Page 1
================================================================================
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D. C. 20549
----------------
Form 10-K
ANNUAL REPORT UNDER SECTION 13 OR 15 (d)
OF THE SECURITIES EXCHANGE ACT OF 1934
FOR FISCAL YEAR ENDED SEPTEMBER 30, 1997
COMMISSION FILE NUMBER 0-6352
ATWOOD OCEANICS, INC.
(Exact name of registrant as specified in its charter)
TEXAS
(State or other jurisdiction of 74-1611874
incorporation or organization) (I.R.S. Employer Identification No.)
15835 Park Ten Place Drive 77084
Houston, Texas (Zip Code)
(Address of principal executive offices)
-----------
Registrant's telephone number, including area code:
281-492-2929
Securities registered pursuant to
Section 12(b) of the Act:
Common Stock, $1 par value
(Title of Class)
Securities registered pursuant to
Section 12(g) of the Act:
Common Stock, $1 par value
(Title of Class)
---------------
Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 15 or 15 (d) of the Securities Exchange Act of 1934
during the preceding 12 months (or for such shorter period that the registrant
was required to file such reports), and (2) has been subject to such filings
requirements for the past 90 days. Yes X No
Indicate by check mark if disclosure of delinquent filers pursuant to Item 405
of Regulation in S-K is not contained herein, and will not be contained, to the
best of the registrant's knowledge, in definite proxy or information statements
incorporated by reference in Part III of this Form 10-K or any amendment to this
Form 10-K { }
The aggregate market value of the voting stock held by non-affiliates of the
registrants as of November 28, 1997 is $486,500,000.
The number of shares outstanding of the issuer's class of Common Stock, as of
November 28, 1997: 13,550,176 shares of Common Stock, $1 par value.
DOCUMENTS INCORPORATED BY REFERENCE
(1) Annual Report to Shareholders for the fiscal year ended September 30, 1997 -
Referenced in Parts I, II and IV of this report.
(2) Proxy Statement for Annual
Meeting of Shareholders to be held February 12, 1998 - Referenced in Part III of
this report.
================================================================================
<PAGE>
Page 2
PART I
ITEM 1. BUSINESS
Atwood Oceanics, Inc. (which together with its subsidiaries is identified
as the "Company" or "Registrant", unless the context requires otherwise), a
corporation organized in 1968 under the laws of the State of Texas, is engaged
in contract drilling of exploratory and development oil and gas wells in
offshore areas and related support, management and consulting services. The
Company currently owns (i) three "third-generation" semisubmersibles, one
"second-generation" semisubmersible,one jack-up, one "second-generation"
semisubmersible tender assist rig, one submersible, and one modular,
self-contained platform rig, and (ii) a fifty percent interest in a new
generation platform rig. The Company also provides labor, supervisory and
consulting services to two operator owned platform rigs in Australia.
In recent times, activity in the contract drilling industry has
significantly improved, especially for mobile drilling rigs that can operate in
deep water. For the last four years, the Company has maintained 99 percent
utilization of its drilling equipment, resulting in four consecutive years of
improved profitability.
To date, most of the Company's drilling operations have been conducted
outside United States waters. Approximately 88 to 93 percent of the Company's
contract revenues were derived from foreign operations in each of the last three
fiscal years. The Company is currently involved in active operations in the
territorial waters of Australia, Malaysia, Equatorial Guinea, United States and
the Phillipines. At the present time, the "ATWOOD HUNTER", a third-generation
semisubmersible, and the submersible "RICHMOND" are the Company's only drilling
vessels located in United States waters. For information relating to the
contract revenues, operating income and identifiable assets attributable to
specific geographic areas of operations, see Note 11 of Notes to Consolidated
Financial Statements contained in the Company's Annual Report to Shareholders
for fiscal year 1997, incorporated by reference herein.
OFFSHORE DRILLING EQUIPMENT
The Company's diversified fleet of owned or operated drilling rigs
currently consists of four semisubmersibles, one jack-up, one semisubmersible
tender assist vessel, one submersible, and four modular, self-contained platform
rigs. Each type of drilling rig is designed for different purposes and
applications, for operations in different water depths, bottom conditions,
environments and geographical areas, and for different drilling and operating
requirements. The following descriptions of the various types of drilling rigs
owned or operated by the Company illustrate the diversified range of application
of the rig fleet.
Each semisubmersible drilling unit has two hulls, the lower of which is
capable of being flooded. Drilling equipment is mounted on the main hull. After
the drilling unit is towed to location, the lower hull is flooded, lowering the
entire drilling unit to its operating draft, and the drilling unit is anchored
in place. On completion of operations, the lower hull is deballasted, raising
the entire drilling unit to its towing draft. This type of drilling unit is
designed to operate in greater water depths than a jack-up and in more severe
sea conditions than a drillship. Semisubmersible units are generally more
expensive to operate than jack-up rigs and, compared to a drillship, are often
limited in the amount of supplies that can be stored on board.
The semisubmersible tender assist vessel operates like a semisubmersible
except that its drilling equipment is temporarily installed on permanently
constructed offshore support platforms. The semisubmersible vessel provides crew
accommodations, storage facilities and other support for the drilling
operations.
A jack-up drilling unit contains all of the drilling equipment on a single
hull designed to be towed to the well site. Once on location, legs are lowered
to the sea floor and the unit is raised out of the water by jacking up on these
legs. On completion of the well, the unit is jacked down, and towed to the next
location. A jack-up drilling unit can operate in more severe sea and weather
conditions than a drillship and is less expensive to operate than a
semisubmersible. However, because it must rest on the sea floor, a jack-up
cannot operate in as deep water as other units.
<PAGE>
Page 3
The submersible drilling unit owned by the Company has two hulls, the
lower being a mat which is capable of being flooded. Drilling equipment and crew
accommodations are located on the main hull. After the drilling unit is towed to
location, the lower hull is flooded, lowering the entire unit to its operating
draft at which it rests on the sea floor. On completion of operations, the lower
hull is deballasted, raising the entire unit to its towing draft. This type of
drilling unit is designed to operate in shallow water depths ranging from 9 to
70 feet and can operate in moderately severe sea conditions. Although drilling
units of this type are less expensive to operate, like the jack-up rig, they
cannot operate in as deep water as other units.
A modular platform rig is similar to a land rig in its basic components.
Modular platform rigs are temporarily installed on permanently constructed
offshore support platforms in order to perform the drilling operations. After
the drilling phase is completed, the modular rig is broken down into convenient
packages and moved by work boats. A platform rig usually stays at a location for
several months, if not years, since several wells are typically drilled from a
support platform.
DRILLING CONTRACTS
The contracts under which the Company operates its vessels are obtained
either through individual negotiations with the customer or by submitting
proposals in competition with other contractors and vary in their terms and
conditions. The initial term of contracts for the Company's owned and/or
operated vessels has ranged from the length of time necessary to drill one well
to several months and is generally subject to early termination in the event of
a total loss of the drilling vessel, excessive equipment breakdown or failure to
meet minimum performance criteria. It is not unusual for contracts to contain
renewal provisions at the option of the customer. As a result of improved market
conditions, contracts with a term of one year or longer are now being awarded.
However, there is no guarantee that the current trend of awarding long-term
contracts will continue.
The rate of compensation specified in each contract depends on the nature
of the operation to be performed, the duration of the work, equipment and
services provided, the areas involved, market conditions and other variables.
Generally, contracts for drilling, management and support services specify a
basic rate of compensation computed on a dayrate basis. Such agreements
generally provide for a reduced dayrate payable when operations are interrupted
by equipment failure and subsequent repairs, field moves, adverse weather
conditions or other factors beyond the control of the Company. Some contracts
also provide for revision of the specified dayrates in the event of material
changes in certain items of cost. Any period during which a vessel is not
earning a full operating dayrate because of the above conditions or because the
vessel is idle and not on contract will have an adverse effect on operating
profit. An over-supply of drilling rigs in any market area can adversely affect
the Company's ability to employ its drilling vessels. Except for two rigs idle
for upgrades, the Company had 100 percent utilization of its drilling fleet in
1997. Based upon current contract commitments, the Company should maintain a
high level of equipment utilization in fiscal 1998, exclusive of proposed rig
upgrades; however, there is no guarantee that the Company will not experience
some equipment idle time in fiscal 1998.
For long moves of drilling equipment, the Company attempts to obtain
either a lump sum or a dayrate as mobilization compensation for expenses
incurred during the period in transit. A surplus of certain types of units,
either worldwide or in particular operating areas, can result in the Company's
acceptance of a contract which provides only partial or no recovery of
relocation costs. As a result of improved market conditions, in recent times,
the Company has received full recovery of relocation costs; however, there is no
guarantee that this trend will continue.
Operation of the Company's drilling equipment is subject to the offshore
drilling requirements of petroleum exploration companies and agencies of foreign
governments. These requirements are, in turn, subject to fluctuations in
government policies, world demand and prices for petroleum products, proved
reserves in relation to such demand and the extent to which such demand can be
met from onshore sources.
The Company also contracts to provide various types of services to third
party owners of drilling rigs. These contracts are normally for a stated term or
until termination of operations or stages of operation at a particular facility
or location. The services may include, as in the case of contracts entered into
by the Company in connection with operations offshore Australia, the supply of
personnel and rig design, fabrication, installation and operation. The contracts
normally provide for reimbursement to the Company for all out-of-pocket
expenses, plus a service or management fee for all of the services performed. In
most instances,
<PAGE>
Page 4
the amount charged for the services may be adjusted if there are changes in
conditions, scope or costs of operations. The Company generally obtains
insurance or a contractual indemnity from the owner for liabilities which could
be incurred in operations.
OPERATIONAL RISKS AND INSURANCE
The Company's operations are subject to the usual hazards associated with
the drilling of oil and gas wells, such as blowouts, explosions and fires. In
addition, the Company's vessels are subject to those perils peculiar to marine
operations, such as capsizing, grounding, collision and damage from severe
weather conditions. Any of these risks could result in damage or destruction of
drilling rigs and oil and gas wells, personal injury and property damage, and
suspension of operations or environmental damage through oil spillage or
extensive, uncontrolled fires. Although the Company believes that it is
adequately insured against normal and foreseeable risks in its operations in
accordance with industry standards, such insurance may not be adequate to
protect the Company against liability from all consequences of well disasters,
marine perils, extensive fire damage or damage to the environment. To date, the
Company has not experienced difficulty in obtaining insurance coverage, although
no assurance can be given as to the future availability of such insurance or
cost thereof. The occurrence of a significant event against which the Company is
not fully insured could have a material adverse effect on the Company's
financial position.
ENVIRONMENTAL PROTECTION
Under the Federal Water Pollution Control Act, as amended by the Oil
Pollution Act of 1990, operators of vessels in navigable United States waters
and certain offshore areas are liable to the United States government for the
costs of removing oil and certain other pollutants for which they may be held
responsible, subject to certain limitations, and must establish financial
responsibility to cover such liability. The Company has taken all steps
necessary to comply with this law, and has received a Certificate of Financial
Responsibility (Water Pollution) from the U.S. Coast Guard. The Company's
operations in United States waters are also subject to various other
environmental regulations regarding pollution and control thereof, and the
Company has taken steps to ensure compliance therewith.
CUSTOMERS
During fiscal year 1997, the Company performed operations for 10
customers. Because of the relatively limited number of customers for which the
Company can operate at any given time, sales to each of 3 different customers
amounted to 10% or more of the Company's fiscal 1997 revenues. Esso Australia
Limited/Esso Production Malaysia, Inc., Mobil Equatorial Guinea Inc. and
Carigali-Triton Operating Company Sdn Bhd. accounted for 28%, 22% and 19%,
respectively, of fiscal year 1997 revenues. The Company's business operations
are subject to the risks associated with a business having a limited number of
customers for its products or services, and a decrease in the drilling programs
of these customers in the areas where they employ the Company may adversely
affect the Company's revenues.
COMPETITION
The Company competes with numerous other drilling contractors, most of
which are substantially larger than the Company and possess appreciably greater
financial and other resources. Although recent business combinations among
drilling companies have resulted in a decrease in the total number of
competitors, the drilling industry remains competitive, with no one drilling
contractor being dominant. Thus, there continues to be competition in securing
available drilling contracts.
Price competition is generally the most important factor in the drilling
industry, but the technical capability of specialized drilling equipment and
personnel at the time and place required by customers is also important. Other
competitive factors include work force experience, rig suitability, efficiency,
condition of equipment, reputation and customer relations. The Company believes
that it competes favorably with respect to these factors. If demand for drilling
rigs increases in the future, rig availability may also become a competitive
factor. Competition usually occurs on a regional basis and, although drilling
rigs are mobile and can be moved from one region to another in response to
increased demand, an oversupply of rigs in any region may result. Demand for
drilling equipment is also dependent on the exploration and development programs
of oil and gas companies,
<PAGE>
Page 5
which are in turn influenced by the financial condition of such companies, by
general economic conditions, by prices of oil and gas, and from time to time by
political considerations and policies.
