SOURCE: DryShips Inc.

February 28, 2007 16:05 ET

DryShips Inc. Reports Fourth Quarter and Year-End 2006 Results

ATHENS, GREECE -- (MARKET WIRE) -- February 28, 2007 -- DryShips Inc. (NASDAQ: DRYS), a global provider of marine transportation services for drybulk cargoes, today announced its unaudited financial and operating results for the fourth quarter and the twelve months ended December 31, 2006.

Financial Highlights

--  For the fourth quarter of 2006 the Company reported EBITDA of $64.1
    million, which is the highest EBITDA reported in a single quarter since the
    Company's inception.
--  The Company reported Net Income of $35.9 million, or $1.02 per share,
    for the fourth quarter of 2006.  Included in the fourth quarter results is
    a gain on the sale of one vessel of $8.6 million or $0.24 per share.
    Excluding this gain Net Income would amount to $27.3 million or $0.77 per
    share.
--  For the year ended December 31, 2006, the Company reported EBITDA of
    $158.4 million.(1)
--  For the year ended December 31, 2006, the Company reported Net Income
    of $56.7 million or $1.75 per share.  Included in the year end 2006 results
    is a gain on the sale of one vessel of $8.6 million or $0.27 per share and
    a one-time loss on Forward Freight Agreement ("FFA") contracts of $ 22.5
    million or $0.69 per share. Excluding the above items Net Income would
    amount to $70.6 million or $2.18 per share.
--  In January 2007 the Company declared and paid its seventh consecutive
    quarterly cash dividend of $0.20 per common share.
    

George Economou, the Company's Chairman and Chief Executive Officer of DryShips Inc., commented:

"We are delighted to report another successful year since our Company's listing in February 2005. DryShips has kept its promise and has executed on its stated strategy of growing and renewing its fleet. Since the beginning of 2006, we entered agreements to buy a total of 12 vessels with an average age of 9.2 years. At the same time we entered agreements to sell a total of 7 vessels with an average age of 19.1 years. We enter 2007 with a bigger and significantly younger fleet and about 64% of the total vessel operating days unfixed which places DryShips in a unique position to capitalize on the strong dry bulk industry fundamentals."

Fourth Quarter 2006 Results

For the fourth quarter ended December 31, 2006, Net Revenues (Voyage Revenues less Voyage Expenses) amounted to $74.0 million as compared to $58.8 million for the fourth quarter ended December 31, 2005. Operating Income was $46.3 million for the quarter ended December 31, 2006, as compared to $29.9 million for the quarter ended December 31, 2005. Net Income for the fourth quarter of 2006 was $35.9 million or $1.02 Earnings Per Share (EPS) calculated on 35.33 million weighted average basic and diluted shares outstanding as compared to $23.0 million or $0.76 Earnings Per Share (EPS) calculated on 30.35 million weighted average basic and diluted shares outstanding for the quarter ended December 31, 2005. EBITDA for the fourth quarter of 2006 was $64.1 million as compared to $44.0 million in the quarter ended December 31, 2005.(1)

---------------------------------

(1) Please see later in this release for a reconciliation of EBITDA to net
cash provided by Operating activities.

An average of 33.86 vessels were owned and operated during the fourth quarter of 2006, earning an average Time Charter Equivalent, or TCE, rate of $24,466 per day as compared to an average of 27.00 vessels owned and operated during the fourth quarter of 2005 earning an average TCE rate of $23,981 per day.

Year ended December 31, 2006 Results

For the year ended December 31, 2006, Net Revenues (Voyage Revenues less Voyage Expenses) amounted to $232.5 million as compared to $219.3 million for the year ended December 31, 2005. Operating Income, net of FFA losses of $22.5 million was $96.5 million for the year ended December 31, 2006 as compared to $130.8 million for the year ended December 31, 2005. Net Income for the year ended December 31, 2006 was $56.7 million or $1.75 Earnings Per Share (EPS) calculated on 32.35 million weighted average basic and diluted shares outstanding as compared to $111.0 million or $3.83 Earnings Per Share (EPS) calculated on 28.96 million weighted average basic and diluted shares outstanding for the year ended December 31, 2005. EBITDA for the year ended December 31, 2006 was $158.4 million as compared to $173.3 million for the year ended December 31, 2005. (1)

An average of 29.76 vessels were owned and operated during the year ended December 31, 2006, earning an average Time Charter Equivalent, or TCE, rate of $21,918 per day as compared to an average of 21.60 vessels owned and operated during the year ended December 31, 2005 earning an average TCE rate of $28,446 per day.

