ATWOOD OCEANICS INC, S-3, 1997-02-04

ATWOOD OCEANICS INC
S-3, 1997-02-04
DRILLING OIL & GAS WELLS

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AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON FEBRUARY 4, 1997
REGISTRATION NO. 333-
================================================================================

SECURITIES AND EXCHANGE COMMISSION
------------------------

FORM S-3

REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
------------------------

ATWOOD OCEANICS, INC.

(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)

TEXAS 1381
(STATE OR OTHER JURISDICTION OF (PRIMARY STANDARD INDUSTRIAL
INCORPORATION OR ORGANIZATION) CLASSIFICATION CODE NO.)

74-1611874-7
(I.R.S. EMPLOYER
IDENTIFICATION NO.)

15835 PARK TEN PLACE DRIVE
HOUSTON, TEXAS 77084
(281) 492-2929

(ADDRESS, INCLUDING ZIP CODE, AND TELEPHONE NUMBER, INCLUDING AREA CODE, OF
REGISTRANT'S PRINCIPAL EXECUTIVE OFFICES)

------------------------
JAMES M. HOLLAND
SENIOR VICE PRESIDENT AND SECRETARY
ATWOOD OCEANICS, INC.
15835 PARK TEN PLACE DRIVE
HOUSTON, TEXAS 77084
(281) 492-2929

(ADDRESS, INCLUDING ZIP CODE, AND TELEPHONE NUMBER, INCLUDING AREA CODE, OF
AGENT FOR SERVICE)

COPIES TO:

W. GARNEY GRIGGS, ESQ. KEITH FULLENWEIDER, ESQ.
GRIGGS & HARRISON, P.C. VINSON & ELKINS L.L.P.
1301 MCKINNEY, SUITE 3200 1001 FANNIN, 2300 FIRST CITY TOWER
HOUSTON, TEXAS 77010 HOUSTON, TEXAS 77002
(713) 651-0600 (713) 758-2222

------------------------
Approximate date of commencement of proposed sale to the public: As soon as
practicable after the effective date of this Registration Statement.

If the only securities being registered on this Form are being offered
pursuant to dividend or interest reinvestment plans, please check the following
box. [ ]

If any of the securities being registered on this Form are to be offered on
a delayed or continuous basis pursuant to Rule 415 under the Securities Act of
1933, other than securities offered only in connection with dividend or interest
reinvestment plans, check the following box. [ ]

If this Form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act, check the following box and
list the Securities Act registration statement number of the earlier effective
registration statement for the same offering. [ ] __________________

If this Form is a post-effective amendment filed pursuant to Rule 462(c)
under the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering. [ ] __________________

If delivery of the prospectus is expected to be made pursuant to Rule 434,
please check the following box. [ ]

------------------------

CALCULATION OF REGISTRATION FEE
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------------------
TITLE OF EACH PROPOSED MAXIMUM PROPOSED MAXIMUM
CLASS OF SECURITIES AMOUNT TO PRICE AGGREGATE AMOUNT OF
TO BE REGISTERED BE REGISTERED PER SHARE(1) PRICE(1) REGISTRATION FEE
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Common Stock, par value $1.00 per share............... 1,725,000 shares $63 3/8 $109,321,875 $33,128
- ------------------------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------------------
</TABLE>

(1) Estimated in accordance with Rule 457(c) solely for the purpose of
calculating the registration fee based upon the average of the high and low
prices of the Common Stock as quoted by the NASDAQ National Market System on
January 28, 1997.
------------------------

THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH DATE OR
DATES AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANT SHALL
FILE A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS REGISTRATION
STATEMENT SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH SECTION 8(A) OF
THE SECURITIES ACT OF 1933 OR UNTIL THE REGISTRATION STATEMENT SHALL BECOME
EFFECTIVE ON SUCH DATE AS THE COMMISSION, ACTING PURSUANT TO SAID SECTION 8(A),
MAY DETERMINE.

================================================================================
<PAGE>
INFORMATION CONTAINED HEREIN IS SUBJECT TO COMPLETION OR AMENDMENT. A
REGISTRATION STATEMENT RELATING TO THESE SECURITIES HAS BEEN FILED WITH THE
SECURITIES AND EXCHANGE COMMISSION. THESE SECURITIES MAY NOT BE SOLD NOR MAY
OFFERS TO BUY BE ACCEPTED PRIOR TO THE TIME THE REGISTRATION STATEMENT BECOMES
EFFECTIVE. THIS PROSPECTUS SHALL NOT CONSTITUTE AN OFFER TO SELL OR THE
SOLICITATION OF AN OFFER TO BUY NOR SHALL THERE BE ANY SALE OF THESE SECURITIES
IN ANY STATE IN WHICH SUCH OFFER, SOLICITATION OR SALE WOULD BE UNLAWFUL PRIOR
TO REGISTRATION OR QUALIFICATION UNDER THE SECURITIES LAWS OF ANY SUCH STATE.

SUBJECT TO COMPLETION, DATED FEBRUARY 4, 1997

[Logo]

ATWOOD OCEANICS, INC.

1,500,000 Shares
Common Stock

($1.00 par value)

------------------------

All 1,500,000 shares (the "Shares") of common stock, $1.00 par value (the
"Common Stock"), of Atwood Oceanics, Inc. (the "Company") offered
hereby are being sold by the Company (the "Offering"). The Common
Stock of the Company is traded on The Nasdaq Stock Market's
National Market ("NNM") under the symbol "ATWD." On
January 31, 1997, the reported last sale price
of the Common Stock on the NNM was $67 3/8
per share. See "Price Range
of Common Stock."

FOR A DISCUSSION OF CERTAIN FACTORS THAT SHOULD BE CONSIDERED IN CONNECTION
WITH AN INVESTMENT IN THE COMMON STOCK, SEE "RISK FACTORS" BEGINNING ON PAGE 8
HEREIN.

THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE
SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION
PASSED UPON THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS.
ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.

UNDERWRITING
PRICE TO DISCOUNTS AND PROCEEDS TO
PUBLIC COMMISSIONS COMPANY (1)
-------- ------------- ------------
Per Share....................
Total (2)....................

(1) Before deduction of expenses payable by the Company, estimated at $400,000.

(2) The Company has granted the Underwriters an option, exercisable for 30 days
from the date of this Prospectus, to purchase a maximum of 225,000
additional shares of Common Stock from the Company to cover over-allotments
of shares. If the option is exercised in full, the total Price to Public
will be $ , Underwriting Discounts and Commissions will be
$ , and Proceeds to Company will be $ . See
"Underwriting."

The Shares are offered by the several Underwriters when, as and if issued
by the Company, delivered to and accepted by the Underwriters and subject to
their right to reject orders in whole or in part. It is expected that the Shares
will be ready for delivery on or about March , 1997, against payment in
immediately available funds.

CREDIT SUISSE FIRST BOSTON
HOWARD, WEIL, LABOUISSE, FRIEDRICHS
INCORPORATED
RAUSCHER PIERCE REFSNES, INC.

Prospectus dated February , 1997
<PAGE>
[Pictures and captions]

IN CONNECTION WITH THIS OFFERING, THE UNDERWRITERS MAY OVER-ALLOT OR EFFECT
TRANSACTIONS WHICH STABILIZE OR MAINTAIN THE MARKET PRICE OF THE COMMON STOCK AT
A LEVEL ABOVE THAT WHICH MIGHT OTHERWISE PREVAIL IN THE OPEN MARKET. SUCH
TRANSACTIONS MAY BE EFFECTED ON THE NASDAQ STOCK MARKET-NATIONAL MARKET OR
OTHERWISE. SUCH STABILIZING, IF COMMENCED, MAY BE DISCONTINUED AT ANY TIME.

IN CONNECTION WITH THIS OFFERING, CERTAIN UNDERWRITERS AND THEIR RESPECTIVE
AFFILIATES MAY ENGAGE IN PASSIVE MARKET MAKING TRANSACTIONS IN THE COMMON STOCK
ON THE NASDAQ STOCK MARKET-NATIONAL MARKET IN ACCORDANCE WITH RULE 10B-6A UNDER
THE SECURITIES AND EXCHANGE ACT OF 1934, AS AMENDED (THE "EXCHANGE ACT"). SEE
"UNDERWRITING".

DURING THIS OFFERING, CERTAIN PERSONS AFFILIATED WITH PERSONS PARTICIPATING
IN THE DISTRIBUTION MAY ENGAGE IN TRANSACTIONS FOR THEIR OWN ACCOUNTS OR FOR THE
ACCOUNTS OF OTHERS IN THE COMMON STOCK PURSUANT TO EXEMPTIONS FROM RULES 10B-6
AND 10B-7 UNDER THE EXCHANGE ACT.

2
<PAGE>
PROSPECTUS SUMMARY

THE FOLLOWING SUMMARY IS QUALIFIED IN ITS ENTIRETY BY AND SHOULD BE READ IN
CONJUNCTION WITH THE MORE DETAILED INFORMATION AND CONSOLIDATED FINANCIAL
STATEMENTS, INCLUDING THE NOTES THERETO, APPEARING ELSEWHERE OR INCORPORATED BY
REFERENCE IN THIS PROSPECTUS. UNLESS OTHERWISE INDICATED, THE INFORMATION IN
THIS PROSPECTUS ASSUMES NO EXERCISE OF THE UNDERWRITERS' OVER-ALLOTMENT OPTION.
IN ADDITION, UNLESS OTHERWISE SPECIFIED, THE FINANCIAL AND OTHER OPERATING DATA
PERTAINING TO THE COMPANY SET FORTH HEREIN ARE REFLECTED ACCORDING TO THE
COMPANY'S FISCAL YEAR WHICH ENDS SEPTEMBER 30.

