Ghana: DryShips Inc Announces Signing of Drilling Contract Worth $160 Million

DryShips Inc. , a global provider of marine transportation services for dry bulk cargoes and off-shore contract drilling oil services, announced today that its fully-owned subsidiary Ocean Rig UDW Inc. has signed definitive documentation following the previously announced Letter of Award.

The contracts were signed with subsidiaries of Vanco Overseas Energy Limited (“Vanco”) for projects in which Vanco is operator and LUKOIL Overseas is majority co-venturer, for a five well contract for exploration drilling offshore Ghana and Cote d’Ivoire for a period of about one year with one drillship, commencing in the second quarter of 2011. The value of the contracts is approximately $160 million. The Company has the option to use either of the OceanRig Corcovado or the OceanRig Olympia. The contract may be extended for an additional year or an additional well, prior to the completion of operations on the second well in the program.

George Economou, Chairman, President & CEO commented:

“We are pleased to have concluded the contract for one of the first two drillships that will deliver from Samsung in the first quarter of 2011. The option of using the first or the second drillship allows us to service the requirements of the customer and gives us flexibility considering the other tenders we are working on. This contract opens a new relationship for OceanRig with International operators who have strong potential in the ultra deepwater space and have drilling programs well beyond this first commitment. Moreover, this contract builds on the platform we have nurtured in Ghana. Ghana is emerging as a new oil province in West Africa with potential that could match Angola in the years to come. Our highly capable and unique semi-submersible drilling rig, the Eirik Raude, has been drilling offshore Ghana on contract to Tullow Oil for almost two years now. The experience gained over this period and the economies of scale with two rigs in adjacent areas will benefit OceanRig and position us for further business in this region. We are proud to be part of the growth story of Ghana.

“The fundamentals of the ultra deepwater market have strengthened substantially in the last couple of months. While this hasn’t manifested itself in the form of rising rates yet, we are experiencing a surge in activity. OceanRig is amongst the first to announce the conclusion of a contract in recent months, but we are aware of at least four additional ultra deepwater units that have been, or are close to being, contracted. Assuming this is the case the supply picture starts to look much better than what analysts were projecting just a few weeks ago. Moreover, demand is rising as we see new projects being tendered, with inquiries emerging on a weekly basis. We remain confident that the remaining three drillships will also find employment contracts in the near future.”

About DryShips

DryShips Inc., based in Greece, is an owner and operator of drybulk carriers and offshore oil deep water drilling units that operate worldwide. As of the day of this release, DryShips owns a fleet of 39 drybulk carriers (including newbuildings), comprising 7 Capesize, 30 Panamax and 2 Supramax, with a combined deadweight tonnage of over 3.5 million tons and 6 offshore oil deep water drilling units, comprising of 2 ultra deep water semisubmersible drilling rigs and 4 ultra deep water newbuilding drillships.

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Source: Ocean Rig, October  18, 2010;