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DryShips Inc.
Analyst Day – June 24, 2011
NASDAQ: “DRYS”
DryShips Inc. Page 2
Forward Looking Statements
Matters discussed in this presentation may constitute forward-looking statements. Forward-looking
statements reflect the Company’s current views with respect to future events and financial performance
and may include statements concerning plans, objectives, goals, strategies, future events or
performance, and underlying assumptions and other statements, which are other than statements of
historical facts.
The forward-looking statements in this release are based upon various assumptions, many of which
are based, in turn, upon further assumptions, including without limitation, management's examination
of historical operating trends, data contained in our records and other data available from third parties.
Although DryShips Inc. believes that these assumptions were reasonable when made, because these
assumptions are inherently subject to significant uncertainties and contingencies which are difficult or
impossible to predict and are beyond our control, DryShips Inc. cannot assure you that it will achieve
or accomplish these expectations, beliefs or projections. Important factors that, in the Company’s view,
could cause actual results to differ materially from those discussed in the forward-looking statements
include the strength of world economies and currencies, general market conditions, including changes
in charterhire rates and vessel values, changes in demand that may affect attitudes of time charterers
to scheduled and unscheduled drydocking, changes in DryShips Inc.'s operating expenses, including
bunker prices, dry-docking and insurance costs, or actions taken by regulatory authorities, potential
liability from pending or future litigation, domestic and international political conditions, potential
disruption of shipping routes due to accidents and political events or acts by terrorists.
Risks and uncertainties are further described in reports filed by DryShips Inc. with the US Securities
and Exchange Commission.
DryShips Inc.
Agenda
Company Overview
Industry Overview
Financial Overview & Conclusion
Q&A
DryShips Inc.
DryShips Today
DryShips Inc.
(NASDAQ: DRYS)
Drybulk Offshore
OCR UDW Inc. Tankers
• 8 units
- 2 UDW drilling rigs
- 2 UDW drillships
- 4 UDW drillships under
construction
• Management in-house
• Strong operational track
record
• 39 vessels
- 7 capesize
- 26 panamax
- 2 handymax
- 4 newbuildings
• Average age 8.1 yrs
• Total DWT: 3.7 Mt
• 12 vessels:
- 5 suezmax N/Bs-1 in water
- 4 aframax N/Bs-2 in water
• Deliveries:2 in 2011, 4 in
2012, 3 in 2013
• Employment in the Heidmar
Pools
• Total DWT: 1.6 Mt
Page 4
100% owned 100% owned 78% owned
DryShips Inc.
DryShips – Selected Financial Data
Page 5
(in $ million) 2010 2011
Revenue 859.7 1,205.6
Adjusted EBITDA 566.1 720.9
Assets 6,984.5 6,991.4
Cash 1,165.4 639.0
Market Capitalization 2.2 bn 1.5 bn
NOTES:
1) Adjusted EBITDA represents net income before interest, taxes, depreciation and amortization, gains or losses on interest rate swaps and contract termination fees and
forfeiture of vessels deposits
2) FY 2010
3) As per 31/12/2010
4) Analyst consensus for FY 2011 – Cantor Fitzgerald, Dahlman Rose, Goldman Sachs, Lazard Capital Markets, Wells Fargo Securities
5) As per 31/03/2011
6) As per 16/06/2011
(1)
(2)
(3)
(5)
(4)
(6)
(2)
(3)
(3)
(5)
(4)
DryShips is one of the largest shipping groups listed in the US
DryShips Inc.
Drybulk Employment Status
Page 6
Total revenue from time charters for the next 2.5 years is about $470 million
76%
37%
19%
Remaining 2011 2012 2013
% Charter coverage Annual Dry Bulk fixed revenue ($m) Average fixed rate1 ($k/d)
$332
$209
$111
2011 2012 2013
$43,100$41,250
$34,000
Remaining 2011 2012 2013
1 Represents rates before commission
Spot ship-years
6.1 23.1 30.6
DryShips Inc. Page 7
Tankers – High Spec Tankers
Aframax vessels
M/T Saga delivered in January 2011
M/T Daytona delivered in April 2011
M/T Belmar – Q4 2011
M/T Calida – Q4 2011
M/T Alicante – Q2 2012
M/T Mareta – Q3 2012
Suezmax vessels
M/T Vilamoura delivered in March 2011
M/T Lipari – Q2 2012
M/T Petalidi – Q2 2012
M/T Bordeira – Q1 2013
M/T Esperona – Q3 2013
M/T Blanca – Q4 2013
DryShips Inc.