Drydock related expenses

During the fourth quarter of 2006, two vessels were drydocked for a total direct cost of $2.3 million. Such costs are capitalized and amortized until the vessels' next drydock.

Capitalization

On December 31, 2006, debt to total capitalization (debt, net of deferred financing fees and stockholders' equity) was 60.3% and net debt (total debt less cash and cash equivalents) to total capitalization was 59.2%.

As of December 31, 2006, the Company had a total liquidity of approximately $29.2 million.

Financing activities

In November 2006, the Company amended its existing term loan facility to include the financing of six vessels delivered in the third and fourth quarter of 2006.

In December 2006, the Company concluded a short-term bridge loan of $25.0 million with a related party. Following the disposal of the MV Panormos on January 10, 2007, the facility was fully repaid.

In February 2007, the Company entered into a bridge facility of $43.4 million for the acquisition of the MV Samsara with HSH Nordbank which is repayable in one installment by May 30, 2007.

The Company expects to enter into further financing agreements with its existing lenders to refinance this facility and arrange permanent financing for all the recent acquisitions.

Fleet Developments

Vessels Acquired and Delivered

On December 18, 2006, the Company took delivery of the MV Redondo, a 2000 built second-hand 74,716 dwt Panamax drybulk carrier, which it has agreed to acquire in September 2006 for a purchase price $40.8 million.

On February 14, 2007, the Company took delivery of the MV Samsara, a 1996 built 151,393 dwt Capesize drybulk carrier, which it had agreed to acquire in December 2006 for a purchase price of $62.0 million.

Vessels Sold and Delivered

On December 20, 2006, the MV Flecha, a 1982 built 65,081 dwt Panamax drybulk carrier was delivered to her new owners for a purchase price of $11.7 million. The Company realized a gain of $8.6 million recognized in the fourth quarter of 2006.

On January 8, 2007, the MV Panormos, a 1995 built 71,747 dwt Panamax drybulk carrier was delivered to her new owners for a purchase price of $35 million. The Company realized a gain of $15.3 million, which will be recognized in the first quarter of 2007.

On January 22, 2007, the MV Striggla, a 1982 built 64,747 dwt Panamax drybulk carrier was delivered to her new owners for a purchase price of $12.1 million. The Company realized a gain of $9.2 million, which will be recognized in the first quarter of 2007.

On January 23, 2007, the MV Daytona, a 1989 built 69,703 dwt Panamax drybulk carrier was delivered to her new owners for a purchase price of $25.3 million. The Company realized a gain of $6.1 million, which will be recognized in the first quarter of 2007.

Vessel Acquisitions - To be delivered

On November 23, 2006, the Company agreed to acquire the MV Ecola, a 2001 built second-hand 73,931 dwt Panamax drybulk carrier, delivery of which is expected during the fourth quarter of 2007, for a purchase price of $39.7 million.

On December 15, 2006, the Company agreed to acquire the MV Primera, a 1998 built second-hand 72,495 dwt Panamax drybulk carrier, delivery of which is expected during the second quarter of 2007, for a purchase price of $38.0 million.

On January 10, 2007, the Company agreed to acquire the MV Brisbane, a 1995 built second-hand 151,066 dwt Capesize drybulk carrier, delivery of which is expected during the second quarter of 2007, for a purchase price of $60.0 million.

Vessel Disposals - To be delivered

On November 20, 2006, the Company entered into an agreement to sell the MV Shibumi, a 1984 built second-hand 166,000 dwt Capesize drybulk carrier for a consideration of $24.6 million. The Company expects to realize a gain of approximately $17.8 million which will be recognized in the second quarter of 2007.

