Ocean Rig had a profitable first quarter. Net income came in at $6.4 million, or a nickel a share. Adjusted EBITDA was $104.7 million compared to $50.7 million in the year-ago period. Revenue from drilling contracts was $246.4 million, up from $163 million in the year-ago quarter. The company experienced some drilling delays tied to equipment upgrades and some unexpected downtime. Rig operating expenses rose in the most recent quarter versus the year-ago period.
To finance the construction of some new drillships, the company got access to a $1.3 billion syndicated secured term loan facility, which has a five-year term. The loan is due in 11 years and the drillships are scheduled for delivery this year.
Ocean Rig UDW Inc (NASDAQ:ORIG) is optimistic about drilling demand and new drilling opportunities in Africa and Asia Pacific.
Shipper comparison
Compared to DryShips Inc. (NASDAQ:DRYS), fellow drybulk shipping company Diana Shipping Inc. (NYSE:DSX) almost appears lean and mean. At the end of 2012, the company had $460.9 million in long-term debt and some $1.3 billion in stockholders’ equity. It recently signed a term-loan facility for up to $30 million to finance two new drybulk carriers. And Diana Shipping Inc. (NYSE:DSX) is adding more vessels on top of those.
But Diana Shipping Inc. (NYSE:DSX) isn’t profitable either. The company reported a first-quarter loss of $3.2 million versus net income of $20 million in the corresponding period last year. This year the company included a loss from an investment in Diana Containerships Inc (NASDAQ:DCIX).
Rate pressure hit Diana Shipping hard, and time charter revenue fell from $57.6 million in last year’s first quarter to $42.6 million most recently. The company stopped paying dividends in December 2008. Until rates strengthen, it’s hard to find a bright spot for this industry.
Conclusion
In DryShips Inc. (NASDAQ:DRYS)’ first-quarter earnings conference call, Economou said that drybulk shippers continue to face difficult times. Clearly, these conditions have taken a toll on the company’s stock, which is inexpensive and trading 33.5% below its 52-week high, but there’s no catalyst for growth. This doesn’t mean that there won’t be a recovery ahead, but in light of the Excel bankruptcy and the persistent uncertainty, there could still be another shoe to drop. Transportation as a whole is a promising investment idea because it is so connected to the economy but the shippers do not appear to be the place to be, at least at the moment.
The article ‘Difficult Times’ Persist for Drybulk Shippers originally appeared on Fool.com and is written by Gerelyn Terzo.
Gerelyn Terzo has no position in any stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. Gerelyn is a member of The Motley Fool Blog Network — entries represent the personal opinion of the blogger and are not formally edited.
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