DryShips Pays U.S. $405 Million for Ocean Rig Stake

DryShips Inc. has entered into an agreement to acquire approximately 30.4% of the issued and outstanding shares and voting rights in Ocean Rig ASA, an offshore drilling contractor listed on the Oslo Stock Exchange (OSLO: OCR).

Ocean Rig owns and operates two ultra deepwater (UDW), modern, high specification, fifth generation, harsh environment semi submersible drilling rigs, built to operate in water depth capacity of between 7,500 to 10,000 feet. Both rigs are presently on charter to ExxonMobil and Shell.

The company will finance the U.S. $405 million investment with U.S. $162 million cash and a $243 million debt. After payment of the cash portion of the acquisition price, Dryships Inc. does not expect any additional expenses related to its investment in Ocean Rig ASA.

George Economou, chairman and CEO of DryShips Inc., has also, in separate transactions, acquired approximately 4.4% of the share capital of Ocean Rig ASA.

"Ocean Rig is uniquely positioned to immediately capitalize on the very strong demand for ultra deepwater drilling rigs that is expected to prevail over the next five to 10 years as exploration and production of fossil fuels moves further offshore into deeper waters," Economou commented. "On the back of these strong demand fundamentals, the current limited supply of UDW drilling rigs worldwide is expected to worsen over the next few years, resulting in significantly higher day rates for operators of these assets.

"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," he continued. "The Eirik Raude is the first deepwater drilling rig available for charter in the world when its current employment contract expires in July 2008 and the Leiv Eiriksson, Ocean Rig's second UDW drilling rig, is one of the few rigs available for employment in 2009."