DryShips buys options to build up to four drillships

DryShips Inc. (NASDAQ: DRYS) says it has entered into an agreement with “a major South Korean shipyard” for the option to construct up to four ultra deepwater drillships.

The new vessels would be sisterships of the four SAIPEM 10K design drillships under construction for DryShips’ Ocean Rig subsidiary at Samsung Heavy Industries, but with further upgrades to the specification.

Each of the four options can be declared within twelve months of this agreement, with deliveries ranging from 2013 until 2014. The total project cost is estimated to be about $600 million per drillship. The agreement includes a non-refundable slot reservation fee of $24.8 million per drillship that will be applied to the drillship contract price if the options are exercised.

Mr. George Economou, Chairman and CEO of DryShips Inc., said: “We are pleased to announce our agreement for the option to construct up to four state of the art ultra deepwater drillships, to be constructed by the leading South Korean shipyard in the offshore segment. This agreement is a step towards our vision to build OceanRig UDW into a premier pure play in the ultra deepwater drilling segment. The ultra deepwater market has turned a corner and we believe this is the bottom of the newbuilding price cycle. We see strong demand for state of the art ultra deepwater drillships and are confident of customer demand for these drillships.’

He said the “embedded optionality” of the agreement “allows us to take advantage of the various employment opportunities we see in the market without unduly stressing our balance sheet.”