FOREIGN OPERATIONS
The operations of the Company are conducted primarily in foreign waters
and are subject to certain political, economic and other uncertainties not
encountered by purely domestic drilling contractors, including risks of
expropriation, nationalization, foreign exchange restrictions, foreign taxation,
changing conditions and foreign and domestic monetary policies. Generally, the
Company purchases insurance to protect against some or all loss due to events of
political risk such as nationalization, expropriation, war, confiscation and
deprivation. Occasionally, customers will indemnify the Company against such
losses. Moreover, offshore drilling activity is affected by government
regulations and policies limiting the withdrawal of offshore oil and gas,
regulations affecting production, regulations restricting the importation of
foreign petroleum, environmental regulations and regulations which may limit
operations in offshore areas by foreign companies and/or personnel. See Note 11
to Consolidated Financial Statements contained in the Company's Annual Report to
Shareholders for fiscal year 1997, incorporated herein by reference, for a
summary of contract revenues, operating income and identifiable assets by
geographic region.
Because of the Company's foreign operations, its overall effective tax
rate may in the future be higher than the maximum United States corporate
statutory rate due to the possibility of higher foreign tax rates in certain
jurisdictions or less than full creditability of foreign taxes paid.
EMPLOYEES
The Company currently employs approximately 700 persons in its domestic
and worldwide operations. In connection with its foreign drilling operations,
the Company has often been required by the host country to hire substantial
portions of its work force in that country, and in some cases, these employees
may be represented by foreign unions. To date, the Company has experienced
little difficulty in complying with such requirements, and the Company's
drilling operations have not been significantly interrupted by strikes or work
stoppages.
ITEM 2. PROPERTIES
Information regarding the location and general character of the Company's
principal assets may be found in the schedule with the caption heading "Offshore
Drilling Operations" in the Company's Annual Report to Shareholders for fiscal
year 1997, which is incorporated by reference herein.
During fiscal 1997, the Company upgraded and relocated the ATWOOD HUNTER
at a cost of approximately $45 million and refurbished and upgraded the ATWOOD
SOUTHERN CROSS at a cost of approximately $35 million. In fiscal 1998, the
Company plans to upgrade the ATWOOD FALCON at an estimated cost of $50 million
and the VICKSBURG at an estimated cost of $35 million. For more information
concerning these costs, see Note 4 in Consolidated Financial Statements
contained in the Company's Annual Report to Shareholders for fiscal year 1997,
incorporated by reference herein.
ITEM 3. LEGAL PROCEEDINGS
The Company is not currently involved in any material legal proceedings.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SHAREHOLDERS
On September 29, 1997, shareholders of record on September 19, 1997 were
advised of a special meeting of the shareholders on November 6, 1997 for the
purpose of approving a proposed amendment to the Company's Restated Articles of
Incorporation to increase the number of authorized shares of the Company's
common stock from 10 million shares to 20 million shares. Of the 6,771,680
shares of common stock outstanding and entitled to vote at the special meeting,
an aggregate of 6,411,680 shares (or approximately 95%) were voted "for" the
amendment, an aggregate of 29,597 shares were voted "against" the amendment, and
an aggregate of 1,720 shares abstained from voting.
<PAGE>
Page 6
PART II
ITEM 5. MARKET FOR THE REGISTRANT'S COMMON STOCK AND RELATED SHAREHOLDER
MATTERS
As of September 30, 1997, there were over 750 beneficial owners of the
Company's common stock.
The Company did not pay cash dividends in fiscal years 1996 or 1997 and
the Company does not anticipate paying cash dividends in the foreseeable future
because of the capital intensive nature of its business. To enable the company
to maintain its high competitive profile in the industry, cash reserves will be
utilized, at the appropriate time, to upgrade existing equipment or to acquire
additional equipment. The Company's revolving credit facility prohibits the
Company from paying dividends on common stock.
Market information concerning the Company's common stock may be found
under the caption heading "Stock Price Information" in the Company's Annual
Report to Shareholders for fiscal 1997, which is incorporated by reference
herein.
ITEM 6. SELECTED FINANCIAL DATA
Information required by this item may be found under the caption "Five
Year Financial Review" in the Company's Annual Report to Shareholders for fiscal
1997, which is incorporated by reference herein.
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS
Information required by this item may be found in the Company's Annual
Report to Shareholders for fiscal 1997, which is incorporated by reference
herein.
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
Information required by this item may be found in the Company's Annual
Report to Shareholders for fiscal 1997, which is incorporated by reference
herein.
ITEM 9. DISAGREEMENTS ON ACCOUNTING AND FINANCIAL DISCLOSURE
There have been no changes in or disagreements with the Company's
independent public accountants on accounting and financial disclosure.
PART III
ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE COMPANY
This information is incorporated by reference from the Company's
definitive Proxy Statement for the Annual Meeting of Shareholders to be held
February 12, 1998, to be filed with the Securities and Exchange Commission (the
Commission) not later than 120 days after the end of the fiscal year covered by
this Form 10-K.
ITEM 11. EXECUTIVE COMPENSATION
This information is incorporated by reference from the Company's
definitive Proxy Statement for the Annual Meeting of Shareholders to be held
February 12, 1998, to be filed with the Commission not later than 120 days after
the end of the fiscal year covered by this Form 10-K.
<PAGE>
Page 7
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
This information is incorporated by reference from the Company's
definitive Proxy Statement for the Annual Meeting of Shareholders to be held
February 12, 1998, to be filed with the Commission not later than 120 days after
the end of the fiscal year covered by this Form 10-K.
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
This information is incorporated by reference from the Company's
definitive Proxy Statement for the Annual Meeting of Shareholders to be held
February 12, 1998, to be filed with the Commission not later than 120 days after
the end of the fiscal year covered by this Form 10-K.
PART IV
ITEM 14. EXHIBITS, FINANCIAL STATEMENTS, AND REPORTS ON FORM 8-K
(a) FINANCIAL STATEMENTS AND EXHIBITS
1. FINANCIAL STATEMENTS
The following financial statements, together with the report of Arthur
Andersen LLP dated November 25, 1997 appearing in the Company's Annual
Report to Shareholders, are incorporated by reference herein:
Consolidated Balance Sheets dated September 30, 1997 and 1996
Consolidated Statements of Operations for each of the three years in
the period ended September 30, 1997
Consolidated Statements of Cash Flows for each of the three years in
the period ended September 30, 1997
Consolidated Statements of Changes in Shareholders' Equity for each of
the three years in the period ended September 30, 1997
Report of Independent Public Accountants
Notes to Consolidated Financial Statements
2. EXHIBITS
See the "EXHIBIT INDEX" for a listing of all of the Exhibits filed as part
of this report.
The management contracts and compensatory plans or arrangements required
to be filed as exhibits to this report are as follows:
Atwood Oceanics, Inc. 1981 Incentive Stock Option Plan -
See Exhibit 10.1 hereof.
Atwood Oceanics, Inc. 1990 Stock Option Plan - See Exhibit 10.2 hereof.
Atwood Oceanics, Inc. 1996 Incentive Equity Plan - See Exhibit 10.3
hereof.
Atwood Oceanics, Inc. Retention Plan for Certain Salaried Employees
dated effective as of May 8, 1996 - See Exhibit 10.8 hereof.
Executive Agreement dated as of May 8, 1996 between the Company and
John R. Irwin - See Exhibit 10.9.1.
Executive Agreement dated as of May 8, 1996 between the Company and
James M. Holland - See Exhibit 10.9.2.
<PAGE>
Page 8
Executive Agreement dated as of May 8, 1996 between the Company and
Glen P. Kelley - See Exhibit 10.9.3.
Executive Agreement dated as of May 8, 1996 between the Company and
Larry P. Till - See Exhibit 10.9.4.
(b) REPORTS ON FORM 8-K
During the last quarter of fiscal 1997, the Company filed with the
Securities and Exchange Commission the following reports on Form 8-K:
a) A report dated July 10, 1997 advising of the exercise of a
contract option by Shell Phillipines Exploration B.V. to
extend drilling operations for the ATWOOD FALCON for three
years beyond its current commitment after the Company spends
approximately $50 million for a required water-depth upgrade.
b) A report dated July 21, 1997 advising that the Company
entered into a $125 million revolving credit facility with a
bank group.
<PAGE>
Page 9
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange
Act of 1934, the Company has duly caused this report to be signed on its behalf
by the undersigned, thereunto duly authorized.
ATWOOD OCEANICS, INC.
/s/ JOHN R. IRWIN
JOHN R. IRWIN, President
DATE: 3 December 1997
Pursuant to the requirements of the Securities Exchange Act of 1934, this report
has been signed below by the following persons on behalf of the registrant and
in the capacities on the dates indicated.
/s/ JAMES M. HOLLAND /s/ JOHN R. IRWIN
JAMES M. HOLLAND JOHN R. IRWIN
Senior Vice President President and Director
(Principal Financial and (Principal Executive Officer)
Accounting Officer) Date: 3 December 1997
Date: 3 December 1997
/s/ ROBERT W. BURGESS /s/ GEORGE S. DOTSON
ROBERT W. BURGESS, GEORGE S. DOTSON,
Director Director
Date: 3 December 1997 Date: 3 December 1997
/s/ HANS HELMERICH /s/ WILLIAM J. MORRISSEY
HANS HELMERICH, WILLIAM J. MORRISSEY,
Director Director
Date: 3 December 1997 Date: 3 December 1997
/s/ W.H. HELMERICH, III
W.H. HELMERICH, III
Director
DATE: 3 December 1997
<PAGE>
Page 10
EXHIBIT INDEX
3.1.1 Restated Articles of Incorporation dated January 1972
(Incorporated herein by reference to Exhibit 3.1.1 of the
Company's Form 10-K for the year ended September 30, 1993).
3.1.2 Articles of Amendment dated March 1975 (Incorporated herein by
reference to Exhibit 3.1.2 of the Company's Form 10-K for the
year ended September 30, 1993).
3.1.3 Articles of Amendment dated March 1992 (Incorporated herein by
reference to Exhibit 3.1.3 of the Company's Form 10-K for the
year ended September 30, 1993).
*3.1.4 Articles of Amendment dated November 6, 1997.
3.2 Bylaws, as amended (Incorporated herein by reference to Exhibit 3.2
of the Company's Form 10-K for the year ended September 30, 1993).
10.1 Atwood Oceanics, Inc. 1981 Incentive Stock Option Plan
(Incorporated herein by reference to Exhibit 10.1 of the
Company's Form 10-K for the year ended September 30, 1993).
10.2 Atwood Oceanics, Inc. 1990 Stock Option Plan (Incorporated herein by
reference to Exhibit 10.2 of the Company's Form 10-K for the year
ended September 30, 1993).
10.3 Joint Venture Letter Agreement dated November 4, 1994 between
the Company and Helmerich & Payne, Inc. (Incorporated herein
by reference to Exhibit 10.3 of the Company's Form 10-K for
the year ended September 30, 1994).
10.4 Atwood Oceanics, Inc. 1996 Incentive Equity Plan (Incorporated herein
by reference to Exhibit 10.2 of the Company's Form 10-Q for the
quarter ended June 30, 1997).
10.5 Drilling Contract dated January 29, 1997 between the Company
and Occidental Phillipines, Inc. (Incorporated herein by
reference to the Company's Form 8-K dated July 10, 1997).
10.6 Credit Agreement dated July 17, 1997 between the Company and
Bank One, Texas, N.A., Christiania Bank OG Kreditkasse Asa,
New York Branch and Other Financial Institutions (Incorporated
herein by reference to the Company's Form 8-K dated July 21, 1997.)
10.7 Drilling Contract dated June 20, 1996 between the Company and
British-Borneo Petroleum, Inc. for use the ATWOOD HUNTER
(Incorporated herein by reference to the Company's Form 8-K
dated June 24, 1996).
10.8 Atwood Oceanics, Inc. Retention Plan for Certain Salaried Employees
dated effective as of May 8, 1996 (Incorporated herein by reference
to Exhibit 10.8 of the Company's Form 10-K for the year ended
September 30, 1996.)
10.9.1 Executive Agreement dated as of May 8, 1996, between the
Company and John R. Irwin (Incorporated herein by reference to
Exhibit 10.9.1 of the Company's Form 10-K for the year ended
September 30, 1996.)
