December 17, 2007
DryShips takes stake in Ocean Rig
Athens-based dry bulk specialist DryShips Inc. (NasdaqGS:DRYS) has entered into an agreement to acquire approximately 30.4 percent of the issued and outstanding shares and voting rights in Oslo-listed offshore drilling contractor Ocean Rig ASA.
Mr. George Economou, Chairman and CEO of DryShips Inc., has also, in separate transactions, acquired approximately 4.4 percent of the share capital of Ocean Rig ASA.
Ocean Rig owns and operates two ultra deepwater ("UDW"), modern, high specification, fifth generation, harsh environment semi submersible drilling rigs, built to operate in water depth capacity of between 7,500 to 10,000 feet. Both rigs are presently on charter to ExxonMobil and Shell.
Mr. Economou commented: "DryShips' acquisition of a strategic stake in Ocean Rig ASA is an exciting step. Ocean Rig is uniquely positioned to immediately capitalize on the very strong demand for ultra deepwater drilling rigs that is expected to prevail over the next five to ten years as exploration and production of fossil fuels moves further offshore into deeper waters. On the back of these strong demand fundamentals, the current limited supply of UDW drilling rigs worldwide is expected to worsen over the next few years, resulting in significantly higher day rates for operators of these assets.
"Ocean Rig has reported that it expects to enter into new employment contracts for its two UDW rigs with terms up to five years at very attractive day rates. The Eirik Raude is the first deepwater drilling rig available for charter in the world when its current employment contract expires in July 2008 and the Leiv Eiriksson, Ocean Rig's second UDW drilling rig, is one of the few rigs available for employment in 2009," he said.
"We intend to finance this $405 million investment with a modest contribution of $162 million from our cash on hand and the incurrence of $243 million in debt," continued Mr. Economou. "We believe the employment of Ocean Rig's two assets at significantly higher day rates in 2008 and 2009 will enable the company to realize its full valuation and growth prospects."
"We remain committed to the positive fundamentals of the dry bulk sector and intend to continue enhancing our leadership role in this sector," noted Mr. Economou. DryShips' Board had concluded that the acquisition was a particularly opportune investment outside the dry bulk sector. "We expect our shareholders to benefit from the potential capital appreciation of its investment in Ocean Rig ASA while we explore a number of strategic alternatives to deliver the value realized from this investment to our shareholders going forward," said Mr. Economou.