DryShips Looks for BP Spill Advantages

DryShips topped analysts' expectations with its second-quarter adjusted profit.
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NEW YORK (TheStreet) -- DryShips (DRYS) - Get Report reported an adjusted second-quarter profit that trumped Wall Street targets and, though it had nothing new to report on the status of its challenged drillships business, the company sought to spin the BP (BP) - Get Report oil spill as "advantageous for us."

Excluding a slew of charges, DryShips said its adjusted bottom line came to $80.4 million, or 30 cents a share. Analysts on average were looking for EPS of 22 cents, according to a survey of the sell side by Thompson Reuters.

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DryShips' revenue in the quarter amounted to $224.2 million, also besting the consensus target, which called for a top line of $216 million.

The charges stemmed from the costs associated with floating senior subordinated notes, which the company used to help shore up its balance sheet as it struggles to find financing for two drillships currently being built by a South Korean shipyard. But the lion's share of the one-time charges was a $63.8 million loss on the company's interest rate swaps, a hedging device. Including all the items, DryShips actually earned just $8.7 million, or 2 .cents a share.

A year ago, the operator of dry-bulk ships and offshore oil-exploration rigs posted a profit of $57.6 million, or 24 cents a share, on revenue of $207.5 million.

DryShips has been struggling to find charter contracts for at least two of the four brand new drillships that it's set to take delivery of this year and next. Without inking agreements to hire out those vessels, the company likely won't be able to find the $1 billion in financing it still needs to pay for the newbuildings. However, recent industry rumors have indicated that DryShips may issue high-yield bonds in order to raise at least some of the money.

In a press release, DryShips CEO George Economou held forth on the Gulf of Mexico oil spill, attempting to spin the disaster as an eventual plus for the drillships portion of his company's business.

"The moratorium imposed on all deepwater drilling in the U.S. Gulf of Mexico is expected to be a short-term negative for the industry as some rigs may move out of the region and compete for business elsewhere," the DryShips boss said.

"However, in the medium-to-long term the resulting emphasis on modern equipment and safety measures is expected to be a positive development for the industry overall. While it's early to authoritatively say what the actual regulations will be one expected result will be a focus on newer equipment. With four state of the art sixth generation drill ships, we believe that any new safety regulations will be advantageous for us."

-- Written by Scott Eden in New York

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Scott Eden has covered business -- both large and small -- for more than a decade. Prior to joining TheStreet.com, he worked as a features reporter for Dealmaker and Trader Monthly magazines. Before that, he wrote for the Chicago Reader, that city's weekly paper. Early in his career, he was a staff reporter at the Dow Jones News Service. His reporting has appeared in The Wall Street Journal, Men's Journal, the St. Petersburg (Fla.) Times, and the Believer magazine, among other publications. He's also the author of Touchdown Jesus (Simon & Schuster, 2005), a nonfiction book about Notre Dame football fans and the business and politics of big-time college sports. He has degrees from Notre Dame and Washington University in St. Louis.