DryShips unit takes delivery of drillship

George Economou, Chairman and CEO of DryShips Inc. (NASDAQ: DRYS) was enthusiastic about the prospects for the deepwater market today as the company reported that its 78  percent owned subsidiary Ocean Rig UDW Inc. had taken delivery of its newbuilding drillship, the Ocean Rig Corcovado. Not all on Wall Street may have been quite so happy. DryShips shares closed the day down some 5.4 percent. It didn’t help that a Morgan Stanley analyst down graded his rating of the company because of a recent $800 million venture into the tanker market.

The Ocean Rig Corcovado is the first four sister drillship newbuilds under construction at Korea’s Samsung Heavy Industries. The construction of all vessels is progressing well and according to schedule. The vessels are sixth generation advanced capability ultra-deep water drillships, each with a drilling capability of 10,000 feet.

The naming ceremony of the first two vessels, Ocean Rig Corcovado and Ocean Rig Olympia, was successfully held in December 2010, at Samsung shipyard.

Mr. Economou commented:

“The delivery of our first newbuilding drillship represents a new milestone in the realization of our business strategy in the ultra deep water drilling sector. With Ocean Rig UDW’s successful private placement offering we have positioned Ocean Rig to be a pure play in the ultra deepwater drilling sector with contracts and a balance sheet that is self-sustaining.

“By the end of 2011, Ocean Rig,, an experienced ultra deep water operator, will have an operational fleet of four state of the art ultra deepwater drillships, plus options to build another four, and two ultra deep water semisubmersible drilling rigs, representing one of the largest ultra deepwater fleets and only pure play entity in the sector.

“The current environment for the ultra deepwater market has improved from the summer low levels we experienced and we believe that rates have turned a corner after bottoming in the third quarter 2010. We believe that the ultra deep water drilling sector has strong fundamentals, as deepwater drilling is the most viable source of new oil supplies. There are positive signs of discovery and long term potential in established and new areas around the world.”

January 3, 2011