PRELIMINARY PROSPECTUS SUPPLEMENT (to the Prospectus dated October 17, 2008)

DRYSHIPS INC.

$300,000,000

     % Convertible Senior Notes due December 1, 2014

          We will pay interest on the notes on June 1 and December 1 of each year, beginning June 1, 2010.

          We are offering $300,000,000 aggregate principal amount of our      % Convertible Senior Notes due December 1, 2014. The notes are convertible into shares of our common stock as described in more detail below. The notes will be our senior unsecured obligations, will rank equal in right of payment to all other senior unsecured debt, and will rank senior to all of our future subordinated debt. The notes will be effectively subordinated to all present and future unsecured debt and other obligations of our subsidiaries. The notes will not be guaranteed by any of our subsidiaries. Holders may convert their notes based on a conversion rate of            shares of common stock per $1,000 principal amount of notes (which is equal to an initial conversion price of approximately $          per share of common stock), subject to adjustment, on or prior to the close of business on the business day immediately preceding the maturity date for the notes only under the following circumstances: (1) if the closing price of our common stock reaches and remains at or above a specified threshold for a specified period, (2) during the ten consecutive trading-day period after any five consecutive trading-day period in which the trading price per $1,000 principal amount of notes for each day of that period was less than 98% of the product of the closing price of our common stock and the then applicable conversion rate, (3) if specified distributions to holders of our common stock are made or specified corporate transactions occur, or (4) during the last six months prior to the maturity date of the notes. If a holder elects to convert its notes in connection with a make-whole adjustment event (as defined in this prospectus supplement), we will, in certain circumstances, pay a make-whole adjustment amount by increasing the conversion rate for notes converted in connection with such make-whole adjustment event. Holders may require us to repurchase for cash all or a portion of their notes upon a fundamental change (as defined in the prospectus supplement).

          We have granted the underwriter the right to purchase up to an additional $45,000,000 principal amount of the notes to cover over-allotments.

          For a more detailed description of the notes, see “Description of Notes” beginning on page S-61.

          Concurrently with this offering of notes, we are offering, by means of a separate prospectus supplement and accompanying prospectus, from time to time up to an aggregate of 22,000,000 shares of our common stock, which we refer to as the “borrowed shares,” which are being borrowed by Deutsche Bank AG, London Branch, an affiliate of Deutsche Bank Securities Inc., the underwriter in this offering, which affiliate we refer to as the “share borrower.” We have been informed by Deutsche Bank Securities Inc. that it or its affiliates intend to use the short position created by the share loan and the concurrent short sales of the borrowed shares to facilitate transactions by which investors in the notes offered hereby may hedge their investments. The share borrower or its affiliates will receive all of the proceeds from the sale of the borrowed shares pursuant to the share lending agreement and we will not receive any of those proceeds, but the share borrower will pay us a nominal lending fee for the use of those shares. See “Description of Share Lending Agreement.” The delivery of the notes is contingent upon the delivery of     borrowed shares pursuant to the share lending agreement. We expect to make delivery of such borrowed shares concurrently with the closing of this offering.

          The notes will not be listed on any securities exchange nor included in any automatic quotation system. Our common stock is listed on The Nasdaq Global Select Market under the symbol “DRYS.” On November 17, 2009, the last reported sale price of our common stock was $7.05 per share.

          Investing in the notes involve significant risks. See “Risk Factors” beginning on page S-18.

          Neither the Securities and Exchange Commission nor any state securities commission has approved or disapproved of these securities or passed upon the adequacy or accuracy of this prospectus. Any representation to the contrary is a criminal offense.

		Per Note				Total
Public offering price			%			$
Underwriting discounts and commissions			%			$
Proceeds, before expenses, to DryShips Inc.			%			$

          The public offering price set forth above does not include accrued interest, if any. Interest on the notes will accrue from      , 2009.

SOLE BOOK RUNNING MANAGER

Deutsche Bank Securities

The date of this prospectus supplement is November  , 2009

TABLE OF CONTENTS

		PAGE
PROSPECTUS SUPPLEMENT
IMPORTANT INFORMATION ABOUT THIS PROSPECTUS SUPPLEMENT			S-1
CAUTIONARY STATEMENT REGARDING FORWARD-LOOKING STATEMENTS			S-2
SUMMARY			S-4
SUMMARY CONSOLIDATED FINANCIAL AND OTHER DATA			S-14
RISK FACTORS			S-18
USE OF PROCEEDS			S-49
MARKET PRICE OF COMMON STOCK			S-50
DIVIDEND POLICY			S-51
CAPITALIZATION			S-52
RATIO OF EARNINGS TO FIXED CHARGES			S-53
DESCRIPTION OF INDEBTEDNESS			S-55
DESCRIPTION OF NOTES			S-61
DESCRIPTION OF CAPITAL STOCK			S-87
DESCRIPTION OF SHARE LENDING AGREEMENT			S-92
TAXATION			S-94
UNDERWRITING			S-104
LEGAL MATTERS			S-107
INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM			S-107
WHERE YOU CAN FIND ADDITIONAL INFORMATION			S-107
PROSPECTUS
PROSPECTUS SUMMARY			1
RISK FACTORS			18
CAUTIONARY STATEMENT REGARDING FORWARD LOOKING STATEMENTS			32
RATIO OF EARNINGS TO FIXED CHARGES			33
CAPITALIZATION			34
PLAN OF DISTRIBUTION			34
ENFORCEMENT OF CIVIL LIABILITIES			35
DESCRIPTION OF CAPITAL STOCK			36
DESCRIPTION OF PREFERRED SHARES			41
DESCRIPTION OF WARRANTS			41
DESCRIPTION OF DEBT SECURITIES			42
DESCRIPTION OF PURCHASE CONTRACTS			51
DESCRIPTION OF UNITS			51
EXPENSES			51
LEGAL MATTERS			52
EXPERTS			52
WHERE YOU CAN FIND ADDITIONAL INFORMATION			52

IMPORTANT INFORMATION ABOUT THIS PROSPECTUS SUPPLEMENT

          This prospectus supplement is based on information provided by us and other sources that we believe to be reliable. The underwriter is not responsible for, and is not making any representation or warranty to you concerning, our future performance or the accuracy or completeness of this prospectus supplement. This prospectus supplement summarizes certain documents and other information, and we refer you to them for a more complete understanding of what we discuss in this prospectus supplement. To the extent information contained in this prospectus supplement is inconsistent with information contained in the accompanying prospectus, you should rely on the information contained in this prospectus supplement.

