fuller11 - I knew there had been dilution. Just basing my observations from the last financials. They identified 380 million shares outstanding. Assuming that number is correct, the pps is less than 20% of book.
I was tending to think it may have more to do with the number of ORIG shares pledged to finance their build out - 9.4 million shares. It isn't clear what the security aspects of the construction loans represent - $1.35 billion secured by what? It makes sense that most of this would be the drill ships themselves, but what else may be involved?
Both ORIG and DRYS are bleeding cash for the moment, but it seems they are on an upward slope curve for revenues. ORIG has $5.1 billion backlog assuming all of the currently known contracts come to fruition. It's difficult to know what the actual cash flow will be though. The BDYI is on the rise and seems to have an upward trajectory. My further assumption is the world economies are heating up and should drive the need for transportation. Resulting competition will move up DRYS day rates and presumably drive customers into long-term contracts again.
Taking all of this into account, it seems to me as the new buildings come into play in the 2nd and 3rd quarters this year, the financial picture will change rapidly for ORIG and its contribution. DRYS has been dependent on long-term contracts and reestablishing them would appear to be a critical necessity.
Something of that is noteworthy - DRYS could be purchased for $750 million with a book value of $3.8 billion. Makes me wonder why the pps is currently where it is?
fwiw,
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