Reuters: Global Markets: Weak rates weigh on DryShips results, shares down

Reuters: Global Markets Reuters.com is your source for breaking news, business, financial and investing news, including personal finance and stocks. Reuters is the leading global provider of news, financial information and technology solutions to the world's media, financial institutions, businesses and individuals. // via fulltextrssfeed.com

Weak rates weigh on DryShips results, shares down Aug 16th 2012, 22:26 By Divya Lad Thu Aug 16, 2012 6:26pm EDT (Reuters) - Weak shipping rates weighed on DryShips Inc's (DRYS.O) quarterly results, taking the shine off a jump in demand at its drilling unit Ocean Rig UDW (ORIG.O) OCRG.NFF. Shares of the company fell as much as 7 percent in extended trade. They closed at $2.31 on Thursday on the Nasdaq. Rates for dry bulk ships have crashed in the last four years due to an oversupply of vessels and weak demand following the economic downturn. Rates for larger dry bulk vessels â€" which transport commodities such as coal, iron ore and grain â€" dropped to $3,000 per day on Thursday, their lowest since December 2008. While DryShips' rivals like Diana Shipping Inc (DSX.N) are opting for long-term contracts, the company continues to have only 44 percent of its drybulk ships chartered. "I do not expect them to charter vessels at current levels. As time charters roll off, the vessels are likely to be placed in the spot market until rate conditions improve," shipping investor Ben Nolan from Knight Capital said. DRILLING HELPS WEATHER STORM The company's drilling business, however, has been gaining from a global shortage of rigs as energy companies ramp up production to meet increasing demand. Ocean Rig, which owns and operates six ultra-deepwater drilling units and has three drillships under construction, said 2013 was close to being sold out, mirroring views of sector leaders Noble Corp (NE.N) and Diamond Offshore Drilling Inc (DO.N). The unit said it signed letters of intent with three major oil companies for three of its drillships â€" including two units under construction. "As long as no contracts are in place there is always a risk the market could soften and a subsequent contract would be at a lower level," Nolan added. DryShips reported a loss of $18.2 million, or 5 cents per share in the second quarter, compared with $114.1 million, or 33 cents per share, a year earlier. Revenue rose 50 percent to $336.1 million as sales from drilling contracts more than doubled. Analysts on average had expected DryShips to earn 4 cents per share on revenue of $342.7 million, according to Thomson Reuters I/B/E/S. DryShips shares have lost 36 percent of their value in the past six months, while the Baltic Exchange's main sea freight index .BADI has gained 20 percent. (Reporting by Divya Lad in Bangalore; Editing by Supantha Mukherjee, Saumyadeb Chakrabarty) Link this Share this Digg this Email Reprints

You are receiving this email because you subscribed to this feed at blogtrottr.com. If you no longer wish to receive these emails, you can unsubscribe from this feed, or manage all your subscriptions