DRYS DryShips Inc

Dryships Inc. Reports Financial and Operating Results for the Fourth Quarter 2013

ATHENS, GREECE--(Marketwired - Feb 18, 2014) - DryShips Inc. (NASDAQ: DRYS), or DryShips or the Company, an international provider of marine transportation services for drybulk and petroleum cargoes, and through its majority owned subsidiary, Ocean Rig UDW Inc., or Ocean Rig, of offshore deepwater drilling services, today announced its unaudited financial and operating results for the fourth quarter ended December 31, 2013.

Fourth Quarter 2013 Financial Highlights

• For the fourth quarter of 2013, the Company reported a net loss of $24.4 million, or $0.06 basic and diluted loss per share.
• The Company reported Adjusted EBITDA of $163.7 million for the fourth quarter of 2013, as compared to $109.5 million for the fourth quarter of 2012. (1)

Year Ended December 31, 2013 Financial Highlights

• For the year ended December 31, 2013, the Company reported a net loss of $223.1 million, or $0.58 basic and diluted loss per share. Included in the year ended December 31, 2013 results are:
  • Losses on the sale of four newbuilding drybulk vessels, of $76.8 million, or $0.20 per share.
  • Non-cash write-offs and breakage costs associated with the full repayment of Ocean Rig's $800.0 million secured term loan agreement and the two $495.0 million senior secured credit facilities totaling $61.1million or $0.16 per share.

• Excluding the above items, the Company would have reported a net loss of $110.0 million, or $0.28 per share. (1)

• The Company reported Adjusted EBITDA(2) of $572.0 million for the year ended December 31, 2013, as compared to $500.5 million for the year ended December 31, 2012.

(1) The net result is adjusted for the minority interests of 40.6% not owned by Dryships Inc. common stockholders. (2) Adjusted EBITDA is a non-GAAP measure; please see later in this press release for reconciliation to net income.

Recent Highlights

• On February 7, 2014, Ocean Rig refinanced its existing short-term Tranche B-2 Term Loans with a fungible add-on to its existing long-term Tranche B-1 Term Loans. As a result of this refinancing, the total $1.9 billion of Tranche B-1 Term Loans will mature no earlier than the third quarter of 2020.
• On January 27, 2014, the Ocean Rig Skyros arrived in Angola and commenced the acceptance testing under the contract with Total E&P.
• On December 31, 2013, the Company resumed sales under its previously announced $200 million program of at the market issuances of its common shares through Evercore Group L.L.C. as its sales agent. During January 2014, 20,837,582 common shares were issued and sold at an average share price of $4.14 per share pursuant to the at-the-market offering, resulting in net proceeds to the Company of $84.5 million, after deducting commissions.
• On December 30, 2013, Ocean Rig agreed with a major oil company to further extend until March 30, 2014, the expiration of the previously announced Letter of Award for its ultra deepwater drillship Ocean Rig Skyros.
• On December 20, 2013, Ocean Rig took delivery of its ultra deepwater drillship, the Ocean Rig Skyros and drew down $450.0 million under its $1.35 billion syndicated secured term loan facility.

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

"We are very excited about the prospects of the shipping markets. Following a period of oversupply the recent volatility in the tanker and drybulk sectors is a clear sign of a balanced supply-demand picture. Asset prices are rising which is a strong indication of current market sentiment. We are optimistic and expect a sustainable recovery in 2014 and beyond.

"Currently Dryships has about 3,600 spot days in 2014 and 3,600 spot days in 2015 for its crude tanker fleet and about 9,000 spot days in 2014 and 11,900 spot days in 2015 for its drybulk fleet. Given this immediate spot exposure, Dryships is uniquely positioned to take full advantage of the imminent market recovery.

"Turning to the offshore side, Ocean Rig continues to execute on its business plan by posting yet another quarter of good operating performance. Ocean Rig's modern fleet, strong balance sheet and solid backlog of $5.4 billion, provides it with a solid foundation to implement the previously announced value creation initiatives."

