is $250 million)

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

"We are delighted to announce another quarter of solid operational performance mainly attributed to the high utilization of about 98% achieved by our drilling segment. We are also excited with the extension for the contracts for the Corcovado and the Mykonos which brings the total backlog of our subsidiary Ocean Rig to $5.5 billion. On the back of this solid backlog, Ocean Rig also announced its third consecutive quarterly dividend payment of $0.19 per share.

Petrobras contract extensions and TOTAL's LOI extension for the Olympia is a positive sign for the future prospects of the UDW market. We see various requirements from clients for additional drilling programs in Angola. We believe that as oil companies are finalizing their budgets for 2015, we will get a much clearer picture of the long term supply and demand balance which may be tighter than market expectations.

We do not believe that the current stock price of Ocean Rig reflects the true value of company, which stock price has been adversely affected by the recent volatility of the oil price and the overhang created by the uncertainty about our ability to repay our Convertible Notes. I want to re-assure all shareholders, that DryShips fully expects to fund the December 1st maturity of the 5% Convertible Notes, and the loan from Ocean Rig is just a backstop in case we need a bit more time to execute on the various alternatives we are working on and if drawn, will be repaid as soon as possible.

Ocean Rig, with its high specification, pure play UDW fleet and solid balance sheet and backlog is uniquely positioned amongst its clients. Ocean Rig's newbuilding program in 2016 and 2017 provides further growth into a market we believe in and its solid backlog supports for dividends and other value creation initiatives, such as the MLP."

You May Also Be Interested In

• Alphabet (GOOGL) soars 16% on Q1 results beat, first-ever dividend
• Bristol-Myers Squibb (BMY) stock slips despite earnings beat
• USCB Financial Holdings (USCB) Reports Q1, Announces 500K Share Buyback