Leading pure-play ultra-deepwater driller
Long-term blue chip customer relationships
Strong cash flow generation from significant contract backlog
Operator with proven capabilities and unblemished safety record; experienced management and operational team
Two of the best and newest harsh environment semisubmersible rigs in the world
Four premium ultra-deepwater drillships by year-end 2011 with two more newbuilding drillships in 2013
Two additional newbuilding options for delivery in 2014 from Samsung
Ultra-deepwater is the key growth market in the offshore drilling industry
Market capacity tightening after lull in 2008-2010
Improving dayrate environment
Pure play
company
Superior asset
base
Strong growth
market
Ocean Rig UDW Inc – Only UDW Pure Play of Size
Page 8
DryShips Inc.
1996 1997 2001 2007 2008 2009 2002 1998
Ocean Rig ASA established
Ordered four hulls
Listed on Oslo Stock Exchange
Started hull construction
Eirik Raude completed, two baredecks sold
Leiv Eiriksson completed
Cardiff Marine ordered two drillships from SHI
DryShips acquired ~30% stake in Ocean Rig ASA
DryShips ordered two drillships from Samsung Heavy Industries (“SHI”)
DryShips acquired a controlling interest in Ocean Rig ASA and subsequently de-listed the company from Oslo Stock Exchange
All drilling assets combined under Ocean Rig UDW
2010
Secured 4 options for drillships at SHI with delivery in 2013/2014
Ocean Rig UDW took delivery of the 2 first drillships
Issued $500m unsecured bond
2011
Ocean Rig UDW completed a USD 500m private placement
Declared two newbuilding options for delivery in 2013
Established long-term history as an UDW drilling contractor
Page 9
DryShips Inc.
6th generation sistership drillships built by
Samsung
2 delivered; Corcovado in January 2011, and
Olympia in March 2011
2 under construction: Poseidon to be delivered in
July 2011, and Mykonos in September 2011
Water depth capacity of 10,000 ft and drilling
depth capacity of 40,000 ft
Dual derrick capabilities to ensure optimal
operational efficiency
Saves 15-40% of drilling days
depending on well parameters, providing
significant cash savings to customers
Transit speed 12 knots
Environmentally friendly zero-spill systems with
low emissions
Other specs include: 5 Mud Pumps, 217 P.O.B
capacity, Powerful DP3, High variable deckload;
20,000 mt
$60m worth of upgrades
Delivered:
Leiv Eiriksson in 2001
Eirik Raude in 2002
– Hull: Dalian
– Outfitting/Topside: Friede Goldman & Irving
Shipyard
5th generation semi with dynamic positioning,
Bingo 9000
Water depth capacity:
10,000 ft for the ER
7,500 ft for the LE
Fully winterized for year around operations in
extreme weather climates
Ideal for development drilling due to high
deckload and storage capacity
Two modern harsh environment semis
Eirik Raude Leiv Eiriksson
Four 6th generation drillships Two 7th generation drillships
Page 10
7th generation sistership drillships built by
Samsung
Under construction, with deliveries in July 2013
and October 2013 respectively
Water depth capacity of 12,000 ft and drilling
depth capacity of 40,000 ft
Upgrades to the four 6th generation drillships
include:
Increased water depth capacity
Seven ram BOP
Dual mud system
Enhanced riser handling and storage
system
Ballast water treatment
High quality assets with superior technology
DryShips Inc.
Construction for drillships proceeding as per schedule
Ocean Rig Poseidon (Hull 1865) , on schedule for delivery in July
Ocean Rig Mykonos (Hull 1866), on schedule for delivery in September
Page 11
Drillships Construction and Operations Update – On Schedule
DryShips Inc.
Options to build up to two high specification UDW drillships at Samsung for 2014
deliveries
Sisterships to the drillships currently being constructed, secures high degree of
standardization
Favorable payment terms
Construction cost estimated at approximately USD 638 million (excluding financing costs)
– attractive relative to current replacement value
Each of the options can be exercised any time prior to November 2011
Two newbuilding options
Attractive Newbuilding Options
Page 12
DryShips Inc.
UDW Contract Backlog – Over $2 billion
Page 13
Notes: Backlog as of 31/03/2011
Vanco/Lukoil backlog do not assume extension of 1-yr
Unit Year Built Redelivery Customer Operating Area Maximum dayrate ($k) Backlog ($m)
Leiv Eiriksson 2001 Apr – 11 Petrobras Black Sea $ 583 $ 5
Leiv Eiriksson 2001 Q4 – 11 Cairn Greenland $ 550 $ 95
Leiv Eiriksson 2001 Q3 – 12 Borders & Southern Falklands $ 530 $ 126
Eirik Raude 2002 Oct – 11 Tullow Off-shore Ghana $ 665 $ 127
OCR Corcovado 2011 Q4 – 11 Cairn Greenland $ 560 $ 107
$ 140
OCR Corcovado 2011 Q4 – 14 Petrobras Brazil $ 460 $ 534
$ 140
OCR Olympia 2011 Q2 – 12 Vanco / Lukoil W. Africa $ 415 $ 160
OCR Poseidon 2011 Q2 – 13 Petrobras Tanzania $ 632 $ 378
OCR Mykonos 2011 Q4 – 14 Petrobras Brazil $ 455 $ 528
Total $ 2,060
Contracts in place
Leiv Eirikson
Eirik Raude
Ocean Rig Corcovado
Ocean Rig Olympia
Ocean Rig Poseidon
Ocean Rig Mykonos
OCR Drillship TBN #1 NB Delivery July 2013
OCR Drillship TBN #2 NB Delivery October 2013
2012
Petrobras Cairn
NB Delivery July 2011
NB Delivery September 2011
Cairn
Petrobras - 20 months
Vanko / Lukoil - 1 yr
B&S
+ 1yr option
2014
Tullow (since 2008)
Petrobras - 3 years
Petrobras - 3 years
20132011
DryShips Inc.