10.9.2 Executive Agreement dated as of May 8, 1996 between the
Company and James M. Holland (Incorporated herein by reference
to Exhibit 10.9.2 of the Company's Form 10-K for the year
ended September 30, 1996.)
10.9.3 Executive Agreement dated as of May 8, 1996 between the
Company and Glen P. Kelley (Incorporated herein by reference
to Exhibit 10.9.3 of the Company's Form 10-K for the year
ended September 30, 1996.)
10.9.4 Executive Agreement dated as of May 8, 1996 between the
Company and Larry P. Till (Incorporated herein by reference to
Exhibit 10.9.4 of the Company's Form 10-K for the year ended
September 30, 1996.)
<PAGE>
*13.1 Annual Report to Shareholders
*21.1 List of Subsidiaries
*23.1 Consent of Independent Public Accountants
*27.1 Financial Data Schedule
* Filed hereinwith
EXHIBIT 3.1.4
ARTICLES OF AMENDMENT TO
RESTATED ARTICLES OF INCORPORATION OF
ATWOOD OCEANICS, INC.
Pursuant to the terms and provisions of Article 4.04 of the Texas Business
Corporation Act, Atwood Oceanics, Inc., a Texas corporation, adopts the
following Articles of Amendment to its Restated Articles of Incorporation.
I.
The name of the corporation is Atwood Oceanics, Inc.
II.
The first paragraph of Article IV of the Company's Restated Articles of
Incorporation is hereby amended by deleting the existing text in its entirety
and substituting the following therefor:
"A. The aggregate number of shares which the corporation shall have
authority to issue is twenty-one million (21,000,000), of which twenty million
(20,000,000) shares of $1.00 par value each shall be common stock ("Common
Shares"), and of which one million (1,000,000) shares without par value shall be
preferred stock ("Preferred Shares")."
III.
Each amendment made by the Articles of Amendment to the Restated Articles
of Incorporation has been effected in conformity with the provisions of the
Texas Business Corporation Act. The Articles of Amendment to the Restated
Articles of Incorporation, including the amendment set forth above, were adopted
by the shareholders of the corporation on November 6, 1997.
IV.
The number of shares of the corporation outstanding and entitled to vote on
the amendment was 6,771,313 shares.
V.
An aggregate of 6,411,680 shares were voted for the amendment, and
aggregate of 29,597 shares were voted against the amendment, and an aggregate of
1,720 shares abstained from voting.
<PAGE>
VI.
The Articles of Amendment to the Restated Articles of Incorporation do not
provide for an exchange, reclassification or cancellation of issued shares.
VII.
The Articles of Amendment to the Restated Articles of Incorporation do not
effect a change in the amount of stated capital.
Dated: November 6, 1997.
ATWOOD OCEANICS, INC.
By:/s/ JAMES M. HOLLAND
James M. Holland
Senior Vice President and Secretary
THE STATE OF TEXAS
COUNTY OF HARRIS
BEFORE ME, the undersigned authority, on this day personally appeared James
M. Holland, Senior Vice President and Secretary of Atwood Oceanics, Inc., a
Texas corporation, known to me to be the person whose name is subscribed above,
being by me duly sworn did say that he is the person whose signature appears
above, that the matters stated in the foregoing instrument are true, and that
the said instrument was signed and acknowledged by him for the purposes and
consideration therein expressed, and in the capacity therein stated.
SUBSCRIBED AND SWORN TO BEFORE ME by the said James M. Holland on this
6th day of November, 1997.
Notary Public in and for the
State of T E X A S
EXHIBIT 13.1
1997 ANNUAL REPORT TO SHAREHOLDERS
THE COMPANY
Atwood Oceanics, Inc. is engaged in the business of international offshore
drilling of exploratory and developmental oil and gas wells and related support,
management and consulting services. Presently, the Company owns and operates a
modern fleet of seven mobile offshore rigs and one modular platform rig, as well
as manages the operations of two operator-owned platform rigs in Northwest
Australia. The Company also owns a fifty percent interest in a new generation
platform rig operating in Australia. The Company supports its operations from
headquarters in Houston and affiliated offices in Australia, Malaysia,
Indonesia, Philippines, United Kingdom and Equatorial Guinea.
<PAGE>
Page 2
PRESIDENT'S MESSAGE
TO OUR SHAREHOLDERS AND EMPLOYEES
During fiscal 1997, the Company continued to enhance shareholders' equity
through its improving financial trends. Net income increased 37% to $15.6
million, while contract revenues increased 12% to $89.1 million. Earnings before
depreciation, interest, taxes and investment income increased 50% from $22.8
million to $34.2 million. Based upon current rig contract commitments, the
Company's financial performance should continue to reflect improving trends
during fiscal 1998.
Fiscal 1997 was a year marked with many accomplishments. Major upgrades of
the ATWOOD HUNTER and the ATWOOD SOUTHERN CROSS were completed with the rigs
commencing contracts in September and November 1997, respectively. The ATWOOD
FALCON, ATWOOD EAGLE and RICHMOND were fully utilized during fiscal 1997 and
have either commenced new contracts or extended existing contracts at
significantly higher dayrates between September 1997 and November 1997. RIG 200,
our newly constructed state-of-the-art platform rig, commenced a term contract
in Australia in January 1997 and is currently drilling its seventeenth well. The
SEAHAWK and RIG 19 contracts have been extended for additional platforms at
higher dayrates. Upgrades of the client-owned GOODWYN 'A' and NORTH RANKIN 'A'
rigs have been approved and are being project managed by the Company. Currently,
the VICKSBURG is under tow to a Singapore shipyard for upgrade and cantilever
conversion, which will take several months to complete. After completion of its
current drilling program during fiscal 1998, the ATWOOD FALCON will be towed to
a Southeast Asia shipyard to undergo a water-depth upgrade for a three-year
contract in the Philippines.
In addition to improved financial performance and contract enhancements,
the Company has also achieved several other important goals. To help provide
funding for the Company's planned rig upgrade opportunities, the Company entered
into a $125 million revolving credit facility with a bank group in July 1997 at
competitive interest rates. The Company listed its common stock on the New York
Stock Exchange in August 1997 and declared a stock split in the form of a
two-for-one stock dividend in November 1997.
Striving for safe operations has remained at the forefront of our efforts
during 1997. Once again, we extend our appreciation to our employees and
shareholders for their contributions and support of our joint efforts to
continue building the Company in the years ahead.
John R. Irwin
President
<PAGE>
Page 3
FINANCIAL HIGHLIGHTS
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
<TABLE>
Fiscal Fiscal
1997 1996
(In Thousands)
FOR THE YEAR
<S> <C> <C>
REVENUES FROM CONTRACT DRILLING AND
MANAGEMENT $ 89,082 $ 79,455
NET INCOME 15,619 11,368
CAPITAL EXPENDITURES (including
investment in RIG-200) 62,778 9,526
AT YEAR END
CASH AND SECURITIES HELD FOR INVESTMENT $42,234 $ 40,492
NET PROPERTY AND EQUIPMENT 143,923 91,124
TOTAL ASSETS 215,330 159,309
TOTAL SHAREHOLDERS' EQUITY 122,689 105,554
</TABLE>
<PAGE>
Page 4
Atwood Oceanics, Inc. and Subsidiaries
FIVE YEAR FINANCIAL REVIEW
<TABLE>
At or For the Years Ended September 30,
- --------------------------------------------------------------------------------
(In thousands, except per
share amounts, fleet 1997 1996 1995 1994 1993
data and ratios)
- --------------------------------------------------------------------------------
STATEMENTS OF OPERATIONS DATA:
<S> <C> <C> <C> <C> <C>
Operating revenues $89,082 $ 79,455 $ 72,231 $ 65,975 $51,775
Drilling costs and general
and administrative expenses (54,890) (56,653) (55,311) (48,652) (41,797)
OPERATING MARGIN 34,192 22,802 16,920 17,323 9,978
Depreciation (9,979) (9,742) (11,134) (13,618) (13,045)
OPERATING INCOME (LOSS) 24,213 13,060 5,786 3,705 (3,067)
Other income (expense) 1,165 2,783 2,238 (73) (597)
Minority interest in
loss of Partnerships --- --- 908 3,303 4,821
Tax provision (9,759) (4,475) (1,872) (726) (2,948)
NET INCOME (LOSS) $ 15,619 $ 11,368 $ 7,060 $ 6,209 $ (1,791)
PER SHARE DATA:
Net earnings (loss) (1) $ 1.16 $ .85 $ .54 $ .47 $(.14)
Weighted average shares
outstanding (1) 13,474 13,328 13,182 13,164 13,164
FLEET DATA:
Number of rigs owned or
managed, at end of period 11 11 10 9 10
Utilization rate for
in-service rigs (excludes
contractual downtime for
rig upgrades in 1997) 100% 100% 99% 99% 88%
BALANCE SHEETS DATA:
Cash and securities held
for investment $ 42,234 $ 40,492 $ 37,922 $41,047 $ 35,044
Working capital 27,549 26,151 13,761 25,171 14,703
Net property and equipment 143,923 91,124 91,427 82,845 90,150
Total assets 215,330 159,309 152,853 153,460 149,853
Total long-term debt 59,500 34,473 39,319 53,294 58,409
Shareholders' equity 122,689 105,554 94,892 85,959 79,750
Ratio of current assets
to current liabilities 2.41 2.45 1.67 2.89 2.24
Note - (1) Retroactively adjusted to reflect two-for-one stock split
declared in November 1997.
</TABLE>
(The Company has not paid any cash dividends on its common stock.)
<PAGE>
Page 5
OFFSHORE DRILLING OPERATIONS
<TABLE>
<S> <C> <C> <C> <C> <C> <C> <C>
NAME TYPE PERCENTAGE MAXIMUM CONTRACT
OF OF OF 1997 WATER STATUS AT
RIG RIG REVENUES BUILT DEPTH LOCATION CUSTOMER NOVEMBER 30, 1997
DRILLING RIGS WHOLLY OR PARTIALLY OWNED
ATWOOD THIRD- 19% 1983 2,500 FT. PHILIPPINES SHELL In November 1997,
FALCON GENERATION PHILIPPINES the rig commenced
SEMISUBMERSIBLE EXPLORATION drilling under a two
B.V. phase program. Phase
one involves the
drilling of four wells
estimated to extend to
June 1998. Upon
completion of the
Phase one program, the
rig will be trans-
ported to Singapore
to undergo an upgrade
to enable the rig to
operate in up to 3,500
feet of water. When
the upgrade is
completed (estimated
the first quarter of
fiscal 1999), the rig
will be transported
back to the Phillip-
pines to commence the
three-year phase two
drillng program.
ATWOOD THIRD- 6% 1981 3,500 FT. UNITED BRITISH- Upon completion of
HUNTER GENERATION (Water depth STATES BORNEO nine month upgrade
SEMISUBMERSIBLE upgrade in GULF OF PETROLEUM period, the rig
1997) MEXICO INC. commenced drilling
under a firm three-
year contract in
September 1997.
ATWOOD THIRD- 22% 1982 2,500 FT. EQUATOR- MOBIL Estimated completion
EAGLE GENERATION IAL EQUATOR- of current contract is
SEMISUBMSIBLE GUINEA IAL February/March 1998.
GUINEA
INC.
ENTER- Upon completion of the
PRISE current drilling
OIL contract, the rig will
ITALIANA be mobilized to the
S.p.A. AND Mediterranean Sea for
BG a minimum 200-day
EXPLORA- drilling program.
TION AND
PRODUCTION
LIMITED
SEAHAWK SECOND- 12% 1974/ N/A MALAYSIA ESSO Term contract
GENERATION 1992 PRODUC- (estimated completion
SEMISUB- TION December 1998).
MERSIBLE MALAYSIA,
TENDER INC.
ASSIST
VICKS- JACK-UP 6% 1976 300 FT. AUSTRALIA WESTERN The rig should
BURG MINING complete its current
CORPORATION contract in December
LIMITED 1997, at which time
it will be trans-
ported to Singapore
to commence an
upgrade and
refurbishment
project estimated
to extend into the
fourth quarter of
fiscal 1998.
RIG-19 MODULAR 8% 1988 N/A AUSTRALIA ESSO Term contract
AUSTRALIA (estimated drilling
LIMITED work of between 9
and 12 months from
January 1998).
Page 6
RICH- SUBMER- 10% 1982 75 FT. UNITED CHEVRON Term Contract
MOND SIBLE STATES U.S.A. (estimated
GULF OF completion May 1998).
MEXICO
ATWOOD SECOND- 0% 1976 2,000 FT. AUSTRALIA SANTOS LTD. In November 1997,
SOUTH- GENERATION (Refurbished the rig commenced
ERN SEMISUB- and upgraded drilling a 300-day
CROSS MERSIBLE in 1997) plus option
contract.
