SOURCE: DryShips Inc.

DryShips Inc.

May 12, 2011 18:00 ET

DryShips Inc. Reports Financial and Operating Results for the First Quarter 2011

ATHENS, GREECE--(Marketwire - May 12, 2011) - 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."

Selected Recent Developments

-- On April 29, 2011, the Company took delivery of its newbuilding
   Aframax tanker, Daytona.

-- On April 27, 2011, the Company exercised the second of its four 7th
   generation newbuilding drillship options and entered into a
   shipbuilding contract for a total yard cost of $608.0 million.
   The Company paid $207.4 million to the shipyard in connection with
   the exercise of the option. Delivery of this hull is scheduled for
   October 2013.

-- On April 27, 2011, the Company completed the issuance of $500 million
   aggregate principal amount of 9.5% senior unsecured notes due 2016
   offered in a private placement. The net proceeds from the notes
   offering amounted to approximately $487.5 million.

-- On April 27, 2011, the Company entered into an agreement with all
   lenders under the two $562.5 million Loan Agreements to restructure
   the agreements. The principal terms of the restructuring are as
   follows: (i) the maximum amount permitted to be drawn is reduced from
   $562.5 million to $495.0 million under each facility; (ii) in addition
   to the guarantee already provided by DryShips, Ocean Rig UDW provided
   an unlimited recourse guarantee that will include certain financial
   covenants that will apply quarterly to Ocean Rig UDW; (iii) the Company
   is permitted to draw under the facility with respect to the Ocean Rig
   Poseidon based upon the employment of the drillship under its drilling
   contract with Petrobras Tanzania, and on April 27, 2010, the cash
   collateral deposited for this vessel was released; and (iv) the Company
   is permitted to draw under the facility with respect to the Ocean Rig
   Mykonos provided the Company has obtained suitable employment for such
   drillship no later than August 2011.

-- On April 20, 2011 the Company entered into a $32.3 million secured term
   loan facility with an international lender to partially finance the
   construction cost of the newbuilding tanker Daytona.

-- On April 18, 2011, the Company entered into an $800 million Syndicated
   Secured Term Loan Facility to partially finance the construction costs
   of the Ocean Rig Corcovado and the Ocean Rig Olympia. This facility has
   a five year term and is repayable in 20 quarterly installments plus a
   balloon payment payable with the last installment. The facility bears
   interest at LIBOR plus a margin. The facility is guaranteed by DryShips
   and Ocean Rig UDW and imposes certain financial covenants on both
   entities. On April 20, 2011, the Company drew down the full amount of
   this facility and prepaid its $325 million Bridge Loan Facility.

-- On April 18, 2011, the Company exercised the first of its four 7th
   generation newbuilding drillship options and entered into a
   shipbuilding contract for a total yard cost of $608 million. The
   Company paid $207.6 million to the shipyard in connection with the
   exercise of the option. Delivery of this hull is scheduled for July
   2013.

-- On April 12, 2011 the Company concluded an order for two 176,000 dwt
   Capesize dry bulk vessels for an aggregate contract price of $108.4
   million, with an established Chinese shipyard. The vessels are
   expected to be delivered in the third and the fourth quarter of 2012,
   respectively.

-- On March 30, 2011, the Company took delivery of its second newbuilding
   drillship Ocean Rig Olympia.

-- On March 23, 2011, the Company took delivery of its newbuilding Suezmax
   tanker, Vilamoura.

-- On March 16, 2011, the Company's vessel, Oliva, was reported to have
   run aground in a group of islands in the South Atlantic Ocean. The
   vessel was declared a total actual loss. As of the date of this press
   release, we have collected substantially all of the insurance proceeds.

First quarter 2011 Financial Highlights

-- For the first quarter of 2011, the Company reported net income of
   $25.8 million, or $0.07 basic and diluted earnings per share. Included
   in the first quarter 2011 results are various items, totaling $30.3
   million, or $0.08 per share which are described below. Excluding these
   items, net income would have amounted to $56.1 million or $0.15 basic
   and diluted earnings per share.