•
Leiv Eiriksson
Eirik Raude
OCR Corcovado
Operating for Tullow
Oil offshore Ghana
Operating for Cairn
offshore Greenland
OCR Poseidon
Operating for Cairn
offshore Greenland
Contracted by
Petrobras offshore
Tanzania
Contracted by Vanco
/ Lukoil offshore
Ghana
OCR Olympia
OCR Mykonos
Contracted by
Petrobras offshore
Brazil
Page 14
Drilling operations during Q3 2011
DryShips Inc.
Source: Company
Leiv Eirikson Eirik Raude OCR Corcovado OCR Olympia OCR Mykonos
164 employees 147 employees 157 employees 173 employees 51 employees
OCR Poseidon
85 employees
Ocean Rig employs 911 people and has been operating drilling rigs for approximately 10 years with a good safety
record and success rate
The company also has 44 project team employees on site in Korea and 90 shore staff
Page 15
Highly capable staff
DryShips Inc.
OCR – Selected Financial Data
Page 16
(in $ million) 2010 2011
Revenue 405.7 669.8
Adjusted EBITDA 266.5 415.3
Assets 4,343.7 4,434.7
Cash 608.5 270.0
Market Capitalization 2.3 bn 2.5 bn
NOTES:
1) Adjusted EBITDA represents net income before interest, taxes, depreciation and amortization, gains or losses on interest rate swaps and contract termination fees and
forfeiture of vessels deposits
2) FY 2010
3) As per 31/12/2010
4) Analyst consensus for FY 2011 – DnB NOR, Fearnley Fonds, Nordea Markets, SEB Enskilda
5) As per 31/03/2011
6) As per 16/06/2011
(1)
(2)
(3)
(5)
(4)
(6)
(2)
(3)
(3)
(5)
(4)
DryShips Inc.
OCR is now fully funded
Page 17
Units Loan facility
Leiv Eiriksson
Eirik Raude DnB NOR facility - $ 615 m
OCR Corcovado
OCR Olympia Nordea & ABN Amro facility - $ 800 m
OCR Poseidon
OCR Mykonos Deutsche Bank facility $ 1 bn
NB Units CAPEX Paid so far Remaining CAPEX (including OFEs, Supervision costs)
OCR Poseidon $ 449 m $ 339 m
OCR Mykonos $ 439 m $ 347 m
Declared Option #1 $ 242 m $ 396 m (entire amount payable in July 2013)
Declared Option #2 $ 242 m $ 396 m (entire amount payable in Oct 2013)
Available free cash today of about $ 500 m
DryShips Inc.
68
45
3710
82
242
98
340
500
Crew Maintenance Other G&A Interest expense 1) Operational Breakeven
Ammortization 2) Financial Breakeven Market rates
Daily breakeven cashflow per drillship ($ 000’s)
Notes:
1) Assuming a $500 million senior facility @ 6.0% interest per rig
2) Assuming principle amount amortized to 50% over 7 years Source: Pareto Research
Daily breakeven cash flow for drillships
Page 18
About $60m
of free cash
flow every
year
DryShips Inc. Page 19
OCR UDW Update
Operations
First two drillships left the yard immediately upon delivery and
have commenced operations
Wells spudded
People
Staffed up offshore and onshore – almost complete
Listing Process Update
Trading on Nasdaq expected to commence this summer
OCR Bond rating process underway
DryShips Inc.
0
5
10
15
20
25
30
Tran
soce
an
No
ble
Sead
rill
Ensc
o /
Pri
de
Oce
an R
ig
Dia
mo
nd
Pac
ific
Od
eb
rech
t
Mae
rsk
Ake
r
Sch
ahin
Seva
n
Van
tage
Ste
na
Atw
oo
d
Q. G
alva
o
Od
fje
ll
Saip
em
IPC
Do
lph
in
Ete
sco
Pe
tro
serv
NA
Dri
llin
g
De
lba
Son
ga
0
5
10
15
20
25
Tran
soce
an
No
ble
Oce
an R
ig
Ensc
o /
Pri
de
Pac
ific
Sead
rill
Od
eb
rech
t
Van
tage
Ste
na
Ake
r
Sch
ahin
Mae
rsk
Atw
oo
d
Dia
mo
nd
Do
lph
in
Ete
sco
Od
fje
ll
Q. G
alva
o
Saip
em
Pe
tro
serv
NA
Dri
llin
g
(1) Ultra-deepwater defined as 7,500 feet of water depth or greater.