          You should rely only on the information contained and incorporated by reference in this prospectus supplement, the accompanying prospectus and any free writing prospectus that we authorize to be delivered to you. We have not, and the underwriter has not, authorized any person to provide you with additional or different information. If anyone provides you with additional, different or inconsistent information, you should not rely on it.

          You should not assume that the information contained in this prospectus supplement is accurate as of any date other than the date appearing on the front cover of this prospectus supplement. You should assume that the information contained in the documents incorporated by reference in this prospectus supplement is accurate only as of the respective dates of those documents.

          In making an investment decision regarding the notes we are offering, you must rely on your own examination of our company and the terms of this offering, including the potential merits and risks involved. We are offering the notes on the basis of this prospectus supplement only. Accordingly, you must base any decision to purchase notes in this offering only on the information contained and incorporated by reference in this prospectus supplement.

CAUTIONARY STATEMENT REGARDING FORWARD-LOOKING STATEMENTS

          The Private Securities Litigation Reform Act of 1995 provides safe harbor protections for forward-looking statements in order to encourage companies to provide prospective information about their business. Forward-looking statements include statements concerning plans, objectives, goals, strategies, future events or performance, and underlying assumptions and other statements, which are other than statements of historical facts.

          We desire to take advantage of the safe harbor provisions of the Private Securities Litigation Reform Act of 1995 and is including this cautionary statement in connection with this safe harbor legislation. This document and any other written or oral statements made by us or on our behalf may include forward-looking statements, which reflect our current views with respect to future events and financial performance. The words “believe,” “anticipate,” “intends,” “estimate,” “forecast,” “project,” “plan,” “potential,” “will,” “may,” “should,” “expect” and similar expressions identify forward-looking statements. We caution that assumptions, expectations, projections, intentions and beliefs about future events may and often do vary from actual results and the differences can be material.

          All statements in this document that are not statements of historical fact are forward-looking statements. Forward-looking statements include, but are not limited to, such matters as:

•

future operating or financial results;

•

statements about planned, pending or recent acquisitions;

•

business strategy and expected capital spending or operating expenses, including drydocking and insurance costs;

•

statements about drybulk shipping market trends, including

o

charter rates and factors affecting supply and demand;

o

our ability to obtain additional financing;

o

expectations regarding the availability of vessel acquisitions; and

o

anticipated developments with respect to pending litigation.

          The forward-looking statements in this document are based upon various assumptions, many of which are based, in turn, upon further assumptions, including without limitation, management’s examination of historical operating trends, data contained in our records and other data available from third parties. Although we believe that these assumptions were reasonable when made, because these assumptions are inherently subject to significant uncertainties and contingencies which are difficult or impossible to predict and are beyond our control, we cannot assure you that it will achieve or accomplish these expectations, beliefs or projections described in the forward looking statements contained in this report.

          Important factors that, in our view, could cause actual results to differ materially from those discussed in the forward-looking statements include the strength of world economies and currencies, general market conditions, including changes in charter rates and vessel values, failure of a seller to deliver one or more vessels, failure of a buyer to accept delivery of a vessel, inability to procure acquisition financing, default by one or more charterers of our ships, changes in demand for drybulk commodities, changes in demand that may affect attitudes of time charterers, scheduled and unscheduled drydocking, changes in our voyage and operating expenses, including bunker prices, dry-docking and insurance costs, changes in governmental rules and regulations, potential liability from pending or future litigation, domestic and international political conditions, potential disruption of shipping routes due to accidents, international hostilities and political events or acts by terrorists.

          Matters discussed in this document may constitute forward-looking statements.

          We refer you to the section entitled “Risk Factors,” beginning on page S-18, for a more complete discussion of these risks and uncertainties and for other risks and uncertainties. These factors and the other risk factors described in this prospectus supplement are not necessarily all of the important factors that could cause actual results or developments to differ materially from those expressed in any of our forward-looking statements. Other unknown or unpredictable factors also could harm our results. Consequently, there can be no assurance that actual results or developments anticipated by us will be realized or, even if substantially realized, that they will have

the expected consequences to, or effects on, us. Given these uncertainties, prospective investors are cautioned not to place undue reliance on such forward-looking statements.

*		Linked to the Baltic Index
**		On November 11, 2009, we entered into a MOA for the sale of the vessel Iguana for $23.35 million. The expected date of delivery, is first quarter 2010.
1.		For vessels trading in the spot market, the TCE rate is for the current voyage.
2.		For vessel trading in the Baumarine pool the TCE rate is the pool’s estimate for earnings in the month of September.
3.		For vessels trading in the spot market or in the Baumarine pool, the quoted rates are not indications of future earnings and the company gives no assurance or guarantee of future rates.
4.		The MV Paros I and MV Pachino are employed under a bareboat charter.

SUMMARY CONSOLIDATED FINANCIAL AND OTHER DATA

          The following table sets forth the selected consolidated financial data and other operating data for the Company as of and for the year ended October 31, 2004, as of and for the two-month period ended December 31, 2004, for the years ended December 31, 2005, 2006, 2007 and 2008 and the nine-months ended September 30, 2008 and 2009, (as adjusted for the Company’s change in accounting policy in the first quarter of 2008 for dry docking costs from the deferral method to the direct expense method). The following information should be read in conjunction with Item 5—“Operating and Financial Review and Prospects” and the consolidated financial statements and related notes in our Annual Report on Form 20-F/A for the year ended December 31, 2008 filed with the SEC on April 3, 2009 and incorporated by reference herein. The following selected consolidated financial data of the Company are derived from our audited consolidated financial statements and the notes thereto which have been prepared in accordance with U.S. generally accepted accounting principles (“US GAAP”). The summary consolidated financial data set forth below as of September 30, 2008 and 2009 have been derived from our unaudited interim consolidated financial statements for such periods incorporated by reference into this prospectus. The results of these interim periods are not necessarily indicative of the results to be expected for the full year ending December 31, 2009.

