This Day On The Street
Continue to site right-arrow
This account is pending registration confirmation. Please click on the link within the confirmation email previously sent you to complete registration.
Need a new registration confirmation email? Click here
Stocks Under $10 with 50-100% upside potential - 14 days FREE!

DryShips Sinks on Oil Tanker Acquisition


(Drybulk shipping report updated with detail on Genco Shipping, Eagle Bulk Shipping and Excel Martime Carriers.)

ATHENS, Greece ( TheStreet) -- DryShips (DRYS) traded sharply lower amid heavy volume Monday after the shipping company announced it would acquire a dozen oil tankers from a Korean shipbuilder.

ARM Holdings

DryShips said it would buy the high-specification newbuilding oil tankers over the next three years for a price of around $770 million, including over $3 million per vessel in extra items.

>>DryShips Sets Rig Unit's Offering at $17.50

Six newbuilding Aframax tankers will be acquired by 2012; six Suezmax tankers will be acquired by 2013. Staggering the tanker deliveries will help DryShips take advantage of improving market conditions over the next few years, the company said.

The announcement was made on Thursday, the last trading before a three-day market holiday.

Investors reacted strongly Monday morning when trading resumed. DryShips shares plunged 7% to close at $5.55 on Monday. Nearly 28 million shares were in play at the closing bell, compared with their average daily trading volume of 22.4 million shares. The Guggenheim Shipping ETF (SEA), an exchange-traded fund that counts DryShips and rival Diana Shipping (DSX) as 5.1% of its total holdings, bid 0.4% lower to $27.83.

DryShips said it made initial payments of $120 million against the oil tanker contracts using cash on hand. It intends to finance the remaining capital commitments, including delivery installments of about 70% of each vessel's price, with cash and bank debt. DryShips also said it intends to position the tanker investments for a spinoff or initial public offering , likely in 2011.

"With OceanRig UDW's successful Norwegian offering, we have positioned OceanRig UDW to be a pure play in the ultra deepwater drilling sector with contracts and a balance sheet that is self-sustaining," said CEO George Economou.

DryShips said earlier this month its wholly-owned Ocean Rig UDW planned to raise $500 million in a private offering .

1 of 5

Select the service that is right for you!

Action Alerts PLUS
Try it NOW

Jim Cramer and Stephanie Link actively manage a real portfolio and reveal their money management tactics while giving advanced notice before every trade.

Product Features:
  • $2.5+ million portfolio
  • Large-cap and dividend focus
  • Intraday trade alerts from Cramer
  • Weekly roundups
TheStreet Quant Ratings
Try it NOW
Only $49.95/yr

Access the tool that DOMINATES the Russell 2000 and the S&P 500.

Product Features:
  • Buy, hold, or sell recommendations for over 4,300 stocks
  • Unlimited research reports on your favorite stocks
  • A custom stock screener
  • Upgrade/downgrade alerts
Stocks Under $10
Try it NOW

David Peltier, uncovers low dollar stocks with extraordinary upside potential that are flying under Wall Street's radar.

Product Features:
  • Model portfolio
  • Stocks trading below $10
  • Intraday trade alerts
  • Weekly roundups
Dividend Stock Advisor
Try it NOW

Jim Cramer's protege, David Peltier, identifies the best of breed dividend stocks that will pay a reliable AND significant income stream.

Product Features:
  • Diversified model portfolio of dividend stocks
  • Alerts when market news affect the portfolio
  • Bi-weekly updates with exact steps to take - BUY, HOLD, SELL
Real Money Pro
Try it NOW

All of Real Money, plus 15 more of Wall Street's sharpest minds delivering actionable trading ideas, a comprehensive look at the market, and fundamental and technical analysis.

Product Features:
  • Real Money + Doug Kass Plus 15 more Wall Street Pros
  • Intraday commentary & news
  • Ultra-actionable trading ideas
Options Profits
Try it NOW

Our options trading pros provide daily market commentary and over 100 monthly option trading ideas and strategies to help you become a well-seasoned trader.

Product Features:
  • 100+ monthly options trading ideas
  • Actionable options commentary & news
  • Real-time trading community
  • Options TV
To begin commenting right away, you can log in below using your Disqus, Facebook, Twitter, OpenID or Yahoo login credentials. Alternatively, you can post a comment as a "guest" just by entering an email address. Your use of the commenting tool is subject to multiple terms of service/use and privacy policies - see here for more details.
Submit an article to us!


DOW 17,778.15 +421.28 2.43%
S&P 500 2,061.23 +48.34 2.40%
NASDAQ 4,748.3960 +104.0840 2.24%

Brokerage Partners

Rates from

  • Mortgage
  • Credit Cards
  • Auto

Free Newsletters from TheStreet

My Subscriptions:

After the Bell

Before the Bell

Booyah! Newsletter

Midday Bell

TheStreet Top 10 Stories

Winners & Losers

Register for Newsletters
Top Rated Stocks Top Rated Funds Top Rated ETFs