(2) Includes newbuilds (assigned zero fleet age) and jackups. Source: ODS Petrodata, includes 5G/6G unit in operation and under construction
Current options
Fleet composition – Ultra-deepwater(1) as a % of NAV
100% 100%
63% 54% 54%
39% 33%
14%
OCR PD SDRL RIG ESV NE DO ATW
Average fleet age(2)
0.1 2.2 2.3
12.8
20.0
22.8 23.9
29.2
PDSA SDRL OCR ATW ESV NE RIG DO
Pure Play with Size, Experience & Premium Assets
Owned and operated drillships (including options) Owned and operated UDW units (including options)
Page 20
DryShips Inc.
Medium to long term
Strategic growth levers
Short term
Safe and top quality operations – Zero incident philosophy
Successful start-up of newbuild drillship operations
Continued focus on increasing contract backlog
– Erik Raude in 2011 and LE in 2012
– Marketing NBs
Target of listing on international exchange before end of Q3 2011
Secure contracts and financing for 7th gen NBs and optional drillships
Institute dividend
Grow fleet to ~10-15 units by 2015
– Capitalize on economies of scale from high degree of standardization and ultra-deepwater “pure play”
– Increase capability to serve clients globally
Fleet growth through organic growth or consolidation
Create leading “Pure Play” contractor in the ultra-deepwater and harsh environment markets
Company Strategy
Page 21
DryShips Inc.
Agenda
Company Overview
Industry Overview
Financial Overview & Conclusion
Q&A
Drybulk
DryShips Inc.
0
10,000
20,000
30,000
40,000
50,000
60,000
70,000
Jan-10 Feb-10 Apr-10 May-10 Jul-10 Sep-10 Oct-10 Dec-10 Feb-11 Mar-11 May-11
Capesize Panamax Supramax
0
50,000
100,000
150,000
200,000
250,000
Jan-05 Sep-05 May-06 Jan-07 Sep-07 Jun-08 Feb-09 Oct-09 Jun-10 Mar-11
Capesize Panamax Supramax
Drybulk Rates – Capesize Rates in the Doldrums
Source: Clarkson
Page 23
(USD / day)
Drybulk Average T/C Routes – Since 2005
Drybulk Average T/C Routes – Since beginning of 2010
(USD / day)
DryShips Inc.
-20
0
20
40
60
80
100
2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 YTD 2011
Deliveries Sold for Scrap Losses Misc. Additions Misc. Removals Net Fleet Change
Drybulk Net Fleet Growth – Achilles Heel
Source: Clarkson
Page 24
(million DWT)
Yearly Net Fleet Changes
DryShips Inc.
0
20
40
60
80
100
120
140
160
Total Scheduled in the beginning of 2010 Actual Delivered
0
20
40
60
80
100
120
140
160
Total Scheduled in the beginning of 2011
Actual Delivered
Assuming Last Year's Slippage
Assuming Current Trend
Page 25
Drybulk Deliveries – Slippage at 61% YTD
Source: Clarkson
Actual vs. scheduled deliveries in terms of DWT in 2010 Actual vs. scheduled deliveries in terms of DWT in 2011
Imp
lied
slip
pag
e: 3
7%
A
ctu
al d
eliv
erie
s o
f
79 m
illion
DW
T
141m DWT
(million DWT) (million DWT)
89m DWT
75m DWT
DryShips Inc. Page 26
Drybulk Demolition – Accelerating
Source: Clarkson
Note: * 2011 Total number represents vessels sold for scrap YTD
Drybulk demolitions per type of vessel in 2010 and YTD 2011 – in terms of DWT
(million DWT)
0
2
4
6
8
10
12
14
Capesize Panamax Handymax Handysize TOTAL DRYBULK
2010 YTD 2011
*
DryShips Inc.
0
20
40
60
80
100
120
140
160
180
200
2003 2004 2005 2006 2007 2008 2009 2010 2011E
0
20
40
60
80
100
120
140
2001
2002
2003
2004
2005
2006
2007
2008
2009
2010
2011
E
0
100
200
300
400
500
600
700
800
2001
2002
2003
2004
2005
2006
2007
2008
2009
2010
2011
E400
450
500
550
600
650
700
750
2009 2010 2011E
Drybulk Demand Growth – Solid Fundamentals
Source: SSY, Banchero Costa, Worldsteel
Page 27
(million tons) (million tons)
China’s Iron Ore Imports China’s Crude Steel Production
China’s Coal (Steam and Coking) Imports India’s Coal (Steam and Coking) Imports
(million tons) (million tons)
DryShips Inc.
