International shipping company
) has increased the floatation size and pricing of it's majority
Ocean Rig UDW Inc.
) that will further reduce its stake in the deepwater oil
drilling unit. The sale proceeds from the issue of shares will be
received by DryShips as the selling shareholder.
Although, in 2007, DryShips acquired a majority stake in Ocean
Rig but in the recent years it has partially divested the
division and currently holds a 65% stake in the company. The
Norwegian shipping company has increased the offering of Ocean
Rig common shares to 7,500,000, which will translate into a total
issue proceed of about $126.4 million. The issue, which is
expected to close on Feb 14, 2013 will cut DryShips' stake in the
unit to 59.4%.
The drybulk shipping industry is cyclical in nature with
volatility in charter hire rates and profitability. Though
DryShips' legacy drybulk shipping cargo division and newly formed
oil tanker division continue their pathetic performances, the oil
rig business is delivering good results for the company.
The acquisition of 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
The offshore drilling division continues to flourish buoyed by
rising expenditures from oil companies and success in ultra deep
water oil field discoveries. The deepwater oil drilling segment
is currently witnessing shortages of rigs throughout the world,
as the energy companies have raised the level of production.
At the end of the third quarter of 2012, Ocean Rig had
approximately $4.5 billion of order backlog over the next three
years. We believe the company is issuing the shares to purchase
more high quality drillship fleets, which will boost DryShips'
top line going forward.
Other Stocks to Consider
Some other stocks in the shipping industry that are currently
performing well are
). Frontline currently have a Zacks Rank #2 (Buy) while
StealthGas carries a Zacks Rank # 3 (Hold).
Currently, DryShips carries a Zacks Rank #3 (Hold).
DRYSHIPS INC (DRYS): Free Stock Analysis
FRONTLINE LTD (FRO): Free Stock Analysis
STEALTHGAS INC (GASS): Free Stock Analysis
OCEAN RIG UDW (ORIG): Free Stock Analysis
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