Included in the first quarter 2011 results are:

   -- Incremental costs associated with class survey of Leiv Eiriksson
      in the first quarter 2011 of $8.9 million, or $0.02 per share.
      Next survey is scheduled for 2016.

   -- Losses incurred on our interest rate swaps, amounting to $3.9
      million, or $0.01 per share.

   -- Non-cash amortization of debt issuance costs, including those
      relating to our convertible senior notes, totaling $17.5 million,
      or $0.05 per share.

-- Basic earnings per share for the first quarter of 2011 includes a
   reduction to net income amounting to $2.5 million relating to the
   cumulative payment-in-kind dividends on the Series A Convertible
   Preferred Stock, which reduces the income available to common
   shareholders.

-- The Company reported adjusted EBITDA of $107.1 million for the first
   quarter of 2011.(1)

Financial Review: 2011 First quarter

The Company recorded net income of $25.8 million, or $0.07 basic diluted earnings per share, for the three-month period ended March 31, 2011, as compared to a net income of $13.3 million, or $0.04 basic and diluted earnings per share, for the three-month period ended March 31, 2010. Adjusted EBITDA, which is defined and reconciled to net income later in this press release, was $107.1 million for the first quarter of 2011 as compared to $116.5 million for the same period in 2010.

Included in the first quarter 2011 results are various items totaling $30.3 million, or $0.08 per share, which are described at the beginning of this press release. Excluding these items, our adjusted net income would have amounted to $56.1 million, or $0.15 per share.

Basic earnings per share for the first quarter of 2011 includes a reduction to net income amounting to $2.5 million relating to the cumulative payment-in-kind dividends on the Series A Convertible Preferred Stock, which reduces the income available to common shareholders.

For the drybulk and tanker carrier segment, net voyage revenues (voyage revenues minus voyage expenses) decreased by $15.3 million to $91.6 million for the three-month period ended March 31, 2011, as compared to $106.9 million for the three-month period ended March 31, 2010. For the offshore drilling segment, revenues from drilling contracts increased by $29.0 million to $109.3 million for the three-month period ended March 31, 2011 as compared to $80.3 million for the same period in 2010.

Total vessel and rig operating expenses increased by $14.5 million to $62.9 million for the three-month period ended March 31, 2011, as compared to $48.4 million for the three-month period ended March 31, 2010, while total depreciation and amortization increased by $8.7 million to $55.9 million for the three-month period ended March 31, 2011 as compared to $47.2 million for the three-month period ended March 31, 2010. Total general and administrative expenses decreased to $25.7 million in the first quarter of 2011 from $27.2 million during the comparative period in 2010.

(1) Please see later in this release for a reconciliation of Adjusted EBITDA to net income, the most directly comparable financial measure calculated in accordance with United States generally accepted accounting principles, or U.S. GAAP.

Fleet List

The table below describes our drybulk and tanker fleet profile as of May 12, 2011

               Year                        Gross rate Redelivery
               Built    DWT       Type      Per day   Earliest     Latest
Dry fleet

Capesize:
Alameda         2001    170,662   Capesize $   27,500     Nov-15     Jan-16
Brisbane        1995    151,066   Capesize $   25,000     Dec-11     Apr-12
Capri           2001    172,579   Capesize       Spot
Flecha          2004    170,012   Capesize $   55,000     Jul-18     Nov-18
Manasota        2004    171,061   Capesize $   67,000     Feb-13     Apr-13
Mystic          2008    170,040   Capesize $   52,310     Aug-18     Dec-18
Samsara         1996    150,393   Capesize       Spot

