DryShips Inc. Reports Its Financial and Operating Results for the Second Quarter Ended June 30, 2009

• Press Release
• Source: DryShips Inc.
• On 4:05 pm EDT, Thursday July 30, 2009

ATHENS, GREECE--(Marketwire - 07/30/09) - DryShips Inc. (NASDAQ:DRYS - News), a global provider of marine transportation services for drybulk cargoes and offshore oil deep water drilling, today announced its unaudited financial and operating results for the second quarter and six month period ended June 30, 2009.

Second Quarter 2009 Financial Highlights

�
--  For the second quarter of 2009, the Company reported a net profit of
    $52.8 million or $0.24 basic and diluted profit per share. Included in the
    second quarter results are (i) a loss related to contract termination fees
    and forfeiture of vessel deposits of $44.8 million or $0.21 per share, (ii)
    a non cash gain of $51.6 million or $0.24 per share associated with the
    valuation of the Company's interest rate swaps and (iii) amortization of
    stock based compensation of $9.5 million or $0.04 per share. Excluding
    these items, net income would amount to $55.5 million or $0.25 per share.
    

George Economou, Chairman and Chief Executive Officer of the Company, commented:

"We are pleased to report another quarter of profitable operating results for DryShips as both our drilling and dry bulk units continued to perform at high utilization rates. The last several months the dry bulk freight markets have recovered to healthy levels led by strong growth in China. The stimulus plan implemented by the Chinese government earlier in the year has translated into accelerated infrastructure development and increased commodity demand. Steel prices are on the rise and are providing healthy margins to steel mills. We are also beginning to see signs of improvement from other regions, with steel mills in Europe, Japan and elsewhere restarting idle capacity. We have taken advantage of this strengthening and now have approximately 87% of our shipdays in 2009 and 2010 fixed at healthy levels and can always leverage the volatility in freight rates in the future through further vessel acquisitions. DryShips now has $1.6 billion in fixed EBITDA from its dry bulk and offshore units over the next 2.5 years. The steps taken by the company to strengthen its balance sheet, earlier in the year, have positioned us to take advantage of distressed deals that are beginning to surface despite the improvement in freight rates."

Financial Review: 2009 Second Quarter

The Company recorded a net profit of $52.8 million, or $0.24 basic and diluted loss per share for the three-month period ended June 30, 2009, as compared to a net profit of $299.8 million, or $6.95 basic and diluted earnings per share for the three-month period ended June 30, 2008. EBITDA, which is defined and reconciled later in this press release, was $127.0 million for the second quarter of 2009 as compared to $359.8 million for the same period in 2008.

Included in the second quarter 2009 results are (i) a loss related to contract termination fees and forfeiture of vessel deposits of $44.8 million or $0.21 per share, (ii) a non cash gain of $51.6 million or $0.24 per share associated with the valuation of the Company's interest rate swaps and (iii) amortization of stock based compensation of $9.5 million or $0.04 per share. Excluding these items, net income would amount to $55.5 million or $0.25 per share.

Following our acquisition of Ocean Rig in the second quarter of 2008, we have two reportable segments, the drybulk carrier segment and the offshore drilling segment.

For the drybulk carrier segment, net voyage revenues (voyage revenues minus voyage expenses) decreased by $145.1 million to $99.9 million for the three-month period ended June 30, 2009, as compared to $245.0 million for the three-month period ended June 30, 2008. The decrease is attributable to the substantially lower freight market during the three-month period ended June 30, 2009 as compared to the second quarter of 2008. For the offshore drilling segment, revenues from drilling contracts amounted to $103.6 million for the three-month period ended June 30, 2009 as compared to $43.8 for the same period in 2008; however, this increase was mainly due to the drilling rig segment being consolidated for less than a full quarter in the second quarter of 2008.(1)