						Two-Months
		Year Ended				Ended				Year Ended December 31,																Nine Months				Nine-Months
		October 31,				December 31								2006				2007								Ended				Ended
(In thousands of Dollars, except per		2004				2004				2005				(as				(as								September 30,				September 30,
share and fleet data)		(as adjusted)				(as adjusted)				(as adjusted)				adjusted)				adjusted)				2008				2008				2009
INCOME STATEMENT
Voyage revenues			63,458				15,599				228,913				248,431				582,561				861,296				730,954				325,052
Revenue from drilling contracts			—				—				—				—				—				219,406				131,859				310,251
Loss on forward freight agreements			—				—				—				22,473				—				—				—				—
Voyage expenses			5,481				1,136				9,592				15,965				31,647				53,172				39,899				21,447
Vessel operating expenses			13,046				1,756				39,875				54,164				63,225				79,662				57,287				55,680
Drilling rig operating expenses			—				—				—				—				—				86,229				52,079				105,924
Depreciation and amortization			4,735				808				40,231				58,011				76,511				157,979				108,313				146,569
Gain on sale of vessels			—				—				—				(8,845	)			(137,694	)			(223,022	)			(226,024	)			(2,432	)
Gain on contract cancellation			—				—				—				—				—				(9,098	)			—				(15,270	)
Contract termination fees and forfeiture of vessel deposits			—				—				—				—				—				160,000				—				230,802
Goodwill impairment charge			—				—				—				—				—				700,457				—				—
General and administrative expenses (1)			1,482				354				9,148				12,540				17,072				89,358				53,142				66,313
Operating Income (loss)			38,714				11,545				130,067				94,123				531,800				(14,035	)			778,117				26,270
Interest and finance costs			(1,515	)			(508	)			(20,668	)			(42,392	)			(51,231	)			(113,194	)			(73,388	)			(72,114	)
Interest income			12				8				749				1,691				5,073				13,085				7,400				7,184
Gain / (loss) on interest rate swaps			—				—				270				676				(3,981	)			(207,936	)			(30,918	)			20,988
Other, net			341				(6	)			(175	)			214				(3,037	)			(12,640	)			103				1,304
Income/ (loss) before income taxes and equity in loss of investee			37,552				11,039				110,243				54,312				478,624				(334,720	)			681,314				(16,368	)
Income taxes			—				—				—				—				—				(2,844	)			(1,508	)			(9,859	)
Equity in loss of investee			—				—				—				—				(299	)			(6,893	)			(6,893	)			—
Net Income / (loss)			37,552				11,039				110,243				54,312				478,325				(344,457	)			672,913				(26,227	)
Net income attributable to non controlling interests			—				—				—				—				—				(16,825	)			(16,825	)			(7,178	)
Net Income/(loss) attributable to Dryships Inc.			37,552				11,039				110,243				54,312				478,325				(361,282	)			656,088				(33,405	)
Basic and diluted earnings/(loss) per share		$	2.44			$	0.72			$	3.81			$	1.68			$	13.40			$	(8.11	)		$	15.73			$	(0.19	)
Weighted average basic and diluted shares outstanding			15,400,000				15,400,000				28,957,397				32,348,194				35,700,182				44,598,585				41,029,206				193,621,270
Dividends declared per share (1)		$	4.48			$	0.00			$	0.40			$	0.80			$	0.80			$	0.80			$	0.80				—
Current assets			69,344								18,777				25,875				153,035				720,427				456,249				773,365
Total assets			179,926								906,778				1,161,973				2,344,432				4,842,680				5,191,346				5,404,843
Current liabilities, including current portion of long-term debt			98,124								135,745				129,344				239,304				2,525,048				637,063				1,900,444
Total long-term debt, including current portion			114,908								525,353				658,742				1,243,778				3,158,870				2,899,423				2,457,673
Number of shares outstanding			15,400,000								30,350,000				35,490,097				36,681,097				70,600,000				43,550,000				254,225,821
Stockholders’ (deficit) / equity			(7,707	)							352,720				444,692				1,021,729				1,291,572				2,137,894				2,667,639
OTHER FINANCIAL DATA
Net cash provided by operating activities			7,309				55,207				163,806				99,082				407,899				540,129				582,301				192,235
Net cash used in investing activities			(20,119	)							(847,649	)			(287,512	)			(955,749	)			(2,110,852	)			(1,676,481	)			(122,659	)
Net cash provided by (used in) financing activities			15,985				(53,007	)			680,656				185,783				656,381				1,762,769				1,312,088				(81,107	)
EBITDA (2)			43,790				12,347				170,393				153,024				600,994				(100,350	)			831,897				187,953

						Two-Months
		Year Ended				Ended				Year Ended December 31,																Nine Months				Nine-Months
		October 31,				December 31								2006				2007								Ended				Ended
(In thousands of Dollars, except per		2004				2004				2005				(as				(as								September 30,				September 30,
share and fleet data)		(as adjusted)				(as adjusted)				(as adjusted)				adjusted)				adjusted)				2008				2008				2009
DRYBULK FLEET DATA:
Average number of vessels (3)			5.9				6				21.6				29.76				33.67				38.56				38.56				37.82
Total voyage days for drybulk carrier fleet(4)			2,066				366				7,710				10,606				12,130				13,896				10,485				10,125
Total calendar days for drybulk carrier fleet(5)			2,166				366				7,866				10,859				12,288				14,114				10,567				10,326
Fleet utilization for drybulk carrier fleet(6)			95.40	%			100.00	%			98.00	%			97.70	%			98.71	%			98.46	%			99.23	%			98.05	%
(In Dollars)
AVERAGE DAILY RESULTS
Time charter equivalent(7)			28,062				39,516				28,446				21,918				45,417				58,155				65,909				29,986
Vessel operating expenses(8)			6,023				4,798				5,069				4,988				5,145				5,644				5,421				5,392
General and administrative expenses(9)			684				966				1,163				1,155				1,390				3,107				2,934				2,353
Total vessel operating expenses(10)			6,707				5,764				6,232				6,143				6,535				8,751				8,355				7,745
DRILLING RIG FLEET DATA:
Average number of drilling rigs(3)							—				—				—				—				2.0				1.0				2.0
Total voyage days for drilling rig fleet(4)			—				—				—				—				—				410				246				516
Total calendar days for drilling rig fleet(5)			—				—				—				—				—				462				278				546
Drilling rig fleet utilization(6)			—				—				—				—				—				88.74	%			88.5	%			94.51	%
(In Dollars)
AVERAGE DAILY RESULTS
Rig operating expenses			—				—				—				—				—				186,643				190,069				189,761
General and administrative expenses			—				—				—				—				—				30,290				43,259				49,728
Total rig operating expenses(2)			—				—				—				—				—				216,933				233,328				239,489

