DryShips Inc. Reports Third Quarter 2008 Results

Market Wire, November, 2008

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

Financial Highlights

--  The Company reported Net Income of $180.0 million or $4.21 per fully
    diluted share for the third quarter of 2008. Included in the third quarter
    results is a capital gain on the sale of two vessels of $65.8 million or
    $1.54 per fully diluted share and a non-cash loss of $36.8 million or $0.86
    per fully diluted share associated with the valuation of interest rate
    swaps. Excluding these items Net Income would amount to $151.0 million or
    $3.53 per fully diluted share.
--  For the third quarter of 2008 the Company reported EBITDA(1),
    excluding vessel gains, of $194.2 million.
--  In September 2008 the Company declared its fourteenth 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, Company's Chairman and Chief Executive Officer of DryShips Inc., commented:

"We are pleased to report another quarter with solid operational and financial results. Taking advantage of the strong freight rate environment prevailing in the second and third quarters of 2008, we gradually shifted our chartering strategy from spot to period with optimal timing. As of today, going forward, we have secured half a billion of revenues per year, having covered annually between 54% and 59% of our drybulk fleet operating days under fixed time charters with an average duration of five years. Furthermore, the diversification of our charterers among a first class base minimizes our counterparty risk.

"DryShips is also in a strong financial condition with cash of $456 million and another $1.224 billion of available committed bank lines, thereby providing us with total liquidity of $ 1.6 billion. Therefore, we believe that we have secured the future of our core dry bulk shipping business while enhancing our earnings visibility and providing us with significant operational leverage and flexibility. We have also expanded and modernized our fleet over the past year enhancing the longevity and quality of our earnings capacity.

"The lack of financing of global trade has temporarily brought the spot market to a virtual standstill but we expect this situation to normalize as the credit crunch subsides and stockpiles are gradually but steadily drawn down. We continue to believe in the long term fundamentals of drybulk shipping. On the demand side, the infrastructure building in the developing economies of China and other countries is irreversible and will continue. On the supply side, we expect that a significant portion of the orderbook will not be delivered due to financing constraints, while scrapping will increase, leading to a tighter supply between supply and demand balance and a healthier freight market. With our modern fleet and strong locked-in cash flows and a strong balance sheet, DryShips is strategically positioned to take advantage of market opportunities as they may arise.

"We are also on track with the implementation of our strategic vision of building a strong position in the ultra deep water drilling sector. With two fully operational units and four additional newbuildings on the way with attractive delivery times, our subsidiary, Primelead, is strategically positioned to be a major participant in this market and to benefit from the strong fundamentals of the ultra deep water drilling sector. Demand continues to outstrip supply, leading to record daily hire rates for the few assets available for employment. We are on track with our objective to spin off this unit to our shareholders within the first quarter of 2009 or earlier, thereby providing our shareholders with a significant value proposition. The spun-off entity, to be renamed 'Ocean Rig UDW Inc.,' will be listed on a US Exchange and will be spun-off to our shareholders in the form of a special share dividend.

"Our strategy has been focused on generating superior operating and financial returns and we reiterate our commitment to maximize shareholder value for the longer term."

Results for Quarter ended September 30, 2008

Following our acquisition of Ocean Rig, we have two reportable segments, the drybulk carrier segment and the offshore drilling rig segment. For the quarter ended September 30, 2008, Net Voyage Revenues (Voyage Revenues less Voyage Expenses) amounted to $228.2 million as compared to $140.5 million for the quarter ended September 30, 2007. For the quarter ended September 30, 2008, revenues from drilling contracts following the acquisition of Ocean Rig amounted to $89.0 million. We did not earn any revenues from drilling contracts in the quarter ended September 30, 2007, as Ocena Rig was not part of Dryships. Total Operating Income, from both segments, was $247.5 million for the quarter ended September 30, 2008, as compared to $119.9 million for the quarter ended September 30, 2007. Total Net Income, from both segments, for the quarter ended September 30, 2008 was $180.0 million or $4.21 Earnings Per Share (EPS) calculated on 42,721,141 weighted average fully diluted shares outstanding as compared to $105.3 million or $2.97 EPS calculated on 35,490,097 weighted average fully diluted shares outstanding for the quarter ended September 30, 2007. Total EBITDA, from both segments, for the quarter ended September 30, 2008 was $260.0 million as compared to $137.6 million for the quarter ended September 30, 2007.