On January 16, 2007, the Company entered into an agreement to sell the MV Delray, a 1994 built second-hand 70,029 dwt Panamax drybulk carrier for consideration of $36.7 million. The Company expects to realize a gain of approximately $7.7 million which will be recognized in the second quarter of 2007.

On February 9, 2007, the Company entered into an agreement to sell the MV Estepona, a 1994 built second-hand 70,003 dwt Panamax drybulk carrier consideration of $36.7 million. The Company expects to realize a gain of approximately $ 6.5 million which will be recognized in the first or second quarter of 2007.

Gains on Vessel Disposals

For the remainder of 2007, DryShips is expected to recognize an aggregate gain on vessel disposals of $62.6 million or $1.76 per share, in accordance with the schedule above.

Newbuildngs

In connection with the previously announced contracts for two Panamax newbuilding vessels in China, scheduled for delivery in the last quarter of 2009 and the first quarter of 2010, DryShips has advanced a total of 20% of the contract price or $13.3 million in cash. No further installments are due in 2007.

When all above mentioned acquisitions and disposals are concluded, DryShips Inc.'s fleet will include 34 drybulk carriers comprising 5 Capesize, 24 Panamax, 3 Handymax and 2 newbuilding Panamax vessels, with a combined deadweight tonnage of approximately 2.8 million, and an average age of 9.5 years.

Fleet Employment Developments

The Company has entered the MV Netadola, a 1993 built 149,475 dwt Capesize vessel, into a time charter for a period of approximately between 7 to 9 months that commenced in February 2007 at a daily rate of $52,500.

The Company has entered the MV Delray, a 1994 built 70,020 dwt Panamax vessel, into a time charter for a period of approximately 60 days that commenced in February 2007 at a daily rate of $27,000.

The Company has entered the MV Ligari, a 2004 built 75,583 Panamax vessel, into a time charter for a period of approximately between 7 to 9 months that commenced in February 2007 at a daily rate of $31,550.

The Company has entered the MV Samsara, a 1996 151,393 dwt Capesize vessel, into a time charter for a period of approximately between 7 to 9 months that commenced in February 2007 at a daily rate of $55,500.

The Company has entered the MV Mendocino, a 2002 built 76,623 dwt vessel, into a time charter for a period of about 40 days that commenced in January 2007 at a daily rate of $31,000.

The Company has entered the MV La Jolla, a 1997 built 72,126 Panamax vessel, into a time charter for a period between 60 and 100 days that commenced in January 2007 at a daily rate of $ 33,500.

The Company has entered the MV Catalina, a 2005 built 74,432 Panamax vessel, into a time charter for a period between 3 to 5 months that commenced in December 2006 at a daily rate of $32,950.

The Company has entered the MV Solana, a 1995 built 75,100 dwt Panamax vessel, into a time charter for a period of approximately between 4 to 6 months that commenced in December 2006 at a daily rate of $30,100.

The Company has entered the MV Paragon, a 1995 built 71,259 dwt Panamax vessel, into a time charter for a period between 3 to 5 months that commenced in November 2006 at a daily rate of $29,500.

The above concluded time charters are expected to contribute approximately between $40.9 million and $55.8 million in time charter revenue during 2007. The lower figure corresponds to the minimum charter duration and the higher figure to the maximum charter duration.

Capital expenditures

The Company expects to incur the following capital expenditures associated with vessel drydockings:

                                  First      Second     Third      Fourth
                                 quarter    quarter    quarter    quarter
                                   2007       2007       2007       2007
                                ---------- ---------- ---------- ----------
Number of vessels                        1          1          1          1
                                ---------- ---------- ---------- ----------
Expected cost in USD millions          0.4        0.5        0.4        0.3
                                ---------- ---------- ---------- ----------
Off-hire days                           20         16         16         15
                                ---------- ---------- ---------- ----------
Such costs are capitalized and amortized until the vessels' next drydock. The actual days and expenses in connection with vessel drydockings will vary based on the shipyard schedule, weather, condition of the vessel and other factors.

