DryShips Inc (fka DRYS)

[Net-Man]

DRYS is clearly being driven down today due to ORIG being in the oil business. OPEC's announcement they are not cutting output will keep the price of oil down for at least the short-term. This is ramping up the risk level associated with being a driller assuming ORIG's customers slow down their exploration efforts.

China is attempting to move away from coal and a very good substitute is oil. This will drive up demand over the mid and long-term and move ORIG's share price back up right along with oil.

Something that should also be noted for the short-term, Panamax and Supramax rates are both up strongly this week. Panamax rates are up almost 5% yesterday and today alone. This has been the lagging sector of DRYS revenue stream. While the Cape index has been driven down, keep in mind that DRYS has all of its Capes on contracts so this is not a factor.

From a revenue perspective DRYS should be able to meet or exceed analysts prediction for this quarter. The larger question is whether the pps will recover to anything close to book value.