THE COMPANY

The Company provides offshore contract drilling services to the oil and gas
industry. The Company's diversified rig fleet consists of eight wholly-owned
rigs, including three third-generation semisubmersibles, one second-generation
semisubmersible, one jack-up, one second-generation semisubmersible
tender-assist vessel, one submersible and one modular self-contained platform
rig, and a fifty percent interest in a newly-constructed platform rig. The
Company's fleet is currently operating in Australia, Southeast Asia, Equatorial
Guinea and the United States. The Company also provides management, labor and
supervisory services pursuant to contracts for two operator-owned drilling and
production platforms.

In fiscal 1996, the Company maintained 100% utilization of its drilling
rigs placed in service, and the Company maintained a utilization rate in excess
of 99% for each of the past three fiscal years. Improved financial results for
the Company in fiscal 1996 reflect continued high rig utilization coupled with
significant dayrate increases for several of the Company's rigs, which were
achieved primarily during the second half of 1996. The Company has recently been
awarded two substantial rig upgrade contracts, and based upon contract
commitments, the Company expects to maintain a high level of utilization of its
remaining rigs during fiscal 1997.

Financial results for the first quarter of fiscal 1997 reflect the impact
of significant dayrate increases realized for several of the Company's rigs.
Contract revenues and earnings before interest expense, taxes and depreciation
for the three months ended December 31, 1996 increased 22% and 85%,
respectively, compared to the three months ended December 31, 1995.

MARKET OVERVIEW

During the last two years, offshore drilling activity has substantially
increased, raising the utilization of the worldwide offshore rig fleet to 92% as
of December 31, 1996, from 82% as of the beginning of 1995. The increase in
activity has been particularly strong in the semisubmersible market, in which
utilization has increased from 79% at the beginning of 1995 to 94% as of
December 31, 1996. The recent levels of offshore rig utilization represent the
highest levels in more than 10 years, driven in part by technological advances
in areas such as subsea completions, floating production systems, horizontal
drilling and 3-D seismic which have led to increased demand for drilling rigs
with deeper water capabilities. During this period, the Company has achieved
significant dayrate increases and secured longer terms for its contracts. The
Company has secured two substantial rig upgrade contracts, and the Company
executed a contract in January 1997 which, if an option is exercised, will
result in a third substantial rig upgrade. The Company is actively pursuing
additional rig upgrade opportunities.

BUSINESS STRATEGY

The Company seeks to enhance shareholder value and maximize profitability,
rig utilization and dayrate margins through (i) upgrading the performance
capabilities of its rig fleet, (ii) operating a diversified rig fleet with an
international focus, (iii) seeking growth opportunities through rig acquisitions
and new rig construction, (iv) maximizing flexibility through conservative
financial management, and (v) maintaining a quality reputation for customer
service and safety.

3
<PAGE>
RIG FLEET UPGRADES -- The Company is capitalizing on opportunities to
enhance its rig fleet to take advantage of increased market dayrates for rigs
with deeper water drilling capabilities. The Company believes it can generate
significantly higher dayrates with increased operating margins by upgrading the
water depth drilling capabilities and deckload capacities of its rigs, thereby
earning a higher rate of return on investment.

The ATWOOD HUNTER is currently undergoing a substantial upgrade at a cost
of approximately $45 million. This upgrade will increase the deckload capacity
of the rig and enable the rig to operate in 3,500 feet of water. The upgrade is
undertaken in connection with a three-year contract for drilling operations in
the Gulf of Mexico, under which the ATWOOD HUNTER is expected to commence
drilling operations in the fourth quarter of fiscal 1997. The contract provides
for a $10 million mobilization fee which offsets a portion of the Company's
upgrade and mobilization costs.

In January 1997, the Company was awarded a 175-day drilling contract for
the ATWOOD SOUTHERN CROSS, which has been stacked in Australia since it was
acquired for $1.5 million in fiscal 1994. The rig should be mobilized to
Singapore in March 1997 to undergo substantial refurbishment and upgrade at a
total cost of approximately $25 million in order to achieve up to 2,000 feet
water depth drilling capability. Upon completion of the refurbishment and
upgrade, the rig will commence drilling operations in Australia in late fiscal
1997 or early fiscal 1998.

Following completion of the ATWOOD FALCON's current contract (estimated
November 1997), the rig will be mobilized to the Philippines to commence
drilling under a contract which provides for drilling of two initial wells
(estimated 90 days duration), with an option (which may be exercised on or
before June 30, 1997) for three years of drilling operations in up to 3,500 feet
of water in the Philippines' South China Sea. In the event the option is
exercised, the rig will be transported to a shipyard following completion of the
initial two well program to undergo an upgrade at a cost of approximately $50
million, which would be partially offset by a $10 million mobilization fee.
Management estimates that the upgrade and mobilization will take six to seven
months to complete.

The ATWOOD EAGLE is a candidate for similar upgrade opportunities in late
fiscal 1998 or thereafter. Potential customer requirements and the renewal of
option terms on the ATWOOD EAGLE will determine the extent of and timing for any
such upgrade.

The VICKSBURG, a 300 foot water depth rated jack-up rig currently working
in production mode in Australia, is also a candidate for upgrade in fiscal 1998.
Depending on contract opportunities and potential customer requirements, the
Company's options upon completion of the current contract, which could extend to
January 1998, include returning the rig to drilling mode at a cost of
approximately $3 million or undertaking a substantial upgrade at a cost ranging
from $10 to $30 million, depending on the extent of the upgrade. The Company
estimates that expenditures of approximately $30 million would enable the rig to
be upgraded to provide for increased leg lengths, cantilever extended reach
drilling with a top drive, increased deckload capacity and other enhanced
drilling capabilities.

DIVERSIFIED OPERATIONS AND INTERNATIONAL FOCUS -- The Company's fleet
consists of six mobile drilling rigs, including four semisubmersibles, one
jack-up and one submersible, as well as two platform rigs and a semisubmersible
tender-assist vessel. The Company also provides management, labor and
supervisory services pursuant to contracts for two operator-owned drilling and
production platforms. The Company has been active in the Australian and
Southeast Asian markets since 1970, and the Company's international operations
in Australia, Southeast Asia and Equatorial Guinea accounted for over 92% of its
fiscal 1996 revenues. Offshore drilling activities in these markets continue to
increase as advances in technology (including subsea completions, floating
production systems, horizontal drilling and 3-D seismic), growth in market
demand for oil and gas, and expansion of local market transportation and
processing infrastructures improve the economics of offshore exploration and
production.

4
<PAGE>
GROWTH OPPORTUNITIES -- The Company has historically grown its fleet
through both rig acquisitions and new rig construction. In fiscal 1990, the
Company significantly enhanced the size and quality of its fleet by acquiring a
50% interest in three third-generation semisubmersible rigs, the ATWOOD FALCON,
ATWOOD EAGLE and ATWOOD HUNTER. In fiscal 1995, the Company acquired the
remaining 50% interest in these three rigs. In fiscal 1994, the Company expanded
its fleet by acquiring a second-generation semisubmersible rig, the ATWOOD
SOUTHERN CROSS. The Company participated in the design and fabrication of a
new-generation platform rig, RIG-200, through a 50/50 joint venture with a
subsidiary of Helmerich & Payne, Inc. RIG-200 commenced operations in January
1997 pursuant to a contract with Esso Australia Limited for drilling operations
in the West Tuna field offshore Australia. The Company continues to seek
opportunities to invest in rig acquisitions and new rig construction.

CONSERVATIVE FINANCIAL MANAGEMENT -- The Company maximizes its flexibility
to pursue upgrade and other growth opportunities by limiting its debt position
as well as maximizing its margins and internal cash flow through strict cost
control. The Company's management systems include detailed real-time tracking of
costs associated with the mobilization and ongoing operations of its rigs,
thereby allowing the Company to maximize profitability under the terms of its
contracts in all geographic areas of operation. After the Offering, the Company
will have less than $2 million of outstanding debt.

QUALITY REPUTATION -- The Company is an experienced, safety-conscious
contract driller and has built long-term customer relationships with several of
the largest and most active operators of offshore oil and gas properties,
including U.S. and foreign integrated and independent oil and gas companies.
Over the last two fiscal years, the Company's high-quality customer base has
included Esso Australia Limited and Esso Production Malaysia, Inc. (33% of total
revenues over the period), BHP Petroleum Pty. Ltd. (11%), Carigali-Triton
Operating Company Sdn. Bhd. (10%), Woodside Offshore Petroleum Pty. Ltd., an
Australian company affiliated with Shell, British Petroleum, BHP Petroleum,
Chevron and Mitsubishi (10%), Mobil Equatorial Guinea Inc. (6%), and Shell
Offshore, Inc. (5%). The Company has received extensive customer recognition for
the safety of its contract drilling operations and completed fiscal 1996 without
experiencing a lost-time accident.

THE OFFERING

Shares to be sold by the
Company(1)......................... 1,500,000 shares of Common Stock
Common Stock outstanding(2):
Before the Offering............. 6,731,488 shares
After the Offering.............. 8,231,488 shares
Use of proceeds...................... To upgrade and refurbish certain of the
Company's drilling rigs, to repay all
amounts outstanding under the Company's
bank facilities and for general corporate
purposes
The Nasdaq Stock Market symbol....... "ATWD"

- ------------

(1) Helmerich & Payne Inc. and its wholly-owned subsidiary, Helmerich & Payne
International Drilling Company, beneficial owners of approximately 23.8% of
the outstanding shares of Common Stock of the Company, have expressed their
intention to purchase 25% of the shares offered hereby.

(2) Does not include 213,125 shares of Common Stock issuable upon exercise
of outstanding employee stock options as of February 3, 1997, with exercise
prices ranging from $9.75 to $37.94 per share. See Note 7 of Notes to
Consolidated Financial Statements.

