DRYS Update

Question

EXCELLENT news today. DRYS was just awarded a 3 year - $630 million contract with Petrobas.

First off this is a solid counterparty to get the deal with.
Second, the contract comes in at $575K a day . . . up from the current contract with Shell that is only $512K a day on the Lief Ericson.
Third . . . . this shows that the UDW market is still very, very strong.

This is excellent news if you are a long term holder of DRYS. What we should / could expect next is DRYS re-upping their Tullow RIG which just stuck oil off the coast of Africa.

Furthermore . . . due to the huge revenue stream down the line locked up, I expect new contracts (hopefully) to come online for the RIGS that are on order. If they come in at $575K a day as well there is some monster potential with this stock down here at $5. Even if we do get diluted big time up to say 150 million shares. Huge potential. Remember those rigs are on order to be delivered late 2010.

I am holding long for the UDW segment. Period. And today finally I got some good news . . . . been some time.

Here is to more contracts in the future.

VirginiaHoldem2 · Answer

EXCELLENT news today. DRYS was just awarded a 3 year - $630 million contract with Petrobas.

First off this is a solid counterparty to get the deal with.
Second, the contract comes in at $575K a day . . . up from the current contract with Shell that is only $512K a day on the Lief Ericson.
Third . . . . this shows that the UDW market is still very, very strong.

This is excellent news if you are a long term holder of DRYS. What we should / could expect next is DRYS re-upping their Tullow RIG which just stuck oil off the coast of Africa.

Furthermore . . . due to the huge revenue stream down the line locked up, I expect new contracts (hopefully) to come online for the RIGS that are on order. If they come in at $575K a day as well there is some monster potential with this stock down here at $5. Even if we do get diluted big time up to say 150 million shares. Huge potential. Remember those rigs are on order to be delivered late 2010.

I am holding long for the UDW segment. Period. And today finally I got some good news . . . . been some time.

Here is to more contracts in the future.

wallstreetcappers · Answer

VH2,That news today didnt shock me at all..I fully expected it.If George used shares to pay for a huge chunk of Cardiff rigs, then I would be ok..but I STILL dont think he did it..At 5 this is a joke..longer term these prices will be joked about as the shipping industry isnt going under and the UDW only makes the company stronger.I dont see how that Tullow deal could be extended, it is still going for a while if I recall?Should be an interesting CC if he ever does it...way overdue.

VirginiaHoldem2 · Answer

This deal alone adds $22 million in pre-tax income alone (575K - 512K) * 365 days.

I thought Tullow is 3 to 4 years with a series of one year options. That is what I thought. Might be wrong. Not that it matters though because they just hit oil I read.

Now we get to sit and wait on the spin off news and 4 other rigs. If George can take care of business (and he stands to make a ton of money if he does) this stock has some serious potential. Just gotta hope.

PALLADIUM · Answer

Should I go in BIG on this one.  It just seems SO cheap am I missing something here?

VirginiaHoldem2 · Answer

Well it still comes with its risks (dilution, loan covenants, etc).

But I am betting the positive outweights the negative at this point. May not happen right away but I'm hoping over next year it takes care of itself.

claycourtlesson · Answer

[Quote: Originally Posted by PALLADIUM] Should I go in BIG on this one.  It just seems SO cheap am I missing something here?&#xD;&#xA;&#xD;&#xA;[/Quote]&#xD;&#xA;Yes, for sure, but this is an "investment" for the long haul, and certainly not a gamble/trade.&#xD;&#xA;5 year time horizon from right now-----you&#x27;ll beat the SP500, and you&#x27;ll beat inflation.  Just like owning the physcial gold itself.