In addition the Company expects to incur expenses for peripheral supplies and other repair works while the vessels will be in drydock which will be included in Vessel operating expenses for the respective quarter.

Dividend Payment

In January 2007, DryShips declared and paid its seventh consecutive quarterly cash dividend of $0.20 per common share. Since the Company's listing on the NASDAQ Global Market in February 2005, DryShips has paid total dividends of $1.40 per common share. For fiscal year 2006, DryShips has declared and paid dividends of $0.80 in total per common share.

As of February 28, 2007, the Company has a total of 35,490,097 shares of common stock outstanding.

Fleet Data

Fourth Quarter 2006

Total TCE revenue increased during the fourth quarter of 2006 compared to the fourth quarter of 2005, primarily as a result of an increase in the average number of vessels operated, from an average of 27.00 vessels in the fourth quarter of 2005 to 33.86 vessels in the fourth quarter of 2006. In addition, the daily average TCE rate in the fourth quarter of 2006 increased to $24,466 from $23,981 in the fourth quarter of 2005.

Vessel operating expenses increased to $14.4 million for the fourth quarter of 2006 compared to $11.9 million for the fourth quarter of 2005. The increase is attributable to the increase in the number of vessels operated from an average of 27.00 vessels for the fourth quarter of 2005 to 33.86 vessels for the fourth quarter of 2006, offset by a decrease in daily vessel operating expenses from $4,804 per day for the fourth quarter of 2005 to $4,622 per day for the fourth quarter of 2006.

Depreciation and amortization increased to $17.9 million in the fourth quarter of 2006 compared to $14.2 million in the fourth quarter of 2005. This was a direct result of the increase in the Company's fleet from an average of 27.00 vessels in the fourth quarter of 2005 to an average of 33.86 vessels in the fourth quarter of 2006.

Management fees increased to $1.9 million in the fourth quarter of 2006 compared to $1.4 million in the fourth quarter of 2005 as a direct result of the increase in the number of fleet calendar days from 2,487 in the fourth quarter of 2005 to 3,116 in the fourth quarter of 2006 due to the growth of the fleet.

General and administrative expenses increased to $2.1 million in the fourth quarter of 2006 from $1.3 million in the fourth quarter of 2005, mainly due to the growth of the fleet.

Year ended December 31, 2006

Total TCE revenue decreased during the year ended December 31, 2006 compared to the year ended December 31, 2005, primarily as a result of a decrease in the average daily TCE rate from $28,446 in the year ended December 31, 2005 to $21,918 in the year ended December 31, 2006 offset by an increase in the average number of vessels operated, from an average of 21.60 vessels in the year ended December 31, 2005 to 29.76 vessels in the year ended December 31, 2006.

Vessel operating expenses increased to $47.9 million for the year ended December 31, 2006 compared to $36.7 million for the year ended December 31, 2005. The increase is attributable to the increase in the number of vessels operated from an average of 21.60 vessels for the year ended December 31, 2005 to 29.76 vessels for the year ended December 31, 2006, offset by lower daily vessel operating expenses decreasing from $4,668 per day to $4,410 day, respectively.

Depreciation and amortization increased to $61.6 million in the year ended December 31, 2006 compared to $42.6 million in the year ended December 31, 2005. This was a direct result of the increase in the Company's fleet from an average of 21.60 vessels in the year ended December 31, 2005 to an average of 29.76 vessels in the year ended December 31, 2006.

Management fees increased to $6.6 million in the year ended December 31, 2006 compared to $5.0 million in the year ended December 31, 2005 as a direct result of the increase in the number of fleet calendar days from 7,866 in the year ended December 31, 2005 to 10,859 in the year ended December 31, 2006 due to the growth of the fleet.

General and administrative expenses increased to $5.9 million in the year ended December 31, 2006 from $4.2 million in the year ended December 31, 2005, mainly due to the growth of the fleet.

