The offshore drilling division of
DryShips Inc.
(
DRYS
) continues to flourish buoyed by high oil prices, rising
expenditures from oil companies and success in ultra deep water oil
field discoveries. The acquisition of
Ocean Rig UDW Inc.
(
ORIG
) turned out to be a major positive.
Recently, Ocean Rig has won a new drilling contract in West
Africa. The contract is for three years and has an estimated
backlog of $652 million.
DryShips is gradually converting itself into an ultra-deep water
drilling company rather than continuing as a simple drybulk cargo
operator. Though DryShips' legacy drybulk shipping cargo division
and newly formed oil tanker division continued their pathetic
performances, the company's majority owned deepwater oil drilling
unit Ocean Rig continued to support DryShips' overall financials.
At the end of 2011, Ocean Rig has $2.3 billion of order
backlog.
Ocean Rig's asset and contract portfolio diversified DryShips'
assets and sources of cash flow. Furthermore, Ocean Rig's
operational expertise provided DryShips with the necessary platform
to compete in the ultra-deep water drilling sector. In the previous
quarter, total revenue of Ocean Rig was approximately $237.7
million, up by an enormous 132.3% year over year.
We believe the demand for deep water drilling services will
boost in the near future, attributable to the discovery of several
large deep water oil reservoirs. Ocean Rig has high quality
drillship fleets, which will enable oil explorers to operate even
under harsh environmental conditions.
On October 5, 2011, DryShips completed partial spin-off Ocean
Rig division for the first time. The company currently holds
73.9% share of Ocean Rig. Yesterday, the company has decided to
reduce its stake in Ocean Rig by an additional 9%. Management also
announced that in the near future, the company may further reduce
its stake to improve the parent company's cash position.
DRYSHIPS INC (
DRYS
): Free Stock Analysis Report
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