Total vessel and rig operating expenses and total depreciation and amortization increased to $53.2 million and $48.7 million, respectively, for the three-month period ended June 30, 2009 from $33.3 million and $33.5 million, respectively, for the three-month period ended June 30, 2008. This increase in these expenses is primarily due to the drilling rig segment being consolidated for less than a full quarter in the second quarter of 2008.(1) Total general and administrative expenses increased to $21.9 million from $19.6 million during the comparative periods mainly due to general and administrative expenses from our offshore drilling segment which was consolidated for less than a full quarter in the second quarter of 2008.(1)

Loss on contract cancellations was $44.8 million during the three-month period ended June 30, 2009 and is attributable to the sale of our interest in the owning company which had contracted for the purchase of a newbuilding drybulk carrier to an unrelated party in which we forfeited deposits of $22.8 million, made a cash payment of $20.0 million and wrote-off other capitalized expenses of $2.0 million.

Interest and finance costs net of interest income decreased to $22.1 million for the three-month period ended June 30, 2009, compared to $25.7 million for the three-month period ended June 30, 2008. This decrease primarily stems from the decline in interest rates during the three-month period ended June 30, 2009, as compared to the same period in 2008.

(1) We gained control of Ocean Rig on May 15, 2008 and commenced consolidation of this entity at that date. Accordingly, for the second quarter of 2008, our drilling rig segment contributed approximately 1.5 months of revenues and expenses to our consolidated totals.

Other Developments

Appointments of Directors

On July 29, 2009, the Board of Directors appointed Mr. Harry Kerames and Mr. Vassilis Karamitsanis to the Board of Directors as independent directors.

Harry Kerames has over 21 years of experience in the transportation industry. Mr. Kerames has been the Managing Director of Global Capital Finance where he was responsible for the firm's shipping practice. Prior to joining Global Capital Finance in 2006, he was the Chief Marketing Officer at Charles R. Weber Company Inc., where he brokered the freight derivative business, and co-founded a freight derivatives hedge fund. Mr. Kerames has also held various directorships, senior level marketing positions, and consultative roles with Illinois Central Railroad, Genstar Corporation, Motive Power Industries, Hub Group Distribution Services, and Ship and Transportation Equipment Finance and Oceanfreight Inc. Mr. Kerames is a member of the Baltic Exchange, the Hellenic American Chamber of Commerce, and the Connecticut Maritime Association. Mr. Kerames graduated with a Bachelor of Science from the University of Connecticut.

Vassilis Karamitsanis is an attorney and a founding partner of SigmaKappaSigma Law Offices. From 2007 to 2009, Mr. Karamitsanis was the Head of the legal department at Karouzos Construction & Development Group. Mr. Karamitsanis has also previously served as a legal advisor to Dimand Real Estate Development and LPSA Consultants SA, and as a special advisor to the Hellenic Ministry of Health & Welfare. He is a member of the Athens Bar Association and practices real estate, corporate, domestic and international contracting, telecommunications, and energy law. Mr. Karamitsanis graduated from Athens College Lyceum, and received his law degree from Aristotle University of Thessaloniki. He also holds a postgraduate degree in Economic Analysis of Law from Erasmus University of Rotterdam, and a postgraduate degree in Economic Analysis of Institutions from University Aix-Marseille III, Aix-en-Provence.

George Xiradakis, Chairman of the Nominating Committee, commented: "We welcome Harry Kerames and Vassilis Karamitsanis to the Board of Directors of DryShips Inc. After a rigorous screening process, we selected these two distinguished individuals who we believe have the credentials and experience to add value to DryShips. With these appointments the Company continues to satisfy NASDAQ corporate governance standards requiring a board comprised of a majority of independent directors."

