(DryShips report updated with stock movement.)

ATHENS, Greece ( TheStreet) -- DryShips ( DRYS) shares pushed higher Monday amid heavy trading after the drybulk shipper said Friday its offshore drilling subsidiary plans to raise $500 million in a private offering.

DryShips said its wholly-owned Ocean Rig UDW unit's planned offering is expected to close before the end of 2010. The offering will be made to Norwegian professionals and eligible counterparties under Norwegian trading regulations, to non-U.S. residents and in a concurrent private placement in the United States only to qualified institutional buyers pursuant to Rule 144A under the Securities Act.

Proceeds from the sale are "expected to be used to finance construction costs of the ultra deepwater newbuilding drillships under construction at Samsung, exercise options to build further ultra deepwater drillships and general corporate purposes."

The offering will reduce DryShips' ownership stake in Ocean Rig to between 78% and 80%.

DryShips shares jumped 6% Monday to $6.23. Nearly 40 million shares changed hands with two hours left in the trading session, compared with their average daily volume of 19.9 million shares. On Friday the stock closed up by 12.4%.

Separately, DryShips said Friday it completed its ATM Equity Offering, raising around $350 million since initiating the offering on Sept. 7.

Earlier last week DryShips' Ocean Rig UDW subsidiary signed a $77 million contract with Borders & Southern Petroleum for a 2-well exploration and drilling pact in the offshore Falkland Islands area for a period of 90 days, beginning in the fourth quarter of 2011.

>>DryShips Trades Higher on Drill Deal

There were three further optional wells that could extend the contract by 135 days.

The dry-bulk shipper and deepwater drill-ship operator recently posted better-than-expected quarterly earnings.

DryShips reported earnings of 18 cents per share, or $49 million. Excluding one-time items the income number would have come in at $99 million, or 38 cents per share, easily besting the consensus Wall Street estimate of 25 cents per share.

Quarterly revenue inched higher by 1.4% to $225.2 million from a year ago, also beating expectations.

>>DryShips Tops Views; Stock Jumps

The company finally made good this fall on promises regarding its long-floundering drilling business, inking contracts on several vessels that had still required financing.

DryShips CEO George Economou issued a rosy outlook on that score as well, saying, "The ultra deepwater market has turned a corner in the last couple of months and we believe that current enquiry from operators matches or may even exceed the supply available in 2011."

Industry rival Diana Shipping ( DSX) traded higher last week as well thanks to a healthy buy rating from Goldman Sachs ( GS). Shares added 1.5% on Monday.

>>Diana Shipping Cruises on Buy Rating

Analysts from Goldman Sachs initiated coverage of the dry-bulk shipper Tuesday with a buy rating and $17 price target, which represents a 34.6% upside to Diana's closing price Tuesday of $12.63.

Goldman's bullish rating cited that 60% of Diana's fleet is chartered out through at least the second half of 2012. The firm estimated that Diana has $1 billion in cash and debt capacity to take advantage of expected vessel acquisition opportunities. Goldman also likes Diana's disciplined managed team.

Diana recently posted third-quarter net income of $33.8 million earlier this month, up 17.8% from a profit of $28.7 million in the third quarter of 2009.

Dry-bulk shipping peer FreeSeas ( FREE) saw its shares rise 2.3% Monday afternoon.

The operator of drybulk carriers posted a net loss of $9.5 million, or $1.51 per share, for the third quarter, compared with a profit of $465,000, or 8 cents per share, in the year-earlier period.

FreeSeas' revenue pushed up 5.3% to $13.8 million.

Paragon Shipping ( PRGN) shares were up 2.6% Monday afternoon.

Analysts from Cantor Fitzgerald maintained a buy rating on Paragon but recently lowered their price target on the stock by $1 to $5.

"We now look for Paragon to report 2010 earnings per share of 39 cents (from 33 cents) and earnings before interest, taxes, depreciation and amortization of $65 million (from $67 million)," the equities research firm noted. "For 2011, we look for PRGN to generate EPS of 40 cents and EBITDA of $70 million. We note that our 2011 estimates assume the company's open vessels achieve an average daily rate of $18,000 for the Handymaxes."

Like FreaSeas, Euroseas ( ESEA) swung to a quarterly loss. The shipper posted lower revenue and hedging benefits, and said rates continued to soften.

Euroseas posted a smaller-than-expected loss but revenue came in shy of expectations.

The drybulk carrier saw its shares bid up 2.7%% in afternoon trading Monday.

-- Written by Miriam Marcus Reimer in New York.

>To contact the writer of this article, click here: Miriam Reimer.

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