DRYSHIPS INC. REPORTS FIRST QUARTER 2008 RESULTS

May 19, 2008, Athens, Greece. DryShips Inc. (NASDAQ: DRYS), a global provider of marine transportation services for drybulk cargoes, today announced its unaudited financial and operating results for the quarter ended March 31, 2008.

Financial Highlights
• The Company reported Net Income of $176.3 million or $4.61 per share, for the first quarter of 2008. Included in the first quarter results is a capital gain on the sale of one vessel of $24.4 million or $0.64 per share and a non-cash loss of $6.1 million or $0.16 per share associated with the valuation of interest rate swaps. Excluding these items Net Income would amount to $158.0 million or $4.13 per share.
• For the first quarter of 2008 the Company reported EBITDA1, excluding vessel gains and non-cash items, of $201.4 million.
• In April 2008 the Company declared and paid its twelfth consecutive quarterly cash dividend of $0.20 per common share.
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 results. We remain confident in the positive fundamentals of the dry bulk market. We have continued with our fleet renewal and expansion strategy aimed to replace older tonnage with younger and larger vessels, thereby expanding and enhancing the quality of earnings of our fleet for the longer term. Based on the sales and purchase activity we have concluded to date, by the end of the year our fleet will include 47 vessels, including 7 newbuildings, with an average age of 7 years, considerably lower than the industry average of 13 years. With our modern, large and versatile fleet, we believe we are strategically positioned to continue taking advantage of the strong freight rate environment.

I am also particularly excited with the implementation of our strategic vision to create a leading presence in the ultra deep water drilling (UDW) market and to take advantage of the extremely positive fundamentals of that sector. The acquisition of Ocean Rig, which already operates two UDW rigs, and the agreement to construct two state of the art drillships create a significant platform for our foray into this sector. As we have mentioned before, we intend to spin off this business unit to our shareholders through a U.S. listing within the next 12 months.

In the short period of about three years since we became public in February 2005, DryShips has come a long way creating significant value for our shareholders. Our stock price has risen from $18 dollars at the time of the IPO to $110.74 as of the closing of last Friday. We are the largest publicly listed Drybulk shipping company in the US and we are in the process of creating a premiere ultra deep water drilling company with significant market presence in that sector. We remain committed to enhancing shareholder value and deliver superior results.”

First Quarter 2008 Results

For the first quarter ended March 31, 2008, Net Revenues (Voyage Revenues less Voyage Expenses) amounted to $217.9 million as compared to $81.4 million for the first quarter ended March 31, 2007. Operating Income was $194.5 million for the quarter ended March 31, 2008, as compared to $78.6 million for the quarter ended March 31, 2007. Net Income for the first quarter ended March 31, 2008 was $176.3 million or $4.61 Earnings Per Share (EPS) calculated on 38,213,975 weighted average basic and diluted shares outstanding as compared to $67.8 million or $1.91 Earnings Per Share (EPS) calculated on 35,490,097 million weighted average basic and diluted shares outstanding for the quarter ended March 31, 2007. EBITDA for the first quarter of 2008 was $219.7 million as compared to $94.6 million in the quarter ended March 31, 2007 An average of 38.3 vessels were owned and operated during the first quarter of 2008, earning an average Time Charter Equivalent, or TCE, rate of $63,127 per day as compared to an average of 32.1 vessels owned and operated during the first quarter of 2007 earning an average TCE rate of $28,930 per day.

Dry-dock related expenses

During the first quarter of 2008, one vessel was drydocked for a cost of $0.3 million. During the first quarter of 2008, the Company changed the method of accounting for drydocking costs from the deferral method to the direct expense method under which related costs are expensed as incurred.

Capitalization

On March 31, 2008, debt to total capitalization (debt, net of deferred financing fees and stockholders equity) was 46.40% and net debt (total debt less cash and cash equivalents) to total capitalization (total debt less cash and cash equivalents and stockholders equity) was 30.12%. As of March 31, 2008, the Company had total cash and cash equivalents of $671.0 million.

Financing activities

On February, 2008, the Company entered into supplemental agreement to amend its existing facility with HSH Nordbank. Pursuant to the supplemental agreement the lender released its security interest over and relating to certain of the Company’s vessels participating in the loan and gave its consent to the borrower’s incurrence of additional financial indebtedness with other financial institutions.

On March, 2008, the Company entered into a loan agreement in an amount of up to $130.0 million with Piraeus Bank. The vessels MV Lacerta, MV Menorca, MV Toro and MV Paragon were pledged as security for this new loan. The loan bears interest at LIBOR plus a margin and is repayable in twenty-eight variable quarterly installments through December 2014.

In April 2008, the Company concluded a loan for $90.0 million with Dresdner Bank in order to partly finance the MV Mystic. The loan bears interest at LIBOR plus a margin is repayable in three consecutive semi annual installments of $10.0 million each and eleven consecutive semi annual installments of $3.0 million plus a balloon payment of $27.0 million payable together with the last installment.

In May 2008, the Company concluded a loan for $125.0 million with Deutsche Schiffsbank in order to partly finance the acquisition cost of vessels MV Capri and MV Positano. The loan bears interest at LIBOR plus a margin is repayable in eight consecutive quarterly installments of $6.5 million followed by twenty four consecutive quarterly installments of $2.3 million plus a balloon payment of $19.0 million payable together with the last installment.

