DryShips COO Pankaj Khanna says the company hopes to ink crucial charter contracts on two offshore rigs "within the next two quarters," moving one step closer to a hotly anticipated IPO of its drillships business.
DryShips also still owes the shipyard -- Samsung Heavy Industries -- about $900 million for two of the four drillships now being built. Khanna said DryShips has made bids with six or seven oil exploration charterers in its effort to score the fixtures. "We've participated in every tender that's been out there," Khanna said. ("Tender" refers to the bidding processes run by energy giants such as Petrobras ( PZE) or Exxon Mobil ( XOM) for the services of these types of drilling rigs.) One bid in particular appears to be close. "There's a contract we've been working on for the last month or so," Khanna said, hopefully. "But I can't say anything more than that right now." Even if those outstanding bids don't result in charter contracts for its drillships, Khanna said, the company will still be able to make due on the $900 million funding gap, with $500 million coming from bank financing and the rest from DryShips' cash reserves, which stood at $1 billion as of Dec. 31. DryShips has been planning an IPO of its drillships business since 2008. It aims to sell about 20% of the venture's equity to the public in the first step of an eventual spin off. Last fall, the company had anticipated signing at least one contract before the end of 2009. Khanna, who admitted to perhaps being a bit too optimistic with his expectations, blamed the delay on exploration companies not wanting to take extra liabilities onto their balance sheets at the end of last year. "We were hearing that people were ready to move," he said. "But they just took longer." In 2010, however, energy concerns have "much larger" budgets for oil and gas exploration and production, Khanna said. "It's much easier for them now to take on those liabilities." As a result, he said, "A number of these companies are actively looking right now."