Fourth Quarter 2006

(Dollars in thousands, except
Average Daily Results - unaudited)    3 Months Ended      3 Months Ended
                                     December 31, 2006   December 31, 2005
                                     =================   =================
Average number of vessels (1)                    33.86               27.00
Total voyage days for fleet (2)                  3,024               2,451
Total calendar days for fleet (3)                3,116               2,487
Fleet Utilization (4)                             97.0%               98.6%
Time charter equivalent (5)                     24,466              23,981
Capesize                                        33,370              35,461
Panamax                                         23,844              22,691
Handymax                                        18,975              16,032
Vessel operating expenses (daily) (6)            4,622               4,804
Management fees (daily)                            624                 567
General and administrative expenses
 (daily) (7)                                       679                 509
Total vessel operating expenses
 (daily) (8)                                     5,925               5,880


Year ended December 31, 2006

(Dollars in thousands, except
Average Daily Results - unaudited)        Year  Ended       Year  Ended
                                       December 31, 2006 December 31, 2005
                                       ================= =================
Average number of vessels (1)                      29.76             21.60
Total voyage days for fleet (2)                   10,606             7,710
Total calendar days for fleet (3)                 10,859             7,866
Fleet Utilization (4)                               97.7%             98.0%
Time charter equivalent (5)                       21,918            28,446
Capesize                                          31,594            46,251
Panamax                                           20,984            25,827
Handymax                                          15,927            20,868
Vessel operating expenses (daily) (6)              4,410             4,668
Management fees (daily)                              609               631
General and administrative expenses
 (daily) (7)                                         546               532
Total vessel operating expenses
 (daily) (8)                                       5,565             5,831


(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 owned
by us for the relevant period net of off hire days associated with major
repairs, drydockings or special or intermediate surveys.
(3) Calendar days are the total days the vessels were owned by us for the
relevant period including off hire days associated with major repairs,
drydockings or special or intermediate surveys.
(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.
(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.
(7) Daily general and administrative expense is calculated by dividing
general and administrative expense by fleet calendar days for the relevant
time period.
(8) Total vessel operating expenses, or TVOE, is a measurement of our total
expenses associated with operating our vessels. TVOE is the sum of vessel
operating expenses, management fees and general and administrative
expenses. Daily TVOE is calculated by dividing TVOE by fleet calendar days
for the relevant time period.
TCE Rates:

The following table reflects the calculation of our TCE rates for the periods then ended:

                                3 Months   3 Months     Year       Year
                                  Ended      Ended      Ended      Ended
                                December   December   December   December
(Dollars in thousands)          31, 2006   31, 2005   31, 2006   31, 2005
                                ---------  ---------  ---------  ---------


Voyage revenues                    79,107     61,680    248,431    228,913
Voyage expenses                    (5,122)    (2,905)   (15,965)    (9,592)

                                ---------  ---------  ---------  ---------
Time Charter equivalent
 revenues                          73,985     58,775    232,466    219,321
                                =========  =========  =========  =========

Total voyage days for fleet         3,024      2,451     10,606      7,710

Time charter equivalent (TCE)
 rate                              24,466     23,981     21,918     28,446
DryShips Inc. Fleet

As at December 31, 2006, the Company's fleet consisted of 34 vessels.

During the three month period ended December 31, 2006, the Company operated the following types of vessels:

                                Capesize    Panamax   Handymax     Total
                                ---------  ---------  ---------  ---------
Average number of vessels
 during period                       4.00      26.86       3.00      33.86
Number of vessels at end of
 period                              4.00      27.00       3.00      34.00
DWT at end of period              657,256  1,956,670    150,069  2,763,995
DWT as percentage of total
 fleet                              23.78%     70.79%      5.43%    100.00%
During the year ended December 31, 2006, the Company operated the following types of vessels:
                                Capesize    Panamax   Handymax     Total
                                ---------  ---------  ---------  ---------
Average number of vessels
 during period                       4.00      23.06       2.70      29.76
Number of vessels at end of
 period                              4.00      27.00       3.00      34.00
Dwt at end of period              657,256  1,956,670    150,069  2,763,995
DWT as percentage of total
 fleet                              23.78%     70.79%      5.43%    100.00%
Financial Statements

The following are DryShips Inc.'s Condensed Income Statements for the three month period ended December 31, 2005 and 2006 and year ended December 31, 2005 and 2006:

                         3 Months    3 Months
(Dollars in thousands,     Ended       Ended     Year Ended   Year Ended
 except for share and    December     December    December     December
 per share data)         31, 2006     31, 2005    31, 2006     31, 2005
                         ----------  ----------  ----------  -------------
                         Unaudited   Unaudited   Unaudited      Audited
                                    Restated (1)

INCOME STATEMENT DATA

Voyage revenues          $   79,107  $   61,680  $  248,431  $     228,913
Loss on Forward Freight
 Agreements                       -           -      22,473              -
Voyage expenses               5,122       2,905      15,965          9,592

Vessels operating
 expenses                    14,399      11,950      47,889         36,722
Depreciation and
 amortization                17,856      14,207      61,605         42,610
Gain on sale of vessel       (8,583)          -      (8,583)             -
Management fees               1,943       1,411       6,609          4,962
General and
 administrative               2,117       1,263       5,931          4,186

                         ----------  ----------  ----------  -------------
Operating Income             46,253      29,944      96,542        130,841
                         ----------  ----------  ----------  -------------

Interest and finance
 costs, net                 (10,346)     (6,784)    (40,025)       (19,649)
Other, net                        5        (195)        214           (175)

                         ----------  ----------  ----------  -------------
Net Income               $   35,912  $   22,965  $   56,731  $     111,017
                         ==========  ==========  ==========  =============

Basic and fully diluted
 earnings per share      $     1.02  $     0.76  $     1.75  $        3.83
Weighted average basic
 and diluted shares
 outstanding             35,330,283  30,350,000  32,348,194     28,957,397


(1) The nature of the restatement of the income statement data for the
three months ended December 31, 2005 consisted mainly of corrections
relating to accrued liabilities, the valuation of an interest rate swap,
the capitalization of loan fees, and the amortization of deferred revenue
for vessels acquired with an attached time charter agreement and expensing
of costs previously capitalized.

The following are DryShips Inc.'s Balance Sheets as at December 31, 2006 and 2005:

                                                     As at        As at
                                                    December     December
(Dollars in thousands)                              31, 2006     31, 2005
                                                  ------------ ------------
BALANCE SHEET DATA                                  Unaudited     Audited
ASSETS
CURRENT ASSETS:
Cash and cash equivalents                                2,537        5,184
Restricted cash                                          6,614        3,040
Accounts receivables - trade, net                        3,187        5,514
Insurance claims                                           671          107
Due from related parties                                 3,353            -
Inventories                                              2,571        1,326
Prepayments and advances                                 5,568        3,336
Prepaid charter revenue                                  1,335            -
Financial instruments                                      985          270
                                                  ------------ ------------
      Total current assets                              26,821       18,777
                                                  ------------ ------------
FIXED ASSETS:
Advances for vessels under construction and
 acquisitions                                           27,380            -
Vessels, net                                         1,084,924      864,733
                                                  ------------ ------------
      Total fixed assets, net                        1,112,304      864,733
                                                  ------------ ------------

Deferred charges, net                                    6,200        3,781
Restricted cash                                         20,000       21,011
Other non current assets                                 2,848        2,257
                                                  ------------ ------------
Total assets                                         1,168,173      910,559
                                                  ============ ============
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES:
Current portion of long-term debt                       71,412      107,738
Financial instruments                                    2,625            -
Accounts payable                                        11,423        8,479
Due to related parties                                  25,000        6,460
Accrued liabilities                                      6,412        6,529
Deferred revenue                                        12,270        6,309
Other current liabilities                                  202          230
                                                  ------------ ------------
      Total current liabilities                        129,344      135,745
                                                  ------------ ------------
Long-term debt, net of current portion                 587,330      417,615
                                                  ------------ ------------
Other non-current liabilities                              607          698
                                                  ------------ ------------
Commitments and Contingencies                                -            -
                                                  ------------ ------------
STOCKHOLDERS' EQUITY:
Capital stock                                              355          304
Additional paid-in capital                             327,446      264,600
Retained earnings                                      123,091       91,597
                                                  ------------ ------------
      Total stockholders' equity                       450,892      356,501
                                                  ------------ ------------
Total liabilities and stockholders' equity           1,168,173      910,559
                                                  ============ ============
EBITDA Reconciliation