0
200
400
600
800
1,000
1,200
2008 2009 2010 2011E
China Iron Ore Imports Rest of the World Imports
0
200
400
600
800
1,000
1,200
2008 2009 2010 2011E
China Coal Imports Rest of the World
Drybulk Demand Growth – Solid Fundamentals
Source: SSY
Page 28
(million tons)
0
200
400
600
800
1,000
1,200
1,400
1,600
2008 2009 2010 2011E
Chinese steel production Rest of the World
(million tons) (million tons)
World Crude Steel Production
Seaborne Coal Trade (Coking + Steam) Seaborne Iron Ore Trade
DryShips Inc.
Urbanization in China and India – Long Terms Story Intact
Source: BHP Billiton, McKinsey 2011, Global Insight
Page 29
Projected India and China finished steel demand Urbanization of India
0
10,000
20,000
30,000
40,000
50,000
60,000
2000 2009 2025 projection
US - $55,600 in 2025
Urbanization of China China’s GDP per capita 2000 – 2025
0
400
800
1,200
1,600
1990 2005 2025 projection
Urbanized population in China Total Population in China
0
400
800
1,200
1,600
1990 2005 2025 projection
Urbanized population in India Total Population in India
0
200
400
600
800
1,000
1990 1995 2000 2005 2010 2015 2025
China's demand India's demand
CAGR: 3.4%
CAGR: 8.0%
USD / Capita (in million)
(in million) (in mtpa)
DryShips Inc.
0
1
2
3
4
5
6
7
8
China and Hong Kong N. Korea, S. Korea and
Taiwan
Indian sub-continent
and South Asia
Japan
2007 2035
0
5
10
15
20
25
30
35
1995 2000 2005 2010 2015 2020 2025 2030 2035
America Europe Asia Total
China and India – Long Term Story Intact
Source: BHP Billiton, McKinsey 2011, Global Insight, International Energy Outlook 2010, SSY
Page 30
Projected India and China finished steel demand
Coal imports to Asia by major importing region
China’s GDP per capita to grow substantialy to 2030
0
200
400
600
800
1,000
1990 1995 2000 2005 2010 2015 2025
China's demand India's demand
CAGR: 3.4%
CAGR: 8.0%
(quadrillion Btu)
(in mtpa)
Coal imports by major importing region
(quadrillion Btu)
DryShips Inc.
Agenda
Company Overview
Industry Overview
Financial Overview & Conclusion
Q&A
Tankers
DryShips Inc.
0
20,000
40,000
60,000
80,000
100,000
Jan-10 Feb-10 Apr-10 May-10 Jun-10 Aug-10 Sep-10 Nov-10 Dec-10 Feb-11 Mar-11 May-11
VLCC Suezmax Aframax
Tanker Rates – Depressed due to Oversupply
Source: Clarkson
Page 32
(USD / day)
Tanker Average Earnings (TCE) – Since 2005
Tanker Average Earnings (TCE) – Since beginning of 2010
(USD / day)
0
50,000
100,000
150,000
200,000
250,000
Jan-05 Sep-05 May-06 Jan-07 Sep-07 Jun-08 Feb-09 Oct-09 Jun-10 Mar-11
VLCC Suezmax Aframax
DryShips Inc. Page 33
Tankers Deliveries – Slippage at 44% YTD
Source: Clarkson
Actual vs. scheduled deliveries in terms of DWT in 2010
0
10
20
30
40
50
60
70
Janu
ary
Febru
ary
Mar
chApr
ilM
ayJu
ne July
Augus
t
Septe
mbe
r
Oct
ober
Nov
embe
r
Dec
embe
r
Total Scheduled in the beginning of 2010
Actual Delivered
Actual vs. scheduled deliveries in terms of DWT in 2011
0
10
20
30
40
50
60
70
Total Scheduled in the beginning of 2011
Actual Delivered
Assuming Last Year's Slippage
Assuming Current Trend
Imp
lied
slip
pag
e: 3
6%
A
ctu
al d
eliv
erie
s o
f
39 m
illion
DW
T
(million DWT) (million DWT)
59m DWT
38m DWT
35m DWT
DryShips Inc.
Tankers Net Fleet Growth – Single Hull Fleet Gone
Source: Clarkson
Page 34
(million DWT)
Yearly Net Fleet Changes
-30
-20
-10
0
10
20
30
40
50
60
2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 YTD 2011
Deliveries Sold for Scrap Losses Misc. Additions Misc. Removals Net Fleet Change
DryShips Inc.