Fleet List

The table below describes our drybulk fleet profile as of July 30, 2009:

�
                  Year                      Gross rate  Redelivery
                  Built     DWT      Type    per day     Earliest   Latest

Fixed rate
 employment

Capesize:
Alameda            2001   170,269  Capesize  $  21,000    Feb-11    May-11
Brisbane           1995   151,066  Capesize  $  25,000    Dec-11    Apr-12
Capri              2001   172,579  Capesize  $  61,000    Apr-18    Jun-18
Flecha             2004   170,012  Capesize  $  55,000    Jul-18    Nov-18
Manasota           2004   171,061  Capesize  $  67,000    Feb-13    Apr-13
Mystic             2008   170,500  Capesize  $  52,310    Aug-18    Dec-18
Samsara            1996   150,393  Capesize  $  57,000    Dec-11    Apr-12

Panamax:
Avoca              2004    76,500   Panamax  $  45,500    Sep-13    Dec-13
Bargara            2002    74,832   Panamax  $  43,750    May-12    Jul-12
Capitola           2001    74,832   Panamax  $  39,500    Jun-13    Aug-13
Catalina           2005    74,432   Panamax  $  40,000    Jun-13    Aug-13
Conquistador       2000    75,607   Panamax  $  17,750    Aug-11    Nov-11
Coronado           2000    75,706   Panamax  $  18,250    Aug-11    Oct-11
Ecola              2001    73,931   Panamax  $  43,500    Jun-12    Aug-12
Iguana *           1996    70,349   Panamax  $  13,456    Sep-11    Sep-11
La Jolla           1997    72,126   Panamax  $  14,750    Aug-11    Nov-11
Levanto            2001    73,931   Panamax  $  16,800    Sep-11    Nov-11
Ligari             2004    75,583   Panamax  $  55,500    Jun-12    Aug-12
Maganari           2001    75,941   Panamax  $  14,500    Jul-11    Sep-11
Majorca            2005    74,364   Panamax  $  43,750    Jun-12    Aug-12
Marbella           2000    72,561   Panamax  $  14,750    Aug-11    Nov-11
Mendocino          2002    76,623   Panamax  $  56,500    Jun-12    Sep-12
Ocean Crystal      1999    73,688   Panamax  $  15,000    Aug-11    Nov-11
Oregon             2002    74,204   Panamax  $  16,350    Aug-11    Oct-11
Padre              2004    73,601   Panamax  $  46,500    Sep-12    Dec-12
Positano           2000    73,288   Panamax  $  42,500    Sep-13    Dec-13
Rapallo            2009    75,000   Panamax  $  15,400    Aug-11    Oct-11
Redondo            2000    74,716   Panamax  $  34,500    Apr-13    Jun-13
Saldanha           2004    75,500   Panamax  $  52,500    Jun-12    Sep-12
Samatan            2001    74,823   Panamax  $  39,500    Jun-13    Aug-13
Toro               1995    73,034   Panamax  $  16,750    May-11    Jul-11
Xanadu             1999    72,270   Panamax  $  39,750    Jul-13    Sep-13

Supramax:
Pachino (ex VOC
 Galaxy)           2002    51,201  Supramax  $  20,250    Sep-10    Feb-11
Paros I (ex
 Clipper
 Gemini)           2003    51,201  Supramax  $  27,135    Oct-11    May-12

New Buildings
Oliva              2009    75,000   Panamax  $  17,850    Oct-11    Dec-11

Spot rate
 employment

Panamax:
Delray             1994    71,862   Panamax
Primera            1998    72,495   Panamax
Sonoma             2001    74,786   Panamax
Sorrento           2004    76,633   Panamax

New Buildings
N/B Hull No:
 SS58              2010    82,000 Kamsarmax
N/B Hull No:
 SS59              2010    82,000 Kamsarmax


* Based on a synthetic time charter





                    Summary Operating Data (unaudited)

           (Dollars in thousands, except average daily results)


                                    Three Months Ended   Six Months Ended
                                         June 30,            June 30,
                                    ------------------  ------------------
                                      2008      2009      2008      2009
                                    --------  --------  --------  --------
Average number of vessels(1)            38.5      37.3      38.4      37.5
Total voyage days for vessels(2)       3,465     3,358     6,917     6,633
Total calendar days for vessels(3)     3,504     3,394     6,989     6,785
Fleet utilization(4)                    98.9%     99.0%     99.0%     97.8%
Time charter equivalent(5)          $ 70,701  $ 29,752  $ 66,921  $ 28,458
Vessel operating expenses
 (daily)(6)                         $  5,673  $  5,266  $  5,387  $  5,317

(1) Average number of vessels is the number of vessels that constituted our fleet for the relevant period, as measured by the sum of the number of days each vessel was a part of our fleet during the period divided by the number of calendar days in that period.