Panamax:
Amalfi          2009     75,000    Panamax $   39,750     Aug-13     Oct-13
Avoca           2004     76,629    Panamax $   45,500     Sep-13     Dec-13
Bargara         2002     74,832    Panamax $   43,750     May-12     Jul-12
Capitola        2001     74,816    Panamax       Spot
Catalina        2005     74,432    Panamax $   40,000     Jun-13     Aug-13
Conquistador    2000     75,607    Panamax $   17,750     Aug-11     Nov-11
Coronado        2000     75,706    Panamax $   18,250     Sep-11     Nov-11
Ecola           2001     73,925    Panamax $   43,500     Jun-12     Aug-12
La Jolla        1997     72,126    Panamax $   14,750     Aug-11     Nov-11
Levanto         2001     73,931    Panamax $   16,800     Sep-11     Nov-11
Ligari          2004     75,583    Panamax $   55,500     Jun-12     Aug-12
Maganari        2001     75,941    Panamax $   14,500     Jul-11     Sep-11
Majorca         2005     74,747    Panamax $   43,750     Jun-12     Aug-12
Marbella        2000     72,561    Panamax $   14,750     Aug-11     Nov-11
Mendocino       2002     76,623    Panamax $   56,500     Jun-12     Sep-12
Ocean Crystal   1999     73,688    Panamax $   15,000     Aug-11     Nov-11
Oregon          2002     74,204    Panamax $   16,350     Aug-11     Oct-11
Padre           2004     73,601    Panamax $   46,500     Sep-12     Dec-12
Positano        2000     73,288    Panamax $   42,500     Sep-13     Dec-13
Rapallo         2009     75,123    Panamax $   15,400     Aug-11     Oct-11
Redondo         2000     74,716    Panamax $   34,500     Apr-13     Jun-13
Saldanha        2004     75,707    Panamax $   52,500     Jun-12     Sep-12
Samatan         2001     74,823    Panamax       Spot
Sonoma          2001     74,786    Panamax $   19,300    Sept-11     Nov-11
Sorrento        2004     76,633    Panamax $   17,300     Sep-11     Dec-11
Toro            1995     73,035    Panamax $   16,750     May-11     Jul-11

Supramax:
Galveston       2002     51,201   Supramax       Spot
Paros I         2003     51,201   Supramax $   27,135     Oct-11     May-12



                Year                       Gross rate
                Built      DWT       Type    Per day
Newbuildings

Panamax 1       2011     76,000    Panamax
Panamax 2       2012     76,000    Panamax
Capesize 1      2012    176,000   Capesize
Capesize 2      2012    176,000   Capesize

Tanker fleet

Saga            2011    115,200    Aframax       Spot
Vilamoura       2011    158,300    Suezmax       Spot
Daytona         2011    115,200    Aframax       Spot

Newbuildings

Alicante        2012    115,200    Aframax
Belmar          2011    115,200    Aframax
Calida          2011    115,200    Aframax

Mareta          2012    115,200    Aframax
Blanca          2013    158,300    Suezmax
Bordeira        2013    158,300    Suezmax
Esperona        2013    158,300    Suezmax
Lipari          2012    158,300    Suezmax
Petalidi        2012    158,300    Suezmax





Drilling Units
                                 Year Built or
                                   Scheduled
                                  Delivery /                       Backlog
                                  Generation     Contract Term  ($ million)
                                 ------------- ----------------- ----------
Existing Drilling Rigs

Leiv                               2001 / 5th  Q2 2011 - Q4 2011   $ 100
Eiriksson                                      Q4 2011 - Q2 2012    $ 80


Eirik                              2002 / 5th  Q4 2008 - Q4 2011   $ 127
Raude


Existing Drillships

Ocean Rig Corcovado                2011 / 6th  Q1 2011 - Q4 2011   $ 107
                                               Q4 2011 - Q4 2014   $ 534

Ocean Rig Olympia                  2011 / 6th  Q2 2011 - Q2 2012   $ 160

Newbuilding Drillships
Ocean Rig Poseidon              Q3 2011 / 6th  Q3 2011 - Q2 2013   $ 378
Ocean Rig Mykonos               Q3 2011 / 6th  Q4 2011 - Q4 2014   $ 528
OCR Drillship TBN #1            Q3 2013 / 7th
OCR Drillship TBN #2            Q3 2013 / 7th
                                                     Total        $2,014





