Losses mount at Dryships

Dryships, which owns and operates a fleet of bulk carriers and tankers as well as offshore drilling units through its majority owned subsidiary Ocean Rig UDW Inc, reported a full year net loss for 2012 totalling $246.8m, including $65.5m in costs associated with the 10 year class survey of the rig Eirik Raude and a $41.3m loss on the sale of two tankers under construction at Samsung Heavy Industries.

Drilling rig operating expenses doubled to $563.5m, contributing to net operating income of just $15.8m compared with $169.6 in 2011.

Time charter equivalent (TCE) earnings for the company's bulk fleet in 2012 averaged at $15,896 for 2012, a steep drop from 2011's $26,912. Tankers saw a slight rise in TCE earnings from 2011's $12,592 but remained low at $13,584.

George Economou, chairman and ceo of Dryships, commented "Our shareholding in Ocean Rig has been our backstop. We recently sold down a portion of our holdings for approximately $120m. This action was not a preferred option (especially at today's pricing levels) but it was necessary. In addition, we have pledged some of our Ocean Rig shares to our banks to remedy covenant breaches. We continue to be bullish about the prospects for Ocean Rig. The backlog currently stands at $5.1bn over three years and provides Ocean Rig with substantial cash flow visibility and growth. Given strong industry fundamentals, we expect to further increase our already substantial backlog by entering into long-term contracts for remaining units."

In late February 2013 Ocean Rig signed a $1.35bn syndicated secure term loan facility to part finance three drillships under construction at Samsung Heavy Industries and due for delivery in 2013.

Earlier this month European Hydrocarbons Ltd unilaterally cancelled a contract in West Africa for the Dalian built ultra deep water semi submersible rig Eirik Raude, which will generate an early termination payment of $13m. Eirik Raude moved straight on from the cancelled work to a six month, one well contract with ExxonMobil off the coast of Ireland.