Financial Review: 2013 Fourth Quarter

The Company recorded a net loss of $24.4 million, or $0.06 basic and diluted loss per share, for the three-month period ended December 31, 2013 as compared to a net loss of $129.8 million, or $0.34 basic and diluted loss per share, for the three-month period ended December 31, 2012. Adjusted EBITDA(1) was $163.7 million for the fourth quarter of 2013, as compared to $109.5 million for the same period in 2012.

For the drybulk carrier segment, net voyage revenues (voyage revenues minus voyage expenses) amounted to $45.4 million for the three-month period ended December 31, 2013, as compared to $34.9 million for the three-month period ended December 31, 2012. For the tanker segment, net voyage revenues amounted to $11.9 million for the three-month period ended December 31, 2013, as compared to $6.5 million for the same period in 2012. For the offshore drilling segment, revenues from drilling contracts increased by $115.7 million to $345.5 million for the three-month period ended December 31, 2013, as compared to $229.8 million for the same period in 2012.

Total vessels', drilling rigs' and drillships' operating expenses and total depreciation and amortization decreased to $166.7 million and increased to $96.5 million, respectively, for the three-month period ended December 31, 2013, from $194.4 million and $84.8 million, respectively, for the three-month period ended December 31, 2012. Total general and administrative expenses increased to $57.1 million in the fourth quarter of 2013, from $39.5 million during the same period in 2012.

Interest and finance costs, net of interest income, amounted to $75.8 million for the three-month period ended December 31, 2013, compared to $53.5 million for the three-month period ended December 31, 2012.

(1) Adjusted EBITDA is a non-GAAP measure; please see later in this press release for reconciliation to net income.

Fleet List The table below describes our fleet profile and drilling contract backlog as of February 14, 2014:

Year

Gross rate

Redelivery

Built

DWT

Type

Per day

Earliest

Latest

Drybulk fleet

Capesize:

Rangiroa

2013

206,000

Capesize

$23,000

Apr-18

Nov-23

Negonego

2013

206,000

Capesize

$21,500

Mar-20

Feb-28

Fakarava

2012

206,000

Capesize

$25,000

Sept-15

Sept-20

Mystic

2008

170,040

Capesize

$52,310

Aug-18

Dec-18

Robusto

2006

173,949

Capesize

$26,000

Aug-14

Apr-18

Cohiba

2006

174,234

Capesize

$26,250

Oct-14

Jun-19

Montecristo

2005

180,263

Capesize

$23,500

May-14

Feb-19

Flecha

2004

170,012

Capesize

$55,000

Jul-18

Nov-18

Manasota

2004

171,061

Capesize

$30,000

Jan-18

Aug-18

Partagas

2004

173,880

Capesize

$11,500

Jun-14

Oct-14

Alameda

2001

170,662

Capesize

$27,500

Nov-15

Jan-16

Capri

2001

172,579

Capesize

$10,000

Nov-13

Mar-14

Panamax:

Raraka

2012

76,037

Panamax

$7,500

Jan-15

Mar-15

Woolloomooloo

2012

76,064

Panamax

$7,500

Dec-14

Feb-15

Amalfi

2009

75,206

Panamax

Spot

N/A

N/A

Rapallo

2009

75,123

Panamax

T/C Index linked

Jul-16

Sep-16

Catalina

2005

74,432

Panamax

Spot

N/A

N/A

Majorca

2005

74,477

Panamax

Spot

N/A

N/A

Ligari

2004

75,583

Panamax

Spot

N/A

N/A

Saldanha

2004

75,707

Panamax

Spot

N/A

N/A

Sorrento

2004

76,633

Panamax

$24,500

Aug-21

Dec-21

Mendocino

2002

76,623

Panamax

T/C Index linked

Sep-16

Nov-16

Bargara

2002

74,832

Panamax

T/C Index linked

Sep-16

Nov-16

Oregon

2002

74,204

Panamax

Spot

N/A

N/A

Ecola

2001

73,931

Panamax

Spot

N/A

N/A

Samatan

2001

74,823

Panamax

Spot

N/A

N/A

Sonoma

2001

74,786

Panamax

Spot

N/A

N/A

Capitola

2001

74,816

Panamax

Spot

N/A

N/A

Levanto

2001

73,925

Panamax

T/C Index linked

Aug-16

Oct-16

Maganari

2001

75,941

Panamax

Spot

N/A

N/A

Coronado

2000

75,706

Panamax

Spot

N/A

N/A

Marbella

2000

72,561

Panamax

Spot

N/A

N/A

Redondo

2000

74,716

Panamax

Spot

N/A

N/A

Topeka

2000

74,716

Panamax

Spot

N/A

N/A

Ocean Crystal

1999

73,688

Panamax

Spot

N/A

N/A

Helena

1999

73,744

Panamax

Spot

N/A

N/A

Supramax:

Byron

2003

51,118

Supramax

Spot

N/A

N/A

Galveston

2002

51,201

Supramax

Spot

N/A

N/A

Year Built/or Scheduled Delivery

DWT

Type

Gross rate Per day

Redelivery Earliest

Latest

Newbuildings

Panamax:

Newbuilding Ice -class Panamax 1

2014

75,900

Panamax

N/A

N/A

N/A

Newbuilding Ice -class Panamax 2

2014

75,900

Panamax

N/A

N/A

N/A

Newbuilding Ice -class Panamax 3

2014

75,900

Panamax

N/A

N/A

N/A

Newbuilding Ice -class Panamax 4

2014

75,900

Panamax

N/A

N/A

N/A

Tanker fleet

Suezmax:

Bordeira

2013

158,300

Suezmax

Spot

N/A

N/A

Petalidi

2012

158,300

Suezmax

Spot

N/A

N/A

Lipari

2012

158,300

Suezmax

Spot

N/A

N/A

Vilamoura

2011

158,300

Suezmax

Spot

N/A

N/A

Aframax:

Alicante

2013

115,200

Aframax

Spot

N/A

N/A

Mareta

2013

115,200

Aframax

Spot

N/A

N/A

Calida

2012

115,200

Aframax

Spot

N/A

N/A

Saga

2011

115,200

Aframax

Spot

N/A

N/A

Daytona

2011

115,200

Aframax

Spot

N/A

N/A

Belmar

2011

115,200

Aframax

Spot

N/A

N/A

Drilling Rigs/Drillships:
Unit		Year built/ or Scheduled Delivery		Redelivery		Operating area		Backlog ($m)
Leiv Eiriksson		2001		Q2 - 16		Norway		$431
Eirik Raude		2002		Q4 - 14		Sierra Leone, Ivory Coast		$167
Ocean Rig Corcovado		2011		Q2 - 15		Brazil		$204
Ocean Rig Olympia		2011		Q3 - 15		Gabon, Angola		$323
Ocean Rig Poseidon		2011		Q2 - 16		Angola		$588
Ocean Rig Mykonos		2011		Q1 - 15		Brazil		$177
Ocean Rig Mylos		2013		Q4 - 16		Brazil		$612
Ocean Rig Skyros		2013		Q4 - 14		Angola		$158
				Q4 - 20		Angola		$1,264(1)
Newbuildings
Ocean Rig Athena (Expected delivery Mar. 2014)		2014		Q2 - 17		Angola		$757
Ocean Rig Apollo (Expected delivery Jan. 2015)		2015		Q1 - 18		Congo		$670
Ocean Rig Santorini (Expected delivery Dec. 2015)		2015		N/A		N/A		N/A
Total								$5,351

(1) Letter of Award is subject to definitive documentation and other approvals.

Drybulk Carrier and Tanker Segment Summary Operating Data (unaudited)
(Dollars in thousands, except average daily results)
Drybulk		Three Months Ended December 31,				Year Ended December 31,
		2012		2013		2012		2013
Average number of vessels(1)		36.0		38.0		35.7		37.2
Total voyage days for vessels(2)		3,312		3,412		13,027		13,442
Total calendar days for vessels(3)		3,312		3,496		13,056		13,560
Fleet utilization(4)		100.0%		97.6%		99.8%		99.1%
Time charter equivalent(5)		$10,547		$13,303		$15,896		$12,062
Vessel operating expenses (daily)(6)		$5,124		$6,251		$5,334		$5,796

