DryShips Inc. Reports Second Quarter 2008 Results

DryShips Inc. (NASDAQ: DRYS), a global provider of marine transportation services for drybulk cargoes, today announced its unaudited financial and operating results for the second quarter and first half ended June 30, 2008.

Financial Highlights

--  The Company reported Net Income of $299.8 million or $7.10 per fully
    diluted share for the second quarter of 2008. Included in the second
    quarter results is a capital gain on the sale of three vessels of $135.8
    million or $3.21 per fully diluted share and a non-cash gain of $12.2
    million or $0.29 per fully diluted share associated with the valuation of
    interest rate swaps. Excluding these items Net Income would amount to
    $151.8 million or $3.60 per fully diluted share.

--  For the second quarter of 2008 the Company reported adjusted
    EBITDA(1), excluding vessel gains and a non-cash gain on interest rate
    swaps, of $199.2 million.

--  In July 2008 the Company declared its thirteenth consecutive quarterly
    cash dividend of $0.20 per common share.

(1) Please see later in this release for a reconciliation of EBITDA to Net cash provided by operating activities.

George Economou, the Company's Chairman and Chief Executive Officer of DryShips Inc., commented:

"I am pleased to report another quarter with very strong operational and financial performance. During this quarter we continued with the consistent implementation of our strategy both in the Drybulk and the Ultra Deep Water drilling (UDW) sectors.

In the drybulk sector, consistent with our belief in the positive long term fundamentals of the drybulk market, we continued with our fleet renewal and expansion replacing older tonnage with newer and larger vessels. When all the S&P transactions announced to date have been completed, by the end of the first quarter of 2009 we expect to have a fleet of 47 vessels (including 7 newbuilding drybulk carriers) with an average age of 6.9 years, well below the industry average. This reaffirms our leadership position and puts the Company in a unique position to consolidate the drybulk sector.

Our exposure to the spot market continues to prove very beneficial for our Company as we have been able to take advantage of the record freight rates. At the same time, by also gradually securing 68.5% of our fleet under time charters for the remainder of 2008, 55% for 2009, 49.7% for 2010 and 46.7% for 2011 we have locked in sizeable cash flows which enhance the visibility and stability of our earnings for the longer term.

In the UDW drilling sector, we are successfully executing our previously announced plans. We have arranged financing for the 2 UDW drillships on order at Samsung, and have successfully completed the OCR acquisition by de-listing the company from the Oslo Stock Exchange.

We continue to remain focused on maximizing shareholders value and delivering superior results."

Second Quarter 2008 Results

Following our acquisition of Ocean Rig, we have two reportable segments, the drybulk carrier segment and offshore drilling rig segment. For the second quarter ended June 30, 2008, Net Voyage Revenues (Voyage Revenues less Voyage Expenses) amounted to $245.0 million as compared to $105.5 million for the second quarter ended June 30, 2007. For the second quarter ended June 30, 2008, revenues from drilling contracts following the acquisition of Ocean Rig amounted to $43.8 million. We did not earn any revenues from drilling contracts in the quarter ended June 30, 2007. Operating Income, from both segments, was $338.2 million for the quarter ended June 30, 2008, as compared to $121.5 million for the quarter ended June 30, 2007. Net Income, from both segments, for the second quarter ended June 30, 2008 was $299.8 million or $7.10 Earnings Per Share (EPS) calculated on 42,208,140 weighted average fully diluted shares outstanding as compared to $110.8 million or $3.12 EPS calculated on 35,490,097 weighted average fully diluted shares outstanding for the quarter ended June 30, 2007. EBITDA, from both segments, for the second quarter of 2008 was $347.1 million as compared to $139.4 million in the quarter ended June 30, 2007.

An average of 38.5 vessels were owned and operated during the second quarter of 2008, earning an average Time Charter Equivalent, or TCE, rate of $70,701 per day as compared to an average of 32.7 vessels owned and operated during the second quarter of 2007 earning an average TCE rate of $36,092 per day. During the period from May 14, 2008 through June 30, 2008, the two drilling rigs that we acquired through Ocean Rig operated at an average daily rate of $512,222.

First Half 2008 Results

Following our acquisition of Ocean Rig, we have two reportable segments, the drybulk carrier segment and offshore drilling rig segment. For the first half ended June 30, 2008, Net Voyage Revenues (Voyage Revenues less Voyage Expenses) amounted to $462.9 million as compared to $186.9 million for the first half ended June 30, 2007. For the first half ended June 30, 2008, revenues from drilling contracts amounted to $43.8 million. We did not earn any revenues from drilling contracts in the first half ended June 30, 2007. Operating Income, from both segments, was $532.6 million for the first half ended June 30, 2008, as compared to $200.0 million for the first half ended June 30, 2007. Net Income, from both segments, for the first half ended June 30, 2008 was $476.1 million or $11.85 EPS calculated on 40,177,016 weighted average fully diluted shares outstanding as compared to $178.6 million or $5.03 EPS calculated on 35,490,097 weighted average fully diluted shares outstanding for the first half ended June 30, 2007. EBITDA, from both segments, for the first half of 2008 was $566.9 million as compared to $234.0 million for the first half ended June 30, 2007.