DryShips Inc. (NASDAQ: DRYS) has just announced a new contract order that is sending shares soaring. The company’s Ocean Rig ASA subsidiary has received a ‘letter of award’ from Petrobras (NYSE: PBR) for a 3-year period employment contract for exploration drilling in the Black Sea. The size of the award is significant on the surface.
The contract is expected to commence in direct continuation from the current contract with Shell (NYSE: RDS-A). The 3-year term is said to include mobilization, disassembly and reassembly of the derrick structure for transit through the Bosporus Strait.
The size of the contract is catching some eyes as well. The total size is listed as roughly $630 million, which includes an estimated 60 days of mobilization, disassembly and reassembly of the derrick structure and an incentive bonus of 8%.
If you just take a three year average, this would generate roughly $210 million per year. As far as how this compares to the big picture, analysts are looking for total revenues of just over $850 million for all of 2009.
Shares are surging with a 27% gain to $5.30 in pre-market trading. To show how volatile this stock is, its 52-week trading range is $2.72 to $116.43.
JON C. OGG