DryShips Inc. Reports Financial and Operating Results for the First Quarter 2012
Wednesday, 30 May 2012 | 12:24
DryShips Inc., 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., or Ocean Rig, of off-shore deepwater drilling services,
announced its unaudited financial and operating results for the first
quarter ended March 31, 2012. First Quarter 2012 Financial Highlights
• For the first quarter of 2012, the Company reported
a net loss of $47.5 million, or $0.12 basic and diluted loss per share. This loss is mainly attributable to downtime and mobilization related to the commencement of new contracts of our subsidiary, Ocean Rig.
Included in the first quarter 2012 results are charges to our subsidiary, Ocean Rig, relating to an out-of-court settlement and associated legal costs for $6.4 million, or $0.01 per share. As has been previously disclosed, a legal claim was made by Ocean Rig's manager in Angola for the reimbursement of import/export duties levied by the Angolan government for the period 2002 to 2007 when the Leiv Eiriksson operated in Angola. An agreement has been reached for an amount paid by the Company in full and final settlement of the London High Court proceedings.
• The Company reported Adjusted EBITDA of $105.5 million for the first quarter of 2012 as compared to $107.1 million for the first quarter of 2011.(1)
• On May 15, 2012 the Ocean Rig Corcovado completed the general testing of equipment as required by Petroleo Brazilieiro S.A., and has commenced revenue-generating drilling operations in Brazil.
• On May 14 and May 9, 2012, Ocean Rig signed amendments under its $990 million senior secured credit facilities and $800 million senior secured term loan agreement, respectively, to, among other things, allow: Ocean Rig UDW Inc. to pay dividends in an amount up to 50% of its net income subject to certain conditions being met; allow borrowers, which are subsidiaries of Ocean Rig, to pay dividends to Ocean Rig UDW Inc., as long as certain conditions are met; and remove all cross-default or cross-acceleration clauses relating to the debt of DryShips Inc.
• On May 10, 2012 Ocean Rig signed definitive documentation for the Ocean Rig Olympia with Total E&P Angola ("Total"). The contract is for a three-year period for drilling offshore West Africa, with an estimated backlog of approximately $652 million. Total has the option to extend the contract for two periods of one year each.
• On May 4, 2012, the vessel Positano was delivered to her new owners resulting in a gain of approximately $0.5 million.
• On April 25, 2012, the vessel Lipari was delivered to the Company.
• On April 17, 2012 the Company completed a public offering of an aggregate of 11,500,000 common shares of Ocean Rig owned by Dryships, resulting in net proceeds to the Company of approximately $180.8 million.
George Economou, Chairman and Chief Executive Officer of the Company, commented:
"The build out of Ocean Rig continues as all six rigs are now operating on contracts. The short term contracts we had taken during 2010 and 2011 will all play out over the next twelve months, after which all the rigs will be on long-term contracts. This year we have entered into two three-year contracts with Total, solely on the Ocean Rig Olympia and as lead operator on the Leiv Eiriksson contract. With these contracts our total backlog has increased to $2.9 billion and provides good cash flow visibility.
"The outlook for the ultra deepwater drilling industry is very positive given the high level of demand we are seeing around the globe and we believe Ocean Rig is well positioned, with five drilling units open for employment in 2013, to capitalize on the continuing strength in industry fundamentals.
"On the shipping side, charter rates continue to be low, but we believe that our defensive chartering strategy and fleet modernization, coupled with our strong balance sheet and access to liquidity, will help us weather the storm and participate in an ensuing recovery in the shipping markets. Specifically we have 49%, of our remaining operating days in 2012, in the drybulk segment under fixed rate charters at an average rate of about $31,249 per day. On the tanker side, with the recent delivery of the Lipari, our brand-new fleet, one of the youngest in the industry, currently includes four Aframax and two Suezmax tankers and is expected to grow to a total of 6 Aframax and 6 Suezmax tankers by the end of 2013.
"In April we sold 11.5 million shares of Ocean Rig common stock thereby reducing our ownership in Ocean Rig to 65.2%. As a result, we received net proceeds of approximately $180.8 million which significantly strengthened our balance sheet while at the same time we managed to increase Ocean Rig's visibility in the US market and its public float."
Financial Review: 2012 First Quarter
The Company recorded net loss of $47.5 million, or $0.12 basic and diluted loss per share, for the three-month period ended March 31, 2012, as compared to net income of $25.8 million, or $0.07 basic and diluted earnings per share, for the three-month period ended March 31, 2011. Adjusted EBITDA was $105.5 million for the first quarter of 2012 as compared to $107.1 million for the same period in 2011.
For the drybulk carrier segment, net voyage revenues (voyage revenues minus voyage expenses) amounted to $72.4 million for the three-month period ended March 31, 2012, as compared to $90.5 million for the three-month period ended March 31, 2011. For the offshore drilling segment, revenues from drilling contracts increased by $53.7 million to $163.0 million for the three-month period ended March 31, 2012 as compared to $109.3 million for the same period in 2011. For the tanker segment, net voyage revenues amounted to $7.2 million for the three-month period ended March 31, 2012 as compared to $1.0 million for the same period in 2011.
Total vessels', drilling rigs' and drillships' operating expenses and total depreciation and amortization increased to $106.9 million and $82.0 million, respectively, for the three-month period ended March 31, 2012, from $62.9 million and $55.9 million, respectively, for the three-month period ended March 31, 2011. Total general and administrative expenses increased to $32.6 million in the first quarter of 2012 from $26.7 million during the comparative period in 2011.
Interest and finance costs, net of interest income, amounted to $52.2 million for the three-month period ended March 31, 2012, compared to $15.6 million for the three-month period ended March 31, 2011.
Source: DryShips Inc.