5
<PAGE>
SUMMARY HISTORICAL FINANCIAL DATA
(IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)

<TABLE>
<CAPTION>
THREE MONTHS ENDED
YEARS ENDED SEPTEMBER 30, DECEMBER 31,
---------------------------------- ----------------------
1994 1995 1996 1995 1996
---------- ---------- ---------- ---------- ----------
<S> <C> <C> <C> <C> <C>
STATEMENT OF OPERATIONS DATA:
Contract revenues.................. $ 65,975 $ 72,231 $ 79,455 $ 18,138 $ 22,093
Contract drilling and management
costs............................ (44,328) (50,826) (51,540) (13,034) (12,660)
General and administrative
expense.......................... (4,324) (4,485) (5,113) (1,060) (1,511)
---------- ---------- ---------- ---------- ----------
Operating margin.............. 17,323 16,920 22,802 4,044 7,922
Depreciation....................... (13,618) (11,134) (9,742) (2,635) (2,302)
---------- ---------- ---------- ---------- ----------
Operating income.............. 3,705 5,786 13,060 1,409 5,620
Other income (expense)............. (73) 2,238 2,783 (101) 114
Minority interest in loss of partnerships.. 3,303 908 -- -- --
Tax provision...................... (726) (1,872) (4,475) (646) (1,815)
---------- ---------- ---------- ---------- ----------
Net income......................... $ 6,209 $ 7,060 $ 11,368 $ 662 $ 3,919
========== ========== ========== ========== ==========
PER SHARE DATA:
Earnings per common share.......... $ .94 $ 1.07 $ 1.71 $ .10 $ .58
Weighted average shares
outstanding...................... 6,582 6,591 6,664 6,632 6,707
OTHER FINANCIAL DATA:
Capital expenditures(1)............ $ 6,722 $ 25,692 $ 9,526 $ 2,125 $ 6,378
EBITDA(2).......................... 20,142 19,724 25,312 4,633 8,568
</TABLE>

<TABLE>
<CAPTION>
AT SEPTEMBER 30, AT DECEMBER 31, 1996
---------------------------------- ----------------------------
1994 1995 1996 HISTORICAL AS ADJUSTED(3)
---------- ---------- ---------- ---------- --------------
<S> <C> <C> <C> <C>
BALANCE SHEET DATA:
Cash and securities held for investment.. $ 41,047 $ 37,922 $ 40,492 $ 40,340
Working capital.................... 25,171 13,761 26,151 10,812
Net property and equipment......... 82,845 91,427 91,124 95,304
Total assets....................... 153,460 152,853 159,309 164,668
Total long-term debt............... 53,294 39,319 34,473 30,790
Shareholders' equity............... 85,959 94,892 105,554 109,722
</TABLE>

- ------------

(1) Includes investment in RIG-200 and acquisition of interest in partnerships.

(2) EBITDA (earnings before interest expense, taxes, depreciation and
amortization, realized gain on sale of investments, and minority interest in
loss of partnerships) is frequently used by securities analysts and is
presented here to provide additional information about the Company's
operations. EBITDA should not be considered as an alternative to net income
as an indication of the Company's operating performance or as an alternative
to cash flow as a better measure of liquidity.

(3) Assumes the Offering and the application of proceeds therefrom had taken
place on December 31, 1996.

6
<PAGE>
- --------------------------------------------------------------------------------

OFFSHORE DRILLING OPERATIONS
<TABLE>
<CAPTION>
MAXIMUM
PERCENTAGE OF YEAR WATER
NAME OF RIG TYPE OF RIG 1996 REVENUES BUILT DEPTH LOCATION
- ------------------------------------- ------------------- ------------- ----------- --------- ---------------
DRILLING RIGS WHOLLY OR PARTIALLY OWNED
<S> <C> <C> <C> <C>
ATWOOD THIRD-GENERATION 14% 1983 2,500 FT. MALAYSIA/
FALCON SEMISUBMERSIBLE THAILAND
JOINT
DEVELOPMENT
AREA
PHILIPPINES'
SOUTH CHINA SEA
ATWOOD THIRD-GENERATION 14% 1981 1,500 FT. UNITED STATES
HUNTER SEMISUBMERSIBLE GULF OF MEXICO
ATWOOD THIRD-GENERATION 20% 1982 2,500 FT. EQUATORIAL
EAGLE SEMISUBMERSIBLE GUINEA
SEAHAWK SECOND-GENERATION 14% 1974/1992 N/A MALAYSIA
SEMISUBMERSIBLE
TENDER ASSIST
VICKSBURG JACK-UP 6% 1976 300 FT. AUSTRALIA
RIG-19 MODULAR 10% 1988 N/A AUSTRALIA
PLATFORM
RICHMOND SUBMERSIBLE 8% 1982 75 FT. UNITED STATES
GULF OF MEXICO
ATWOOD SECOND-GENERATION 0% 1976 1,500 FT. AUSTRALIA
SOUTHERN CROSS SEMISUBMERSIBLE
RIG-200 MODULAR 3% 1995 N/A AUSTRALIA
PLATFORM

MANAGEMENT/LABOR CONTRACTS
GOODWYN "A' MODULAR 10% N/A N/A AUSTRALIA
PLATFORM
NORTH RANKIN "A' MODULAR 1% N/A N/A AUSTRALIA
PLATFORM
</TABLE>

<TABLE>
<CAPTION>
CONTRACT STATUS AT
NAME OF RIG CUSTOMER FEBRUARY 3, 1997
- ------------------------------------- --------------- --------------------------------------------------------
<S> <C> <C>
ATWOOD CARIGALI- Drilling the ninth of thirteen firm wells (estimated
FALCON TRITON completion November 1997).
OPERATING
COMPANY
SDN BHD
OCCIDENTAL Upon completion of the current drilling program
PHILIPPINES, (estimated November 1997), the rig will be mobilized to
INC. the Philippines to commence drilling under a contract
for two firm wells, plus an option (which may be
exercised on or before June 30, 1997) for three years of
drilling operations in up to 3,500 feet of water in the
Philippines' South China Sea.
ATWOOD BRITISH- The rig has been moved to a shipyard in Singapore for
HUNTER BORNEO upgrade to operate in up to 3,500 feet of water in the
PETROLEUM Gulf of Mexico. The upgrade and mobilization are
INC. estimated to take approximately six months with
estimated commencement of drilling operations in July or
August 1997 under a three-year contract.
ATWOOD MOBIL Under contract until May 1997 with two six-months
EAGLE EQUATORIAL options.
GUINEA INC.
SEAHAWK ESSO Term contract (estimated completion September 1997).
PRODUCTION
MALAYSIA, INC.
VICKSBURG WESTERN Under contract until January 1998, subject to early
MINING termination under certain circumstances.
CORPORATION
LIMITED
RIG-19 ESSO Term contract (estimated drilling work of between 9 and
AUSTRALIA 12 months from January 1997).
LIMITED
RICHMOND SHELL OFFSHORE, Following completion of the current contract (estimated
INC. completion February 1997), the rig will commence
drilling operations for three firm wells, plus three
option wells under a contract with Chevron USA, Inc.
(estimated completion July 1997).
ATWOOD SANTOS LTD. The rig will be moved to a shipyard in Singapore for
SOUTHERN CROSS refurbishment and upgrade to operate in up to 2,000 feet
of water for a 175-day contract estimated to commence in
late fiscal 1997 or early fiscal 1998.
RIG-200 ESSO Term contract (minimum duration of two years from
AUSTRALIA January 1997).
LIMITED
GOODWYN "A' WOODSIDE Term contract (estimated completion May 1997).
OFFSHORE
PETROLEUM
PTY. LTD.
("WOODSIDE")
NORTH RANKIN "A' WOODSIDE Term contract (estimated completion May 1997).
</TABLE>
- --------------------------------------------------------------------------------

<PAGE>
RISK FACTORS

Prospective investors should consider carefully the following factors, in
addition to the other information contained or incorporated by reference in this
Prospectus.

FORWARD LOOKING INFORMATION

This Prospectus includes "forward-looking statements" within the meaning
of Section 27A of the Securities Act of 1933, as amended (the "Securities
Act") and Section 21E of the Exchange Act. All statements other than statements
of historical facts included in this Prospectus 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 the additional risk factors set forth below, in "Management's
Discussion and Analysis -- Liquidity and Capital Resources" and elsewhere in
this Prospectus and the documents incorporated herein by reference. 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.

DEPENDENCE ON OIL AND GAS INDUSTRY; INDUSTRY CONDITIONS

The Company's operations are materially dependent upon the levels of
activity in offshore oil and natural gas exploration, development and
production. Such activity levels are affected by, among other factors,
short-term and long-term trends in oil and natural gas prices. Historically, the
prices for oil and natural gas have been volatile and are subject to wide
fluctuations in response to changes in the supply and demand for oil and natural
gas, market uncertainty and a variety of political, economic and other factors
beyond the control of the Company. Worldwide military, political and economic
events, including initiatives by the Organization of Petroleum Exporting
Countries, have contributed to, and are likely to continue to contribute to,
price volatility. The Company cannot predict future oil and natural gas price
movements with any certainty. Any prolonged reduction in oil and natural gas
prices, however, will depress the level of exploration, development and
production activity and result in a corresponding decline in the demand for the
Company's services and, therefore, have a material adverse effect on the
Company's results of operation and financial position.

In addition to adverse effects that future declines in demand could have on
the Company, ongoing movement or reactivation of offshore rigs or new
construction of rigs could adversely affect dayrates and utilization levels,
even in an environment of stronger oil and natural gas prices and increased
drilling activity. Moreover, increases in worldwide drilling demand since
mid-1995 and the attendant increase in the number of rigs operating has resulted
in a shortage of qualified rig personnel in the industry. If the Company is
unable to attract and retain sufficient qualified personnel, its ability to move
rigs and to put stacked and newly acquired rigs into service will be limited.
Further, labor shortages could result in wage increases, which could, without
offsetting increases in revenues, reduce the Company's operating margins.