RIG-200 MODULAR 7% 1995 N/A AUSTRALIA ESSO The rig commenced
PLATFORM AUSTRALIA drilling under a
LIMITED two-year contract
with options in
January 1997.
MANAGEMENT/LABOR CONTRACTS
GOOD- MODULAR 8% N/A N/A AUSTRALIA WOODSIDE Term contract for
WYN 'A'PLATFORM OFFSHORE management of
PETROLEUM owner funded rig
PTY. LTD. upgrades and options
("WOODSIDE")for management of
extended drilling
program.
NORTH MODULAR 2% N/A N/A AUSTRALIA WOODSIDE Term contract for
RANKIN PLATFORM management of owner
'A' funded rig upgrades
and option for
management of
extended drilling
program.
</TABLE>
<PAGE>
Page 7
MANAGEMENT'S DISCUSSION AND ANALYSIS
OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
This Annual Report to Shareholders and the Form 10-K for the fiscal year
ended September 30, 1997 includes "forward-looking statements" within the
meaning of Section 27A of the Securities Act of 1933, as amended, and Section
21E of the Securities Exchange Act of 1934, as amended. All statements other
than statements of historical facts included in this report and the related Form
10-K regarding the Company's financial position, business strategy, budgets and
plans and objectives of management for future operations are forward-looking
statements. Although the Company believes that the expectations reflected in
such forward-looking statements are reasonable, it can give no assurance that
such expectations will prove to have been correct. Important factors that could
cause actual results to differ materially from the Company's expectations
("Cautionary Statements") are disclosed in "Liquidity and Capital Resources" and
elsewhere in this report and the related Form 10-K. All subsequent written and
oral forward-looking statements attributable to the Company, or persons acting
on its behalf, are expressly qualified in their entirety by the Cautionary
Statements.
OUTLOOK
Activity in the offshore contract drilling industry continues to be strong
in virtually all worldwide market areas, with current worldwide fleet
utilization for mobile offshore units in excess of 95 percent. Except for two
rigs idle for upgrades, the Company had 100 percent utilization of its drilling
fleet in 1997. With the completion of the upgrades of the ATWOOD HUNTER in
September 1997 and the ATWOOD SOUTHERN CROSS in November 1997, all of the
Company's drilling vessels are currently generating revenues. Based upon firm
contract commitments for its fleet, the Company should maintain a high level of
equipment utilization during fiscal 1998.
RESULTS OF OPERATIONS
Fiscal Year 1997 Versus Fiscal Year 1996
Despite the ATWOOD HUNTER being idle for approximately eight months while
undergoing upgrades, contract revenues in fiscal 1997 increased 12 percent to
$89.1 million from $79.5 million. This increase was primarily attributable to
dayrate increases on the ATWOOD FALCON, ATWOOD EAGLE and RICHMOND, to an
increase in labor services provided to NORTH RANKIN 'A' and to a complete year
of revenues from RIG-200. An analysis of contract revenues by rig for fiscal
1997 and 1996 is as follows:
<TABLE>
CONTRACT REVENUES
-----------------------------------------------
(In millions)
Fiscal Fiscal
1997 1996 Variance
<S> <C> <C> <C>
ATWOOD FALCON $16.9 $ 11.5 $ 5.4
ATWOOD HUNTER 5.2 11.3 (6.1)
ATWOOD EAGLE 19.3 15.6 3.7
RIG-200 5.9 2.2 3.7
SEAHAWK 11.3 11.0 0.3
VICKSBURG 5.1 5.0 0.1
RIG-19 7.1 8.2 (1.1)
RICHMOND 8.8 6.2 2.6
GOODWYN 'A' 7.3 7.6 (0.3)
NORTH RANKIN 'A' 2.2 0.9 1.3
$89.1 $ 79.5 $ 9.6
</TABLE>
<PAGE>
Page 8
Contracts commenced during the last half of fiscal 1996 by the ATWOOD
FALCON AND ATWOOD EAGLE, which resulted in dayrate increases of approximately 60
percent and 25 percent, respectively, extended through fiscal 1997, accounting
for the increase in revenues for these rigs. The ATWOOD HUNTER entered the
shipyard in December 1996 for its deep water upgrade which was not completed
until September 1997, accounting for its decrease in revenues. The Company began
receiving a holding dayrate on RIG-200 in January 1996 while awaiting
commencement of active drilling operations in Australia which did not occur
until January 1997. A full year of revenues coupled with the commencement of
active drilling at higher dayrates accounted for the increase in revenues for
RIG-200. Stable contracts for the SEAHAWK and VICKSBURG provided consistency to
these operations. The decline in revenues for RIG-19 was due to the rig being
moved to a new platform during fiscal 1997 with no revenues being recognized
during the relocation period. Market conditions for the RICHMOND also improved
during fiscal 1997 resulting in increased revenues.
In contrast to a 12 percent increase in contract revenues, contract
drilling and managment costs in fiscal 1997 decreased 5 percent to $48.8 million
from $51.5 million. The decrease was primarily due to the absence of drilling
costs on the ATWOOD HUNTER during its upgrade period. An analysis of contract
drilling and management costs by rig is as follows:
<TABLE>
CONTRACT DRILLING AND
MANAGEMENT COSTS
----------------------------------------------------
(In millions)
Fiscal Fiscal
1997 1996 Variance
<S> <C> <C> <C>
ATWOOD FALCON $ 6.3 $ 6.9 $(0.6)
ATWOOD HUNTER 1.7 7.2 (5.5)
ATWOOD EAGLE 9.8 9.1 0.7
RIG-200 2.0 0.3 1.7
SEAHAWK 7.0 6.5 0.5
VICKSBURG 3.6 3.1 0.5
RIG-19 5.3 6.4 (1.1)
RICHMOND 5.0 4.8 0.2
GOODWYN 'A' 5.7 5.9 (0.2)
NORTH RANKIN 'A' 1.1 0.6 0.5
OTHER 1.3 0.7 0.6
$ 48.8 $ 51.5 $(2.7)
</TABLE>
The ATWOOD HUNTER was out of service for approximately eight months in
fiscal 1997 during the upgrade period. The increase in costs of RIG-200 was due
to a full year of operations. The decrease in costs for RIG-19 was due to its
relocation to a new platform which resulted in no drilling costs being
recognized during the relocation period. The increase in operating costs for the
ATWOOD EAGLE, SEAHAWK, VICKSBURG and NORTH RANKIN 'A' were due primarily to
higher payroll related costs.
<PAGE>
Page 9
An analysis of depreciation expense by rig is as follows:
<TABLE>
DEPRECIATION EXPENSE
-------------------------------------------------
(In millions)
Fiscal Fiscal
1997 1996 Variance
<S> <C> <C> <C>
ATWOOD FALCON $ 2.7 $ 2.6 $ 0.1
ATWOOD HUNTER 0.6 1.6 (1.0)
ATWOOD EAGLE 2.1 2.0 0.1
RIG-200 1.5 0.0 1.5
SEAHAWK 2.2 2.2 0.0
VICKSBURG 0.0 0.0 0.0
RIG-19 0.2 0.6 (0.4)
RICHMOND 0.4 0.4 0.0
OTHER 0.3 0.3 0.0
$10.0 $ 9.7 $ 0.3
</TABLE>
With the ATWOOD HUNTER out-of-service for drilling operations during its
water depth enhancement, no depreciation was recognized during the rig's upgrade
period. Deprecation of RIG-200 commenced upon start-up of active drilling
operation in January 1997.
General and administrative expense increased 19 percent in fiscal 1997
compared to fiscal 1996. This increase was attributable to an increase in
payroll related costs and to professional fees associated with a registration
statement filed with the Securities and Exchange Commission in February 1997
with respect to a public offering of 1.5 million shares of the Company's common
stock which was subsequently withdrawn due to the stock price range not
adequately reflecting the value of the Company. Investment income in fiscal
years 1997 and 1996 of $2.4 million and $2.5 million, respectively, offset
interest expense for both years. With an increase in taxable income and
virtually no carryforward tax attributes, both foreign and domestic tax
provisions significantly increased.
Fiscal Year 1996 Versus Fiscal Year 1995
Contract revenues in fiscal 1996 increased 10 percent to $79.5 million from
$72.2 million. This increase was primarily attributable to commencement of
contract revenues from Rig-200 in addition to general dayrate increases on the
fleet. An analysis of contract revenues by rig for fiscal years 1996 and 1995 is
as follows:
<TABLE>
CONTRACT REVENUES
-----------------------------------------------------
(In millions)
Fiscal Fiscal
1996 1995 Variance
<S> <C> <C> <C>
ATWOOD FALCON $ 11.5 $ 10.9 $ 0.6
ATWOOD HUNTER 11.3 10.2 1.1
ATWOOD EAGLE 15.6 15.1 0.5
RIG-200 2.2 0.0 2.2
SEAHAWK 11.0 10.8 0.2
VICKSBURG 5.0 4.9 0.1
RIG-19 8.2 7.1 1.1
RICHMOND 6.2 5.0 1.2
GOODWYN 'A' 7.6 7.3 0.3
NORTH RANKIN 'A' 0.9 0.9 0.0
$ 79.5 $ 72.2 $ 7.3
</TABLE>
<PAGE>
Page 10
The increase in revenues for the ATWOOD FALCON was due to an increase of
approximately 60 percent in the contract dayrate during the fourth quarter of
fiscal 1996. The increase in revenues for the ATWOOD HUNTER was also due to
higher dayrates in fiscal 1996 compared to fiscal 1995. In 1996, the ATWOOD
EAGLE was relocated from the territorial waters of Australia to the territorial
waters of Equitorial Guinea with an approximate 25 percent increase in contract
dayrate. The Company received dayrate revenues from RIG-200 during the period
January 1996 through September 1996 while awaiting instructions for shipment to
Australia. Stable contracts for the SEAHAWK, VICKSBURG and RIG-19 provided
consistency to these operations. The $1.1 million increase in RIG-19 revenues
was due to an increase in the dayrates during fiscal 1996. As a result of
improved market conditions, the RICHMOND, also experienced an increase in
dayrate revenues during fiscal 1996.
In contrast to a 10 percent increase in contract revenues, contract
drilling and management costs increased only one percent in fiscal 1996 compared
to fiscal 1995. An analysis of contract drilling and management costs by rig is
as follows:
<TABLE>
CONTRACT DRILLING AND
MANAGEMENT COSTS
-----------------------------------------------------
(In millions)
Fiscal Fiscal
1996 1995 Variance
<S> <C> <C> <C>
ATWOOD FALCON $ 6.9 $ 6.4 $ 0.5
ATWOOD HUNTER 7.2 7.2 0.0
ATWOOD EAGLE 9.1 12.7 (3.6)
RIG-200 0.3 0.0 0.3
SEAHAWK 6.5 5.9 0.6
VICKSBURG 3.1 3.0 0.1
RIG-19 6.4 5.1 1.3
RICHMOND 4.8 4.1 0.7
GOODWYN 'A' 5.9 5.2 0.7
NORTH RANKIN 'A' 0.6 0.6 0.0
OTHER 0.7 0.6 0.1
$ 51.5 $ 50.8 $ 0.7
</TABLE>
The increases in operating costs for the ATWOOD FALCON, SEAHAWK and
RICHMOND were due to increases in general maintenance and payroll related costs.
The reduction in the ATWOOD EAGLE's costs was attributable to the rig being
relocated from Australia to Equitorial Guinea where operating costs are lower,
primarily due to reductions in local labor costs, and to the rig incurring costs
in fiscal 1995 associated with certain required surveys and repairs that were
not required in fiscal 1996. The increase in operating costs of RIG-19 was
primarily due to increase in payroll related costs as a result of certain labor
union awards in Australia. The increase in operating costs of the GOODWYN 'A'
was also attributable to higher labor costs in Australia.
<PAGE>
Page 11
An analysis of depreciation expense by rig is as follows:
<TABLE>
DEPRECIATION EXPENSE
----------------------------------------------
(In millions)
Fiscal Fiscal
1996 1995 Variance
<S> <C> <C> <C>
ATWOOD FALCON $ 2.6 $ 3.1 $ (0.5)
ATWOOD HUNTER 1.6 1.8 (0.2)
ATWOOD EAGLE 2.0 2.2 (0.2)
SEAHAWK 2.2 2.3 (0.1)
VICKSBURG 0.0 0.0 0.0
RIG-19 0.6 1.2 (0.6)
RICHMOND 0.4 0.3 0.1
OTHER 0.3 0.2 0.1
$ 9.7 $ 11.1 $ (1.4)
</TABLE>
On December 31, 1994, when the Company acquired the remaining 50 percent
interest in the ATWOOD FALCON, ATWOOD HUNTER and ATWOOD EAGLE, management
increased the estimated useful lives of these rigs by an additional five years
which accounts for reduction in depreciation expense for these rigs in fiscal
1996. The decrease in depreciation expense of RIG-19 was due to virtually all of
the rig's capital equipment becoming fully depreciated in fiscal 1996.