Tanker		Three Months Ended December 31,				Year Ended December 31,
		2012		2013		2012		2013
Average number of vessels(1)		7.0		10.0		6.3		9.9
Total voyage days for vessels(2)		644		920		2,293		3,598
Total calendar days for vessels(3)		644		920		2,293		3,598
Fleet utilization(4)		100.0%		100.0%		100.0%		100.0%
Time charter equivalent(5)		$10,062		$12,963		$13,584		$12,900
Vessel operating expenses (daily)(6)		$6,781		$7,148		$7,195		$7,286

(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 dry-docking days. (3) Calendar days are the total number of days the vessels were in our possession for the relevant period including dry-docking 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 revenues, a non-U.S. GAAP measure, provides additional meaningful information in conjunction with revenues from our vessels, the most directly comparable U.S. GAAP measure, because it assists our management in making decisions regarding the deployment and use of its vessels and in evaluating their financial performance. TCE is also 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. Please see below for a reconciliation of TCE rates to voyage revenues. (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.

(In thousands of U.S. dollars, except for TCE rate, which is expressed in Dollars, and voyage days)
Drybulk		Three Months Ended December 31,									Year Ended December 31,
		2012					2013				2012				2013
Voyage revenues		$	40,754			$	53,021			$	227,141			$	191,024
Voyage expenses			(5,821	)			(7,630	)			(20,064	)			(28,886	)
Time charter equivalent revenues		$	34,933			$	45,391			$	207,077			$	162,138
Total voyage days for fleet			3,312				3,412				13,027				13,442
Time charter equivalent TCE		$	10,547			$	13,303			$	15,896			$	12,062

Tanker		Three Months Ended December 31,								Year Ended December 31,
		2012				2013				2012				2013
Voyage revenues		$	12,361			$	32,873			$	41,095			$	120,740
Voyage expenses			(5,881	)			(20,947	)			(9,948	)			(74,325	)
Time charter equivalent revenues		$	6,480			$	11,926			$	31,147			$	46,415
Total voyage days for fleet			644				920				2,293				3,598
Time charter equivalent TCE		$	10,062			$	12,963			$	13,584			$	12,900

Dryships Inc.
Financial Statements
Unaudited Condensed Consolidated Statements of Operations
(Expressed in Thousands of U.S. Dollars except for share and per share data)		Three Months Ended December 31,								Year Ended December 31,
		2012				2013				2012				2013
REVENUES:
Voyage revenues		$	53,115			$	85,894			$	268,236			$	311,764
Drilling revenues, net			229,751				345,458				941,903				1,180,250
			282,866				431,352				1,210,139				1,492,014
EXPENSES:
Voyage expenses			11,702				28,577				30,012				103,211
Vessel operating expenses			21,337				28,430				86,139				104,808
Drilling rigs operating expenses			173,092				138,311				563,583				504,957
Depreciation and amortization			84,843				96,506				335,458				357,372
Vessel impairments and other, net			41,517				-				42,518				76,783
General and administrative expenses			39,460				57,144				145,935				184,722
Legal settlements and other, net			(5,912	)			(581	)			(9,360	)			4,585
Operating income/(loss)			(83,173	)			82,965				15,854				155,576
OTHER INCOME / (EXPENSES):
Interest and finance costs, net of interest income			(53,456	)			(75,785	)			(205,925	)			(319,631	)
Gain/ (Loss) on interest rate swaps			(4,582	)			(3,467	)			(54,073	)			8,373
Other, net			(1,891	)			(2,483	)			(492	)			2,245
Income taxes			(11,354	)			(9,492	)			(43,957	)			(44,591	)
Total other expenses, net			(71,283	)			(91,227	)			(304,447	)			(353,604	)
Net loss			(154,456	)			(8,262	)			(288,593	)			(198,028	)
Net (income)/loss attributable to Non controlling interests			24,608				(16,107	)			41,815				(25,065	)
Net loss attributable to Dryships Inc.		$	(129,848	)		$	(24,369	)		$	(246,778	)		$	(223,093	)
Loss per common share, basic and diluted		$	(0.34	)		$	(0.06	)		$	(0.65	)		$	(0.58	)
Weighted average number of shares, basic and diluted			380,179,472				388,083,468				380,159,088				384,063,306