RISK OF UPGRADE AND REFURBISHMENT PROJECTS

The Company has committed to substantial upgrade and refurbishment capital
expenditures and expects to pursue additional upgrade opportunities in the
future. Such projects are subject to the risks of delay or cost overruns
inherent in any large construction project, including shortages of materials or
skilled labor, unforeseen engineering problems, work stoppages, weather
interference, unanticipated cost increases, and inability to obtain any of the
requisite permits or approvals. In particular, there is a current shortage of
certain types of drilling equipment that could delay and increase the cost of
certain upgrades. The Company attempts to minimize the potential for cost
overruns and delays through detailed real-time tracking of costs associated with
mobilization, construction and ongoing operations of its rigs. Significant cost
overruns or delays would adversely affect the Company's financial condition and
results of operations. Significant

8
<PAGE>
delays could also adversely affect the Company's marketing plans for its
drilling units and could jeopardize the long-term contracts under which the
Company plans to operate certain drilling units.

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, cratering, 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, suspension of operations or substantial 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. Moreover,
such insurance is subject to substantial deductibles and provides for premium
adjustments based on claims. Management believes that the Company has a good
claims record. 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 Company does not maintain
business interruption insurance, and damage to its equipment, even if such
damage is covered by insurance, may result in a loss of revenues against which
the Company is not insured. The occurrence of a significant event against which
the Company is not fully insured could have a material adverse effect on the
Company's results of operations or financial position.

FOREIGN OPERATIONS

The operations of the Company are conducted primarily in foreign waters.
For the fiscal years ended 1994, 1995 and 1996, the Company's revenues
attributable to foreign operations were 92%, 93% and 92%, respectively, of total
revenues. The Company's foreign operations are subject to political, economic
and other uncertainties not encountered by purely domestic drilling contractors,
including the risk of expropriation of its equipment, expropriation of a
customer's property or drilling rights, foreign and domestic monetary policies,
repudiation of contracts, foreign exchange restrictions, foreign taxation,
adverse tax policies, general hazards associated with foreign sovereignty over
certain areas in which the Company operates, fluctuations in foreign economies,
United States regulation of direct foreign investment or additional taxation of
foreign income, boycotts and embargoes. 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. 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

Typically, non-U.S. operations incur an effective tax rate higher than the
United States corporate statutory tax rate due to higher foreign tax rates in
certain jurisdictions or less than full creditability of foreign taxes paid.
While the Company's overall effective tax rate has recently been lower than the
U.S. tax rate because of net operating losses and other factors, the overall
effective tax rate may in the future be higher than the maximum United States
corporate statutory tax rate.

GOVERNMENT REGULATIONS

The Company's business is affected by domestic and international political
developments and by federal, state, local and foreign laws and regulations that
may relate directly or indirectly to the oil and gas industry. The adoption of
laws and regulations curtailing exploration and development drilling for oil and
gas for economic, environmental and other policy reasons adversely affects the
Company's operations by limiting available drilling opportunities. Additionally,
laws relating to natural gas exploration and equipping and operating offshore
vessels may add to the cost of operating offshore drilling equipment.

9
<PAGE>
ENVIRONMENTAL MATTERS

The Company's operations are subject to federal, state, local and foreign
laws and regulations controlling the discharge of materials into the environment
or otherwise relating to the protection of the environment. Such laws and
regulations could impose significant liability on the Company for damages,
clean-up costs and penalties in the event of the occurrence of oil spills or
similar discharges of pollutants into the environment in the course of the
Company's operations. To date, such laws and regulations have not had a material
adverse effect on the Company's results of operations, nor has the Company
experienced an accident which has exposed it to material liability for
discharges of pollutants into the environment.

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, and there continues to
be competition in securing available drilling contracts. 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. In addition, there are a number of inactive
rigs that are being or could be reactivated and upgraded. Such reactivation, new
rig construction or a decrease in drilling activity in any major market could
depress dayrates and adversely affect utilization of the Company's rigs, even in
an environment of stronger oil and natural gas prices.

CONCENTRATION OF CUSTOMERS

During fiscal 1996, the Company performed operations for ten major
customers. Esso Australia Limited/Esso Production Malaysia, Inc.,
Carigali-Triton Operating Sdn. Bhd. and Mobil Equatorial Guinea Inc. accounted
for 32%, 14% and 11%, respectively, of fiscal 1996 revenues. Although the
Company believes its customer relationships are strong, the loss of any
significant customer or a decrease in the drilling programs of significant
customers in the areas where they employ the Company could have a material
adverse effect on the Company's results of operations.

AVAILABILITY OF QUALIFIED RIG PERSONNEL

Increases in worldwide drilling demand during the past two years and the
corresponding increase in the number of rigs working has resulted in a shortage
of qualified rig personnel in the industry. To date, the Company has not
experienced significant problems with personnel in its areas of operation,
however, if the Company is unable to continue to attract and retain sufficient
qualified personnel, its operations could be adversely affected and its ability
to put newly acquired rigs to work could be restricted. A shortage of personnel
could also result in wage increases which could, without offsetting increases in
revenues, affect the Company's profitability.

CONTROL BY CERTAIN STOCKHOLDERS

Helmerich & Payne Inc. and its wholly-owned subsidiary, Helmerich & Payne
International Drilling Company (collectively "H&P"), beneficially own
approximately 23.8% of the outstanding shares of Common Stock of the Company. As
a result, H&P has the ability to influence the election of the Company's
directors, which may be conducted on a cumulative voting basis pursuant to the
Company's charter, and the outcome of other matters requiring a stockholder
vote. Three of the Company's six directors are affiliated with H&P. H&P has
expressed its intention to purchase 25% of the shares offered hereby (excluding
the over-allotment option).

10
<PAGE>
USE OF PROCEEDS

The net proceeds to be received by the Company from the Offering, after
deducting underwriting discounts and commissions and estimated expenses, are
estimated to be approximately $ million ($ if the Underwriters'
over-allotment option is exercised in full). Such net proceeds will be used (i)
to satisfy contractual commitments to upgrade and relocate the ATWOOD HUNTER at
a cost of approximately $45 million, (ii) to satisfy contractual commitments to
refurbish and upgrade the ATWOOD SOUTHERN CROSS at a cost of approximately $25
million, (iii) to repay all of the Company's bank debt, which has an outstanding
balance of $22.3 million as of February 4, 1997, and (iv) for general corporate
purposes.

One of the Company's bank credit facilities has an outstanding balance of
approximately $17.3 million, bears interest at a floating rate (approximately 7%
per annum at December 31, 1996), and matures in March 1998. The Company's
remaining $5 million outstanding bank debt is borrowed on a month-to-month basis
and currently bears interest at 6.2%. See "Management's Discussion and Analysis
of Financial Condition and Results of Operations -- Liquidity and Capital
Resources."

Pending its use of proceeds, the Company will invest in short-term interest
bearing securities. If additional rig upgrade opportunities arise prior to
closing, the Company may reevaluate its decision to repay bank debt with
proceeds of the Offering.

PRICE RANGE OF COMMON STOCK

The Common Stock is traded on The Nasdaq Stock Market's National Market
under the symbol "ATWD." The following table sets forth the high and low sales
prices per share of the Common Stock as reported by The Nasdaq Stock Market for
the periods indicated:

LOW HIGH
---- ----
Fiscal 1995:
First Quarter................... 11 3/4 14 1/4
Second Quarter.................. 10 3/8 14 3/8
Third Quarter................... 13 5/8 16 1/2
Fourth Quarter.................. 15 1/4 22 3/4
Fiscal 1996:
First Quarter................... 16 1/2 27
Second Quarter.................. 24 1/2 37 3/4
Third Quarter................... 36 45 1/4
Fourth Quarter.................. 40 50 1/2
Fiscal 1997:
First Quarter................... 44 65 1/2
Second Quarter (through January
31, 1997)...................... 60 3/4 71

On January 31, 1997, the closing sale price of the Common Stock, as
reported by The Nasdaq Stock Market, was $67 3/8 per share. The number of record
holders of Common Stock on January 31, 1997 was approximately 170. The Company
has never declared or paid cash dividends on its Common Stock. Although there
are no current contractual restrictions limiting the payment of dividends,
management anticipates that all earnings in the foreseeable future will be
retained for development of the Company's business.

11
<PAGE>
CAPITALIZATION

The following table sets forth the capitalization of the Company at
December 31, 1996, and as adjusted to give effect to the Offering and the
application of the net proceeds therefrom as described in "Use of Proceeds".
This table should be read in conjunction with the consolidated financial
statements and the notes thereto included elsewhere or incorporated by reference
in this Prospectus.

AS OF DECEMBER 31, 1996
----------------------------
ACTUAL AS ADJUSTED(1)
-------- --------------
(IN THOUSANDS)
Debt facilities, including current
maturities and short-term debt..... $ 30,790 $ 1,500(2)
-------- --------------
Shareholders' equity:
Common stock, $1 par value,
10,000,000 shares authorized
with 6,710,000 and 8,210,000
shares outstanding,
respectively(3)................ $ 6,710 $
Paid-in capital................. 55,698
Net unrealized holding loss on
available-for-sale
securities..................... (137) (137)
Retained earnings............... 47,451 47,451
-------- --------------
Total shareholders'
equity................. 109,722
-------- --------------
Total
capitalization.... $140,512 $
======== ==============

- ------------

(1) As adjusted amounts are presented assuming that the net proceeds from the
Offering total $ million (net of expenses), excluding the Underwriters'
over-allotment option. Further, it is assumed that the net proceeds will be
used to retire existing bank debt and to fund planned capital expenditures
totaling approximately $70 million for the ATWOOD HUNTER and ATWOOD SOUTHERN
CROSS, with the balance temporarily invested.

(2) Since December 31, 1996, the Company has repaid $7 million of bank debt with
cash from operations.

(3) Does not include 234,200 shares of Common Stock issuable upon exercise of
outstanding employee stock options as of December 31, 1996.

12
<PAGE>
SELECTED HISTORICAL FINANCIAL DATA
(IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)

The following table sets forth certain historical data relating to the
Company. For each of the five years ended September 30, 1996, such data are
derived from the audited consolidated financial statements of the Company, which
in the case of the three years ended September 30, 1996, are included elsewhere
in this Prospectus. The selected financial data for the three months ended
December 31, 1995 and 1996 are unaudited but, in the opinion of management,
include all adjustments, consisting only of normal recurring adjustments,
necessary to present fairly the financial condition and results of operations
for such periods. Such data are not necessarily indicative of results that could
be expected for a full year. The selected financial data should be read in
conjunction with "Management's Discussion and Analysis of Financial Condition
and Results of Operations" and the consolidated financial statements and the
notes thereto included elsewhere or incorporated by reference in this
Prospectus.