        Drybulk Carrier Segment Summary Operating Data (unaudited)

          (Dollars in thousands, except average daily results)

                                          Three Months Ended
                                               March 31,
                                         --------------------
                                           2010       2011
                                         ---------  ---------
Average number of vessels(1)                  37.6       36.8
Total voyage days for vessels(2)             3,314      3,268
Total calendar days for vessels(3)           3,384      3,314
Fleet utilization(4)                            98%      98.6%
Time charter equivalent(5)                  32,250     27,700
Vessel operating expenses (daily)(6)         5,691      5,794

(1) Average number of vessels is the number of vessels that constituted
    our fleet for the relevant period, as measured by the sum of the
    number of days each vessel was a part of our fleet during the period
    divided by the number of calendar days in that period.
(2) Total voyage days for fleet are the total days the vessels were in our
    possession for the relevant period net of off hire days.
(3) Calendar days are the total number of days the vessels were in our
    possession for the relevant period including off hire days.
(4) Fleet utilization is the percentage of time that our vessels were
    available for revenue generating voyage days, and is determined by
    dividing voyage days by fleet calendar days for the relevant period.
(5) Time charter equivalent, or TCE, is a measure of the average daily
    revenue performance of a vessel on a per voyage basis. Our method of
    calculating TCE is consistent with industry standards and is
    determined by dividing voyage revenues (net of voyage expenses) by
    voyage days for the relevant time period. Voyage expenses primarily
    consist of port, canal and fuel costs that are unique to a particular
    voyage, which would otherwise be paid by the charterer under a time
    charter contract, as well as commissions. TCE is a standard shipping
    industry performance measure used primarily to compare period-to-period
    changes in a shipping company's performance despite changes in the
    mix of charter types (i.e., spot charters, time charters and bareboat
    charters) under which the vessels may be employed between the periods.





                                          Three Months Ended
                                               March 31,
                                         --------------------
                                           2010       2011
                                         ---------  ---------
Voyage revenues                            113,903     96,988
Voyage expenses                             (7,026)    (6,465)
                                         ---------  ---------
Time charter equivalent revenues           106,877     90,523
                                         ---------  ---------
Total voyage days for fleet                  3,314      3,268
Time charter equivalent TCE                 32,250     27,700


(6) Daily vessel operating expenses, which includes crew costs,
    provisions, deck and engine stores, lubricating oil, insurance,
    maintenance and repairs is calculated by dividing vessel operating
    expenses by fleet calendar days for the relevant time period.





                               Dryships Inc.

                           Financial Statements

         Unaudited Condensed Consolidated Statements of Operations

(Expressed in Thousands of
 U.S. Dollars - except                               Three Months Ended
 for share and per share data)                            March 31,
                                                  ------------------------
                                                      2010         2011
                                                  -----------  -----------
                                                 (As restated)

REVENUES:
Voyage revenues                                   $   113,903  $    98,087
Revenues from drilling contracts                       80,256      109,326
                                                  -----------  -----------
                                                      194,159      207,413

EXPENSES:
Voyage expenses                                         7,026        6,516
Vessel operating expenses                              19,259       21,085
Drilling rigs operating expenses                       29,100       41,850
Depreciation and amortization                          47,158       55,916
Loss/ (gain) on sale of vessels                       (10,684)           -
General and administrative expenses                    27,187       25,677
                                                  -----------  -----------

Operating income                                       75,113       56,369

OTHER INCOME / (EXPENSES):
Interest and finance costs, net of interest
 income                                               (16,895)     (15,606)
Gain/(loss) on interest rate swaps                    (34,638)      (3,854)
Other, net                                             (5,728)       1,057
Income taxes                                           (4,577)      (5,961)
                                                  -----------  -----------
Total other income/(expenses), net                    (61,838)     (24,364)
                                                  -----------  -----------

Net income/(loss)                                      13,275       32,005

Net income attributable to non-controlling
 interests                                                  -       (6,240)
                                                  -----------  -----------

Net  income/(loss) attributable to Dryships Inc.  $    13,275  $    25,765
                                                  ===========  ===========


Earnings/(loss) per common share, basic and
 diluted                                          $      0.04  $      0.07

Weighted average number of shares, basic and
 diluted                                          254,823,623  337,143,598





                               Dryships Inc.