General and administrative expenses increased 14 percent in fiscal 1996
compared to fiscal 1995. This increase was attributable to increases in payroll
related costs and professional fees. Investment income in fiscal years 1996 and
1995 of $2.5 million and $2.8 million, respectively, virtually offset interest
expense for both years. In fiscal 1996, the Company sold its remaining 32,000
shares of Mobil Corporation common stock at a realized gain of $2.8 million.
Foreign tax expense increased from $1.6 million in fiscal 1995 to $2.6 million
in fiscal 1996 and domestic taxes increased from $300,000 in fiscal 1995 to $1.9
million in fiscal 1996, which accounted for the increase in the provision for
income taxes.
LIQUIDITY AND CAPITAL RESOURCES
During fiscal 1997, operating cash flow (before changes in working capital
and other assets and liabilities) increased 27 percent from $20.3 million in
fiscal 1996 to $25.8 million. In order to provide funding for all rig upgrade
opportunities, the Company executed a $125 million revolving credit agreement
with a bank group in July 1997, with $58 million borrowed under this facility at
September 30, 1997. During fiscal 1997, the Company utilized its internally
generated funds and funds borrowed under the revolving credit facility to repay
$33 million in existing debt, to invest approximately $38 million in the
water-depth upgrade of the ATWOOD HUNTER, to invest approximately $20 million in
the refurbishment and upgrade of the ATWOOD SOUTHERN CROSS, and to fund
approximately $5 million in other capital expenditures.
After enhancing the ATWOOD HUNTER to drill in up to 3,500 feet of water and
relocating the rig from Southeast Asia to the United States Gulf of Mexico at an
aggregate cost of approximately $45 million, of which $38 million was expended
during fiscal 1997, the rig commenced drilling under a three-year contract in
September 1997. The contract provided for the payment of a $10 million
mobilization fee which offset a portion of the Company's costs. During fiscal
1997, the ATWOOD SOUTHERN CROSS was mobilized from Australia to a shipyard in
Singapore to undergo refurbishment and upgrade at an aggregate cost of
approximately $35 million, of which $20 million was expended during fiscal 1997.
The rig's refurbishment and upgrade was completed in November 1997, at which
time the rig was mobilized back to Australia to commence a 300-day plus option
contract.
The ATWOOD FALCON is currently in the Philippines drilling phase one of a
two phase program. Upon completion of the phase one drilling program (estimated
June 1998), the rig will be mobilized to Singapore to undergo an
<PAGE>
Page 12
estimated $50 million water-depth upgrade. When the upgrade is completed
(estimated the first quarter of fiscal 1999), the rig will be mobilized back to
the Philippines to commence the three-year phase two drilling program.
The VICKSBURG will complete its current contract in Australia in December
1997, at which time the Company plans to mobilize the rig to Singapore for an
upgrade to provide for cantilevering for extended reach drilling, to add a top
drive and to provide other enhanced drilling capabilities at an estimated cost
of $35 million. The rig is currently being marketed in its upgrade mode, and
management is confident that a profitable contract will be obtained for this rig
after its upgrade.
At September 30, 1997, the Company continued to have approximately $22.6
million invested in United States treasury bonds, of which $20 million in market
value plus the ATWOOD HUNTER, ATWOOD EAGLE and the RICHMOND are pledged as
collateral under the $125 million revolving credit agreement. The revolving line
of credit converts to a reducing facility commencing on March 31, 1999, with
commitment reduction of $8.3 million per quarter until final maturity on March
31, 2002.
Management expects the Company's revolving credit facility plus cash on
hand and operating cash flow to provide sufficient cash resources to fund all of
the currently planned rig upgrades. Depending upon additional capital
investments, anticipated future operating cash flows are expected to provide the
Company with the option of repaying funds borrowed under the revolving credit
facility prior to its required maturity. However, as additional growth
opportunities are pursued, additional funding may be required. The Company would
expect to finance additional capital expenditures through a combination of
operating cash flows or equity or debt financing; however, the Company can give
no assurance that additional equity or debt financing would be available on
terms acceptable to the Company. The Company continues to periodically review
and adjust its planned capital expenditures and financing of such expenditures
in light of current market conditions.
<PAGE>
Page 13
Atwood Oceanics, Inc. and Subsidiaries
CONSOLIDATED BALANCE SHEETS
<TABLE>
September 30,
- ---------------------------------------------------------------------------
(In thousands) 1997 1996
- ---------------------------------------------------------------------------
<S> <C> <C>
ASSETS
CURRENT ASSETS:
Cash and cash equivalents $19,264 $ 17,565
Accounts receivable 16,353 16,687
Inventories of materials and supplies,
at lower of average cost or market 7,004 5,454
Deferred tax assets 1,820 1,510
Prepaid expenses 2,610 2,954
Total Current Assets 47,051 44,170
SECURITIES HELD FOR INVESTMENT:
Held-to-maturity, at amortized cost 22,581 22,576
Available-for-sale, at fair value 389 351
22,970 22,927
PROPERTY AND EQUIPMENT, at cost:
Drilling vessels, equipment and
drill pipe 249,496 191,801
Other 5,363 4,810
254,859 196,611
Less - accumulated depreciation 110,936 105,487
Net Property and Equipment 143,923 91,124
DEFERRED COSTS AND OTHER ASSETS 1,386 1,088
$215,330 $159,309
</TABLE>
The accompanying notes are an integral part of these consolidated financial
statements.
<PAGE>
Page 14
Atwood Oceanics, Inc. and Subsidiaries
CONSOLIDATED BALANCE SHEETS
<TABLE>
September 30,
- --------------------------------------------------------------------------
(In thousands, except share data) 1997 1996
- --------------------------------------------------------------------------
<S> <C> <C>
LIABILITIES AND SHAREHOLDERS'
EQUITY
CURRENT LIABILITIES:
Current maturities of long-term debt $ 750 $ 7,933
Accounts payable 5,323 2,615
Accrued liabilities 13,429 7,471
Total Current Liabilities 19,502 18,019
LONG-TERM DEBT,
net of current maturities 58,750 26,540
DEFERRED CREDITS:
Income taxes 1,810 2,289
Mobilization fees and other 12,579 6,907
14,389 9,196
SHAREHOLDERS' EQUITY:
Preferred stock, no par value;
1,000,000 shares authorized,
none outstanding --- ---
Common stock, $1 par value; 20,000,000
shares authorized with 13,546,000 and
13,382,000 issued and outstanding in 1997
and 1996, respectively 13,546 13,382
Paid-in capital 50,104 48,779
Net unrealized holding loss on
available-for-sale securities (112) (139)
Retained earnings 59,151 43,532
Total Shareholders' Equity 122,689 105,554
$215,330 $159,309
</TABLE>
The accompanying notes are an integral part of these consolidated financial
statements.
<PAGE>
Page 15
Atwood Oceanics, Inc. and Subsidiaries
CONSOLIDATED STATEMENTS OF OPERATIONS
<TABLE>
Years Ended September 30,
- ----------------------------------------------------------------------------------
(In thousands, except per share amounts) 1997 1996 1995
- ----------------------------------------------------------------------------------
<S> <C> <C> <C>
REVENUES:
Contract drilling $86,833 $78,555 $70,715
Contract management 2,249 900 1,516
89,082 79,455 72,231
COSTS AND EXPENSES:
Contract drilling 47,714 50,912 50,241
Contract management 1,076 628 585
Depreciation 9,979 9,742 11,134
General and administrative 6,100 5,113 4,485
64,869 66,395 66,445
OPERATING INCOME 24,213 13,060 5,786
OTHER INCOME (EXPENSE)
Interest expense (1,212) (2,522) (2,936)
Investment income 2,377 2,510 2,804
Realized gain on sale of securities -- 2,795 2,370
1,165 2,783 2,238
INCOME BEFORE MINORITY INTEREST AND INCOME TAXES 25,378 15,843 8,024
MINORITY INTEREST IN LOSS OF PARTNERSHIPS --- --- 908
INCOME BEFORE INCOME TAXES 25,378 15,843 8,932
PROVISION FOR INCOME TAXES 9,759 4,475 1,872
NET INCOME $15,619 $11,368 $ 7,060
EARNINGS PER COMMON SHARE $ 1.16 $ .85 $ .54
WEIGHTED AVERAGE NUMBER OF
COMMON SHARES OUTSTANDING 13,474 13,328 13,182
</TABLE>
The accompanying notes are an integral part of these consolidated financial
statements.
<PAGE>
Page 16
Atwood Oceanics, Inc. and Subsidiaries
CONSOLIDATED STATEMENTS OF CASH FLOWS
<TABLE>
For Years Ended September 30,
- -------------------------------------------------------------------------------
(In thousands) 1997 1996 1995
- -------------------------------------------------------------------------------
<S> <C> <C> <C>
CASH FLOW FROM OPERATING ACTIVITIES:
Net income $15,619 $ 11,368 $ 7,060
Adjustments to reconcile
net income to net cash
provided by operating activities:
Depreciation 9,979 9,742 11,134
Amortization of deferred items 539 604 429
Deferred federal income tax
provision (benefit) (330) 1,400 (400)
Gain on sale of securities --- (2,795) (2,370)
Minority interest in loss
of partnerships --- --- (908)
Changes in assets and liabilities:
Decrease (increase) in
accounts receivable 334 (3,412) 490
Increase (decrease)
in accounts payable 2,708 (3,645) 2,532
Increase (decrease)
in accrued liabilities 5,958 (1,524) 2,422
Net mobilization fees 6,286 3,000 ---
Other (1,848) 2,216 (1,192)
23,626 5,586 12,137
Net Cash Provided by Operating
Activities 39,245 16,954 19,197
CASH FLOW FROM INVESTING ACTIVITIES:
Proceeds from sale of securities --- 3,738 3,343
Capital expenditures (62,153) (6,660) (4,545)
Investment in Rig-200 (625) (2,866) (7,872)
Acquisition of interest in
partnerships --- --- (13,275)
Payments received on notes receivable --- --- 202
Net Cash Used by Investing
Activities (62,778) (5,788) (22,147)
CASH FLOW FROM FINANCING ACTIVITIES:
Proceeds from exercises of
stock options 1,019 761 545
Proceeds from revolving
credit facility 58,000 --- ---
Principal payments on
long-term debt (32,973) (4,846) (3,130)
Deferred financing costs (814) --- ---
Net payments to limited
partner --- --- (100)
Proceeds (repayment) of
short-term note payable --- (1,500) 1,500
Net Cash Provided (Used)
by Financing Activities 25,232 (5,585) (1,185)
NET INCREASE (DECREASE) IN CASH
AND CASH EQUIVALENTS 1,699 5,581 (4,135)
CASH AND CASH EQUIVALENTS,
at beginning of period 17,565 11,984 16,119
CASH AND CASH EQUIVALENTS,
at end of period $19,264 $ 17,565 $ 11,984
__________________________
Supplemental disclosure of
cash flow information:
Cash paid during the year for
domestic and foreign income taxes $ 6,896 $ 2,660 $ 1,558
Cash paid during the year for interest,
net of amounts capitalized $ 1,295 $ 2,478 $ 2,552
</TABLE>
The accompanying notes are an integral part of these consolidated financial
statements.
<PAGE>
Page 17
Atwood Oceanics, Inc. and Subsidiaries
CONSOLIDATED STATEMENTS OF CHANGES IN
SHAREHOLDERS' EQUITY
<TABLE>
- --------------------------------------------------------------------------------
Unrealized
Common Stock Paid-in Holding Retained
(In thousands) Shares Amount Capital Gain (loss)Earnings
- --------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
September 30, 1994 6,582 $6,582 $54,273 $ --- $25,104
Unrealized holding gain --- --- --- 1,328 ---
Exercises of employee stock
options 47 47 498 --- ---
Retroactive adjustment
for two-for-one stock
split declared in November
1997 6,629 6,629 (6,629) --- ---
Net income --- --- --- --- 7,060
September 30, 1995 13,258 13,258 48,142 1,328 32,164
Unrealized holding gain at
September 30, 1995
realized upon sale
of securities in 1996 --- --- --- (1,482) ---
Decrease in unrealized
holding loss --- --- --- 15 ---
Exercises of employee stock
options 62 62 699 --- ---
Retroactive adjustment for
two-for-one stock split
declared in November 1997 62 62 (62) --- ---
Net income --- --- --- --- 11,368
September 30, 1996 13,382 13,382 48,779 (139) 43,532
Decrease in unrealized
holding loss --- --- --- 27 ---
Exercises of employee
stock options 82 82 937 --- ---
Tax benefit from exercises of
employee stock options --- --- 470 --- ---
Retroactive adjustment for
two-for-one stock split
declared in November 1997 82 82 (82) --- ---
Net income --- --- --- --- 15,619
September 30, 1997 13,546 $13,546 $50,104 $(112) $59,151
</TABLE>
----------------- Preferred stock, no par value, of 1,000,000 shares
was authorized in 1975 and no shares have been issued.