<TABLE>
<CAPTION>
THREE MONTHS ENDED
YEARS ENDED SEPTEMBER 30, DECEMBER 31,
----------------------------------------------------- --------------------
1992 1993 1994 1995 1996 1995 1996
--------- --------- --------- --------- --------- --------- ---------
<S> <C> <C> <C> <C> <C> <C> <C>
STATEMENT OF OPERATIONS DATA:
Contract revenues................ $ 44,772 $ 51,775 $ 65,975 $ 72,231 $ 79,455 $ 18,138 $ 22,093
Contract drilling and management
costs.......................... (36,035) (37,694) (44,328) (50,826) (51,540) (13,034) (12,660)
General and administrative
expense........................ (4,109) (4,103) (4,324) (4,485) (5,113) (1,060) (1,511)
--------- --------- --------- --------- --------- --------- ---------
Operating margin............ 4,628 9,978 17,323 16,920 22,802 4,044 7,922
Depreciation..................... (15,398) (13,045) (13,618) (11,134) (9,742) (2,635) (2,302)
Write-down of drilling vessels
and other assets............... (17,000) -- -- -- -- -- --
--------- --------- --------- --------- --------- --------- ---------
Operating income (loss)..... (27,770) (3,067) 3,705 5,786 13,060 1,409 5,620
Other income (expense)........... (431) (597) (73) 2,238 2,783 (101) 114
Minority interest in loss of
partnerships................... 4,862 4,821 3,303 908 -- -- --
Tax benefit (provision).......... 2,402 (2,948) (726) (1,872) (4,475) (646) (1,815)
--------- --------- --------- --------- --------- --------- ---------
Net income (loss)................ $ (20,937) $ (1,791) $ 6,209 $ 7,060 $ 11,368 $ 662 $ 3,919
========= ========= ========= ========= ========= ========= =========
PER SHARE DATA:
Earnings (loss) per common
share.......................... $ (3.18) $ (.27) $ .94 $ 1.07 $ 1.71 $ .10 $ .58
Weighted average shares
outstanding.................... 6,582 6,582 6,582 6,591 6,664 6,632 6,707
OTHER FINANCIAL DATA:
Capital expenditures(1).......... $ 15,542 $ 5,302 $ 6,722 $ 25,692 $ 9,526 $ 2,125 $ 6,378
EBITDA(2)........................ 7,720 12,448 20,142 19,724 25,312 4,633 8,568
</TABLE>

<TABLE>
<CAPTION>
AT SEPTEMBER 30, AT DECEMBER 31, 1996
----------------------------------------------------- ----------------------------
1992 1993 1994 1995 1996 HISTORICAL AS ADJUSTED(3)
--------- --------- --------- --------- --------- ---------- --------------
<S> <C> <C> <C> <C> <C> <C>
BALANCE SHEET DATA:
Cash and securities held for
investment......................... $ 33,877 $ 35,044 $ 41,047 $ 37,922 $ 40,492 $ 40,340
Working capital...................... 12,236 14,703 25,171 13,761 26,151 10,812
Net property and equipment........... 98,033 90,150 82,845 91,427 91,124 95,304
Total assets......................... 165,942 149,853 153,460 152,853 159,309 164,668
Total long-term debt................. 63,016 58,409 53,294 39,319 34,473 30,790
Shareholders' equity................. 81,541 79,750 85,959 94,892 105,554 109,722
</TABLE>

- ------------

(1) Includes investment in RIG-200 and acquisition of interest in partnerships.

(2) EBITDA (earnings before interest expense, taxes, depreciation and
amortization, write-down of drilling vessels and other assets, realized gain
on sale of investments, and minority interest in loss of partnerships) is
frequently used by securities analysts and is presented here to provide
additional information about the Company's operations. EBITDA should not be
considered as an alternative to net income as an indication of the Company's
operating performance or as an alternative to cash flow as a better measure
of liquidity.

(3) As adjusted amounts assume the Offering and the application of proceeds
therefrom had taken place on December 31, 1996, and assume that the net
proceeds from the Offering total $ million (net of expenses), excluding the
Underwriters' over-allotment option. Further, it is assumed that the net
proceeds will be used to retire existing bank debt and to fund planned
capital expenditures totaling approximately $70 million for the ATWOOD
HUNTER and ATWOOD SOUTHERN CROSS, with the balance temporarily invested.

<PAGE>
MANAGEMENT'S DISCUSSION AND ANALYSIS
OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

OUTLOOK

The current worldwide fleet utilization for mobile offshore drilling units
is approximately 92% compared to approximately 86% a year ago. Activity in the
offshore contract drilling industry is strong in virtually all worldwide market
areas, especially for mobile rigs that can operate in deeper water. The improved
market trends are particularly evident in the escalation of dayrates seen in
1996 and in the increase in equipment upgrade projects.

The Company's active fleet utilization was 100% for fiscal 1996 and was in
excess of 99% for each of the past three fiscal years. During the second half of
fiscal 1996, the Company realized higher dayrates on the ATWOOD FALCON, ATWOOD
HUNTER, ATWOOD EAGLE and the RICHMOND. The Company entered into a contract to
operate the ATWOOD HUNTER in deep water in the Gulf of Mexico, commencing in
mid-1997, at a significant increase in dayrate and operating margins. The
Company was also awarded a contract on the ATWOOD SOUTHERN CROSS for operations
in Australia following a substantial refurbishment and upgrade of the rig. In
addition, a new contract for the ATWOOD FALCON contains an option which, if
exercised, would provide for a three-year deep water drilling program in the
Philippines' South China Sea following a rig upgrade. Based upon firm contract
commitments for its active fleet, management expects that the Company will
maintain a high level of equipment utilization during fiscal 1997.

RESULTS OF OPERATIONS

FIRST QUARTER FISCAL 1996 VERSUS FIRST QUARTER FISCAL 1997

During the first quarter of fiscal 1997, the Company continued to maintain
100% utilization of its drilling equipment. Contract revenues, earnings before
interest expense, taxes and depreciation and net income for the three months
ended December 31, 1996 increased 22%, 85% and 492%, respectively, compared to
the three months ended December 31, 1995. This improvement in operating results
reflects the impact of dayrate increases on several of the Company's mobile rigs
which occurred during the fourth quarter of fiscal 1996 and the first quarter of
fiscal 1997, coupled with the commencement of dayrate revenues in January 1996
on RIG-200. A comparative analysis of contract revenues is as follows:

<TABLE>
<CAPTION>
CONTRACT REVENUES
---------------------------------------------------
FIRST QUARTER FIRST QUARTER
FISCAL 1996 FISCAL 1997 VARIANCE
------------- ------------- -------------
(IN MILLIONS)
<S> <C> <C> <C>
ATWOOD FALCON........................ $ 2.5 $ 4.2 $ 1.7
ATWOOD HUNTER........................ 2.5 3.5 1.0
ATWOOD EAGLE......................... 3.9 4.7 0.8
RIG-200.............................. 0.0 0.4 0.4
SEAHAWK.............................. 2.7 2.8 0.1
VICKSBURG............................ 1.3 1.3 0.0
RIG-19............................... 1.9 0.9 (1.0)
RICHMOND............................. 1.3 2.0 0.7
GOODWYN "A'.......................... 1.8 1.9 0.1
NORTH RANKIN "A'..................... 0.2 0.4 0.2
------------- ------------- -------------
$18.1 $22.1 $ 4.0
============= ============= =============
</TABLE>

The increase in revenues for the ATWOOD FALCON was due to an increase of
approximately 60% in the contract dayrates during the quarter ended September
30, 1996. The increase in revenues for the ATWOOD HUNTER was also due to higher
average dayrates, which increased 35% from the first quarter of fiscal 1996 to
the first quarter of fiscal 1997. The ATWOOD HUNTER completed its work in
Malaysia

14
<PAGE>
in December 1996 and was mobilized to Singapore to undergo a substantial
upgrade. No income or expenses associated with the ATWOOD HUNTER will be
recognized during the second and third quarters of fiscal 1997 while the upgrade
is in progress. During fiscal 1996, the ATWOOD EAGLE was relocated from
Australia to Equatorial Guinea with an approximate 25% increase in contract
dayrate. The delivery of RIG-200 to Australia was completed in November 1996.
RIG-200 was installed on the offshore platform in November and December 1996,
and commenced drilling operations in January 1997. Commencing in January 1997,
net realized mobilization income (approximately $3 million) will be amortized
over the estimated contract term of five years. Relatively long-term, stable
contracts for the SEAHAWK and VICKSBURG continue to provide consistency to these
operations. During the first quarter of fiscal 1997, RIG-19 was relocated to a
new platform, which caused revenues to decline as no revenues or expenses were
recognized during the relocation period. The Company's only current United
States operation, the RICHMOND, continues to experience an increase in dayrate
revenues. The increase in NORTH RANKIN "A' revenues was due to an increase in
labor services provided to the rig.