PALLADIUM · Answer

I bought @ 4.74 just 1k shares that&#x27;s enough for now.  Have a  hard time selling my metal stocks to buy anything.  Heck I sold QMM @ .55 this morning to buy DRYS and now QMM is at .69 oh well

VirginiaHoldem2 · Answer

Well near term I feel that DRYS will continue to be in for some more pain as the BDI continues to fall.  DRYS fill wall right inline with all of the other shippers.  But again, you one should be holding this stock for the drilling aspect.The shelf offering I feel (others can dispute) will most likely be used to reduce debt levels so that DRYS could spin off the Primelead.  Without the spinoff we don&#x27;t get 2 of the 4 Rigs.  I am hoping sometime this summer we get some contracts announced on the rigs that are set to come on in 2010 and 2011.  A company called Vantage just landed 2 contracts for their rigs coming on in 2010.  That would surely help this stock.  Just one of those contracts would provide revenue of $210 million a year.  I read on another board that the revenue generated from 1 UDW is = 50 panamaxes.  So basically one UDW gets the revenue of most of DRYS competitors.  So that is what we are dealing with here.  Time will tell . . . but in the mean time expect more pain (mainly due to BDI &#x2B; world in general).

Vermeer · Answer

I do not see world trade rebounding, period. The system is broken, not impaired. Contemplate what the cycle really was:cheap credit, American demand for unnecessary crap, and Chinese supply of cheap crap. Those days are over. RIP

Not saying the US/China trade is ALL the shipping trade, just the most important. But demand throughout the western world is cratering and not coming back, as it too was built on the same premise. Spanish housing for example is simply a repeat of our subprime debacle.And so on ad nauseum throughout the world.

And now, you have the dolts of the world attempting to command the world economy. If you believe in the likes of Barney Frank, or do not recall recent Soviet history, perhaps you think pols will succeed in rectifying what they created.They won't because they can't.

KOAJ · Answer

I do not see world trade rebounding, period. The system is broken, not impaired. Contemplate what the cycle really was:cheap credit, American demand for unnecessary crap, and Chinese supply of cheap crap. Those days are over. RIP
-----------

also, the world is overbuilt...america, china, middle east

easier to sell scrap steel and iron ore from unused buildings than get new stuff and ship it somewhere

claycourtlesson · Answer

Vermeer, you are right, and oh boy oh boy are we totally screwed for the long haul......"but in the near term"...........trillions upon trillions of currency has basically just been printed up to put a bandaid on the system.&#xD;&#xA; &#xD;&#xA;What has been printed is MAJOR.&#xD;&#xA; &#xD;&#xA;Thus, time has been bought.  Is it going to help anything long term?  Probably not, unless long term means less than 5 years.&#xD;&#xA; &#xD;&#xA;But in the meantime, you got to make money where and while you can.  No one is as bearish on the future as I am, but we are right in the middle of a vicious bear market rally that could last a few years.&#xD;&#xA; &#xD;&#xA;By end of 2014-2015:&#xD;&#xA; &#xD;&#xA;1) Dow 20,000&#xD;&#xA;2) Inflation like 250% from right now&#xD;&#xA;3) Social security declared caput&#xD;&#xA;4) We&#x27;re all fckued

Vermeer · Answer

CC:

Is the money printed major compared to what has gone up in smoke? From the numbers I see, admittedly some contradictory, and some guesstimates, the printed sum is in fact quite small compared to what has been burned through already, not to mention what is yet to be admitted to.They may have bought time, but not much. Things are really just now working their way through the world economy.

However, I hope the Dow does go to 20,000 as I will be selling right into it.

claycourtlesson · Answer

Trillions of dollars printed out of thin air is definitely enough to buy some time.  IMO, at least.&#xD;&#xA; &#xD;&#xA;Yeah, but with 250% inflation between now and &#x27;14-&#x27;15--------no diferent than Dow 8,000 in real terms even if it does touch 20,000.&#xD;&#xA; &#xD;&#xA;Oh yeah, Vermeer, I agree that we are so fckued it is sad, but the reaming won&#x27;t really be obvious for another couple of years.&#xD;&#xA; &#xD;&#xA;BTW, I saw that those who got burned by Madoff and other "ponzi schemes" can write those losses off returns.  Hahahahahahaha.  Time to start back-writing all the money I&#x27;ve put in to social security---------which is a ponzi scheme that will make Bernie Madoff look like Mary Poppins.

kevk87 · Answer

it all depends on how the printed money is going to be used. It has to be spent in order for inflation to occur.

