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DryShips Surges on Subsidiary's Private Offering

(DryShips report updated with stock movement.)

ATHENS, Greece ( TheStreet) -- DryShips (DRYS - Get Report) shares pushed higher Monday amid heavy trading after the drybulk shipper said Friday its offshore drilling subsidiary plans to raise $500 million in a private offering.

DryShips said its wholly-owned Ocean Rig UDW unit's planned offering is expected to close before the end of 2010. The offering will be made to Norwegian professionals and eligible counterparties under Norwegian trading regulations, to non-U.S. residents and in a concurrent private placement in the United States only to qualified institutional buyers pursuant to Rule 144A under the Securities Act.

Proceeds from the sale are "expected to be used to finance construction costs of the ultra deepwater newbuilding drillships under construction at Samsung, exercise options to build further ultra deepwater drillships and general corporate purposes."

The offering will reduce DryShips' ownership stake in Ocean Rig to between 78% and 80%.

DryShips shares jumped 6% Monday to $6.23. Nearly 40 million shares changed hands with two hours left in the trading session, compared with their average daily volume of 19.9 million shares. On Friday the stock closed up by 12.4%.

Separately, DryShips said Friday it completed its ATM Equity Offering, raising around $350 million since initiating the offering on Sept. 7.

Earlier last week DryShips' Ocean Rig UDW subsidiary signed a $77 million contract with Borders & Southern Petroleum for a 2-well exploration and drilling pact in the offshore Falkland Islands area for a period of 90 days, beginning in the fourth quarter of 2011.

>>DryShips Trades Higher on Drill Deal

There were three further optional wells that could extend the contract by 135 days.

The dry-bulk shipper and deepwater drill-ship operator recently posted better-than-expected quarterly earnings.

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