(1) The net result is adjusted for the minority interests of 35% not owned by DryShips Inc. common stockholders.
(2) Adjusted EBITDA is a non-GAAP measure; please see later in this press release for a reconciliation to net income.
George Economou, Chairman and Chief Executive Officer of the Company, commented:
"The shipping market continues to be severely depressed. Both tanker and drybulk spot charter rates have been at historic low levels -- well below cash breakeven rate -- for some time. Unfortunately this is coming at a time when our lucrative legacy charters continue to expire on a staggered basis. We have contract coverage of 33% and 22% of the calendar days for 2013 and 2014, respectively.
The deteriorating economic situation in Europe, together with BASEL III capital requirements, have led to a number of shipping banks with large portfolios to exit the sector. High profile restructurings and payment defaults have started to take their toll on the few remaining lenders. This comes at a time when we have significant capital expenditures to finance our drybulk and tanker newbuilding programs. The lack of liquidity is further exacerbated by falling assets values, which continued to decline during the quarter.
The optimization of our drybulk and tanker newbuilding programs is our top priority right now and we are in discussions with the shipyards in this respect to reduce and prolong our CAPEX program. We are in a challenging environment so these negotiations will be difficult and drawn out but we believe a win-win solution could be found.
Our shareholding in Ocean Rig UDW Inc. provides some flexibility in addressing the capital needs of our shipping segment. For example, we have recently pledged (and will continue to pledge) some of our Ocean Rig shares to our banks to remedy covenant breaches. We continue to be bullish about the prospects for Ocean Rig. The backlog currently stands at $4.5 billion over three years and provides Ocean Rig with substantial cash flow visibility and growth. Given strong industry fundamentals and the fact that there are very few ultra-deepwater units available in 2013, we expect to further increase our already substantial backlog by entering into long-term contracts for our two remaining units available in 2013. We continue to build on the Ocean Rig story and have positioned the company to build further on this strong platform to become the preferred contractor in the ultra-deepwater sector."
Financial Review: 2012 Third Quarter
The Company recorded a net loss of $51.3 million, or $0.13 basic and diluted loss per share, for the three-month period ended September 30, 2012, as compared to a net income of $25.0 million, or $0.07 basic and diluted earnings per share, for the three-month period ended September 30, 2011. Adjusted EBITDA was $141.0 million for the third quarter of 2012, as compared to $172.9 million for the same period in 2011.(1)
For the drybulk carrier segment, net voyage revenues (voyage revenues minus voyage expenses) amounted to $41.1 million for the three-month period ended September 30, 2012, as compared to $85.5 million for the three-month period ended September 30, 2011. For the offshore drilling segment, revenues from drilling contracts increased by $59.7 million to $285.7 million for the three-month period ended September 30, 2012, as compared to $226.0 million for the same period in 2011. For the tanker segment, net voyage revenues amounted to $9.0 million for the three-month period ended September 30, 2012, as compared to $3.3 million for the same period in 2011.
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