0
2
4
6
8
10
12
14
VLCC Suezmax Aframax Panamax Handy TOTAL TANKERS
2010 YTD 2011
Page 35
Tankers Demolition
Tankers demolitions per type of vessel in 2010 and YTD 2011 – in terms of DWT
(million DWT)
Source: Clarkson
Note: * 2011 Total number represents vessels sold for scrap YTD
*
DryShips Inc.
-1.0
0.0
1.0
2.0
3.0
4.0
2002 2003 2004 2005 2006 2007 2008 2009 2010 2011E 2012E 2013E 2014E 2015E
0
0.2
0.4
0.6
0.8
1
1.2
1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011E 2012E 2013E 2014E 2015E
Oil Consumption – Demand Growth Intact
Source: IEA
Page 36
(million barrels per day)
Year-on-year change in Global Oil Demand
Year-on-year change in Chinese Oil Demand
(million barrels per day)
DryShips Inc.
-0.4
-0.2
0
0.2
0.4
0.6
0.8
1
1.2
09 -10 Change 10 - 1Q11 Change 4Q10 - 1Q11 Change 10 - 11 Expected Change
OPEC Middle East OPEC Other Non-OPEC
0
10
20
30
40
50
60
2009 2010 Q1 2011 2011E
OPEC Middle East OPEC Other Non-OPEC
Oil Production
Source: IEA
Page 37
(million barrels per day)
World oil production
Change in world oil production
(million barrels per day)
DryShips Inc.
80
82
84
86
88
90
2007 2008 2009 2010
2,400
2,500
2,600
2,700
2,800
Q1-05 Q3-05 Q1-06 Q3-06 Q1-07 Q3-07 Q1-08 Q3-08 Q1-09 Q3-09 Q1-10 Q3-10 Q1-11
45
50
55
60
65
OECD Inventories Days of Forward Demand Curve
-3.00
-2.00
-1.00
0.00
1.00
2.00
2007 2008 2009 2010 2011 2012
OPEC production Non-OPEC production
Oil Supply – Non-OPEC Production Growth Slowing
Source: SSY, Jefferies, Deutsche Bank, OECD, OPEC, EIA, OGJ, IEA
Page 38
OECD Inventories And Forward Demand Cover
Global Oil Supply OPEC vs. Non-OPEC Production Growth
(million barrels per day)
(million barrels) (days)
(million barrels per day)
0.02
0.03
0.04
0.05
0.14
0.18
0.19
0.22
0.23
0.26
0.33
3.50
0.0 0.5 1.0 1.5 2.0 2.5 3.0 3.5 4.0
Ecuador
Algeria
Iran
Iraq
Venezuela
Qatar
Angola
Libya
Kuwait
Nigeria
UAE
Saudi Arabia
(million barrels per day)
OPEC Spare Capacity vs Jan 2011 Supply
DryShips Inc.
Agenda
Company Overview
Industry Overview
Financial Overview & Conclusion
Q&A
UDW Drilling
DryShips Inc.
0
20
40
60
80
100
120
140
160
Jan-2005 Sep-2005 May-2006 Jan-2007 Oct-2007 Jun-2008 Feb-2009 Oct-2009 Jun-2010 Mar-2011
High Oil Prices – Fundamentals + Conflicts
Analysts expect high oil prices for the near future, mainly driven by:
Demand growth in emerging markets
Declining production in mature provinces (e.g. North Sea, Mexico)
Slowing non-OPEC production growth
Brent (USD/bbl)
Page 40
DryShips Inc.
15%15%16%
13%
0%
4%
8%
12%
16%
20%
Super Majors &
Majors
National Oil
Companies
Independents Average
Onshore and shallow water oil reserves are mature; deepwater and ultra-deepwater are the new frontiers
Oil companies have announced plans for increased CAPEX budgets in 2011 vs 2010
Aggregate increase in CAPEX being 15% across the group
Budgets are likely to increase further during 2011, with an increase of around 15-20% for 2011 more likely
Petrobras announced E&P growth of 16.5%
BG, Chevron and ConocoPhillips are all increasing capex by 25% or more
Most UDW projects profitable above $60 per barrel
Technological innovations have improved the economic viability of deepwater developments
E&P spending is accelerating
Source: Pareto, SEB
Page 41
Oil Demand & Spare Capacity and Global E&P CAPEX Growth in 2011 E&P Spending Budgets
DryShips Inc.
0
1
2
3
4
5
6
7
8
200
0
200
1
200
2
200
3
200
4
200
5
200
6
200
7
200
8
200
9
201
0
201
1
201
2
201
3
201
4
201
5
US Brazil Angola Nigeria Equatorial Guinea Congo Malaysia Ghana Other
Global deepwater production (mbd)
Source: Pareto Research, HIS CERA, Wood Mackenzie
Strong production growth in deepwater Significant development of deep water wells
Rising oil prices improve economics for UDW operators
Depleting reserves make UDW exploration critical
UDW is still a young segment focused mostly on exploration
Development in infancy and gathering pace
Deepwater production has doubled in last 5 years
Deepwater discoveries accounted for ~50% of world discoveries from 2006-2009
Deepwater discoveries 6x larger in size than new onshore discoveries
Established Developing Frontier
Ultra-deepwater exploration: a proven growth market
Page 42
DryShips Inc.