             Unaudited Condensed Consolidated Balance Sheets

                                                    December 31,  March 31,
(Expressed in Thousands of U.S. Dollars)                2010        2011
                                                    ----------- -----------

ASSETS
CURRENT ASSETS:
  Cash and cash equivalents                         $   391,530 $   129,463
  Restricted cash                                       578,311     304,564
  Trade accounts receivable, net                         25,204      57,386
  Other current assets                                   70,065     160,514
                                                    ----------- -----------
  Total current assets                                1,065,110     651,927
                                                    ----------- -----------

FIXED ASSETS, NET:
  Advances for vessels and rigs under construction
   and acquisitions                                   2,072,699     977,075
  Vessels, net                                        1,917,966   1,962,882
  Drilling rigs, machinery and equipment, net         1,249,333   2,996,623
                                                    ----------- -----------
  Total fixed assets, net                             5,239,998   5,936,580
                                                    ----------- -----------

OTHER NON CURRENT ASSETS:
  Restricted cash                                       195,517     205,000
  Other non-current assets                              483,869     197,888
                                                    ----------- -----------
Total non current assets                                679,386     402,888
                                                    ----------- -----------
  Total assets                                        6,984,494   6,991,395
                                                    =========== ===========

LIABILITIES AND STOCKHOLDERS' EQUITY

CURRENT LIABILITIES:
  Current portion of long-term debt                     731,232     651,428
  Other current liabilities                             204,203     255,635
                                                    ----------- -----------
  Total current liabilities                             935,435     907,063
                                                    ----------- -----------

NON CURRENT LIABILITIES
  Long-term debt, net of current portion              1,988,460   1,992,370
  Other non-current liabilities                         161,070     146,756
                                                    ----------- -----------
  Total non current liabilities                       2,149,530   2,139,126
                                                    ----------- -----------

COMMITMENTS AND CONTINGENCIES                                 -           -

STOCKHOLDERS' EQUITY:
  Total Dryhsips Inc. stockholders' equity            3,363,253   3,401,945
  Non controlling interests                             536,276     543,261
                                                    ----------- -----------
  Total equity                                        3,899,529   3,945,206
                                                    ----------- -----------
  Total liabilities and stockholders' equity        $ 6,984,494 $ 6,991,395
                                                    =========== ===========





                            Ocean Rig UDW Inc.

                           Financial Statements

         Unaudited Condensed Consolidated Statements of Operations


(Expressed in Thousands of U.S.
 Dollars - except for share and                      Three Months Ended
 per share data)                                           March 31,
                                                  ------------------------
                                                      2010         2011
                                                  -----------  -----------
                                                 (As restated)

REVENUES:
Revenues from drilling contracts                  $    80,256  $   109,326
                                                  -----------  -----------


EXPENSES:
Drilling rigs operating expenses                       29,100       41,850
Depreciation and amortization                          18,468       28,197
General and administrative expenses                     5,517        6,099
                                                  -----------  -----------

Operating income                                       27,171       33,180

OTHER INCOME / (EXPENSES):
Interest income                                         1,658        5,653
Interest and finance costs                             (2,889)      (2,624)
Gain/(loss) on interest rate swaps                     (9,509)      (1,517)
Other, net                                               (683)         137
Income taxes                                           (4,577)      (5,961)
                                                  -----------  -----------
Total other income/(expenses), net                    (16,000)      (4,312)
                                                  -----------  -----------


Net  income/(loss)                                $    11,171  $    28,868
                                                  ===========  ===========

Earnings/(loss) per common share, basic and
 diluted                                          $      0.11  $      0.22

Weighted average number of shares, basic and
 diluted                                          103,125,500  131,696,928





                            Ocean Rig UDW Inc.