On May 9, 2008, the Company concluded a loan agreement for $800.0 million with Nordea Bank in order to finance the acquisition cost of the Ocean Rig shares and to refinance prior debt obtained to finance the purchase price of the shares acquired as of December 31, 2007. As of March 31, 2008, the Company had a total of $1,344 million in debt outstanding under its credit facilities with several institutions.

Fleet Developments

Deliveries – New Vessels

On January 29, 2008, the Company took delivery of the vessel MV Avoca a 2004 built secondhand 76,500 dwt Panamax drybulk carrier which it had agreed to acquire on July 26, 2007 for $70.2 million.

On April 8, 2008, the Company took delivery of the vessel MV Conquistador a 2000 built secondhand 75,607 dwt Panamax drybulk carrier, which it had agreed to acquire on November 29, 2007, for a purchase price of $85.0 million.

On May 15, 2008, the Company took delivery of the vessel MV Capri a 2001 built secondhand 172,579 dwt Capesize drybulk carrier which it had agreed to acquire on November 13, 2007, for a purchase price of $152.3 million.

Deliveries – Sold Vessels

On February 25, 2008, the MV Matira, a 1994 built 45,863 dwt Handymax drybulk carrier was delivered to her new owners for a purchase price of $46.5 million. The Company realized a gain of $24.4 million which was recognized in the first quarter of 2008.

On April 10, 2008, the MV Netadola, a 1993 built 149,475 dwt Capesize drybulk carrier was delivered to her new owners for a purchase price of $93.9 million. The Company realized a gain of $63.5 million, which will be recognized in the second quarter of 2008.

Acquisitions

On March 12, 2008, the Company agreed to acquire the MV Positano, a 2000 built second-hand 73,288 dwt Panamax drybulk carrier, delivery of which is expected during the second quarter of 2008 for an aggregate price of approximately $72.0 million.

On April 14, 2008, the Company agreed to acquire the MV Sorento, a 2004 built second-hand 76,500 dwt Panamax drybulk carrier, delivery of which is expected during the third quarter of 2008 for an aggregate price of approximately $86.7 million.

On April 30, 2008, the Company agreed to acquire the MV Flecha, a 2004 built second-hand 170,012 dwt Capesize drybulk carrier, delivery of which is expected during the third quarter of 2008 for an aggregate price of approximately $158.0 million.

On April 30, 2008, the Company agreed to acquire the MV Daytona, a 177,000 dwt Capesize drybulk carrier, delivery of which is expected during the fourth quarter of 2008 for an aggregate price of approximately $153.0 million. The vessel is currently under construction.

Vessel Disposals

On March 13, 2008 the Company entered into an agreement to sell the MV Lanzarote a 1996 built, 73,008 dwt Panamax drybulk carrier to unaffiliated third party for a price of $65.0 million. The Company expects to realize a gain of approximately $37.2 million which will be recognized in the second quarter of 2008.

On March 15, 2008 the Company entered into an agreement to sell the MV Lacerta a 1994 built, 71,862 dwt Panamax drybulk carrier to unaffiliated third party for a price of $55.5 million. The Company expects to realize a gain of approximately $45.2 million which will be recognized in the fourth quarter of 2008.

On April 14, 2008, the Company entered into an agreement to sell the MV Waikiki, a 1995 built second-hand 75,473 dwt Panamax drybulk carrier for a price of approximately $63.0 million. The Company expects to realize a gain of approximately $37.7 million which will be recognized in the third quarter of 2008.

On April 14, 2008, the Company entered into an agreement to sell the MV Solana a 1995 built 75,100 dwt Panamax drybulk carrier for a price of approximately $63.0 million. The Company expects to realize a gain of approximately $29.9 million which will be recognized in the third quarter of 2008.

Gains on Vessel Disposals

In the first quarter of 2008 the Company recognized an aggregate gain on vessel disposals of $24.4 million or $0.64 per share. For the remainder of 2008 with known sales as of today the Company expects to recognize capital gain of $213.5 million.

Dividend Payment

In April 2008, DryShips declared and paid its twelfth consecutive quarterly cash dividend of $0.20 per common share.

As of March 31, 2008, the Company has a total of 41,440,097 shares of common stock outstanding.

Acquisition of Ocean Rig ASA

On May 14, 2008, we submitted a mandatory offer for 100% of the remaining outstanding shares of Ocean Rig ASA which has been filed with the Oslo Stock Exchange. Through our subsidiary Primelead Limited we own 128,035,373 shares or 75.1% of the shares and votes in Ocean Rig. The mandatory offer period will end on June 11, 2008 and the terms of the offer are prescribed by the requirements of the Norwegian Securities Trading Act.

Acquisition of two UDW drillships

On April 24, 2008, DryShips announced that it will acquire two Ultra Deep Water (UDW) drillships. The drillships are to be constructed by Samsung Heavy Industries Co., Ltd. (SHI) and are expected to be delivered from the shipyard in the third quarter of 2011. The expected delivered cost of each drillship is approximately $800.0 million per unit. The company has received a firm commitment for the debt portion to finance construction and other payments.



About DryShips Inc.
DryShips Inc., based in Greece, is an owner and operator of drybulk carriers that operate worldwide. As of the day of this release, DryShips owns a fleet of 47 drybulk carriers comprising 4 Capesize, 32 Panamax, 2 Supramax, 9 newbuilding drybulk vessels, with a combined deadweight tonnage of over 4 million tons.

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

DryShips Inc. Press Release