Source: Pareto Research
Major planned development in Brazil Large opportunities in harsh environments
Brazilian Tupi development will require ~200 wells
Speed of the most recently drilled UDW well (156 days) indicates one rig can drill ~2.3 wells/ year
There will be learning curve effects, but considering routine downtime (transit, shipyard etc.) we believe an estimate of 2.3 wells/year is reasonable
Assuming 6+ years development, Tupi alone will employ 17 rigs – 13% of the world UDW fleet (#130 YE 2013)
The Tupi field could employ ~13% of the world’s UDW fleet
The Area north of the Arctic Circle has an estimated 90 billion barrels of undiscovered oil
The Arctic region accounts for 13% of undiscovered natural gas and 20% of undiscovered natural gas liquids
UDW and harsh environment development in infancy
Page 43
DryShips Inc.
UDW Drilling – A Rising Market
UDW day rates Rates bottomed out in Q3 2010 in the low
~$400,000 per day range and now trading up
– Management estimate of current market
rate: $500,000 per day, for short period
Recent Diamond newbuild fixtures of
$495,000 beginning in 2013 / 2014 give
credence to this estimate
Currently more than 15 open enquiries for
projects in Brazil, West Africa, North Sea,
Mediterranean, Malaysia, etc
Brazil expected to play a critical role in
balancing ultra-deepwater demand and
supply
Latent demand from GoM could be game
changer for the UDW market
$0
$100
$200
$300
$400
$500
$600
$700
Ma
r-0
0
Ma
r-0
1
Ma
r-0
2
Ma
r-0
3
Ma
r-0
4
Ma
r-0
5
Ma
r-0
6
Ma
r-0
7
Ma
r-0
8
Ma
r-0
9
Ma
r-1
0
Ma
r-1
1
Page 44
DryShips Inc.
Ultra-deepwater units – Eirik Raude Only Hot Rig in 2011
Source: Fearnley Offshore
Page 45
FIRM CONTRACT 1
OPTION
CONSTRUCTION DELIVERY 3NEWBUILDINGS
2011 2012
RIG OPERATOR AREA COUNTRY CONTRACTOR TYPE UDW WD 1 DP / Moored (M)J F M A M J J A S ON D J F M A M J J A S ON D
PACIFIC MISTRAL YARD/AVAILABLE AP S.Korea Pacific Drilling DS Y 10 000 DP
SONGA ECLIPSE YARD/AVAILABLE AP Singapore Songa SS Y 7 500 DP
LA MURALLA IV YARD/AVAILABLE AP S.Korea IPC SS Y 10 000 DP
WEST CAPRICORN YARD/AVAILABLE AP Singapore Seadrill SS Y 10 000 DP
WEST LEO YARD/AVAILABLE AP SEA Seadrill SS Y 10 000 DP
EIRIK RAUDE TULLOW WAFR Ghana OCR SS Y 10 000 DP
DEEP OCEAN MOLOKAI YARD/AVAILABLE AP S.Korea Pride DS Y 10 000 DP
STENA DRILLMAX REPSOL BRA Brazil Stena DS Y 10 000 DP 1 1 1 1 1 1
NOBLE JIM DAY SHELL GOM USA Noble SS Y 12 000 DP
STENA ICEMAX YARD/AVAILABLE AP S.Korea Stena DS Y 7 500 DP
ENSCO 8504 YARD/TOTAL AP Singapore/Brunei Ensco SS Y 8 500 DP
ENSCO 8505 YARD/AVAILABLE AP Singapore Ensco SS Y 8 500 DP
OCEAN MONARCH MARATHON/BP GOM/SEA USA/Vietnam Diamond SS Y 10 000 M
OCEAN ENDEAVOR BURULLUS MED EGYPT Diamond SS Y 8 000 M
NOBLE CLYDE BOUDREAUX SHELL GoM USA Noble SS Y 10 000 M
OCEAN RIG OLYMPIA VANCO WAFR Ghana OCR DS Y 10 000 DP
DEEPSEA METRO I YARD/BG (WOODSIDE) AP S.Korea Odfjell DS Y 10 000 DP 1 1 1 1 1 1 1 1 1 1 1 1
LEIV EIRIKSSON CAIRN/BORDERS & SOUTHERN (FALKLAND O&G)CAN/SOA Greenland/Falklands OCR SS Y 7 500 DP
ATWOOD CONDOR YARD/AVAILABLE AP Singapore Atwood SS Y 7 500 DP
PACIFIC SCIROCCO TOTAL WAFR NIgeria Pacific Drilling DS Y 12 000 DP
DEEPWATER NAUTILUS SHELL GoM USA Transocean SS Y 8 000 M
ENSCO 8506 YARD/AVAILABLE AP Singapore Ensco SS Y 8 500 DP
DISCOVERER ENTERPRISE BP GoM USA Transocean DS Y 10 000 DP
ENSCO 8502 NEXEN GOM USA Ensco SS Y 8 500 DP
CATARINA YARD/AVAILABLE AP S.Korea Petroserv SS Y 10 000 DP
WEST GEMINI TOTAL WAFR Angola Seadrill DS Y 10 000 DP
WEST POLARIS EXXONMOBIL BRA Brazil Seadrill DS Y 10 000 DP 1 1 1 1 1 1 1
SAIPEM 10000 ENI AP Australia/Indonesia/India/MozambiqueSaipem DS Y 10 000 DP
OCEAN CONFIDENCE MURPHY/COBALT/TOTALWAFR/GoM Congo/Angola/USA Diamond SS Y 10 000 DP
GSF DEV. DRILLER 1 BHP GoM USA Transocean SS Y 7 500 DP
DryShips Inc.