             Unaudited Condensed Consolidated Balance Sheets

                                                    December 31,  March 31,
(Expressed in Thousands of U.S. Dollars)                2010        2011
                                                    ----------- -----------

ASSETS
CURRENT ASSETS:
  Cash and cash equivalents                         $    95,707 $    30,007
  Restricted cash                                       512,793     239,999
  Trade accounts receivable, net                         24,286      50,097
  Other current assets                                   39,220      66,371
                                                    ----------- -----------
  Total current assets                                  672,006     386,474
                                                    ----------- -----------

FIXED ASSETS, NET:
  Advances for assets under construction and
   acquisitions                                       1,888,490     832,377
  Drilling rigs, machinery and equipment, net         1,249,333   2,968,198
                                                    ----------- -----------
  Total fixed assets, net                             3,137,823   3,800,575
                                                    ----------- -----------

OTHER NON CURRENT ASSETS:
  Other non-current assets                              533,869     247,688
                                                    ----------- -----------
  Total non current assets                              533,869     247,688
                                                    ----------- -----------
  Total assets                                        4,343,698   4,434,737
                                                    =========== ===========


LIABILITIES AND STOCKHOLDERS' EQUITY

CURRENT LIABILITIES:
  Current portion of long-term debt                     560,561     486,727
  Other current liabilities                             107,357     290,959
                                                    ----------- -----------
  Total current liabilities                             667,918     777,686
                                                    ----------- -----------

NON CURRENT LIABILITIES
  Long-term debt, net of current portion                696,986     651,424
  Other non-current liabilities                          97,712      95,025
                                                    ----------- -----------
  Total non current liabilities                         794,698     746,449
                                                    ----------- -----------

COMMITMENTS AND CONTINGENCIES                                 -           -

STOCKHOLDERS' EQUITY:
  Total stockholders' equity                          2,881,082   2,910,602
                                                    ----------- -----------
  Total equity                                        2,881,082   2,910,602
                                                    ----------- -----------
  Total liabilities and stockholders' equity        $ 4,343,698 $ 4,434,737
                                                    =========== ===========

Adjusted EBITDA Reconciliation

Adjusted EBITDA represents net income before interest, taxes, depreciation and amortization and gains or losses on interest rate swaps. Adjusted EBITDA does not represent and should not be considered as an alternative to net income or cash flow from operations, as determined by U.S. GAAP, and our calculation of adjusted EBITDA may not be comparable to that reported by other companies. Adjusted EBITDA is included herein because it is a basis upon which the Company measures its operations and efficiency. Adjusted EBITDA is also used by our lenders as a measure of our compliance with certain covenants contained in our loan agreements and because the Company believes that it presents useful information to investors regarding a company's ability to service and/or incur indebtedness.

The following table reconciles net income to Adjusted EBITDA:

Dryships Inc.

                                                        Three      Three
                                                        Months     Months
                                                        Ended      Ended
                                                       March 31,  March 31,
                                                         2010       2011
(Expressed in Thousands of U.S. Dollars)
                                                    (As restated)


Net  income/(loss) attributable to Dryships Inc.          13,275     25,765

Add: Net interest expense                                 16,895     15,606
Add: Depreciation and amortization                        47,158     55,916
Add: Income taxes                                          4,577      5,961
Add: Loss/ (gain) on interest rate swaps                  34,638      3,854

                                                      ---------- ----------
Adjusted EBITDA                                          116,543    107,102
                                                      ========== ==========



Ocean Rig UDW Inc.