Contract drilling and management costs were $12.7 million for the first
quarter of fiscal 1997 compared to $13.0 million for the first quarter of fiscal
1996. This decline in operating costs was primarily attributable to lower
operating costs for RIG-19 and the ATWOOD EAGLE. An analysis of contract
drilling and management costs by rig is as follows:

<TABLE>
<CAPTION>
CONTRACT DRILLING AND
MANAGEMENT COSTS
---------------------------------------------------
FIRST QUARTER FIRST QUARTER
FISCAL 1996 FISCAL 1997 VARIANCE
------------- ------------- -------------
(IN MILLIONS)
<S> <C> <C> <C>
ATWOOD FALCON........................ $ 1.7 $ 1.7 $ 0.0
ATWOOD HUNTER........................ 1.8 1.9 0.1
ATWOOD EAGLE......................... 2.9 2.5 (0.4)
RIG-200.............................. 0.0 0.0 0.0
SEAHAWK.............................. 1.6 1.7 0.1
VICKSBURG............................ 0.8 0.8 0.0
RIG-19............................... 1.4 0.8 (0.6)
RICHMOND............................. 1.1 1.3 0.2
GOODWYN "A'.......................... 1.4 1.5 0.1
NORTH RANKIN "A'..................... 0.1 0.2 0.1
OTHER................................ 0.2 0.3 0.1
------------- ------------- -------------
$13.0 $12.7 $(0.3)
============= ============= =============
</TABLE>

The increases in operating costs for the ATWOOD HUNTER, SEAHAWK, RICHMOND,
GOODWYN "A' and NORTH RANKIN "A' were due primarily to increases in payroll
related costs. The reduction in operating costs for the ATWOOD EAGLE was
attributable to the rig working in Equatorial Guinea where labor costs are lower
than in Australia. The relocation of RIG-19 to a new platform during the first
quarter of fiscal 1997 accounted for its reduction in costs, as no revenues or
costs are recognized during the relocation period.

15
<PAGE>
An analysis of depreciation expense by rig is as follows:

DEPRECIATION EXPENSE
--------------------------------
FIRST QUARTER FIRST QUARTER
FISCAL 1996 FISCAL 1997
------------- -------------
(IN MILLIONS)
ATWOOD FALCON........................ $ 0.7 $ 0.7
ATWOOD HUNTER........................ 0.4 0.3
ATWOOD EAGLE......................... 0.5 0.5
RIG-200.............................. 0.0 0.0
SEAHAWK.............................. 0.5 0.5
VICKSBURG............................ 0.0 0.0
RIG-19............................... 0.3 0.1
RICHMOND............................. 0.1 0.1
OTHER................................ 0.1 0.1
------------- -------------
$ 2.6 $ 2.3
============= =============

The reduction in depreciation expense for the ATWOOD HUNTER was a result of
moving the rig into the shipyard in December 1996 for upgrade. While undergoing
upgrade (estimated to take six to seven months), no depreciation expense is
recognized on the rig. Depreciation of RIG-200 will commence with the start-up
of its drilling operations in January 1997.

General and administrative expense increased 43% in the first quarter of
fiscal 1997 compared to the first quarter of fiscal 1996. This increase was
attributable to increases in payroll related costs and professional fees. As a
result of a reduction in outstanding long-term debt, interest expense declined.
Due to an increase in profitability and a reduction in tax attributes, current
United States taxation is expected to be higher in fiscal 1997 compared to
fiscal 1996, which accounted for the increase in the provision for income taxes.

FISCAL YEAR 1995 VERSUS FISCAL YEAR 1996

Contract revenues in fiscal 1996 increased 10% to $79.5 million from $72.2
million in fiscal 1995. 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 1995 and
1996 is as follows:

CONTRACT REVENUES
------------------------------------
FISCAL FISCAL
1995 1996 VARIANCE
------ ------ --------
(IN MILLIONS)
ATWOOD FALCON........................ $ 10.9 $ 11.5 $0.6
ATWOOD HUNTER........................ 10.2 11.3 1.1
ATWOOD EAGLE......................... 15.1 15.6 0.5
RIG-200.............................. 0.0 2.2 2.2
SEAHAWK.............................. 10.8 11.0 0.2
VICKSBURG............................ 4.9 5.0 0.1
RIG-19............................... 7.1 8.2 1.1
RICHMOND............................. 5.0 6.2 1.2
GOODWYN "A'.......................... 7.3 7.6 0.3
NORTH RANKIN "A'..................... 0.9 0.9 0.0
------ ------ --------
$ 72.2 $ 79.5 $7.3
====== ====== ========

The increase in revenues for the ATWOOD FALCON was due to an increase of
approximately 60% 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. During April and May

16
<PAGE>
1996, the ATWOOD EAGLE was relocated from the territorial waters of Australia to
the territorial waters of Equatorial Guinea with an approximate 25% 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. The rig was delivered to Australia in November 1996 and
earns a holding dayrate or mobilization fee pending the anticipated commencement
of drilling operations in January 1997. Relatively long-term, stable contracts
for the SEAHAWK, VICKSBURG and RIG-19 continue to provide 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, located in the United States Gulf of Mexico, also experienced an
increase in dayrate revenues during fiscal 1996.

In contrast to a 10% increase in contract revenues, contract drilling and
management costs increased only 1% in fiscal 1996 compared to fiscal 1995. An
analysis of contract drilling and management costs by rig is as follows:

CONTRACT DRILLING AND
MANAGEMENT COSTS
------------------------------------
FISCAL FISCAL
1995 1996 VARIANCE
------ ------ --------
(IN MILLIONS)
ATWOOD FALCON........................ $ 6.4 $ 6.9 $0.5
ATWOOD HUNTER........................ 7.2 7.2 0.0
ATWOOD EAGLE......................... 12.7 9.1 (3.6)
RIG-200.............................. 0.0 0.3 0.3
SEAHAWK.............................. 5.9 6.5 0.6
VICKSBURG............................ 3.0 3.1 0.1
RIG-19............................... 5.1 6.4 1.3
RICHMOND............................. 4.1 4.8 0.7
GOODWYN "A'.......................... 5.2 5.9 0.7
NORTH RANKIN "A'..................... 0.6 0.6 0.0
OTHER................................ 0.6 0.7 0.1
------ ------ --------
$ 50.8 $ 51.5 $0.7
====== ====== ========

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 Equatorial 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 higher 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.

17
<PAGE>
An analysis of depreciation expense by rig is as follows:

DEPRECIATION EXPENSE
--------------------
FISCAL FISCAL
1995 1996
------ ------
(IN MILLIONS)
ATWOOD FALCON........................ $ 3.1 $2.6
ATWOOD HUNTER........................ 1.8 1.6
ATWOOD EAGLE......................... 2.2 2.0
SEAHAWK.............................. 2.3 2.2
VICKSBURG............................ 0.0 0.0
RIG-19............................... 1.2 0.6
RICHMOND............................. 0.3 0.4
OTHER................................ 0.2 0.3
------ ------
$ 11.1 $9.7
====== ======

General and administrative expenses increased 14% 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 1995 and 1996 of
$2.8 million and $2.5 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.

FISCAL YEAR 1994 VERSUS FISCAL YEAR 1995

Contract revenues in fiscal 1995 increased 9% to $72.2 million from $66.0
million in fiscal 1994. This increase was primarily attributable to increases in
revenues from the ATWOOD EAGLE and GOODWYN "A' of $3.1 million and $5.1 million,
respectively, offset somewhat by a $1.7 million decrease in revenues from NORTH
RANKIN "A'. An analysis of contract revenues by rig for fiscal years 1994 and
1995 is as follows:

CONTRACT REVENUES
------------------------------------
FISCAL FISCAL
1994 1995 VARIANCE
------ ------ --------
(IN MILLIONS)
ATWOOD FALCON........................ $ 11.1 $ 10.9 $ (0.2)
ATWOOD HUNTER........................ 10.2 10.2 0.0
ATWOOD EAGLE......................... 12.0 15.1 3.1
SEAHAWK.............................. 10.9 10.8 (0.1)
VICKSBURG............................ 4.4 4.9 0.5
RIG-19............................... 6.9 7.1 0.2
RICHMOND............................. 5.5 5.0 (0.5)
GOODWYN "A'.......................... 2.2 7.3 5.1
NORTH RANKIN "A'..................... 2.6 0.9 (1.7)
OTHER................................ 0.2 0.0 (0.2)
------ ------ --------
$ 66.0 $ 72.2 $ 6.2
====== ====== ========

The ATWOOD FALCON started fiscal 1995 working in Korea; however, in the
second quarter of the year, the rig was relocated to China, and during the last
quarter, it was relocated to the Malaysia/Thailand Joint Development Area. The
reduced revenues during the relocation periods accounted for the small decrease
in revenues with respect to the ATWOOD FALCON. The ATWOOD HUNTER has worked
continuously in Malaysia for the same customer since April 1993. During the
first quarter of fiscal 1994, the

18
<PAGE>
ATWOOD EAGLE was relocated from Malaysia to the Australia/Indonesia Zone of
Cooperation, where the rig worked continuously until it was moved in September
1995 to sheltered water to undergo certain planned surveys and repairs. Even
with four more days of idle time in fiscal 1995, revenues for the ATWOOD EAGLE
were higher due to the rig working at a higher dayrate level in fiscal 1995
compared to fiscal 1994. Relatively long-term, stable contracts for the SEAHAWK,
VICKSBURG and RIG-19 continued to provide consistency to these operations during
fiscal 1995. The $500,000 increase in VICKSBURG revenues was due to an increase
in the dayrate commencing in February 1995. In August 1995, the RICHMOND was
moved to sheltered water to undergo certain planned surveys and repairs. This
required downtime accounted for the RICHMOND's decrease in revenues. During
fiscal 1994, the Company received a standby fee related to GOODWYN "A' while
awaiting commencement of drilling operations, which occurred during the first
quarter of fiscal 1995. The Company received substantially higher revenues from
GOODWYN "A' during drilling operations, resulting in an increase of revenues in
fiscal 1995 over fiscal 1994. The reduction in revenues from NORTH RANKIN "A'
was due to the Company providing less labor services to this operation in fiscal
1995.