DryShips Inc. considers EBITDA to represent net income before interest, taxes, depreciation and amortization. EBITDA does not represent and should not be considered as an alternative to net income or cash flow from operations, as determined by United States generally accepted accounting principles, or U.S. GAAP, and our calculation of EBITDA may not be comparable to that reported by other companies. EBITDA is included herein because it is a basis upon which the Company assesses its liquidity position, it is used by our lenders as a measure of our compliance with certain loan covenants 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 cash from operating activities to EBITDA:

(Dollars in thousands)                   3 Months Ended    3 Months Ended
                                       December 31, 2006  December 31, 2005
                                        ----------------  ----------------

Net cash provided by operating
 activities                                       25,560            34,922
Net increase / (decrease) in current
 assets                                            3,246            (3,637)
Net (increase) / decrease in current
 liabilities, excluding current portion
 of long term debt                                (1,949)            4,568
Gain on Sale of Vessel                             8,583                 -
Amortization of deferred revenue                   4,565               578
Amortization of free lubricants                       (1)             (167)
Change in fair value of derivatives               12,017               522
Net Interest expense                              10,346             6,784
Amortization of deferred financing
 costs included in interest expense                 (496)              (53)
Payments for dry-docking costs                     2,243               439
                                        ----------------  ----------------
EBITDA                                            64,114            43,956
                                        ================  ================



(Dollars in thousands)                     Year Ended        Year Ended
                                       December 31, 2006  December 31, 2005
                                        ----------------  ----------------

Net cash provided by operating
 activities                                       99,004           163,806
Net increase in current assets                     5,070             4,560
Net (increase) in current liabilities,
 excluding current portion of long term
 debt                                              2,014           (21,914)
Gain on Sale of Vessel                             8,583                 0
Amortization of deferred revenue                   2,967             5,224
Amortization of free lubricants                      119              (928)
Change in fair value of derivatives               (1,910)              270
Net Interest expense                              40,025            19,649
Amortization of deferred financing
 costs included in interest expense               (3,786)             (544)
Payments for dry-docking costs                     6,275             3,153
                                        ----------------  ----------------
EBITDA                                           158,361           173,276
                                        ================  ================
Fleet List

The table below describes in detail our fleet development and current employment profile as of February 28, 2007:

            Year                         Current              Redelivery
                                                    Gross
            Built Deadweight   Type     Employment   Rate   Earliest Latest
            ===== ========== ========== ========== ======== ======== ======
Capesize
Manasota     2004    171,061   Capesize     TC     $ 55,000  Aug-07  Nov-07
Alameda      2001    170,662   Capesize     TC     $ 28,000  Feb-07  Apr-07
Shibumi      1984    166,058   Capesize     TC     $ 40,000  Prompt  Apr-07
Netadola     1993    149,475   Capesize     TC     $ 52,500  Sep-07  Nov-07
Samsara      1996    151,393   Capesize     TC     $ 55,500  Sep-07  Nov-07
                5    808,649 11.3 years                   -       -       -
Panamax
Ligari       2004     75,583    Panamax     TC     $ 31,550  Sep-07  Nov-07
Padre        2004     73,601    Panamax     TC     $ 30,000  Sep-07  Nov-07
Maganari     2001     75,941    Panamax     TC     $ 29,000  Prompt  May-07
Coronado     2000     75,706    Panamax     TC     $ 18,500  Apr-07  Jun-07
Ocean
 Crystal     1999     73,688    Panamax     TC     $ 34,000  Prompt  Mar-07
Xanadu       1999     72,270    Panamax     TC     $ 18,500  Apr-07  Jun-07
Lanzarote    1996     73,008    Panamax     TC     $ 31,500  Prompt  Apr-07
Iguana       1996     70,349    Panamax     TC     $ 28,000  Sep-07  Nov-07
Formentera   1996     70,015    Panamax     TC     $ 18,000  May-07  Jul-07
Waikiki      1995     75,473    Panamax     TC     $ 17,500  Prompt  Apr-07
Delray       1994     70,029    Panamax     TC     $ 27,000  Prompt  Apr-07
Estepona     1994     70,003    Panamax     TC     $ 18,500  May-07  Sep-07
Redondo      2000     74,716    Panamax     TC     $ 31,250  Apr-07  May-07
Catalina     2005     74,432    Panamax     TC     $ 32,950  Prompt  May-07
Mendocino    2002     76,623    Panamax     TC     $ 31,000  Prompt  Mar-07
La Jolla     1997     72,126    Panamax     TC     $ 33,500  Prompt  May-07
Solana       1995     75,100    Panamax     TC     $ 30,100  Apr-07  May-07
Paragon      1995     71,259    Panamax     TC     $ 29,500  Prompt  May-07
Sonoma       2001     74,786    Panamax  Baumarine $ 30,166
Toro         1995     73,034    Panamax  Baumarine $ 29,077
Lacerta      1994     71,862    Panamax  Baumarine $ 30,456
Lanikai      1988     68,676    Panamax  Baumarine $ 26,980
Tonga        1984     66,798    Panamax  Baumarine $ 23,829
Mostoles     1981     75,395    Panamax  Baumarine $ 24,213
               24  1,750,473 10.4 years
Handymax
Alona        2002     48,640   Handymax     TC     $ 27,000  Prompt  May-07
Matira       1994     45,863   Handymax     TC     $ 25,750  Prompt  May-07
Hille
 Oldendorff  2005     55,566   Handymax     BB     $ 20,020  Jan-07  May-07
                3    150,069  6.3 years
Newbuildings
TBN          2009     75,000    Panamax
TBN          2010     75,000    Panamax
                2    150,000

Total Fleet    34  2,859,191 10.5 years

Notes:
1. For spot vessels the TCE rate is for the current voyage
2. For vessels trading in the Baumarine pool the TCE rate is the Pool's
   estimate for earnings in the month of February
3. The MV Maganari has been fixed in direct continuation at $18,400 per day
   for 12 months
4. The MV Hille Oldendorff is employed under a bareboat charter
5. The MV Conrad Oldendorff upon redelivery by previous charterers was
   renamed mv Mendocino
6. The MV Belmonte upon redelivery by previous charterers was renamed Padre
7. The quoted rates are not indications of future earnings and the Company
   gives no assurance or guarantee of future rates.
Conference Call and Webcast: March 01, 2007, at 10:00 a.m. EST

DryShips' management team will host a conference call on Thursday, March 01, 2007, at 10:00 a.m. Eastern Time to discuss the Company's financial results for the fourth quarter and year-end 2006 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) 953 953-0329 (from the UK) or +(44) 1452 542 301 (from outside the US). Please quote "DryShips."

In case of any problem with the above numbers, please dial 1(866) 869 2352 (from the US), 0(800) 694-1449 (from the UK) or +(44) 1452 560-304 (from outside the US). Quote "DryShips."

A replay of the conference call will be available until March 8th, 2007. The United States replay number is 1(866) 247 4222; the international replay number is 0(800) 953-1533; from the UK or (+44) 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. is an international provider of drybulk carriers. Headquartered in Athens, Greece, DryShips owns and operates a fleet of 34 drybulk carriers comprising 5 Capesize, 24 Panamax, 3 Handymax and 2 newbuilding Panamax vessels, with a combined deadweight tonnage of approximately 2.8 million.

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

Visit our 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 DryShips Inc. believes 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, DryShips Inc. 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 rates and vessel values, changes in demand that may affect attitudes of time charterers to scheduled and unscheduled drydocking, changes in DryShips Inc.'s operating expenses, including bunker prices, dry-docking and insurance costs, 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

  • Company Contact:
    Gregory Zikos
    Chief Financial Officer
    Dryships Inc.
    Tel: 011-30-210-8090513
    E-mail: management@dryships.com

    Investor Relations / Media:
    Nicolas Bornozis
    Capital Link, Inc. (New York)
    Tel. 212-661-7566
    E-mail: nbornozis@capitallink.com