DRYSHIPS INC. REPORTS SECOND QUARTER 2008 RESULTS

August 21, 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 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 EBITDA1, excluding vessel gains, of $224 million.

• In July 2008 the Company declared its thirteenth 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 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 $359.8 million as compared to $141 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 $573.4 million as compared to $235.4 million for the first half ended June 30, 2007.

An average of 38.4 vessels were owned and operated during the first half of 2008, earning an average TCE rate of $66,921 per day as compared to an average of 32.4 vessels owned and operated during the first half of 2007 earning an average TCE rate of $32,580 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.

Dry-dock related expenses
During the second quarter of 2008, one vessel was drydocked incurring 27 dry dock days at a cost of $0.5 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. The June 30, 2007 Condensed Consolidated Financial Statements and the December 31, 2007 Condensed Consolidated Balance Sheet are adjusted to reflect this change in Accounting Policy.

Capitalization
On June 30, 2008, debt to total capitalization (debt, net of deferred financing fees and stockholders equity) was 59.6% and net debt (total debt less cash and cash equivalents) to total capitalization (total debt less cash and cash equivalents and stockholders equity) was 56.0%. As of June 30, 2008, the Company had total cash and cash equivalents of $401.9 million.

Financing activities
On May 6, 2008 the Company concluded a loan agreement of up to $103.2 million with West LB A.G. in order to partly finance the acquisition cost of the vessels MV Sorrento and to refinance the existing up to that date loan of MV Iguana. During the six month period ended June 30, 2008, the Company drew down the amount of $32.5 million from the loan in connection with the acquisition of the vessel Iguana. The loan bears interest at LIBOR plus a margin and is repayable in thirty two variable quarterly installments through July 2016.

In July 2008 the Company concluded two facility agreements with Deutsche Bank A.G for an aggregate amount of $1.125 billion in order to partly finance the construction cost of drillship Hulls 1865 and 1866. The loans bear interest at LIBOR plus a margin and are repayable in eighteen consecutive semi-annually installments.

In July 2008 the Company concluded a facility agreement with Nord LB for an amount of $126.4 million in order to partly finance the acquisition cost of the vessel MV Flecha. The loan bears interest at LIBOR plus a margin and is repayable in forty consecutive quarterly installments. As of June 30, 2008, the Company had a total of $2.877 billion in debt outstanding under its credit facilities with several institutions.

Fleet Developments

Deliveries – New Vessels

On June 27, 2008, the Company took delivery of the vessel MV Positano, a 2000 built secondhand 73,288 dwt Panamax drybulk carrier, which it had agreed to acquire for $72.0 million. On June 27, 2008, the Company took delivery of the vessel MV Mystic, a 2008 built 170,500 dwt Capesize drybulk carrier, which it had agreed to acquire for $147.5 million.

On July 28, 2008, the Company took delivery of the vessel MV Sorento, a 2004 built secondhand 76,500 dwt Panamax drybulk carrier, which it had agreed to acquire for $86.7 million. On July 30, 2008, the Company took delivery of the vessel MV Flecha, a 2004 built second-hand 170,012 dwt drybulk carrier, which it had agreed to acquire for $158.0 million.

Deliveries – Sold Vessels
On June 24, 2008, the MV Lanzarote, a 1996 built 73,008 dwt Panamax drybulk carrier was delivered to her new owners for a sale price of $65.0 million. The Company realized a gain of $36.3 million, which was recognized in the second quarter of 2008.

On June 27, 2008, the MV Menorca, a 1997 built 71,662 dwt Panamax drybulk carrier was delivered to her new owners for a sale price of $77.0 million. The Company realized a gain of $36.9 million, which was recognized in the second quarter of 2008.

On July 2, 2008, the MV Waikiki, a 1995 built 75,473 dwt Panamax drybulk carrier was delivered to her new owners for a sale price of $63.0 million. The Company realized a gain of $36.9 million, which will be recognized in the third quarter of 2008.

On August 14, 2008, the MV Solana, a 1995 built 75,473 dwt Panamax drybulk carrier was delivered to her new owners for a sale price of $63.0 million. The Company realized a gain of $29.2 million, which will be recognized in the third quarter of 2008.

Vessels Acquisitions
On June 25, 2008, the Company entered into memoranda of agreement to acquire two Panamax vessels built in 2007 and 2008, respectively, for an aggregate purchase price of $200.0 million from companies controlled by George Economou. The vessels are expected to be delivered by the end of 2008 with existing time charters attached, each with a remaining period of approximately four years and each for a gross daily rate of $43,750.