Dryships Inc.
Unaudited Condensed Consolidated Balance Sheets
(Expressed in Thousands of U.S. Dollars)			December 31, 2012			December 31, 2013
ASSETS
	Cash, cash equivalents and restricted cash (current and non-current)		$	720,458		$	739,312
	Other current assets			338,446			494,887
	Advances for vessels and drillships under construction and related costs			1,201,807			679,008
	Vessels, net			2,059,570			2,249,087
	Drilling rigs, drillships, machinery and equipment, net			4,446,730			5,828,231
	Other non-current assets			111,480			133,167
	Total assets			8,878,491			10,123,692
LIABILITIES AND STOCKHOLDERS' EQUITY
	Total debt			4,386,715			5,568,003
	Total other liabilities			623,757			723,991
	Total stockholders' equity			3,868,019			3,831,698
	Total liabilities and stockholders' equity		$	8,878,491		$	10,123,692

Adjusted EBITDA Reconciliation

Adjusted EBITDA represents earnings before interest, taxes, depreciation and amortization, vessel impairments, dry-dockings and class survey costs and gains or losses on interest rate swaps. Adjusted 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 adjusted EBITDA may not be comparable to that reported by other companies. Adjusted EBITDA is included herein because it is a basis upon which the Company measures its operations and efficiency. Adjusted EBITDA is also used by our lenders as a measure of our compliance with certain covenants contained in our loan agreements 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 loss to Adjusted EBITDA:

(Dollars in thousands)		Three Months Ended December 31, 2012				Three Months Ended December 31, 2013				Year Ended December 31, 2012				Year Ended December 31, 2013
Net loss		$	(129,848	)		$	(24,369	)		$	(246,778	)		$	(223,093	)
Add: Net interest expense			53,456				75,785				205,925				319,631
Add: Depreciation and amortization			84,843				96,506				335,458				357,372
Add: Impairment losses and other			41,339				-				41,339				76,783
Add: Dry-dockings and class survey costs			43,745				2,839				66,506				5,056
Add: Income taxes			11,354				9,492				43,957				44,591
Add: Gain/(loss) on interest rate swaps			4,582				3,467				54,073				(8,373	)
Adjusted EBITDA		$	109,471			$	163,720			$	500,480			$	571,967

Conference Call and Webcast: February 19, 2014

As announced, the Company's management team will host a conference call, on Wednesday, February 19, 2014 at 9:00 a.m. Eastern Standard 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) (0) 1452 542 301 (from outside the US). Please quote "DryShips."

A replay of the conference call will be available until February 26, 2014. 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. is an owner of drybulk carriers and tankers that operate worldwide. Through its majority owned subsidiary, Ocean Rig UDW Inc., DryShips owns and operates 11 offshore ultra deepwater drilling units, comprising of 2 ultra deepwater semisubmersible drilling rigs and 9 ultra deepwater drillships, 1 of which is scheduled to be delivered to Ocean Rig during 2014 and 2 of which are scheduled to be delivered during 2015. DryShips owns a fleet of 42 drybulk carriers (including newbuildings), comprising 12 Capesize, 28 Panamax and 2 Supramax with a combined deadweight tonnage of approximately 4.4 million tons, and 10 tankers, comprising 4 Suezmax and 6 Aframax, with a combined deadweight tonnage of over 1.3 million tons.

DryShips' common stock is listed on the NASDAQ Global Select 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 within the meaning of the Private Securities Litigation Reform Act of 1995. The Private Securities Litigation Reform Act of 1995 provides safe harbor protections for forward-looking statements in order to encourage companies to provide prospective information about their business. The Company desires to take advantage of the safe harbor provisions of the Private Securities Litigation Reform Act of 1995 and is including this cautionary statement in connection with such safe harbor legislation.

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 we believe 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, we 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 and drilling dayrates and drybulk vessel, drilling rig and drillship values, failure of a seller to deliver one or more drilling rigs, drillships or drybulk vessels, failure of a buyer to accept delivery of a drilling rig, drillship, or vessel, inability to procure acquisition financing, default by one or more charterers of our ships, changes in demand for drybulk commodities or oil, changes in demand that may affect attitudes of time charterers and customer drilling programs, scheduled and unscheduled drydockings and upgrades, changes in our operating expenses, including bunker prices, drydocking and insurance costs, changes in governmental rules and regulations 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 U.S. Securities and Exchange Commission.

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