The accompanying notes are an integral part of these consolidated financial
statements.
<PAGE>
Page 18
REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS
To Board of Directors of Atwood Oceanics, Inc.:
We have audited the accompanying consolidated balance sheets of Atwood
Oceanics, Inc. (a Texas corporation) and subsidiaries as of September 30, 1997
and 1996, and the related consolidated statements of operations, cash flows and
changes in shareholders' equity for each of the three years in the period ended
September 30, 1997. These financial statements are the responsibility of the
Company's management. Our responsibility is to express an opinion on these
financial statements based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly,
in all material respects, the financial position of Atwood Oceanics, Inc. and
subsidiaries as of September 30, 1997 and 1996, and the results of their
operations and their cash flows for each of the three years in the period ended
September 30, 1997, in conformity with generally accepted accounting principles.
/s/ Arthur Andersen LLP
ARTHUR ANDERSEN LLP
Houston, Texas
November 25, 1997
<PAGE>
Page 19
Atwood Oceanics, Inc. and Subsidiaries
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
NOTE 1 - NATURE OF OPERATIONS
Atwood Oceanics, Inc. together with its wholly-owned subsidiaries
(collectively referred to herein as the "Company"), is engaged in the business
of international offshore drilling of exploratory and developmental oil and gas
wells and related support, management and consulting services. Presently, the
Company owns and operates a modern fleet of seven mobile offshore rigs and one
modular platform rig, as well as manages the operations of two operator- owned
platform rigs in Northwest Australia. The Company also owns a fifty percent
interest in a new generation platform rig. Currently, the Company is involved in
active operations in the territorial waters of Australia, Malaysia, Equatorial
Guinea, United States and the Philippines.
Demand for drilling equipment is dependent on the exploration and
development programs of oil and gas companies, which is in turn influenced by
the financial conditions of such companies, by general economic conditions, by
prices of oil and gas, and from time to time, by political considerations and
policies. The Company's business operations are subject to the risks associated
with a business having a limited number of customers for which it can operate at
any given time. A decrease in the drilling programs of customers in the areas
where the Company is employed may adversely affect the Company's revenues. The
contracts under which the Company operates its drilling rigs are obtained either
through individual negotiations with the customer or by submitting proposals in
competition with the other drilling contractors and vary in their terms and
conditions. The Company competes with several other drilling contractors, most
of which are substantially larger than the Company and possess appreciably
greater financial and other resources. Price competition is generally the most
important factor in the drilling industry, but the technical capability of
specialized drilling equipment and personnel at the time and place required by
customers is also important. Other competitive factors include work force
experience, rig suitability, efficiency, condition of equipment, reputation and
customer relations. The Company believes that it competes favorably with respect
to these factors.
NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Consolidation -
The consolidated financial statements include the accounts of Atwood
Oceanics, Inc. ("AOI") and all of its wholly owned domestic and foreign
subsidiaries. The Company's undivided 50 percent interest in RIG-200 is
accounted for using the proportionate consolidation method (See Note 4). Prior
to December 31, 1994, AOI owned a 50 percent interest in two Texas limited
partnerships, Atwood Deep Seas, Ltd. ("Deep Seas") and Atwood Falcon I, Ltd. the
accounts of which were included in the Company's consolidated financial
statements. The other limited partner's interest in the net assets and loss of
the two partnerships was reflected in the Company's financial statements as
"minority interest in partnerships". (See Note 4 - "Acquisition of Interest in
ATWOOD HUNTER, ATWOOD EAGLE and ATWOOD FALCON".) All significant intercompany
accounts and transactions have been eliminated in consolidation.
Foreign exchange -
The U.S. dollar is the functional currency for all areas of operations of
the Company. Accordingly, monetary assets and liabilities denominated in foreign
currency are remeasured to U.S. dollars at the rate of exchange in effect at the
end of the year, items of income and expense are remeasured at average monthly
rates, and property and equipment and other nonmonetary amounts are remeasured
at historical rates. Gains and losses on foreign currency transactions and
remeasurements are included in drilling costs in the consolidated statements of
operations. The Company realized foreign exchange losses of $658,000 and
$155,000 in 1997 and 1995, respectively, with a foreign exchange gain of
$240,000 in 1996.
<PAGE>
Page 20
Property and equipment -
Property and equipment is recorded at cost. Interest costs related to
property under construction are capitalized as a component of construction
costs. Interest capitalized during fiscal 1997 totaled $1,284,000.
Depreciation is provided on the straight-line method over the following
estimated useful lives of the various classifications of assets:
Years
--------------
Drilling vessels and related equipment 5-15
Drill pipe 3
Furniture and Other 3-10
Maintenance, repairs and minor replacements are charged against income as
incurred; major replacements and upgrades are capitalized and depreciated over
the remaining useful life of the asset as determined upon completion of the
work. The cost and related accumulated depreciation of assets sold, retired or
otherwise disposed are removed from the accounts at the time of disposition, and
any resulting gain or loss is reflected in the consolidated statements of
operations for the applicable period.
Deferred costs -
The Company defers the costs of moving a drilling rig to a new area and
amortizes such costs on a straight-line basis over the life of the applicable
drilling contract. There were no unamortized mobilization costs at September 30,
1997 or 1996.
The Company defers the costs of scheduled drydocking and charges such costs
to expense over the period to the next scheduled drydocking (normally 30
months).
Federal income taxes -
The Company accounts for income taxes in accordance with Statement of
Financial Accounting Standards ("SFAS") No. 109 "Accounting for Income Taxes".
Under SFAS No. 109, deferred income taxes are recorded to reflect the tax
consequences on future years of differences between the tax basis of assets and
liabilities and their financial reporting amounts at each year-end given the
provisions of enacted tax laws. Deferred tax assets are reduced by a valuation
allowance when, based upon management's estimates, it is more likely than not
that a portion of the deferred tax assets will not be realized in a future
period.
Revenue recognition -
The Company accounts for drilling and management contract revenues using
the percentage of completion method of accounting, under which revenues are
recognized on a daily basis as earned. Mobilization revenues are first used to
cover the costs of mobilization with the excess revenues deferred and amortized
on a straight-line basis over the life of the applicable drilling contract. At
September 30, 1997 and 1996, deferred revenues totaling $9.3 million and $3
million, respectively, were included in Deferred Credits on the accompanying
consolidated balance sheet.
Cash and cash equivalents -
Cash and cash equivalents consist of cash in banks and highly liquid debt
instruments which mature within three months of the date of purchase.
Receivables -
Based upon the Company's historical collection of accounts receivable, the
Company has not established an allowance for doubtful accounts.
<PAGE>
Page 21
Investments -
Investments in held-to-maturity securities are stated at the amortized cost
at the balance sheet date. The Company has the ability and intent to hold such
securities to maturity. At September 30, 1997 and 1996, investments in
available- for-sale securities are carried at fair value with the unrealized
holding loss, net of deferred tax, included in shareholders' equity.
Earnings per common share -
Earnings per common share was computed by dividing net income by the
weighted average number of shares of common stock outstanding during each
period. The dilutive effect of stock options is immaterial.
In February 1997, the Financial Accounting Standards Board issued SFAS No.
128, "Earnings per Share". The new standard simplifies the computation of
earnings per share (EPS) and increases comparability to international standards.
Under SFAS No. 128, primary EPS is replaced by "Basic" EPS, which excludes
dilution and is computed by dividing income available to common shareholders by
the weighted-average number of common shares outstanding for the period.
"Diluted" EPS, which is computed similarly to fully diluted EPS, reflects the
potential dilution that could occur if securities or other contracts to issue
common stock were exercised or converted into common stock. The company is
required to adopt the new standard in its fiscal 1998 financial statements. All
prior-period EPS information (including interim EPS) is required to be restated
at that time. Early adoption is not permitted. Diluted EPS, under SFAS No. 128,
would not be materially different from amounts presented herein.
Stock-Based Compensation -
The Company accounts for employee stock-based compensation using the
intrinsic value method prescribed by Accounting Principles Board (APB) Opinion
No. 25, "Accounting for Stock Issued to Employees". Accordingly, the adoption of
SFAS No. 123, "Accounting for Stock-Based Compensation" in fiscal 1996 had no
effect on the Company's results of operations.
Use of Estimates -
The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that affect the reported amounts of assets and liabilities and
disclosure of contingent assets and liabilities at the date of the financial
statements and the reported amounts of revenues and expenses during the
reporting period. Actual results could differ from those estimates.
NOTE 3 - SECURITIES HELD FOR INVESTMENT
All of the Company's investments in equity securities are classified as
"available-for-sale" and accordingly, are reflected in the September 30, 1997
and 1996 Consolidated Balance Sheets at fair value, with the aggregate
unrealized gain or loss, net of related deferred tax liability or asset,
included in shareholders' equity. All of the Company's investment in United
States Treasury Bonds (which mature in 2000 and 2001) are classified as
"held-to-maturity" and, accordingly, are reflected in the September 30, 1997 and
1996 Consolidated Balance Sheets at amortized cost.
<PAGE>
Page 22
There were no sales of securities during fiscal 1997. During fiscal 1996
and fiscal 1995, 32,000 shares and 33,000 shares of Mobil Corporation common
stock were sold for $3.7 million and $3.3 million resulting in realized gains,
using average cost, of $2.8 million and $2.4 million, respectively. An analysis
of the Company's investment in marketable securities is as follows (in
thousands) :
<TABLE>
Amortized Unrealized
Cost Gain (Loss) Fair Value
<S> <C> <C> <C>
September 30, 1997 -
Equity Securities $ 561 $ (172) $ 389
United States
Treasury Bonds 22,581 1,429 24,010
$23,142 1,257 $ 24,399
September 30, 1996 -
Equity Securities $ 561 $ (210) $ 351
United States
Treasury Bonds 22,576 1,387 23,963
$23,137 $ 1,177 $ 24,314
</TABLE>
NOTE 4 - PROPERTY AND EQUIPMENT
ATWOOD HUNTER -
The ATWOOD HUNTER has been upgraded to achieve up to 3,500 feet water depth
drilling capability and relocated from Southeast Asia to the United States Gulf
of Mexico at an aggregate cost of approximately $45 million, of which $38
million was expended during fiscal 1997. In September 1997, the rig commenced
drilling operations under a three-year contract with British-Borneo Petroleum
Inc. The contract provided for the payment of a $10 million mobilization fee of
which $6.4 million (net after mobilization costs) was recorded to Deferred
Credits and will be amortized into revenues over the three-year contract period.
ATWOOD SOUTHERN CROSS -
During fiscal year 1997, the ATWOOD SOUTHERN CROSS was mobilized from
Australia to a Singapore shipyard, refurbished and upgraded to achieve 2,000
feet water depth drilling capability at an aggregate cost of approximately $35
million, of which $20 million was expended during fiscal 1997. During November
1997, the rig was mobilized from Singapore to Australia to commence working
under a 300-day plus option contract.
VICKSBURG -
The VICKSBURG is expected to complete its current contract in December
1997, at which time the rig will be transported to Singapore to undergo an
estimated $35 million refurbishment and upgrade project which is estimated to
take seven to eight months to complete. The rig is currently being marketed
based upon its capabilities after refurbishment and upgrades.
ATWOOD FALCON -
During November 1997, the ATWOOD FALCON was relocated to the Philippines to
commence working under a long-term contract which will require, after initially
drilling four wells, that the rig be transported to a shipyard in Singapore to
undergo an upgrade at an estimated cost of approximately $50 million. Management
estimates that the upgrade and mobilization will take six to seven months to
complete.
<PAGE>
Page 23
RIG 200 -
RIG-200 (a modular platform rig built in 1995) is owned 50 percent by the
Company and 50 percent by Helmerich & Payne, Inc. ("H&P") (current owner of 24
percent of the Company's outstanding common stock). After incurring an
approximate one year project delay in Australia unrelated to the Company's and
H&P's activities, RIG-200 was transported to Australia from the United States
and commenced active drilling operation in January 1997. A holding dayrate was
received during fiscal 1996.