Agenda
Company Overview
Industry Overview
Financial Overview & Conclusion
Q&A
DryShips Inc. Page 47
CAPEX
Yard Commitments – as of today
(USD millions) FY2011 FY2012 FY2013 FY2014 Total
Drillships:
Hull 1865 305.3 - - - 305.3
Hull 1866 305.3 - - - 305.3
NB Drillship TBN #1 365.6 - 365.6
NB Drillship TBN #2 365.6 - 365.6
Total 610.6 - 731.2 - 1,341.8
Drybulk Vessels:
Panamax 1 23.1 - - - 23.1
Panamax 2 6.6 16.5 - - 23.1
Capesize 1 - 40.6 - - 40.6
Capesize 2 - 40.6 - - 40.6
29.7 97.8 - - 127.5
Tanker Vessels:
Belmar 42.8 - - - 42.8
Calida 45.6 - - - 45.6
Lipari 54.4 - - 54.4
Petalidi 6.8 54.4 - - 61.2
Alicante 45.6 - - 45.6
Mareta 5.7 45.6 - - 51.3
Bordeira 6.8 54.4 - - 61.2
Esperona - 6.8 54.4 - 61.2
Blanca - 6.8 6.8 47.6 61.2
107.7 268.0 61.2 47.6 484.5
GRAND TOTAL 748.0 365.8 792.4 47.6 1,953.8
DryShips Inc. Page 48
DEBT
Proforma Debt Repayment Schedule – as of today
(USD million)
Drybulk Segment Tanker Segment Drilling Rig Segment Total
Remaining 2011 65 3 112 180
FY 2012 114 7 167 288
FY 2013 110 7 549 666
Long-term Debt
DryShips Inc. Page 49
Strong Contracted Cashflow - Upside from Drillships & Spot Drybulk and Tankers
Notes:
− EBITDA has been estimated on the basis of Net Revenues; Drydock expenses are not included in calculation of EBITDA. Cash G&A is taken into account in calculation
of EBITDA
− Assumed utilization rate of 95% for the rigs and drillships
− * Estimates only include fixed contracts
− ** Spot – assumed fixed at market EBITDA: All units as they become available, are assumed fixed upon delivery at $500,000 per day (with 1 month mobilization
period, and assumed OPEX of $150,000 per day)
− Dry Cargo and Tankers – Spot: 2011 and 2012 rates as per FFA forward curve. 2013 rates as per management projections
($ in millions)
$225$153
$79
$140
$492$452
$232
$17 $214$478
$45$15
$749
$863
$930
$0
$200
$400
$600
$800
$1,000
2011 2012 2013
Ultra Deep Water - Spot (assumed fixed at market) **
Ultra Deep Water - Fixed *
Dry Cargo and Tankers - Spot (assumed fixed at market)
Dry Cargo - Fixed contracts
EBITDA Estimates
DryShips Inc.
Drybulk
Tankers
UDW Drilling
Page 50
DryShips Inc Strategy – Three Standalone Segments
Spin-off / IPO
Dividend play
Stand alone entity
Capitalization
proceeding
Increase backlog
Fleet growth
Increase liquidity
(float)
Opportunistic
Valuation of long-
term charters
Fleet renewal/M&A
Take advantage
when market
improves
DryShips Inc.
OCRG Closing Price = US$19 per share
78% of OCR = US$2.0 billion
DRYS Market Cap = US$1.6 billion
Buy 1 (20% off) and Get 2 free
Page 51
Buy OCR at a 20% discount and get the drybulk and
tankers for free