						Two-Months
		Year Ended				Ended				Year Ended December 31,																Nine Months				Nine-Months
		October 31,				December 31								2006				2007								Ended				Ended
(In thousands of Dollars, except per		2004				2004				2005				(as				(as								September 30,				September 30,
share and fleet data)		(as adjusted)				(as adjusted)				(as adjusted)				adjusted)				adjusted)				2008				2008				2009
Net Cash provided by operating activities			7,309				55,207				163,806				99,082				407,899				540,129				582,301				192,235
Net increase /(decrease) in current assets			36,925				(42,322	)			4,560				5,067				23,291				33,914				12,047				11,739
Net (increase) / decrease in current liabilities, excluding current portion of long-term debt			(1,815	)			(927	)			(21,914	)			2,015				(18,873	)			(9,904	)			7,140				41,160
Increase in non-current assets			—				—				—				—				—				—				—				9,112
Decrease in non-current liabilities			—				—				—				—				—				—				—				(1,712	)
Interest income on restricted cash			—				—				—				—				—				—				—				5,919
Gain on sale of vessels			—				—				—				8,845				137,694				223,022				226,024				2,432
Contract termination fees and forfeiture of vessel deposits			—				—				—				—				—				(55,000	)			—				(172,708	)
Gain on contract cancellation																							9,098				—				15,270
Goodwill impairment charge																							(700,457	)			—				—
Amortization of stock based compensation			—				—				—				—				—				(31,502	)			(22,142	)				(28,465	)
Accrued commitments on undrawn lines of credit			—				—				—				—				—				(2,855	)			—				(4,320	)
Amortization of fair value of acquired time charters			—				—				5,224				2,967				7,185				34,638				25,897				14,901
(Recognition) / amortization of free lubricants benefit			—				—				(928	)			119				257				276				276				24
Interest on credit facility from related parties			—				—				—				(77	)			—				—				—				—
Equity of loss of investees			—				—				—				—				(299	)			(6,893	)			(6,893	)			—
Change in fair values of derivatives			—				—				270				(1,910	)			(128	)			(204,964	)			(30,795	)			45,846
Income taxes			—				—				—				—				—				2,844				1,508				9,859
Net income attributable to non controlling interests			—				—				—				—				—				(16,825	)			(16,825	)			(7,178	)
Interest and finance costs, net			1,503				500				19,919				40,701				46,158				100,109				65,988				64,930
Amortization and write-off of deferred financing costs included in interest and finance costs			(132	)			(111	)			(544	)			(3,785	)			(2,190	)			(15,980	)			(12,629	)			(11,091	)
EBITDA(3)(4)(5)(6)(7)			43,790				12,347				170,393				153,024				600,994				(100,350	)			831,897				187,953

						Two-Months																				Nine-Months				Nine-Months
		Year Ended				Ended				Year Ended December 31,																Ended				Ended
Drybulk Carrier Segment		October 31,				December 31																				September 30,				September 30,
In thousands of Dollars, except for TCE		2004				2004				2005				2006				2007				2008				2008				2009
Voyage revenues			63,458				15,599				228,913				248,431				582,561				861,296				730,954				325,052
Voyage expenses			(5,481	)			(1,136	)			(9,592	)			(15,965	)			(31,647	)			(53,172	)			(39,899	)			(21,447	)
Time charter equivalent revenues			57,977				14,463				219,321				232,466				550,914				808,124				691,055				303,605
Total voyage days for drybulk fleet			2,066				366				7,710				10,606				12,130				13,896				10,485				10,125
Time charter equivalent (TCE) rate			28,062				39,516				28,446				21,918				45,417				58,155				65,909				29,986

						Two-Months
		Year Ended				Ended				Year Ended December 31,																Nine Months				Nine-Months
		October 31,				December 31								2006				2007								Ended				Ended
(In thousands of Dollars, except per		2004				2004				2005				(as				(as								September 30,				September 30,
share and fleet data)		(as adjusted)				(as adjusted)				(as adjusted)				adjusted)				adjusted)				2008				2008				2009
Revenue from drilling contracts																							219,406				131,859				310,251
Drilling rig operating expenses																							86,229				52,079				105,924
																							133,177				79,780				204,327
Total employment days for drilling rigs																							410				246				516

RISK FACTORS

          You should carefully consider the risk factors set forth below as well as the other information included in this prospectus supplement in evaluating us or our business before deciding to purchase any notes. Additional risk factors are included in the accompanying prospectus, beginning on page 18. The occurrence of any of the events described in this section or any of these risks may have a material adverse effect on our business, financial condition, results of operations and cash flows. In that case, you may lose all or part of your investment in the notes.

Industry Specific Risk Factors

While the drybulk carrier charter market has recently strengthened, it remains significantly below the high in 2008, which has adversely affected our revenues, earnings and profitability and our ability to comply with our loan covenants.

          The Baltic Drybulk Index, or BDI, declined from a high of 11,793 in May 2008 to a low of 663 in December 2008, which represents a decline of 94%. The BDI fell over 70% during the month of October alone. Over the comparable period of May through December 2008, the high and low of the Baltic Panamax Index and the Baltic Capesize Index represent a decline of 96% and 99%, respectively. During 2009 the BDI increased from a low of 772 and reached a maximum of 4,291 in June of 2009. The decline and volatility in charter rates is due to various factors, including the lack of trade financing for purchases of commodities carried by sea, which has resulted in a significant decline in cargo shipments, and the excess supply of iron ore in China, which has resulted in falling iron ore prices and increased stockpiles in Chinese ports. The decline and volatility in charter rates in the drybulk market also affects the value of our drybulk vessels, which follows the trends of drybulk charter rates, and earnings on our charters, and similarly, affects our cash flows, liquidity and compliance with the covenants contained in our loan agreements.

