November 8, 2011 / 4:16 PM / 8 years ago

DryShips says drilling unit bidding for Petrobras contract

Nov 8 (Reuters) - DryShips Inc confirmed market speculation that its Ocean Rig UDW drilling unit was bidding to rent out five new drillships to Brazilian state oil company, Petrobras .

Shares of Athens-based DryShips were up 9 percent at $2.95 on Tuesday morning on Nasdaq, a day after it posted estimate-beating third-quarter profit.

Through its majority-owned Ocean Rig unit, DryShips owns and operates 9 ultra-deepwater drilling units, comprising 2 ultra-deepwater semisubmersible rigs and 7 ultra-deepwater drillships.

“We are a part of the tender process for the Petrobras domestic tender. The contracts are still being negotiated, it’s still at a very early stage,” Chief Operating Officer Pankaj Khanna said on a conference call.

He said the 15-year contract at a rate of $620,000 per day would be “very profitable,” adding that the company was confident of receiving financing for 85 to 90 percent of the transaction.

“It would be really positive for earnings in the future, especially given that the current rates are at $500,000 per day for a one-year contract,” analyst Salvatore Vital of Sterne, Agee & Leach told Reuters.

Earlier in the year Ocean Rig, which started trading on Nasdaq on October 6, won a $1.1 billion deepwater drilling contract from Brazil’s Petrobras

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