In July 2008, the Company entered into two agreements to acquire the total shares of two companies previously held by companies controlled by George Economou. The purchase price for the shares amounts to $140.0 million in total. These companies’ assets are two charter free Panamax vessels currently under construction, in a first class Chinese yard, that are scheduled to be delivered in the fourth quarter of 2008 and the first quarter of 2009 respectively. The company has assumed the obligation to make $60 million in yard installments between now and the delivery as per the pre-existing shipbuilding contracts.

On August 13, 2008, the Company agreed to acquire the MV Petalidi, a 76,608 dwt Panamax drybulk carrier, delivery of which is expected during the first quarter of 2009 for a total price of approximately $61 million. The vessel is expected to be delivered with its existing time charter attached, with a remaining period of approximately 4 years and a gross daily rate of $28,000.

Vessels disposals
On March 15, 2008, the Company entered into an agreement to sell the MV Lacerta a 1994 built 71,862 dwt Panamax drybulk carrier for a price of approximately $55.5 million. The Company expects to realize a gain of approximately $44.7 million which will be recognized in the fourth quarter of 2008.

On May 19, 2008, the Company entered into an agreement to sell the MV Primera a 1998 built 72,495 dwt Panamax drybulk carrier for a price of approximately $75.0 million. The Company expects to realize a gain of approximately $39.2 million which will be recognized in the fourth quarter of 2008.

On June 24, 2008, the Company entered into an agreement to sell the MV Paragon a 1995 built 71,259 dwt Panamax drybulk carrier for a price of approximately $61.0 million. The Company expects to realize a gain of approximately $30.8 million which will be recognized in the first quarter of 2009.

On July 17, 2008, the Company entered into an agreement to sell the MV Toro a 1995 built 73,034 dwt Panamax drybulk carrier for a price of approximately $63.4 million. The Company expects to realize a gain of approximately $36.0 million which will be recognized in the first quarter of 2009.

On July 29, 2008, the Company entered into an agreement to sell the MV La Jolla a 1997 built 72,126 dwt Panamax drybulk carrier for a price of approximately $66.0 million. The Company expects to realize a gain of approximately $32.8 million which will be recognized in the first quarter of 2009.



Gains on Vessel Disposals
During the six-months ended June 30, 2008 the Company recognized an aggregate gain on sale of vessels of $160.3 million or $3.99 per share. Based on agreements that have been concluded to date, the Company expects to recognize a capital gain of $150.0 million in the second half of 2008 and approximately $99.6 million in the first quarter of 2009.

Dividend Payment
On July 18, 2008, the Company declared dividends of $0.20 per share payable on August 22, 2008 to the stockholders of record as of August 8, 2008. This is the thirteenth consecutive quarterly dividend since Dryships became a publicly listed company in February 2005. As of June 30, 2008, the Company has a total of 43,550,000 shares of common stock issued and outstanding.

Acquisition of Ocean Rig ASA
On May 14, 2008, Dryships obtained control of Ocean Rig ASA (“Ocean Rig”). Ocean Rig, a former Oslo Stock Exchange listed company, is a drilling contractor in the area of offshore exploration, development and production and operates two ultra deep-water drilling rigs the Leiv Eiriksson and the Eirik Raude. As of June 30, 2008, Dryships held 98.5% of Ocean Rig’s outstanding capital stock. In early July, the Company acquired through a compulsory transfer of shares the remaining shares of Ocean Rig and effective July 22, 2008, Ocean Rig was delisted from the Oslo Stock Exchange.

Ocean Rig’s operating results are reflected in the Company’s consolidated financial statements from May 14, 2008, and the acquisition has been accounted for using the purchase method of accounting. In accordance with such purchase accounting, certain preliminary fair values were allocated to significant assets acquired and liabilities assumed of Ocean Rig in connection with the consolidation of its financial results with the financial results of the Company. This purchase price allocation and resulting goodwill have not yet been finalized and thus may be revised in a future filing.

Acquisition of two UDW drillships
On April 24, 2008, the Company 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 total cost of each drillship is approximately $800.0 million per unit. The drillships will be managed by Ocean Rig.

More at www.dryships.com

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 53 drybulk carriers comprising 7 Capesize, 30 Panamax, 2 Supramax, 10 newbuilding drybulk vessels, with a combined deadweight tonnage of over 3.8 million tons and 2 drilling rigs. Dryships has also agreed to purchase 2 ultra deep water drillships to be built at Samsung Heavy Industries for delivery in the third quarter of 2011. These drillships will be managed by Ocean Rig ASA.

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

DryShips Inc. Press Release