DryShips (DRYS) Stock Surges 15% On Contract Extension

DryShips, Inc. (DRYS) rallied 15% in early trading on Monday after the company announced it expects its 3Q EBITDA to be within the range of $265 million to $300 million. The company also announced the following:

“Ocean Rig [DryShip’s majority owned subsidiary of offshore deepwater drilling services] has agreed to provide DryShips with $120M of immediate liquidity through a short-term unsecured loan. The proceeds will be used, if needed, to repay its 5% Convertible Notes maturing on Dec. 1, 2014.

Ocean Rig has declared its third consecutive quarterly cash dividend with respect to the quarter ended September 30, 2014, of $0.19 per common share, to shareholders of record as of October 31, 2014, and payable on or about November 11, 2014.

Ocean Rig has been awarded extensions of the drilling contracts for its two ultra deepwater drillships the Ocean Rig Corcovado and the Ocean Rig Mykonos by Petróleo Brasileiro S.A. (“Petrobras”) for drilling offshore Brazil. The contracts extensions are subject to partner approvals. The term of each extension is for 1,095 days with a total combined revenue backlog of over $1.1 billion, excluding reimbursement by Petrobras for contract related equipment upgrades. The new contracts will commence in direct continuation from the end of the current agreements with Petrobras, in Q1 and Q2 of 2015.

Ocean Rig signed an amendment with Total E&P Angola to extend the date by which Total E&P Angola should exercise the option to extend the term of the contract for two additional one-year periods. The first option is now exercisable until February 27, 2015 and the second option exercisable within one year after the date of exercise of the first option.”

DRYS shares recently gained $0.20 to $1.89. Approximately 4,507,304 shares have already changed hands compared to the stock’s average daily volume of 6,986,970.

In the past 52 weeks, shares of Athens, Greece-based company have traded between a low of $1.32 and a high of $5.00. Shares are down 51.58% year-over-year and 64.04% year-to-date.

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