Contract drilling and management costs increased 15% from $44.3 million in
fiscal 1994 to $50.8 million in fiscal 1995. This increase was primarily
attributable to increased costs on the ATWOOD EAGLE and GOODWYN "A'. An analysis
of contract drilling and management costs by rig is as follows:

CONTRACT DRILLING AND MANAGEMENT
COSTS
------------------------------------
FISCAL FISCAL
1994 1995 VARIANCE
------ ------ --------
(IN MILLIONS)
ATWOOD FALCON........................ $ 7.0 $ 6.4 $ (0.6)
ATWOOD HUNTER........................ 7.0 7.2 0.2
ATWOOD EAGLE......................... 9.9 12.7 2.8
SEAHAWK.............................. 6.1 5.9 (0.2)
VICKSBURG............................ 2.2 3.0 0.8
RIG-19............................... 4.6 5.1 0.5
RICHMOND............................. 3.6 4.1 0.5
GOODWYN "A'.......................... 1.5 5.2 3.7
NORTH RANKIN "A'..................... 1.8 0.6 (1.2)
OTHER................................ 0.6 0.6 0.0
------ ------ --------
$ 44.3 $ 50.8 $ 6.5
====== ====== ========

The reduction in ATWOOD FALCON costs in fiscal 1995 was due to the rig
working a portion of fiscal 1994 in Australia where costs are significantly
higher than in most countries of Southeast Asia. The ATWOOD HUNTER's costs have
been relatively unchanged due to its stable contract status. Cost increases for
the ATWOOD EAGLE were attributed to the rig working the entire year in the
Australia/Indonesia Zone of Cooperation where costs are higher than in Malaysia
and to costs incurred in performing certain required surveys and repairs during
the last two weeks of September 1995. In fiscal 1994, the VICKSBURG and RIG-19
received some personnel tax refunds which accounted for the increase in costs as
no such refunds were received in fiscal 1995. Like the ATWOOD EAGLE, the
RICHMOND had to undergo certain surveys and repairs in August 1995 which
accounted for its operating cost increases. The increase in GOODWYN "A'
operating costs related directly to the commencement of drilling operations.
Even though the Company does not own this facility, the Company does provide
personnel and other operating support services. The decline in NORTH RANKIN "A'
costs was due to a reduction in personnel services provided to this operation.

19
<PAGE>
The Company acquired the remaining 50% interest in the ATWOOD FALCON,
ATWOOD HUNTER and ATWOOD EAGLE, effective as of December 31, 1994, on the basis
that these rigs will remain long-term productive assets. Effective January 1,
1995, management increased its estimated depreciable lives on these rigs by an
additional five years. The effect of the change in depreciable lives was a $2.7
million reduction in depreciation for the last nine months of fiscal 1995
compared to fiscal 1994 and a corresponding increase in net income in fiscal
year 1995 of $1.8 million or $.27 per share. An analysis of depreciation expense
by rig is as follows:

DEPRECIATION EXPENSE
--------------------
FISCAL FISCAL
1994 1995
------ ------
(IN MILLIONS)
ATWOOD FALCON........................ $ 4.5 $ 3.1
ATWOOD HUNTER........................ 2.5 1.8
ATWOOD EAGLE......................... 2.9 2.2
SEAHAWK.............................. 2.2 2.3
VICKSBURG............................ 0.0 0.0
RIG-19............................... 1.2 1.2
RICHMOND............................. 0.0 0.3
OTHER................................ 0.3 0.2
------ ------
$ 13.6 $ 11.1
====== ======

At the time the Company acquired the remaining interest in the ATWOOD
FALCON, ATWOOD HUNTER and ATWOOD EAGLE, these rigs were incurring net losses,
50% of which were allocated to the limited partner. As a result of this
acquisition, for the last nine months of fiscal year 1995, there was no
accounting for a minority interest.

In fiscal 1995, the Company sold 33,000 shares of Mobil Corporation common
stock at a realized gain of $2.4 million. Investment income of $2.8 million for
each of the fiscal years 1994 and 1995 virtually offset interest expense in each
year. Foreign tax expense increased from approximately $500,000 in fiscal 1994
to $1.6 million in fiscal 1995, which accounted for substantially all of the
increase in the provision for income taxes.

LIQUIDITY AND CAPITAL RESOURCES

During fiscal 1996, operating cash flows (before changes in working capital
and other assets and liabilities) increased 36% from $14.9 million in fiscal
1995 to $20.3 million, and operating cash flows increased 89% from $3.4 million
in the first quarter of fiscal 1996 to $6.5 million in the first quarter of
fiscal 1997. During fiscal 1996, the Company invested approximately $3 million
in completing the construction of RIG-200, purchased approximately $7 million in
capital equipment for the ATWOOD HUNTER, ATWOOD SOUTHERN CROSS and other rigs,
repaid approximately $6 million of bank debt and reduced accounts payable by
approximately $4 million. For the three months ended December 31, 1996, the
Company purchased approximately $6 million of additional capital equipment for
the ATWOOD HUNTER and other rigs and reduced bank debt by approximately $4
million.

The Company has a contractual commitment to upgrade the ATWOOD HUNTER to
drill in 3,500 feet of water and relocate the rig from Southeast Asia to the
United States Gulf of Mexico in mid-1997 at an aggregate cost of approximately
$45 million, offset in part by a $10 million mobilization fee. The Company also
has a contractual commitment to substantially refurbish and upgrade the ATWOOD
SOUTHERN CROSS at a total cost of approximately $25 million in order to achieve
up to 2,000 feet water depth drilling capability. In addition, if an option is
exercised pursuant to a contract for the ATWOOD FALCON, the Company will be
required to upgrade the rig to drill in 3,500 feet of water at an estimated cost
of approximately $50 million.

20
<PAGE>
At December 31, 1996, the Company continued to have approximately $22.6
million invested in United States treasury bonds with maturities in the years
2000 and 2001. The Company's portfolio of accounts receivable is comprised of
major international corporate entities with stable payment experiences. The
Company continues to experience no difficulties in receivable collections.

At December 31, 1996, the Company had outstanding bank debt of $29.3
million, all of which was borrowed by a subsidiary of the Company that owns the
ATWOOD HUNTER and the ATWOOD EAGLE. The debt is secured by preferred mortgages
on the ATWOOD HUNTER and ATWOOD EAGLE, and the loan documents restrict the
amount of capital expenditures that can be incurred in any given year on these
rigs. The estimated capital expenditures to be incurred in fiscal 1997 to
upgrade the ATWOOD HUNTER to enable the rig to perform under its three year
contract with British-Borneo Petroleum Inc. will significantly exceed the annual
limit. On February 3, 1997, the bank group agreed to waive the annual capital
expenditures limit for 1997, and the Company reduced the outstanding loan
balance through a $10 million prepayment and agreed to guaranty $3 million of
the outstanding balance. The Company estimates that excess cash flows during the
1997 calendar year will require $9 million in principal payments, in addition to
regular quarterly payments of $750,000. The remaining balance of the facility is
due in March 1998.

The Company obtained an additional $30 million short-term line of credit
with a bank that is secured by the pledge of all the Company's United States
treasury bonds. The Company borrowed $5 million under this facility in February
1997 to finance a portion of the prepayment to the bank group. Additional
borrowings under this facility may be used to fund principal payments to the
bank group, and to fund equipment upgrades or for general corporate purposes.

The Company believes that cash on hand, borrowings under its new credit
facility and the proceeds of the Offering will be sufficient to fund its planned
rig upgrades and other capital expenditures during 1997. The Company would
expect to finance additional upgrade expenditures through a combination of
operating cash flow, equity or debt financings or a sale of investment
securities. The Company continues to periodically review and adjust its planned
capital expenditures in light of current market conditions.

21
<PAGE>
BUSINESS

THE COMPANY

In fiscal 1996, the Company maintained 100% utilization of its drilling
rigs placed in service, and the Company maintained a utilization rate in excess
of 99% for each of the past three fiscal years. Improved financial results for
the Company in fiscal 1996 reflect continuing high rig utilization coupled with
significant dayrate increases for several of the Company's rigs, which were
achieved primarily during the second half of 1996. The Company has recently been
awarded two substantial rig upgrade contracts, and based upon contract
commitments, the Company expects to maintain a high level of utilization of its
remaining rigs during fiscal 1997.

MARKET OVERVIEW

BUSINESS STRATEGY

RIG FLEET UPGRADES -- The Company is capitalizing on opportunities to
enhance its rig fleet to take advantage of increased market dayrates for rigs
with deeper water drilling capabilities. The Company believes it can generate
significantly higher dayrates with increased operating margins by upgrading the
water depth drilling capabilities and deckload capacities of its rigs, thereby
earning a higher rate of return on investment.

22
<PAGE>
In January 1997, the Company was awarded a 175-day drilling contract for
the ATWOOD SOUTHERN CROSS, which has been stacked in Australia since it was
acquired for $1.5 million in fiscal 1994. The rig should be mobilized to
Singapore in March 1997 to undergo substantial refurbishment and upgrade at a
total cost of approximately $25 million in order to achieve up to 2,000 feet
water depth drilling capability. Upon completion of the refurbishment and
upgrade, the rig will commence drilling operations in Australia in late fiscal
1997 or early fiscal 1998.

GROWTH OPPORTUNITIES -- The Company has historically grown its fleet
through both rig acquisitions and new rig construction. In fiscal 1990, the
Company significantly enhanced the size and quality of its fleet by acquiring a
50% interest in three third-generation semisubmersible rigs, the ATWOOD FALCON,
ATWOOD EAGLE and ATWOOD HUNTER. In fiscal 1995, the Company acquired the
remaining 50% interest in these three rigs. In fiscal 1994, the Company expanded
its fleet by acquiring a second-generation semisubmersible rig, the ATWOOD
SOUTHERN CROSS. The Company participated in the design and fabrication of a
new-generation platform rig, RIG-200, through a 50/50 joint venture with a
subsidiary of Helmerich & Payne, Inc. RIG-200 commenced operations in January
1997 pursuant to a contract with Esso Australia Limited for drilling operations
in the West Tuna field offshore Australia. The Company continues to seek
opportunities to invest in rig acquisitions and new rig construction.