(2) Total voyage days for fleet are the total days the vessels were in our possession for the relevant period net of off hire days.

(3) Calendar days are the total number of days the vessels were in our possession for the relevant period including off hire days.

(4) Fleet utilization is the percentage of time that our vessels were available for revenue generating voyage days, and is determined by dividing voyage days by fleet calendar days for the relevant period.

(5) Time charter equivalent, or TCE, is a measure of the average daily revenue performance of a vessel on a per voyage basis. Our method of calculating TCE is consistent with industry standards and is determined by dividing voyage revenues (net of voyage expenses) by voyage days for the relevant time period. Voyage expenses primarily consist of port, canal and fuel costs that are unique to a particular voyage, which would otherwise be paid by the charterer under a time charter contract, as well as commissions. TCE is a standard shipping industry performance measure used primarily to compare period-to-period changes in a shipping company's performance despite changes in the mix of charter types (i.e., spot charters, time charters and bareboat charters) under which the vessels may be employed between the periods.

�
                                    Three Months Ended   Six Months Ended
                                         June 30,            June 30,
                                    ------------------  ------------------
                                      2008      2009      2008      2009
                                    --------  --------  --------  --------
Voyage revenues                      258,921   106,866   490,984   204,468
Voyage expenses                      (13,942)   (6,959)  (28,092)  (15,705)
                                    --------  --------  --------  --------
Time charter equivalent revenues     244,979    99,907   462,892   188,763
                                    --------  --------  --------  --------
Total voyage days for fleet            3,465     3,358     6,917     6,633
Time charter equivalent TCE           70,701    29,752    66,921    28,458

(6) Daily vessel operating expenses, which includes crew costs, provisions, deck and engine stores, lubricating oil, insurance, maintenance and repairs is calculated by dividing vessel operating expenses by fleet calendar days for the relevant time period.

�
                           Financial Statements

            Unaudited Condensed Consolidated Income Statements



(Expressed in Thousands
 of U.S. Dollars
 except for share and
 per share data)           Three Months Ended         Six Months Ended
                                June 30,                  June 30,
                        ------------------------  ------------------------
                            2008         2009         2008         2009
                        -----------  -----------  -----------  -----------

REVENUES:
Voyage revenues         $   258,921  $   106,866  $   490,984  $   204,468
Revenues from drilling
 contracts                   43,795      103,618       43,795      202,632
                        -----------  -----------  -----------  -----------
                            302,716      210,484      534,779      407,100

EXPENSES:
Voyage expenses              13,942        6,959       28,092       15,705
Vessel operating
 expenses                    19,877       17,873       37,650       36,078
Drilling rigs operating
 expenses                    13,388       35,299       13,388       69,326
Depreciation and
 amortization                33,517       48,736       57,935       97,153
Loss (gain) on sale of
 vessels                   (135,815)           6     (160,258)      (2,432)
Loss on contract
 cancellations, net               -       44,764            -      215,532
General and
 administrative
 expenses                    19,642       21,929       25,347       43,420
                        -----------  -----------  -----------  -----------

Operating income /
 (loss)                     338,165       34,918      532,625      (67,682)