Charter hire rates for drybulk carriers have decreased, which have continued to adversely affect our earnings.

          The drybulk shipping industry is cyclical with attendant volatility in charter hire rates and profitability. For example, the degree of charter hire rate volatility among different types of drybulk carriers has varied widely. After reaching historical highs in mid-2008, charter hire rates for Panamax and Capesize drybulk carriers reached near historically low levels in December 2008 began improving in January and February 2009 and after a volatile year, BDI rates have risen to over 4,000 in November 2009, the high levels for the year, although still well below the historic highs of recent years. Because we charter some of our vessels pursuant to spot market voyage charters, or spot charters, we are exposed to changes in spot market charter rates for drybulk carriers and such changes may affect our earnings and the value of our drybulk carriers at any given time. We may not be able to successfully charter our vessels in the future or renew existing charters at rates sufficient to allow us to meet our obligations. Because the factors affecting the supply and demand for vessels are outside of our control and are unpredictable, the nature, timing, direction and degree of changes in industry conditions are also unpredictable.

          If charter rates in the drybulk market decline and remain at low levels for any significant period in 2010, this could have an adverse affect on our revenues, profitability, cash flows and our ability to comply with the financial covenants in our loan agreements.

          Factors that influence demand for vessel capacity include:

	•		supply and demand for energy resources, commodities, semi-finished and finished consumer and industrial products;
	•		changes in the exploration or production of energy resources, commodities, semi-finished and finished consumer and industrial products;
	•		the location of regional and global exploration, production and manufacturing facilities;
	•		the location of consuming regions for energy resources, commodities, semi-finished and finished consumer and industrial products;

	•		the globalization of production and manufacturing;
	•		global and regional economic and political conditions, including armed conflicts, terrorist activities, embargoes and strikes;
	•		developments in international trade;
	•		changes in seaborne and other transportation patterns, including the distance cargo is transported by sea;
	•		environmental and other regulatory developments;
	•		currency exchange rates; and
	•		weather.

     The factors that influence the supply of vessel capacity include:

	•		the number of newbuilding deliveries;
	•		port and canal congestion;
	•		the scrapping rate of older vessels;
	•		vessel casualties; and
	•		the number of vessels that are out of service.

          We anticipate that the future demand for our drybulk carriers will be dependent upon continued economic growth in the world’s economies, including China and India, seasonal and regional changes in demand, changes in the capacity of the global drybulk carrier fleet and the sources and supply of drybulk cargoes to be transported by sea. The capacity of the global drybulk carrier fleet seems likely to increase and economic growth may not continue. Adverse economic, political, social or other developments could have a material adverse effect on our business and operating results.

An over-supply of drybulk carrier capacity may lead to reductions in charter hire rates and profitability.

          The market supply of drybulk carriers has been increasing, and the number of drybulk carriers on order is near historic highs. These newbuildings were delivered in significant numbers starting at the beginning of 2006 and continuing through 2008. As of October 2009, newbuilding orders had been placed for an aggregate of more than 63.7% of the existing global drybulk fleet, with deliveries expected during the next 36 months. An over-supply of drybulk carrier capacity may result in a further reduction of charter hire rates. If such a reduction occurs, upon the expiration or termination of our vessels’ current charters we may only be able to re-charter our vessels at reduced or unprofitable rates or we may not be able to charter these vessels at all.

          We recently cancelled the acquisition of a total of thirteen Capesize vessels, nine of which were newbuildings, five Panamax vessels, two of which were newbuildings, from third party and related party sellers and two newbuilding Kamsarmax vessels.

An economic slowdown in the Asia Pacific region could exacerbate the effect of recent slowdowns in the economies of the United States and the European Union and may have a material adverse effect on our business, financial condition and results of operations.

          We anticipate a significant number of the port calls made by our vessels will continue to involve the loading or discharging of drybulk commodities in ports in the Asia Pacific region. As a result, further negative changes in economic conditions in any Asia Pacific country, particularly in China, may exacerbate the effect of recent slowdowns in the economies of the United States and the European Union and may have a material adverse effect on our business, financial condition and results of operations, as well as our future prospects. In recent years, China has been one of the world’s fastest growing economies in terms of gross domestic product, which has had a

significant impact on shipping demand. For the period ended September 30, 2009, the growth of China’s gross domestic product from the prior year ended December 31, 2008 was approximately 9.05%, compared with a growth rate of 11.03% over the same two year period ended December 31, 2008. It is possible that China and other countries in the Asia Pacific region will continue to experience slowed economic growth in the near future. Moreover, the current economic slowdown in the economies of the United States, the European Union and other Asian countries may further adversely affect economic growth in China and elsewhere. Our business, financial condition and results of operations, as well as our future prospects, will likely be adversely affected by a further economic downturn in any of these countries.

Changes in the economic and political environment in China and policies adopted by the government to regulate its economy may have a material adverse effect on our business, financial condition and results of operations.

          The Chinese economy differs from the economies of most countries belonging to the Organization for Economic Cooperation and Development, or OECD, in such respects as structure, government involvement, level of development, growth rate, capital reinvestment, allocation of resources, rate of inflation and balance of payments position. Prior to 1978, the Chinese economy was a planned economy. Since 1978, increasing emphasis has been placed on the utilization of market forces in the development of the Chinese economy. Annual and five-year state plans are adopted by the Chinese government in connection with the development of the economy. Although state-owned enterprises still account for a substantial portion of the Chinese industrial output, in general, the Chinese government is reducing the level of direct control that it exercises over the economy through state plans and other measures. There is an increasing level of freedom and autonomy in areas such as allocation of resources, production, pricing and management and a gradual shift in emphasis to a “market economy” and enterprise reform. Limited price reforms were undertaken, with the result that prices for certain commodities are principally determined by market forces. Many of the reforms are unprecedented or experimental and may be subject to revision, change or abolition based upon the outcome of such experiments. If the Chinese government does not continue to pursue a policy of economic reform, the level of imports to and exports from China could be adversely affected by changes to these economic reforms by the Chinese government, as well as by changes in political, economic and social conditions or other relevant policies of the Chinese government, such as changes in laws, regulations or export and import restrictions, all of which could adversely affect our business, operating results and financial condition.