Vermeer · Answer

[Quote: Originally Posted by claycourtlesson]  Trillions of dollars printed out of thin air is definitely enough to buy some time.  IMO, at least.&#xD;&#xA; &#xD;&#xA;Yeah, but with 250% inflation between now and &#x27;14-&#x27;15--------no diferent than Dow 8,000 in real terms even if it does touch 20,000.&#xD;&#xA; &#xD;&#xA;Oh yeah, Vermeer, I agree that we are so fckued it is sad, but the reaming won&#x27;t really be obvious for another couple of years.&#xD;&#xA; &#xD;&#xA;BTW, I saw that those who got burned by Madoff and other "ponzi schemes" can write those losses off returns.  Hahahahahahaha.  Time to start back-writing all the money I&#x27;ve put in to social security---------which is a ponzi scheme that will make Bernie Madoff look like Mary Poppins.  [/Quote]  Social Security is the biggest Ponzi scheme ever, you are right CC...pathetic.It will blow up just like Bernie&#x27;s did.But you can rest assured a fraud like Chris Dodd, or a buffoon like Frank will promise to "fix it"...LMAO.

PALLADIUM · Answer

I&#x27;m selling covered July 7.5&#x27;s calls and writing naked July 2.5 Puts.That&#x27;s my plan. I&#x27;ll take more shares at 2 in July nd I&#x27;lltake thosehuge premiums on almost a double.

claycourtlesson · Answer

Good plan there, Palladium.  Solid.

VirginiaHoldem2 · Answer

So . . . . . .

DRYS releases earnings at close of market tomorrow
Conference and webcast on Wednesday morning

Anyone care to guess what is disclosed? I'll put together my short wish list.

Dilution; is the secondary done . . . if so how many shares were sold (most important)
Covenant issues with Deutsche Bank
Spin off . . . what is going on . . . any possible new rig contracts coming

Those are my 3 most important at this time.

Last 3 earnings releases GE has firmly kicked me in the nuts . . . I don't know if I'll be able to get up again if he tells me the spinoff is called off (which means we don't get RIGS 5 and 6) or that somehow there are now 200 million shares outstanding.

wallstreetcappers · Answer

VH2,Here is my guess-Less dilution than many thinkCovenant issues either resolved or in negociationsDiscussions about long term contracts with the two rigs in the queueEarnings will be BAD, not core earnings but accounting writeoff of goodwill and asset valesNO spinoff in current environmentWhat would make me VERY VERY happy is if any dilution was to either pay for the balance on the two rigs, for half of the two from Cardiff or to knock out most of the shipping debt.

grapevinekid · Answer

DRYS making a nice move up today when most of the market is down.

depeche2 · Answer

DRYS is ready to move way higher.  $9-10 within 2 weeks IMO.

wallstreetcappers · Answer

Palladium,I didnt see your message earlier, why cap yourself on those CCs with the stock at such dramatic lows?I wont consider CCs for many many points personally..they are trading it here as a BK candidate..not gonna happen.I agree with Depeche..a good CC here and the fire can be lit to move this stock much higher. Even an honest and realistic CC will do it no harm.

BountyHunt · Answer

I just sold for 5.79 for a 25% profit. DRYS could jump big before it dips, but I have been burnt too many times by not cashing out.  &#xD;&#xA; &#xD;&#xA;I am looking to rebuy on a pull back. Hopefully I don&#x27;t miss the boat....

claycourtlesson · Answer

DRYS, I believe, reports earnings after today&#x27;s close (like 10-11ish PM on east coast).&#xD;&#xA; &#xD;&#xA;Numbers won&#x27;t mean a gd thing----all about the tone of the conference call.&#xD;&#xA; &#xD;&#xA;If you got money on the table in this one, be careful.  This could open at 10 tomorrow or 3.  No joke.

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