DryShips amends rig contract; deal value

UPDATE 2-DryShips amends rig contract; deal value unclear

Mon Oct 4, 2010 1:54pm EDT

* Contract days go up to 360 days

* To drill five wells; up by 1

* No clarity on additional rev generation

* Shares off 5 percent (Adds details, analyst comment; updates share movement)

By Krishna N Das

BANGALORE, Oct 4 (Reuters) - Greek drybulk shipper and deepwater driller DryShips Inc (DRYS.O) amended its contract to drill wells off the West Africa coast, raising the number of wells and the contract period, but did not say if the initial contract value would go up.

The company's shares, which were up about 1 percent in early morning trade, reversed course to fall about 5 percent to $4.56. The broader Baltic Exchange's main sea freight index .BADI, meanwhile, was up about 1 percent at 2478 points.

The initial 300-day, four-well contract, valued at $135 million, would have resulted in the company earning a day rate of about $450,000, a figure analysts had said was in line with current market rates. [ID:nSGE68R0IQ]

DryShips declined to comment on whether there would be any increase in the value of the contract following Monday's extension.

"Extra 60 days in the contract, assuming that they get the same day rate ($450,000), would be an incremental positive," Oppenheimer & Co analyst Scott Burk said.

DryShips, which started out as a drybulk shipper before foraying into the deepwater drilling business in 2008, said the amendment increases the number of wells to be drilled to five.

The contract win, the first for one of DryShips' four new rigs to be delivered in 2011, nevertheless has eased some of the financing concerns plaguing it for nearly two years. (Reporting by Krishna N. Das in Bangalore; Editing by Don Sebastian)