DryShip to Aquire 30.4% of Ocean Rig, Shares Plunge

DryShips (DRYS) agreed to acquire about 30.4% of offshore drilling contractor Ocean Rig ASA, traded on the Oslo exchange, for about $405 million. Separately, DryShips CEO George Economou acquired approximately 4.4% of the share capital of Ocean Rig.

Ocean Rig owns and operates two ultra deepwater semi-submersible drilling rigs, built to operate in water depths between 7,500 to 10,000 feet. These rigs are currently on charter to ExxonMobil and Shell. 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. Demand for ultra deepwater rigs is expected to be strong for 5 to 10 years. DryShips game plan is to capitalize on this expected strong demand, but investors have responded negatively. DryShips shares dropped 14.35% to $72.18. DryShips, which owns and sails 45 freighters, said it plans to finance the deal with $162 million in cash on hand and $243 million in debt.

Sources: Press release, Reuters, AP, MarketWatch, Schaeffers Research
Additional Reading: Revisiting Dry Bulk Shippers

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