Since the Company has a 50 percent undivided ownership interest in RIG-200
and is actively involved in its operations, the Company accounts for its
investment in the rig on a proportionate consolidation method. Accordingly, the
Company's $12 million investment in RIG-200 is reflected in "Drilling Vessels,
Equipment and Drill Pipe" in the Consolidated Balance Sheet, with 50 percent of
the rig's operating results for fiscal years 1997 and 1996 reflected in the
Company's Consolidated Statement of Operations.
ACQUISITION OF INTEREST IN ATWOOD HUNTER, ATWOOD EAGLE AND ATWOOD FALCON -
Effective as of December 31, 1994, the Company acquired the remaining 50
percent interest in the ATWOOD HUNTER, ATWOOD EAGLE and the ATWOOD FALCON, at an
aggregrate purchase price of approximately $36 million. This purchase price
consisted of approximately $13 million cash and the issuance or assumption of
debt totaling approximately $23 million. Combined with the Company's previous 50
percent ownership, the Company became the sole owner of these semisubmersible
rigs. The transaction was accounted for using the purchase method of accounting.
ADOPTION OF FASB STATEMENT NO. 121 -
In fiscal 1995, the Company adopted SFAS No. 121 "Accounting for the
Impairment of Long-Lived Assets and for Long-Lived Assets to Be Disposed of".
The adoption of SFAS No. 121 has had no impact on the Company's financial
statements.
NOTE 5 - DEBT
LONG-TERM DEBT -
A summary of long-term debt is as follows (in thousands):
<TABLE>
September 30
-----------------------
1997 1996
<S> <C> <C>
Revolving credit agreement, bearing interest
(market adjustable) at approximately 7 percent
per annum at September 30, 1997 $58,000 $ ----
Notes payable to bank group ---- 32,223
Term note, bearing interest at 6 percent per annum 1,500 2,250
59,500 34,473
Less - current maturities 750 7,933
$58,750 $ 26,540
</TABLE>
<PAGE>
Page 24
In July 1997, the Company entered into a $125 million revolving credit
facility with a bank group. The revolving line of credit converts to a reducing
facility commencing on March 31, 1999, with commitment reduction of $8.3 million
per quarter until final maturity on March 31, 2002. The bank group's collateral
for this revolving credit facility consists principally of preferred mortgages
on the ATWOOD HUNTER, ATWOOD EAGLE and the RICHMOND plus the assigment of $20
million in market value of United States Treasury Bonds. The credit facility
prohibits the Company from incurring any additional indebtedness in excess of $5
million, disposing of any material assets, paying dividends or repurchasing any
of the Company's outstanding common stock. The proceeds borrowed under this
revolving credit facility have been used to repay the notes payable to bank
group and to fund capital expenditures.
A portion of the December 1994 purchase of the limited partner's interest
in the ATWOOD HUNTER, ATWOOD FALCON and ATWOOD EAGLE (see Note 4) included the
issuance of a $3 million unsecured note payable in four annual $750,000
installments.
The maturities of long-term debt are as follows (in thousands):
<TABLE>
FISCAL YEAR AMOUNT
<S> <C> <C>
1998 $ 750
1999 750
2000 ---
2001 24,900
2002 33,100
$ 59,500
</TABLE>
LINE OF CREDIT -
The Company has a $3 million unsecured short-term line of credit with a
bank to support issuance, when required, of standby letters of guarantee and the
Indian tax guarantee (see Note 6). At September 30, 1997, standby letters of
guarantee in the aggregate amount of approximately $2 million were outstanding
under this facility.
NOTE 6 - INCOME TAXES
Domestic and foreign income (loss) before income taxes and minority
interest for the three years in the period ended September 30, 1997 are as
follows (in thousands):
<TABLE>
Fiscal Fiscal Fiscal
1997 1996 1995
<S> <C> <C> <C>
Domestic income $ 14,623 $ 17,508 $ 6,237
Foreign income (loss) 10,755 (1,665) 1,787
$ 25,378 $ 15,843 $ 8,024
</TABLE>
<PAGE>
Page 25
The provision (benefit) for domestic and foreign taxes on income consists
of the following (in thousands):
<TABLE>
Fiscal Fiscal Fiscal
1997 1996 1995
<S> <C> <C> <C>
Current domestic provision $ 5,736 $ 452 $ 700
Deferred domestic provision (benefit) (330) 1,400 (400)
Current foreign provision 4,353 2,623 1,572
$ 9,759 $ 4,475 $ 1,872
</TABLE>
The components of the deferred income tax assets (liabilities) as of
September 30, 1997 and 1996 are summarized as follows (in thousands):
<TABLE>
September 30,
------------------------
1997 1996
<S> <C> <C>
Deferred tax assets -
Net operating loss carryforwards $2,970 $ 2,950
Investment tax credit carryforwards --- 2,460
Book reserves 1,260 1,530
Deferred mobilization revenues 3,210 ---
7,440 6,940
Deferred tax liabilities -
Difference in book and tax basis of equipment 4,940 2,990
Deferred charges 160 450
Unrealized holding loss on
available-for-sale securities (60) (71)
5,040 3,369
Net deferred tax assets before valuation allowance 2,400 3,571
Valuation allowances (2,390) (4,350)
Net deferred tax asset (liability) $ 10 $ (779)
Net current deferred tax assets $ 1,820 $ 1,510
Net noncurrent deferred tax liabilities (1,810) (2,289)
Net deferred tax asset (liability) $ 10 $ (779)
</TABLE>
U.S. deferred taxes have not been provided on foreign earnings totaling
approximately $6.1 million which are permanently invested abroad. Foreign tax
credits totaling approximately $3.5 million are available to reduce the U.S.
taxes on such amounts.
<PAGE>
Page 26
The differences between the statutory and the effective income tax rate are
as follows:
<TABLE>
Fiscal Fiscal Fiscal
1997 1996 1995
<S> <C> <C> <C>
Statutory income tax rate 35% 34% 34%
Increase (decrease) in tax rate resulting from -
Foreign tax rate differentials, net of
foreign tax credit utilization 10 12 1
Change in valuation allowance (2) (15) (10)
Investment tax credit utilization (5) --- ---
Financial income not subject to domestic
income taxes --- --- (1)
Other, net --- (3) (3)
Effective income tax rate 38% 28% 21%
</TABLE>
The Company has United States net operating loss carryforwards totaling
$8.5 million which expire in fiscal years 2001 through 2003. Due to various
utilization limitations, management estimates that a significant portion of this
tax attribute will not be available to reduce future tax obligations;
accordingly, a $2.4 million valuation allowance is recorded as of September 30,
1997.
For several years, the Company has pursued legal action to collect certain
tax refund claims in India. As a result of favorable court decisions in India,
and upon the Company providing a letter of guarantee, the Company received tax
refunds in 1997 and 1994 of $ 1,051,000 and $639,000, respectively, (net of
taxes on interest and other related expense), which is reflected in the balance
sheet as other deferred credits, pending ultimate resolution of the issue by the
Indian High Court.
NOTE 7 - CAPITAL STOCK
STOCK SPLIT -
On November 6, 1997, the Company's Board of Directors declared a
two-for-one common stock split, payable in the form of a 100% stock dividend to
shareholders of record as of November 12, 1997. The distribution of such
dividend occurred on November 19, 1997. All share and per share information has
been retroactively restated in the Consolidated Financial Statements to reflect
the stock split.
STOCK OPTION PLANS -
The Company has an incentive equity plan ("1996 Plan") whereby 670,000
shares of common stock may be granted to officers and key employees through
February 12, 2007. At September 30, 1997, options to purchase 104,000 shares
were outstanding under this Plan. The Company also has options outstanding to
purchase 337,400 shares under a stock plan ("1990 Plan") and 3,300 shares under
1981 incentive stock option plan ("1981 Plan") which expired for future grant
purposes on November 17, 1991. Under all plans, the exercise price of each
option equals the market price of the Company's stock on the date of grant, and
all outstanding options have a maximum term of 10 years. Under the 1981 Plan,
options vest over a period from the fifth to the tenth year from the date of
grant, and under the 1996 and 1990 Plans, options vest over a period from the
second to the fifth year from the date of grant.
<PAGE>
Page 27
A summary of the status of the Company's Plans as of September 30, 1997,
1996 and 1995, and changes during the years ended on those dates is presented
below:
<TABLE>
Fiscal Fiscal Fiscal
1997 1996 1995
Weighted- Weighted- Weighted-
Number of Average Number of Average Number of Average
Options Exercise Options Exercise Options Exercise
Price Price Price
<S> <C> <C> <C> <C> <C> <C>
Outstanding at
beginning of year 506,800 $ 9.46 480,200 $6.15 509,000 $6.10
Granted 112,500 28.00 151,000 17.25 64,000 6.57
Exercised (164,000) 6.22 (124,400) 6.12 (92,800) 5.88
Forfeited (10,600) 6.46 --- --- --- ---
Expired --- --- --- --- --- ---
Outstanding at
end of year 444,700 15.42 506,800 $9.46 480,200 $6.15
Exercisable at
end of year 69,450 $5.67 164,676 $6.02 159,974 $6.06
Available for grant
at end of year 567,000 --- 151,000
Weighted-average
fair value of options
granted during
the year $ 23.36 $ 6.68
</TABLE>
The following table summarizes information about stock options outstanding
at September 30, 1997:
<TABLE>
Options Outstanding Options Exercisable
----------------------------------------------------------
Weighted-
Number Average Weighted- Number Weighted-
Range of Outstanding Remaining Average Exercisable Average
Exercise Prices at 9/30/97 Contractual LifeExercise at 9/30/97 Exercise
Price Price
<S> <C> <C> <C> <C> <C>
$4.88 to 6.13 71,200 4.9 years $5.28 46,950 $5.22
6.50 to 6.69 110,000 6.6 years 6.62 22,500 6.61
16.63 to 18.97 151,000 8.5 years 17.25 --- ---
28.00 112,500 9.5 years 28.00 --- ---
4.88 to 28.00 444,700 7.5 years $15.42 69,450 $5.67
</TABLE>
<PAGE>
Page 28
As permitted by SFAS No. 123, the Company applies APB Opinion No. 25 and
related Interpretations in accounting for its stock option plans. Accordingly,
no compensation cost has been recognized for the granting of options pursuant to
its stock option plans. Had compensation costs been determined based on the fair
value at the grant dates for awards made in fiscal 1997 and 1996 consistent with
the method of SFAS No. 123, the Company's net income and earnings per share
would have been reduced to the pro forma amounts indicated below (in thousands,
except for per share amounts):
<TABLE>
Fiscal Fiscal
1997 1996
<S> <C> <C>
Net Income As reported $ 15,619 $ 11,368
Pro forma 15,404 11,291
Earnings per share As reported 1.16 .85
Pro forma 1.14 .85
</TABLE>
The fair value of grants made in fiscal 1997 and 1996 was estimated on the
date of grant using the Black-Scholes option pricing model with the following
weighted-average assumptions used: fiscal 1997 - risk-free interest rate of 6.7
percent, expected volatility of 33.6 percent, expected lives of 5 years and no
dividend yield; fiscal 1996 - risk-free interest rate of 5.8 percent, expected
volatility of 33.7 percent, expected lives of 5 years and no dividend yield.
NOTE 8 - RETIREMENT PLAN
The Company has a contributory retirement plan (the "Plan") under which
qualified participants may make contributions of up to 5% of their compensation,
as defined (the basic contribution). The Company makes a contribution to the
Plan equal to twice the basic contribution. Company contributions vest 100
percent to each participant beginning with the fourth year of participation. If
a participant terminates employment before becoming fully vested, the unvested
portion is credited to the Company's account and can be used only to offset
Company contribution requirements. The Company used forfeitures of $84,000,
$58,000 and $112,000 in fiscal 1997, 1996 and 1995, respectively, to reduce its
cash contribution requirements, which resulted in actual contributions of
$927,000, $738,000 and $637,000 in fiscal 1997, 1996 and 1995, respectively. As
of September 30, 1997, there remains approximately $47,000 of contribution
forfeitures which can be utilized to reduce future Company cash contribution
requirements.
NOTE 9 - FAIR VALUE OF FINANCIAL INSTRUMENTS
The carrying values of cash and cash equivalents, accounts receivable,
accounts payable and accrued liabilities included in the accompanying
Consolidated Balance Sheets approximated fair value due to the short maturity of
these instruments. Since the bank debt has a market adjustable interest rate,
the carrying value of these instruments approximated fair value as of fiscal
year end 1997 and 1996. Although the $1.5 million term note has a fixed 6
percent interest rate at September 30, 1997, it also approximated fair value.