Disruptions in world financial markets and the resulting governmental action in the United States and in other parts of the world could have a further material adverse impact on our results of operations, financial condition and cash flows, and could cause the market price of our common stock to further decline.

          The United States and other parts of the world are exhibiting deteriorating economic trends and have been in a recession. For example, the credit markets in the United States have experienced significant contraction, de-leveraging and reduced liquidity, and the United States federal government and state governments have implemented and are considering a broad variety of governmental action and/or new regulation of the financial markets. Securities and futures markets and the credit markets are subject to comprehensive statutes, regulations and other requirements. The U.S. Securities and Exchange Commission, or the SEC, other regulators, self-regulatory organizations and exchanges are authorized to take extraordinary actions in the event of market emergencies, and may effect changes in law or interpretations of existing laws.

          Recently, a number of financial institutions have experienced serious financial difficulties and, in some cases, have entered bankruptcy proceedings or are in regulatory enforcement actions. The uncertainty surrounding the future of the credit markets in the United States and the rest of the world has resulted in reduced access to credit worldwide. As of September 30, 2009, we had total outstanding indebtedness of $2.5 billion under our various secured credit facilities.

          We face risks attendant to changes in economic environments, changes in interest rates, and instability in the banking and securities markets around the world, among other factors. Major market disruptions and the current adverse changes in market conditions and regulatory climate in the United States and worldwide may adversely affect our business or impair our ability to borrow amounts under our credit facilities or any future financial arrangements. We cannot predict how long the current market conditions will last. However, these recent and developing economic and governmental factors, together with the concurrent decline in charter rates and vessel values, may have a material adverse effect on our results of operations, financial condition or cash flows, have

caused the price of our common stock on the Nasdaq Global Select Market to decline and could cause the price of our common stock to decline further.

Acts of piracy on ocean-going vessels have recently increased in frequency, which could adversely affect our business.

          Acts of piracy have historically affected ocean-going vessels trading in regions of the world such as the South China Sea and in the Gulf of Aden off the coast of Somalia. Throughout 2008, the frequency of piracy incidents has increased significantly, particularly in the Gulf of Aden. For example, in November 2008, the MV Sirius Star, a tanker vessel not affiliated with us, was captured by pirates in the Indian Ocean while carrying crude oil estimated to be worth $100 million. In February 2009, the vessel Saldanha, which is owned by our subsidiary, Team-Up Owning Company Limited, was seized by pirates while transporting coal through the Gulf of Aden. If these piracy attacks result in regions (in which our vessels are deployed) being characterized by insurers as “war risk” zones, as the Gulf of Aden temporarily was in May 2008, or Joint War Committee (JWC) “war and strikes” listed areas, premiums payable for such insurance coverage could increase significantly and such insurance coverage may be more difficult to obtain. Crew costs, including those due to employing onboard security guards, could increase in such circumstances. In addition, while we believe the charterer remains liable for charter payments when a vessel is seized by pirates, the charterer may dispute this and withhold charter hire until the vessel is released. A charterer may also claim that a vessel seized by pirates was not “on-hire” for a certain number of days and it is therefore entitled to cancel the charter party, a claim that we would dispute. We may not be adequately insured to cover losses from these incidents, which could have a material adverse effect on us. In addition, detention hijacking as a result of an act of piracy against our vessels, or an increase in cost, or unavailability of insurance for our vessels, could have a material adverse impact on our business, financial condition, results of operations and cash flows.

World events could affect our results of operations and financial condition.

          Terrorist attacks such as those in New York on September 11, 2001 and in London on July 7, 2005 and the continuing response of the United States to these attacks, as well as the threat of future terrorist attacks in the United States or elsewhere, continues to cause uncertainty in the world’s financial markets and may affect our business, operating results and financial condition. The continuing conflict in Iraq may lead to additional acts of terrorism and armed conflict around the world, which may contribute to further economic instability in the global financial markets. These uncertainties could also adversely affect our ability to obtain additional financing on terms acceptable to us or at all. In the past, political conflicts have also resulted in attacks on vessels, mining of waterways and other efforts to disrupt international shipping, particularly in the Arabian Gulf region. Acts of terrorism and piracy have also affected vessels trading in regions such as the South China Sea. Any of these occurrences could have a material adverse impact on our operating results, revenues and costs.

          Terrorist attacks on vessels, such as the October 2002 attack on the VLCC Limburg, a vessel not related to us, may in the future also negatively affect our operations and financial condition and directly impact our vessels or our customers. Future terrorist attacks could result in increased volatility of the financial markets in the United States and globally and may impact the economic recession in the United States and other countries. Any of these occurrences could have a material adverse impact on our revenues and costs.

Our revenues are subject to seasonal fluctuations, which could affect our operating results and our ability to pay dividends, if any, in the future.

          We operate our vessels in markets that have historically exhibited seasonal variations in demand and, as a result, in charter hire rates. This seasonality may result in quarter-to-quarter volatility in our operating results, which could affect our ability to pay dividends, if any, in the future from quarter to quarter. The drybulk carrier market is typically stronger in the fall and winter months in anticipation of increased consumption of coal and other raw materials in the northern hemisphere during the winter months. In addition, unpredictable weather patterns in these months tend to disrupt vessel scheduling and supplies of certain commodities. As a result, our revenues have historically been weaker during the fiscal quarters ended June 30 and September 30, and, conversely, our revenues have historically been stronger in fiscal quarters ended December 31 and March 31. This seasonality may adversely affect our operating results and our ability to pay dividends, if any, in the future.

Rising fuel prices may adversely affect our profits.

          While we do not bear the cost of fuel or bunkers, under our time and bareboat charters, fuel is a significant, if not the largest, expense in our shipping operations when vessels are under spot charter. Changes in the price of fuel may adversely affect our profitability. The price and supply of fuel is unpredictable and fluctuates based on events outside our control, including geopolitical developments, supply and demand for oil and gas, actions by the Organization of Petroleum Exporting Countries, or OPEC, and other oil and gas producers, war and unrest in oil producing countries and regions, regional production patterns and environmental concerns. Further, fuel may become much more expensive in the future, which may reduce the profitability and competitiveness of our business versus other forms of transportation, such as truck or rail.