OTHER INCOME /
 (EXPENSES):
Interest and finance
 costs, net of interest
 income                     (25,652)     (22,097)     (38,544)     (48,654)
Gain on interest rate
 swaps                       12,153       51,576        6,079       60,294
Other, net                      518       (2,074)         499         (535)
Equity in income of
 investee                    (7,750)           -       (6,893)           -
Income taxes                   (867)      (3,453)        (867)      (6,354)
                        -----------  -----------  -----------  -----------
Total other income /
 (expenses), net            (21,598)      23,952      (39,726)       4,751
                        -----------  -----------  -----------  -----------

Net income / (loss)         316,567       58,870      492,899      (62,931)

Net income attributable
 to Noncontrolling
 interests                  (16,813)      (6,115)     (16,813)      (6,115)
                        -----------  -----------  -----------  -----------

Net income / (loss)
 attributable
 to Dryships Inc.
 common stockholders    $   299,754  $    52,755  $   476,086  $   (69,046)
                        ===========  ===========  ===========  ===========

Earnings per common
 share, basic           $      6.95  $      0.24  $     11.67  $     -0.42
Weighted average number
 of shares, basic        42,150,753  216,344,623   40,173,941  163,011,168

Earnings per common
 share, diluted         $      6.95  $      0.24  $     11.67  $     -0.42
Weighted average number
 of shares, diluted      42,208,141  216,344,623   40,177,016  163,011,168





              Unaudited Condensed Consolidated Balance Sheets


(Expressed in Thousands of U.S.
 Dollars except for share and per
 share data)                          December 31, 2008    June 30, 2009
                                      ------------------ ------------------

ASSETS
CURRENT ASSETS:
  Cash and cash equivalents           $          303,114 $          475,904
  Restricted cash                                320,560            334,783
  Trade accounts receivable, net                  52,441             28,777
  Other current assets                            44,312             52,855
                                      ------------------ ------------------
  Total current assets                           720,427            892,319
                                      ------------------ ------------------

FIXED ASSETS, NET:
  Advances for vessels under
   construction and acquisitions                 535,616          1,100,502
  Vessels, net                                 2,134,650          2,084,220
  Drilling rigs, machinery and
   equipment, net                              1,393,158          1,360,127
                                      ------------------ ------------------
  Total fixed assets, net                      4,063,424          4,544,849
                                      ------------------ ------------------

OTHER NON CURRENT ASSETS:
  Other non-current assets                        58,829             64,918
                                      ------------------ ------------------
Total non current assets, net                     58,829             64,918
                                      ------------------ ------------------
  Total assets                        $        4,842,680 $        5,502,086
                                      ================== ==================

LIABILITIES AND STOCKHOLDERS� EQUITY

CURRENT LIABILITIES:
  Current portion of long-term debt   $        2,370,556 $        1,839,846
  Other current liabilities                      154,492            135,237
                                      ------------------ ------------------
  Total current liabilities                    2,525,048          1,975,083
                                      ------------------ ------------------

NON CURRENT LIABILITIES
  Long term debt, net of current
   portion                                       788,314            728,069
  Other non-current liabilities                  237,746            119,787
                                      ------------------ ------------------
Total non current liabilities                  1,026,060            847,856
                                      ------------------ ------------------

COMMITMENTS AND CONTINGENCIES                          -                  -

STOCKHOLDERS� EQUITY:
  Total Dryships Inc. stockholders�
   equity                                      1,291,572          2,283,727
  Noncontrolling interests                             -            395,420
                                      ------------------ ------------------
  Total equity                                 1,291,572          2,679,147
                                      ------------------ ------------------
  Total liabilities and equity        $        4,842,680 $        5,502,086
                                      ================== ==================

EBITDA Reconciliation

EBITDA represents net income before interest, taxes, depreciation and amortization. EBITDA does not represent and should not be considered as an alternative to net income or cash flow from operations, as determined by United States generally accepted accounting principles, or U.S. GAAP, and our calculation of EBITDA may not be comparable to that reported by other companies. EBITDA is included herein because it is a basis upon which the Company assesses its liquidity position, it is used by our lenders as a measure of our compliance with certain loan covenants and because the Company believes that it presents useful information to investors regarding a company's ability to service and/or incur indebtedness.