The Company's only financial instruments at September 30, 1997 and 1996 with a
fair value different from carrying value are marketable securities; the
difference of which is shown in Note 3.
NOTE 10 - CONCENTRATION OF MARKET AND CREDIT RISK
All of the Company's customers are in the oil and gas offshore exploration
and production industry. This industry concentration has the potential to impact
the Company's overall exposure to market and credit risks, either positively or
negatively, in that the Company's customers could be affected by similar changes
in economic, industry or other conditions. However, the Company believes that
the credit risk posed by this industry concentration is offset by the
creditworthiness of the Company's customer base. The Company's portfolio of
accounts receivable is comprised of major international corporate entities and
government organizations with stable payment experience. Historically, the
Company's uncollectible accounts receivable have been immaterial, and typically,
the Company does not require collateral for its receivables.
Drilling revenues for fiscal 1997 include $24.3 million, $19.3 million and
$16.9 million in revenues received from ESSO Australia Limited/ESSO Production
Malaysia, Mobil Equatorial Guinea Inc. and Carigali-Triton Operating Company
Sdn. Bhd., respectively. Drilling revenues for fiscal 1996 include $25.6
million, $11.5 million and $8.4 million in revenues received from Esso Australia
Limited/Esso Production Malaysia, Inc., Carigali-Triton Operating Company
<PAGE>
Page 29
Sdn. Bhd. and Mobil Equatorial Guinea Inc., respectively. Drilling revenues
for fiscal 1995 include $24.8 million, $16.0 million and $7.5 million in
revenues received from Esso Australia Limited/Esso Production Malaysia, Inc.,
BHP Petroleum Pty. Ltd. and Woodside Offshore Petroleum Pty. Ltd., respectively.
NOTE 11 - OPERATIONS BY GEOGRAPHIC AREAS
The Company is engaged in offshore contract drilling. The contract drilling
operations consist of contracting Company owned or managed offshore drilling
equipment primarily to major oil and gas exploration companies. Operating income
(loss) is contract revenues less operating expenses. In computing operating
income (loss) for each geographic area, none of the following items were
considered: investment income or gains on sale of securities, general corporate
expenses, interest expense, minority interest in loss of partnerships and
domestic and foreign income taxes. Identifiable assets are those assets that are
used by the Company in operations in each geographic area. General corporate
assets are principally investments in marketable securities.
A summary of revenues, operating income and identifiable assets by
geographic areas is as follows (in thousands):
<TABLE>
Fiscal Fiscal Fiscal
1997 1996 1995
<S> <C> <C> <C>
CONTRACT REVENUES:
United States $10,585 $ 6,208 $ 4,981
Australia 27,599 31,043 35,314
Southeast Asia 31,583 33,774 31,936
Africa 19,315 8,430 ---
$ 89,082 $ 79,455 $ 72,231
OPERATING INCOME
United States $ 5,642 $ 42 $ (603)
Australia 8,236 8,018 6,562
Southeast Asia 8,235 6,316 4,318
Africa 8,200 3,831 ---
India/Middle East --- (34) (6)
General corporate expense (6,100) (5,113) (4,485)
$ 24,213 $ 13,060 $ 5,786
IDENTIFIABLE ASSETS:
United States $ 81,800 $ 31,071 $ 22,599
Australia 49,713 19,365 42,143
Southeast Asia 40,387 64,163 62,166
Africa 20,457 21,780 ---
India/Middle East 3 3 7
General corporate 22,970 22,927 25,938
$ 215,330 $159,309 $152,853
</TABLE>
<PAGE>
Page 30
NOTE 12 - QUARTERLY FINANCIAL DATA (UNAUDITED)
Summarized quarterly results for fiscal years 1997 and 1996 are as follows
(in thousands, except per share amounts):
<TABLE>
QUARTERS ENDED
---------------------------------------------------
DECEMBER 31, MARCH 31, JUNE 30, SEPTEMBER 30,
<S> <C> <C> <C> <C>
1997
Revenues $ 22,093 $ 20,805 $22,069 $24,115
Income before income taxes 5,734 5,117 5,660 8,867
Net income 3,919 3,114 3,662 4,924
Earnings per common share .29 .23 .27 .37
1996
Revenues $ 18,138 $ 19,086 $ 19,127 $23,104
Income before income taxes 1,308 2,281 3,638 8,616(a)
Net income 662 1,331 2,379 6,996
Earnings per common share .05 .10 .18 .52
</TABLE>
(a) The Company sold 32,000 shares of Mobil Corporation common stock which
resulted in a $2.8 million positive effect on fiscal 1996 fourth quarter
results.
<PAGE>
Page 31
DIRECTORS
ROBERT W. BURGESS (3)
Senior Vice President
CIGNA Investment Division
CIGNA Companies
Bloomfield, Connecticut
GEORGE S. DOTSON (1, 2, 3)
Vice President
Helmerich & Payne, Inc.
President
Helmerich & Payne International
Drilling Co.
Tulsa, Oklahoma
W. H. HELMERICH, III
Chairman
Helmerich & Payne, Inc.
Tulsa, Oklahoma
HANS HELMERICH (1, 3)
President, Chief Executive Officer
Helmerich & Payne, Inc.
Tulsa, Oklahoma
JOHN R. IRWIN (1)
President, Chief Executive Officer
Atwood Oceanics, Inc.
Houston, Texas
WILLIAM J. MORRISSEY (2)
Bank Executive, Retired
Elkhorn, Wisconsin
(1) Executive Committee
(2) Audit Committee
(3) Compensation Committee
ANNUAL MEETING
The annual meeting of stockholders will be held on February 12, 1998
at the Company's principal office: 15835 Park Ten Place Drive,
Houston, Texas. A formal notice of the meeting together with a
proxy statement and form of proxy will be mailed to stockholders
about January 12, 1998.
<PAGE>
Page 32
OFFICERS
JOHN R. IRWIN
President, Chief Executive Officer
JAMES M. HOLLAND
Senior Vice President and Secretary
GLEN P. KELLEY
Vice President - Contracts and Administration
LARRY P. TILL
Vice President - Operations
TRANSFER AGENT AND REGISTRAR
Liberty Bank & Trust of Oklahoma City, N.A.
P. O. Box 25848
100 N. Broadway, 7th Floor (73102)
Oklahoma City, OK 73125
FORM 10-K
A copy of the Company's Form 10-K as filed with the Securities and Exchange
Commission is available free on request by writing to:
Secretary, Atwood Oceanics, Inc.
P. O. Box 218350
Houston, Texas 77218
STOCK PRICE INFORMATION -
On August 6, 1997, the common stock of Atwood Oceanics, Inc. ceased trading
on the Nasdaq Stock Market (NASDAQ) under the symbol "ATWD" and commenced
trading on the New York Stock Exchange ("NYSE") under the symbol "ATW". No cash
dividends on common stock were paid in fiscal year 1996 or 1997, and none are
anticipated in the foreseeable future. As of September 30, 1997, there were over
750 beneficial owners of the common stock of Atwood Oceanics, Inc. As of
November 28, 1997, the closing sale price of the common stock of Atwood
Oceanics, Inc., as reported by NYSE, was $ 49 5/16 per share. The following
table sets forth the range of high and low sales prices per share of common
stock as reported by NASDAQ and the NYSE for the periods indicated, after
retroactive restatement for the November 1997 two-for-one common stock split
paid in form of a 100% stock dividend.
<TABLE>
Fiscal Fiscal
1996 1997
<S> <C> <C> <C> <C>
QUARTERS ENDED LOW HIGH LOW HIGH
December 31 8 1/4 13 1/2 22 3/8 32 3/4
March 31 12 1/4 18 7/8 26 3/4 35 1/2
June 30 18 22 5/8 28 7/8 35 1/8
September 30 20 25 1/4 33 3/4 57 1/16
</TABLE>
<PAGE>
Page 33
APPENDIX
The following graphic and image information in the form of "Bar Charts" are
located in the Annual Report immediately following "Highlights".
BAR CHART - CONTRACT REVENUES ($ MILLIONS)
1993 1994 1995 1996 1997
$51.8 $66.0 $72.2 $79.5 $89.1
BAR CHART - EARNINGS, BEFORE DEPRECIATION, INTEREST, TAXES AND
INVESTMENT INCOME ($ MILLIONS)
1993 1994 1995 1996 1997
$10.0 $17.3 $16.9 $22.8 $34.2
BAR CHART - OPERATING CASH FLOW ($ MILLIONS)
1993 1994 1995 1996 1997
$8.1 $16.8 $14.9 $20.3 $25.8
BAR CHART - NET INCOME (LOSS) ($ MILLIONS)
1993 1994 1995 1996 1997
$(1.8) $6.2 $7.1 $11.4 $15.6
BAR CHART - CAPITAL EXPENDITURES ($ MILLIONS)
1993 1994 1995 1996 1997
$5.3 $6.4 $25.7 $9.5 $62.8
BAR CHART - CASH AND SECURITIES HELD FOR INVESTMENT ($ MILLIONS)
1993 1994 1995 1996 1997
$35.0 $41.0 $38.0 40.5 $42.2
EXHIBIT 21.1
SUBSIDIARY COMPANIES AND STATE OR
JURISDICATION OF INCORPORATION
All Oceans Drilling B.V. Netherlands 100%
Alpha Offshore Drilling Services Cayman Islands, B.W.I. 100%
Atwood Drilling Inc. Delaware 100%
Atwood Offshore Inc. Delaware 100%
Atwood Hunter Co. Delaware 100%
Atwood Oceanics Australia Pty. Ltd. Australia 100%
Atwood Oceanics Drilling Company Texas 100%
Atwood Oceanics Drilling Pty. Ltd. Australia 100%
Atwood Oceanics International, S.A. Panama 100%
Atwood Oceanics (M) Sdn. Bhd. Malaysia 100%
Atwood Oceanics (NZ) Limited New Zealand 100%
Atwood Oceanics Pacific Limited Cayman Islands B.W.I. 100%
Atwood Oceanics Platforms Pty. Ltd. Australia 100%
Atwood Oceanics Service Pty. Ltd. Australia 100%
Atwood Oceanics West Tuna Pty. Ltd. Australia 50%
Aurora Offshore Service GmbH Germany 100%
Clearways Drilling (M) Sdn. Bhd. Malaysia 30%
Clearways Offshore Development Drilling Sdn. Bhd. Malaysia 30%
Deep Seas Drilling Pty. Ltd. Australia 100%
Drillquest (M) Sdn. Bhd. Malaysia 90%
Eagle Oceanics, Inc. Delaware 100%
Oceandril (M) Sdhn. Bhd. Malaysia 90%
PT Pentawood Offshore Drilling Indonesia 80%
Swiftdrill, Inc. Texas 100%
Swiftdrill Nigeria Limited Nigeria 60%
EXHIBIT 23.1
CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS
As independent public accountants, we hereby consent to the
incorporation of our report dated November 25, 1997, incorporated
by reference in this Form 10-K, into the Company's previously
filed Registration Statement Nos. 33-36921 and 33-52065 on Form
S-8.
/s/ ARTHUR ANDERSEN LLP
ARTHUR ANDERSEN LLP
Houston, Texas
December 18, 1997
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
(*Retroactively restated EPS for the November 1997 two-for-one common
stock split paid in form of a 100% stock dividend.)
</LEGEND>
<CIK> 0000008411
<NAME> Atwood Oceanics, Inc.
<MULTIPLIER> 1000
<CURRENCY> USD
<S> <C>
<PERIOD-TYPE> Year
<FISCAL-YEAR-END> SEP-30-1997
<PERIOD-START> OCT-01-1996
<PERIOD-END> SEP-30-1997
<EXCHANGE-RATE> 1
<CASH> 19,264
<SECURITIES> 22,970
<RECEIVABLES> 16,353
<ALLOWANCES> 0
<INVENTORY> 7,004
<CURRENT-ASSETS> 47,051
<PP&E> 254,859
<DEPRECIATION> 110,936
<TOTAL-ASSETS> 215,330
<CURRENT-LIABILITIES> 19,502
<BONDS> 58,750
0
0
<COMMON> 13,546
<OTHER-SE> 49,992
<TOTAL-LIABILITY-AND-EQUITY> 215,330
<SALES> 89,082
<TOTAL-REVENUES> 89,082
<CGS> 54,890
<TOTAL-COSTS> 64,869
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 1,212
<INCOME-PRETAX> 25,378
<INCOME-TAX> 9,759
<INCOME-CONTINUING> 15,619
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 15,619
<EPS-PRIMARY> 1.16
<EPS-DILUTED> 1.16
</TABLE>