We are subject to international safety regulations and the failure to comply with these regulations may subject us to increased liability, may adversely affect our insurance coverage and may result in our vessels being denied access to, or detained in, certain ports.

          Our business and the operation of our vessels are materially affected by government regulation in the form of international conventions, national, state and local laws and regulations in force in the jurisdictions in which the vessels operate, as well as in the country or countries of their registration. Because such conventions, laws, and regulations are often revised, we cannot predict the ultimate cost of complying with such conventions, laws and regulations or the impact thereof on the resale prices or useful lives of our vessels. Additional conventions, laws and regulations may be adopted which could limit our ability to do business or increase the cost of our doing business and which may materially adversely affect our operations. We are required by various governmental and quasi governmental agencies to obtain certain permits, licenses, certificates, and financial assurances with respect to our operations.

          In addition, vessel classification societies also impose significant safety and other requirements on our vessels. In complying with current and future environmental requirements, vessel-owners and operators may also incur significant additional costs in meeting new maintenance and inspection requirements, in developing contingency arrangements for potential spills and in obtaining insurance coverage. Government regulation of vessels, particularly in the areas of safety and environmental requirements, can be expected to become stricter in the future and require us to incur significant capital expenditures on our vessels to keep them in compliance.

          The operation of our vessels is also affected by the requirements set forth in the United Nations’ International Maritime Organization’s International Management Code for the Safe Operation of Ships and Pollution Prevention, or ISM Code. The ISM Code requires shipowners, ship managers and bareboat charterers to develop and maintain an extensive “Safety Management System” that includes the adoption of a safety and environmental protection policy setting forth instructions and procedures for safe operation and describing procedures for dealing with emergencies. Each of the vessels that has been delivered to us is ISM Code-certified and we expect that any vessels that we acquire in the future will be ISM Code-certified when delivered to us. The failure of a shipowner or bareboat charterer to comply with the ISM Code may subject it to increased liability, may invalidate existing insurance or decrease available insurance coverage for the affected vessels and may result in a denial of access to, or detention in, certain ports. If we are subject to increased liability for non-compliance or if our insurance coverage is adversely impacted as a result of non-compliance, it may negatively affect our ability to pay dividends, if any, in the future. If any of our vessels are denied access to, or are detained in, certain ports, this may decrease our revenues.

We are subject to complex laws and regulations, including environmental regulations that can adversely affect the cost, manner or feasibility of doing business.

          Our operations are subject to numerous laws and regulations in the form of international conventions and treaties, national, state and local laws and national and international regulations in force in the jurisdictions in which our vessels operate or are registered, which can significantly affect the ownership and operation of our vessels. These requirements include, but are not limited to, the International Convention on Civil Liability for Oil Pollution Damage of 1969, the International Convention for the Prevention of Pollution from Ships of 1975, the International Maritime Organization, or IMO, International Convention for the Prevention of Marine Pollution of 1973, the IMO International Convention for the Safety of Life at Sea of 1974, the International Convention on Load Lines of 1966, the U.S. Oil Pollution Act of 1990, or OPA, the U.S. Clean Air Act, U.S. Clean Water Act and the U.S. Marine Transportation Security Act of 2002. Compliance with such laws, regulations and standards, where applicable, may require installation of costly equipment or operational changes and may affect the resale value or useful lives of our vessels. We may also incur additional costs in order to comply with other existing and future regulatory obligations, including, but not limited to, costs relating to air emissions, the management of ballast waters, maintenance and

inspection, elimination of tin-based paint, development and implementation of emergency procedures and insurance coverage or other financial assurance of our ability to address pollution incidents. These costs could have a material adverse effect on our business, results of operations, cash flows and financial condition. A failure to comply with applicable laws and regulations may result in administrative and civil penalties, criminal sanctions or the suspension or termination of our operations. Environmental laws often impose strict liability for remediation of spills and releases of oil and hazardous substances, which could subject us to liability without regard to whether we were negligent or at fault. Under OPA, for example, owners, operators and bareboat charterers are jointly and severally strictly liable for the discharge of oil within the 200-mile exclusive economic zone around the United States. An oil spill could result in significant liability, including fines, penalties and criminal liability and remediation costs for natural resource damages under other federal, state and local laws, as well as third-party damages. We are required to satisfy insurance and financial responsibility requirements for potential oil (including marine fuel) spills and other pollution incidents. Although we have arranged insurance to cover certain environmental risks, such insurance may not be sufficient to cover all such risks or any claims will not have a material adverse effect on our business, results of operations, cash flows and financial condition and our ability to pay dividends, if any, in the future.

Increased inspection procedures and tighter import and export controls could increase costs and disrupt our business.

          International shipping is subject to various security and customs inspection and related procedures in countries of origin, destination and trans-shipment points. Inspection procedures may result in the seizure of the contents of our vessels, delays in the loading, offloading or delivery and the levying of customs duties, fines or other penalties against us.

          It is possible that changes to inspection procedures could impose additional financial and legal obligations on us. Changes to inspection procedures could also impose additional costs and obligations on our customers and may, in certain cases, render the shipment of certain types of cargo uneconomical or impractical. Any such changes or developments may have a material adverse effect on our business, financial condition and results of operations.

Maritime claimants could arrest one or more of our vessels, which could interrupt our cash flow.

          Crew members, suppliers of goods and services to a vessel, shippers of cargo and other parties may be entitled to a maritime lien against a vessel for unsatisfied debts, claims or damages. In many jurisdictions, a claimant may seek to obtain security for its claim by arresting a vessel through foreclosure proceedings. The arrest or attachment of one or more of our vessels could interrupt our cash flow and require us to pay large sums of money to have the arrest or attachment lifted. In addition, in some jurisdictions, such as South Africa, under the “sister ship” theory of liability, a claimant may arrest both the vessel which is subject to the claimant’s maritime lien and any “associated” vessel, which is any vessel owned or controlled by the same owner. Claimants could attempt to assert “sister ship” liability against a vessel in our fleet for claims relating to another of our vessels.

Governments could requisition our vessels during a period of war or emergency, resulting in a loss of earnings.

