(DryShips story updated with commentary from an investor and for stock-price movement.)
ATHENS ( TheStreet) -- DryShips (DRYS - Get Report), the controversial maritime shipping company that's been trying to build a deepwater oil-drilling business, said it had obtained key long-term contracts for two of its drill rigs, allowing the company to spin off the unit in an IPO within the "next few months."
The company gave the update in its first-quarter earnings report after Thursday's market closed.
The contracts, signed with Petrobras (PZE - Get Report) to explore for oil off the coast of Brazil, have a combined value of $1.1 billion, the company said. The contracts provide crucial financial support for an IPO spin-off of the drill-rig unit, called Ocean Rig, which DryShips has been planning -- and promising to sometimes skeptical investors -- since 2008.Said DryShips' CEO George Economou in a statement, "These two contracts are the culmination of our efforts since we entered the drilling segment three years ago." He said Ocean Rig's backlog had doubled to $2 billion. The company has six drillships under contract. Two more vessels have been ordered from shipbuilding yards, scheduled for delivery in 2013. In the company's earnings report, DryShips said, "During the next few months we plan to take active steps to monetize DryShips' most prized asset, its shares of Ocean Rig common stock, through a public listing in the U.S." The move comes as the dry-bulk shipping industry struggles through its worst market for freight rates since the darkest days of the financial crisis. This time, rates have collapsed because of a massive glut of new ships, ordered by shipowners when business was flush during the pre-crisis boom years. DryShips' rig business has allowed the company to avoid some of the financial distress suffered by other publicly traded dry-bulk companies, many of which -- Eagle Bulk Shipping (EGLE - Get Report) and Excel Maritime (EXM - Get Report), for instance -- swung to losses in the first quarter.