DryShips Inc's quarterly results missed market expectations on lower rates in its drybulk carrier segment and relocation of rigs at its drilling unit Ocean Rig UDW but forecast strong demand at the unit.
Energy companies have ramped up production to meet growing demand leading to a drilling boom, which has caused a global shortage of rigs, especially those that can drill in depths of more than 10,000 feet.
"Given strong industry fundamentals and the fact that there are virtually no available units in 2012 we expect to further increase our backlog," DryShips's Chief Executive George Economou said in a statement.
The unit, in which DryShips cut its stake to about 65.2 percent last month, said its backlog stood at $2.9 billion for the quarter ended March 31.
Ocean Rig, which owns and operates six ultra deepwater drilling units and has ordered for 3 new rigs, reported a 50 percent increase in revenue from drilling contracts at $163 million for the first quarter.
"The short-term contracts we had taken during 2010 and 2011 will all play out over the next twelve months, after which all the rigs will be on long-term contracts," said Economou, who is also the CEO of Ocean Rig, which has a market value of $2.06 billion.
A fall in rates for dry bulk vessels, which transport commodities such as coal, iron ore and grain, hurt the company in the first quarter.
DryShips, which has secured 23 of its 36 drybulk carriers under long-term contracts, reported a 20 percent fall in drybulk carrier segment time charter equivalent revenue at $72.4 million.
Time charter equivalent is a shipping industry standard used to calculate the average daily revenue performance of a vessel.
Q1 MISS
The company incurred a loss of $47.5 million, or 12 cents per share in first quarter, compared with a profit of $25.8 million, or 7 cents per share, a year earlier.
Revenue rose 19 percent to $247.5 million.
Analysts on average had expected DryShips to incur a loss of 4 cents per share on revenue of $267.8 million, according to Thomson Reuters I/B/E/S.
DryShips shares, which have lost 36 percent of their value in the last three months, fell 2 percent in extended trade. They closed at $2.29 on Tuesday on the Nasdaq.
The U.S.-listed shares of Ocean Rig, which went public in October last year, closed at $15.82 on Tuesday on the Nasdaq.
The Baltic Exchange's main sea freight index .BADI has declined 91 percent from its 2008 peak of 11,793.