          A government could requisition one or more of our vessels for title or for hire. Requisition for title occurs when a government takes control of a vessel and becomes her owner, while requisition for hire occurs when a government takes control of a vessel and effectively becomes her charterer at dictated charter rates. Generally, requisitions occur during periods of war or emergency, although governments may elect to requisition vessels in other circumstances. Although we would be entitled to compensation in the event of a requisition of one or more of our vessels, the amount and timing of payment would be uncertain. Government requisition of one or more of our vessels may negatively impact our revenues and reduce the amount of dividends, if any, in the future.

In the highly competitive international shipping industry, we may not be able to compete for charters with new entrants or established companies with greater resources and as a result, we may be unable to employ our vessels profitability.

          We employ our vessels in a highly competitive market that is capital intensive and highly fragmented. Competition arises primarily from other vessel owners, some of whom have substantially greater resources than we do. Competition for the transportation of drybulk cargo by sea is intense and depends on price, location, size, age, condition and the acceptability of the vessel and its operators to the charterers. Due in part to the highly fragmented

market, competitors with greater resources could enter the drybulk shipping industry and operate larger fleets through consolidations or acquisitions and may be able to offer lower charter rates and higher quality vessels than we are able to offer. If we are unable to successfully compete with other drybulk shipping companies, this would have an adverse impact on our results of operations.

Risks associated with operating ocean-going vessels could affect our business and reputation, which could adversely affect our revenues and stock price.

          The operation of ocean-going vessels carries inherent risks. These risks include the possibility of:

	•		marine disaster;
	•		environmental accidents;
	•		cargo and property losses or damage;
	•		business interruptions caused by mechanical failure, human error, war, terrorism, political action in various countries, labor strikes or adverse weather conditions; and
	•		piracy.

          The involvement of our vessels in an environmental disaster may harm our reputation as a safe and reliable vessel owner and operator. Any of these circumstances or events could increase our costs or lower our revenues.

The shipping industry has inherent operational risks that may not be adequately covered by our insurance.

          We procure insurance for our fleet against risks commonly insured against by vessel owners and operators. Our current insurance includes hull and machinery insurance, war risks insurance and protection and indemnity insurance (which includes environmental damage and pollution insurance). We may not be adequately insured against all risks or our insurers may not pay a particular claim. Even if our insurance coverage is adequate to cover our losses, we may not be able to timely obtain a replacement vessel in the event of a loss. Furthermore, in the future, we may not be able to obtain adequate insurance coverage at reasonable rates for our fleet. We may also be subject to calls, or premiums, in amounts based not only on our own claim records but also the claim records of all other members of the protection and indemnity associations through which we receive indemnity insurance coverage for tort liability. Our insurance policies also contain deductibles, limitations and exclusions which, although we believe are standard in the shipping industry, may nevertheless increase our costs.

The operation of drybulk carriers has certain unique operational risks.

          The operation of certain ship types, such as drybulk carriers, has certain unique risks. With a drybulk carrier, the cargo itself and its interaction with the ship can be a risk factor. By their nature, drybulk cargoes are often heavy, dense, easily shifted, and react badly to water exposure. In addition, drybulk carriers are often subjected to battering treatment during unloading operations with grabs, jackhammers (to pry encrusted cargoes out of the hold), and small bulldozers. This treatment may cause damage to the vessel. Vessels damaged due to treatment during unloading procedures may be more susceptible to breach to the sea. Hull breaches in drybulk carriers may lead to the flooding of the vessels holds. If a drybulk carrier suffers flooding in its forward holds, the bulk cargo may become so dense and waterlogged that its pressure may buckle the vessels bulkheads leading to the loss of a vessel. If we are unable to adequately maintain our vessels we may be unable to prevent these events. Any of these circumstances or events could negatively impact our business, financial condition, results of operations and our ability to pay dividends, if any, in the future. In addition, the loss of any of our vessels could harm our reputation as a safe and reliable vessel owner and operator.

Offshore Drilling Industry—Specific Risk Factors

Our business in the offshore drilling sector depends on the level of activity in the offshore oil and gas industry, which is significantly affected by, among other things, volatile oil and gas prices and may be materially and adversely affected by a decline in the offshore oil and gas industry.

          The offshore contract drilling industry is cyclical and volatile. Our business in the offshore drilling sector depends on the level of activity in oil and gas exploration, development and production in offshore areas worldwide. The availability of quality drilling prospects, exploration success, relative production costs, the stage of reservoir development and political and regulatory environments affect customers’ drilling campaigns. Oil and gas prices and market expectations of potential changes in these prices also significantly affect this level of activity and demand for drilling units.

     Oil and gas prices are extremely volatile and are affected by numerous factors beyond our control, including the following:

	•		worldwide demand for oil and gas;
	•		the cost of exploring for, developing, producing and delivering oil and gas;
	•		expectations regarding future energy prices;
	•		advances in exploration and development technology;
	•		the ability of OPEC to set and maintain levels and pricing;
	•		the level of production in non-OPEC countries;
	•		government regulations;
	•		local and international political, economic and weather conditions;
	•		domestic and foreign tax policies;
	•		development and exploitation of alternative fuels;
	•		the policies of various governments regarding exploration and development of their oil and gas reserves; and
	•		the worldwide military and political environment, including uncertainty or instability resulting from an escalation or additional outbreak of armed hostilities or other crises in the Middle East or other geographic areas or further acts of terrorism in the United States, or elsewhere.

          Declines in oil and gas prices for an extended period of time could negatively affect our business in the offshore drilling sector. Sustained periods of low oil prices typically result in reduced exploration and drilling because oil and gas companies’ capital expenditure budgets are subject to their cash flow and are therefore sensitive to changes in energy prices. These changes in commodity prices can have a dramatic effect on rig demand, and periods of low demand can cause excess rig supply and intensify the competition in the industry which often results in drilling units, particularly lower specification drilling units, being idle for long periods of time. We cannot predict the future level of demand for our services or future conditions of the oil and gas industry. Any decrease in exploration, development or production expenditures by oil and gas companies could reduce our revenues and materially harm our business and results of operations.

     In addition to oil and gas prices, the offshore drilling industry is influenced by additional factors, including:

	•		the availability of competing offshore drilling vessels;
	•		the level of costs for associated offshore oilfield and construction services;
	•		oil and gas transportation costs;
	•		the discovery of new oil and gas reserves; and
	•		the cost of non-conventional hydrocarbons, such as the exploitation of oil sands.