NEW YORK (TheStreet) -- Since BP's (BP - Get Report) oil-well spill began poisoning the Gulf of Mexico on April 20, shares of DryShips (DRYS), the dry-bulk shipping company run by the outspoken CEO with the ambitious plan to create a deepwater oil drilling business, have slumped 32%.

Investors have fled the stocks of all companies involved in offshore energy exploration, of course. But DryShips finds itself in an odd and precarious position. Having spent the last two years attempting to build and then carve out a so-called drillships business, the company has seen those efforts bog down to the point of being dead in the water.
Leiv-Eiriksson
DryShips' Leiv Eiriksson, a deepwater oil-drilling vessel

Back in 2008, DryShips acquired Ocean Rig, a Norwegian operator of two ultra-deepwater rigs -- mobile, exploratory drilling vessels capable of plumbing for petroleum and gas at depths up to 10,000 feet (double the fathomage of the doomed Deepwater Horizon).

DryShips CEO George Economou promptly declared his intent to build up this drillships segment and then spin it out in some way, most likely via an initial public offering, with the parent company retaining around three-quarters ownership.

Two years on, DryShips has added four more rigs to its fleet -- except that they're still being constructed at the Samsung shipyard in Korea. Two of them remain unfinanced, lacking about $1 billion, and all four remain uncontracted.

The other two rigs acquired in the initial acquisition are gainfully employed, however, one in the Black Sea and the other off the coast of West Africa. Those two rigs alone were enough to generate 41% of DryShips' revenue in the first quarter, down from about 50% a year ago -- which shows how much the company has come to depend on the drilling segment.

DryShips has said that a precondition for any IPO was that at least two of the four new ships score long-term charter contracts. Even before BP's disaster in the Gulf, charter day-rates for ultra-deepwater rigs had weakened considerably, falling to nearly $400,000 from $500,000 last year.

Uncertainty now surrounds the prospect of deepwater drilling in the Gulf of Mexico, where President Obama has ordered a six-month moratorium on exploration. Though an end to offshore oil extraction is about as likely as a worldwide ban on automobiles, the near-term prospects for the industry, and DryShips' drillships, have grown far choppier.

For one thing, in the wake of the BP spill, inking charter contracts for its new vessels just got even more difficult. (It's already taken much longer to secure winning bids for these contracts than DryShips had expected, something the company's operating chief, Pankaj Khana, admitted in March.)

One reason for DryShips' recent difficulty in winning fixtures may have arisen because big oil companies (like BP once was) are now leery of hiring out rigs from smaller operators like DryShips. They may fear a lack of experience (not that experience in any way helped Transocean ( RIG - Get Report) avert disaster). To be fair, the Norwegian team from the original drillships acquisition remain in place, and that these people have long experience in the sector, as DryShips' defenders are quick to point out.

More crucially, though, the concerns among charterers may have to do with liability. Oil companies may now be seeking to hire vessels only from rig operators that are big enough to sue -- and with enough money and insurance coverage to help pay out damages -- should one of the wells being drilled spring a leak.

The best-case scenario for a drillships IPO now appears to be a fourth-quarter offering, though some observers believe it won't happen until 2011. That's because the window of opportunity appears to have closed for maritime IPOs after three disappointing shipping-stock debuts earlier this year.

For DryShips' stock price, that could mean a prolonged period of underperformance.

In a note to clients a few weeks ago, after the company posted first-quarter results, shipping analyst Omar Nokta wrote, "Until more clarity arises for the IPO/carve-out of the rigs, DRYS shares are likely to remain range-bound." TheStreet's ratings service recently upgraded DryShips to hold.

The bullish DryShips argument, proffered by the likes of Lazard Capital Markets analyst Urs Dur, holds that DryShips stock as it stands now is essentially trading at a discount to the company's break-up value. Dur puts that number at about $7.50 a share. DryShips was trading Thursday afternoon at about $4.50 a share.

Anticipation of the IPO among investors had been high. Khana said back in March that a drillships stock issuance could double DryShips' share price. Executives were adamant on the first-quarter conference call with anlaysts that a deal would eventually get done, but not until the markets righted themselves.

"We are not doing the IPO just for the sake of it," Khana said on that call, two weeks ago. "We will wait for the right valuation before moving ahead with it."

-- Reported 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.