The following table reconciles net income to EBITDA:

�
                   Three Months  Three Months   Six Months    Six Months
(Dollars in            Ended         Ended         Ended         Ended
 thousands)        June 30, 2008 June 30, 2009 June 30, 2008 June 30, 2009
                   ------------- ------------- ------------- -------------

Net income / (loss)      299,754        52,755       476,086       (69,046)

Add: Net interest
 expense                  25,652        22,097        38,544        48,654
Add: Depreciation
 and amortization         33,517        48,736        57,935        97,153
Add: Income taxes            867         3,453           867         6,354

                   ------------- ------------- ------------- -------------
EBITDA                   359,790       127,041       573,432        83,115
                   ============= ============= ============= =============

Conference Call and Webcast: Friday, July 31st, 2009

As announced, the Company's management team will host a conference call, on Friday, July 31, 2009 at 8:00 AM Eastern Daylight Time to discuss the Company's financial results.

Conference Call Details

Participants should dial into the call 10 minutes before the scheduled time using the following numbers: 1(866) 819-7111 (from the US), 0(800) 953-0329 (from the UK) or +(44) 1452 542 301 (from outside the US). Please quote "DryShips."

A replay of the conference call will be available until August 2, 2009. The United States replay number is 1(866) 247-4222; from the UK 0(800) 953-1533; the standard international replay number is (+44) (0) 1452 55 00 00 and the access code required for the replay is: 2133051#

A replay of the conference call will also be available on the Company's website at www.dryships.com under the Investor Relations section.

Slides and Audio Webcast

There will also be a simultaneous live webcast over the Internet, through the DryShips Inc. website (www.dryships.com). Participants to the live webcast should register on the website approximately 10 minutes prior to the start of the webcast.

About DryShips Inc.

DryShips Inc., based in Greece, is an owner and operator of drybulk carriers and offshore oil deep water drilling that operate worldwide. As of the day of this release, DryShips owns a fleet of 41 drybulk carriers comprising seven Capesize, 29 Panamax, two Supramax and three newbuilding drybulk vessels, with a combined deadweight tonnage of over 3.6 million tons, 2 ultra deep water semisubmersible drilling rigs and 4 ultra deep water newbuilding drillships.

DryShips Inc.'s common stock is listed on the NASDAQ Global Market where it trades under the symbol "DRYS."

Visit the Company's website at www.dryships.com

Forward-Looking Statement

Matters discussed in this release may constitute forward-looking statements. Forward-looking statements reflect our current views with respect to future events and financial performance and may include statements concerning plans, objectives, goals, strategies, future events or performance, and underlying assumptions and other statements, which are other than statements of historical facts.

The forward-looking statements in this release are based upon various assumptions, many of which are based, in turn, upon further assumptions, including without limitation, management's examination of historical operating trends, data contained in our records and other data available from third parties. Although DryShips Inc. believes that these assumptions were reasonable when made, because these assumptions are inherently subject to significant uncertainties and contingencies which are difficult or impossible to predict and are beyond our control, DryShips Inc. cannot assure you that it will achieve or accomplish these expectations, beliefs or projections.

Important factors that, in our view, could cause actual results to differ materially from those discussed in the forward-looking statements include the strength of world economies and currencies, general market conditions, including changes in charterhire rates and vessel values, changes in demand that may affect attitudes of time charterers to scheduled and unscheduled drydocking, changes in DryShips Inc.'s operating expenses, including bunker prices, dry-docking and insurance costs, or actions taken by regulatory authorities, potential liability from pending or future litigation, domestic and international political conditions, potential disruption of shipping routes due to accidents and political events or acts by terrorists.

Risks and uncertainties are further described in reports filed by DryShips Inc. with the US Securities and Exchange Commission.

 
Investor Relations / Media:
Nicolas Bornozis
Capital Link, Inc. (New York)
Tel. 212-661-7566
E-mail: dryships@capitallink.com