                                                        Three      Three
                                                        Months     Months
                                                        Ended      Ended
                                                       March 31,  March 31,
                                                         2010       2011
(Expressed in Thousands of U.S. Dollars)
                                                    (As restated)

Net income/(loss)                                         11,171    28,868

Add: Net interest expense                                  1,231    (3,029)
Add: Depreciation and amortization                        18,468    28,197
Add: Income taxes                                          4,577     5,961
Add: Loss/ (gain) on interest rate swaps                   9,509     1,517

                                                      ---------- ---------
Adjusted EBITDA                                           44,956    61,514
                                                      ========== =========

Conference Call and Webcast: May 13, 2011

As announced, the Company's management team will host a conference call on Friday, May 13, 2011, at 8:00 a.m. EDT to discuss the Company's financial results.

Conference Call details:

Participants should dial into the call 10 minutes before the scheduled time using the following numbers: 1(866) 819-7111 (from the US), 0(800) 953-0329 (from the UK) or +(44) (0) 1452 542 301 (from outside the US). Please quote "DryShips."

A replay of the conference call will be available until May 15, 2011. The United States replay number is 1(866) 247-4222; from the UK 0(800) 953-1533; the standard international replay number is (+44) (0) 1452 550 000 and the access code required for the replay is: 2133051#.

Slides and audio webcast:

There will also be a simultaneous live webcast over the Internet, through the DryShips Inc. website (www.dryships.com). Participants to the live webcast should register on the website approximately 10 minutes prior to the start of the webcast.

About DryShips Inc.

DryShips Inc., based in Greece, is an owner of drybulk carriers and tankers that operate worldwide. Through its majority owned subsidiary, Ocean Rig UDW, Inc., DryShips owns and operates 8 offshore ultra deepwater drilling units, comprising of 2 ultra deepwater semisubmersible drilling rigs and 6 ultra deepwater drillships, 4 of which remain be delivered to the company during 2011 and 2013. As of the day of this release, DryShips owns a fleet of 39 drybulk carriers (including newbuildings), comprising 9 Capesize, 28 Panamax and 2 Supramax, with a combined deadweight tonnage of over 3.4 million tons, and 12 tankers (including newbuildings), comprising 6 Suezmax and 6 Aframax, with a combined deadweight tonnage of over 1.6 million tons.

DryShips Inc.'s common stock is listed on the NASDAQ Global Select Market where it trades under the symbol "DRYS."

Visit the Company's website at www.dryships.com

Forward-Looking Statement

Matters discussed in this release may constitute forward-looking statements. Forward-looking statements reflect our current views with respect to future events and financial performance and may include statements concerning plans, objectives, goals, strategies, future events or performance, and underlying assumptions and other statements, which are other than statements of historical facts.

The forward-looking statements in this release are based upon various assumptions, many of which are based, in turn, upon further assumptions, including without limitation, management's examination of historical operating trends, data contained in our records and other data available from third parties. Although we believe that these assumptions were reasonable when made, because these assumptions are inherently subject to significant uncertainties and contingencies which are difficult or impossible to predict and are beyond our control, we cannot assure you that it will achieve or accomplish these expectations, beliefs or projections.

Important factors that, in our view, could cause actual results to differ materially from those discussed in the forward-looking statements include the strength of world economies and currencies, general market conditions, including changes in charterhire and drilling dayrates and drybulk carrier, tanker vessel, drilling rig and drillship values, failure of a seller to deliver one or more drilling units or drybulk carrier or tanker vessels, failure of a buyer to accept delivery of a drilling unit or vessel, inability to procure acquisition financing, default by one or more charterers of our ships, changes in demand for drybulk commodities or oil or petroleum products, changes in demand that may affect attitudes of time charterers and customer drilling programs, scheduled and unscheduled drydockings and upgrades, changes in our operating expenses, including bunker prices, dry-docking and insurance costs, changes in governmental rules and regulations or actions taken by regulatory authorities, potential liability from pending or future litigation, domestic and international political conditions, potential disruption of shipping routes due to accidents and political events or acts by terrorists.

Risks and uncertainties are further described in reports filed by DryShips Inc. with the US Securities and Exchange Commission.

Contact Information

  • Investor Relations / Media:

    Nicolas Bornozis
    Capital Link, Inc. (New York)
    Tel. 212-661-7566
    E-mail: dryships@capitallink.com