23
<PAGE>
QUALITY REPUTATION -- The Company is an experienced, safety-conscious
contract driller and has built long-term customer relationships with several of
the largest and most active operators of offshore oil and gas properties,
including U.S. and foreign integrated and independent oil and gas companies.
Over the last two fiscal years, the Company's high-quality customer base has
included Esso Australia Limited and Esso Production Malaysia, Inc. (33% of total
revenues over the period), BHP Petroleum Pty. Ltd. (11%), Carigali-Triton
Operating Company Sdn. Bhd. (10%), Woodside Offshore Petroleum Pty. Ltd., an
Australian company affiliated with Shell, British Petroleum, BHP Petroleum,
Chevron and Mitsubishi (10%), Mobil Equatorial Guinea Inc. (6%), and Shell
Offshore, Inc. (5%). The Company has received extensive customer recognition for
the safety of its contract drilling operations and completed fiscal 1996 without
experiencing a lost-time accident.

OFFSHORE DRILLING EQUIPMENT

The Company's diversified fleet of owned or operated drilling rigs
currently consists of four semisubmersibles, one jack-up, one submersible 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 applications 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.

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.

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.

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.

24
<PAGE>
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 or years 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 in certain markets, including in the U.S. Gulf of Mexico, where
the ATWOOD HUNTER will commence operations in mid-1997 under a three-year
contract. 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. The Company does not provide turnkey contract
drilling services. 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
oversupply of drilling rigs in any market area can adversely affect the
Company's ability to employ its drilling vessels. In fiscal 1996, the Company
maintained 100% utilization of its drilling equipment placed in service. Based
upon current contract commitments, the Company should maintain a high level of
equipment utilization in fiscal 1997; however, there is no guarantee that the
Company will not experience some equipment idle time in fiscal 1997.

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.

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, 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.

ENVIRONMENTAL MATTERS

25
<PAGE>
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 1996, 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 1996 revenues. Esso Australia Limited/Esso
Production Malaysia, Inc., Carigali-Triton Operating Company Sdn Bhd. and Mobil
Equatorial Guinea Inc. accounted for 32%, 14% and 11%, respectively, of fiscal
year 1996 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 although the Company believes its customer relationships are
strong, the loss of any significant customer or a decrease in the drilling
programs of significant customers in the areas where they employ the Company may
adversely affect the Company's results of operations.

COMPETITION

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 rig availability, 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. Demand for drilling equipment is also dependent on the exploration and
development programs of oil and natural gas companies, which are in turn
influenced by the financial condition of such companies, by general economic
conditions, by prices of oil and natural gas, and from time to time by political
considerations and policies.

EMPLOYEES

The Company currently employs approximately 650 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.

LEGAL PROCEEDINGS

From time to time, claims are filed against the Company in the ordinary
course of business. In the opinion of management, no pending claims against the
Company are expected to have a material adverse effect on its financial position
or results of operations.

<PAGE>
MANAGEMENT

The following table sets forth certain information with respect to the
directors and principal executive officers of the Company:

NAME AGE POSITION
- -------------------------------- --- -------------------------------------
John R. Irwin................... 51 Director, President and Chief
Executive Officer
James M. Holland................ 51 Senior Vice President and Secretary
Glen P. Kelley.................. 48 Vice President -- Contracts and
Administration
Larry P. Till................... 52 Vice President -- Operations
Robert W. Burgess............... 55 Director
George S. Dotson................ 56 Director
Walter H. Helmerich, III........ 73 Director
Hans Helmerich.................. 38 Director
William J. Morrissey............ 69 Director

Mr. Irwin joined the Company in July 1979, serving as Operations
Manager -- Technical Services. He was elected Vice President -- Operations in
November 1980, Executive Vice President in October 1988, President and Chief
Operating Officer in November 1992, and President and Chief Executive Officer in
March 1993.

Mr. Holland joined the Company as Accounting Manager in April 1977. He was
elected Vice President -- Finance in May 1981 and Senior Vice President and
Secretary in October 1988.

Mr. Kelley rejoined the Company in January 1983 as Manager of Operations
Administration. He was elected Vice President -- Contracts and Administration in
October 1988.

Mr. Till joined the Company in February 1983 as General
Manager -- Technical. He was elected Vice President -- Technical Services in
June 1984 and Vice President -- Operations in November 1992.

Mr. Burgess has served as Chief Financial Officer (Senior Vice President)
for CIGNA Investment Division, CIGNA Companies since 1982. CIGNA is a
diversified financial services company with major businesses in insurance,
health care, pensions and investments.

Mr. Dotson has served as Vice President -- Drilling of Helmerich & Payne,
Inc. and President of Helmerich & Payne International Drilling Co., both located
in Tulsa, Oklahoma, since 1977. Helmerich & Payne, Inc. is a diversified natural
resources company with divisions engaged in drilling, exploration, production
and real estate development. Mr. Dotson serves as a director of Helmerich &
Payne, Inc.

Mr. Walter H. Helmerich, III has served since 1960 as Chairman of the Board
of Helmerich & Payne, Inc. In addition, Mr. Helmerich serves as a director of
Liberty Bank & Trust Company of Oklahoma City, N.A., Liberty Bank & Trust
Company of Tulsa, N.A., and Liberty Bancorp, Inc. He is the father of Mr. Hans
Helmerich, who is also a director of the Company.

Mr. Hans Helmerich has served since 1989 as the Chief Executive Officer as
well as a director of Helmerich & Payne, Inc. He is the son of Mr. Walter H.
Helmerich, III.

Mr. Morrissey is a retired executive who served as Director and Vice
Chairman of the Board of Marine Corporation until the end of 1987, when Marine
Corporation was acquired by Banc One Corporation, Columbus, Ohio.

27
<PAGE>
UNDERWRITING

Under the terms and subject to the conditions contained in an Underwriting
Agreement dated February , 1997 (the "Underwriting Agreement"), the
Underwriters named below (the "Underwriters"), for whom Credit Suisse First
Boston Corporation, Howard, Weil, Labouisse, Friedrichs Incorporated and
Rauscher Pierce Refsnes, Inc. are acting as representatives (the
"Representatives"), have severally but not jointly agreed to purchase from the
Company the following respective numbers of shares of Common Stock:

UNDERWRITER NUMBER OF SHARES
- ------------------------------------- ----------------
Credit Suisse First Boston
Corporation..........................
Howard, Weil, Labouisse, Friedrichs
Incorporated.........................
Rauscher Pierce Refsnes, Inc.........

----------------
Total........................... 1,500,000
================

The Underwriting Agreement provides that the obligations of the
Underwriters are subject to certain conditions precedent and that the
Underwriters will be obligated to purchase all of the shares of Common Stock
offered hereby (other than those shares covered by the over-allotment option
described below) if any are purchased. The Underwriting Agreement provides that,
in the event of a default by an Underwriter, in certain circumstances the
purchase commitments of non-defaulting Underwriters may be increased or the
Underwriting Agreement may be terminated.

The Company has granted to the Underwriters an option, expiring at the
close of business on the 30th day after the date of this Prospectus, to purchase
up to 225,000 additional shares at the initial public offering price less the
underwriting discounts and commissions, all as set forth on the cover page of
this Prospectus. Such option may be exercised only to cover over-allotments in
the sale of the shares of Common Stock. To the extent such option is exercised,
each Underwriter will become obligated, subject to certain conditions, to
purchase approximately the same percentage of such additional shares of Common
Stock as it was obligated to purchase pursuant to the Underwriting Agreement.

The Company has been advised by the Representatives that the Underwriters
propose to offer the Shares to the public initially at the public offering price
set forth on the cover page of this Prospectus and, through the Representatives,
to certain dealers at such price less a concession of $ per share, and the
Underwriters and such dealers may allow a discount of $ per share on sales
to certain other dealers. After the initial public offering, the public offering
price and concession and discount to dealers may be changed by the
Representatives.

In connection with this Offering, Credit Suisse First Boston Corporation
and certain of the Underwriters and selling group members (if any) and their
respective affiliates may engage in passive market making transactions in the
Common Stock on The Nasdaq Stock Market in accordance with Rule 10b-6A under the
Exchange Act during a period before commencement of offers or sales of the
Shares offered hereby. The passive market making transactions must comply with
applicable volume and price limits and be identified as such.

The Company and H&P and each of the Company's directors and executive
officers have agreed that they will not offer, sell, contract to sell, announce
their intention to sell, pledge or otherwise dispose of, directly or indirectly,
or file with the Securities and Exchange Commission (the "Commission") a
registration statement under the Securities Act relating to, any shares of
Common Stock or securities convertible into or exchangeable or exercisable for
any shares of the Common Stock without the prior written consent of Credit
Suisse First Boston Corporation for a period of 120 days (with respect to the
Company and H&P) or 60 days (with respect to the Company's directors and
officers) after the date of this Prospectus, except in the case of the issuances
by the Company pursuant to the exercise of employee stock options outstanding on
the date hereof.

28
<PAGE>
The Company has agreed to indemnify the Underwriters against certain
liabilities, including civil liabilities under the Securities Act, or contribute
to payments which the Underwriters may be required to make in respect thereof.

The Underwriters are reserving an aggregate of 375,000 shares of Common
Stock to be offered to H&P at the public offering price set forth on the cover
page of this Prospectus.

NOTICE TO CANADIAN RESIDENTS

RESALE RESTRICTIONS

The distribution of the Shares in Canada is being made only on a private
placement basis exempt from the requirement that the Company prepare and file a
prospectus with the securities regulatory authorities in each province where
trades of Shares are effected. Accordingly, any resale of the Shares in Canada
must be made in accordance with applicable securities laws which will vary
depending on the relevant jurisdiction, and which may require resales to be made
in accordance with available statutory exemptions or pursuant to a discretionary
exemption granted by the applicable Canadian securities regulatory authority.
Purchasers are advised to seek legal advice prior to any resale of the Shares.

REPRESENTATIONS OF PURCHASERS

Each purchaser of Shares in Canada who receives a purchase confirmation
will be deemed to represent to the Company and the dealer from whom such
purchase confirmation is received that (i) such purchaser is entitled under
applicable provincial securities laws to purchase such Shares without the
benefit of a prospectus qualified under such securities laws, (ii) where
required by law, that such purchaser is purchasing as principal and not as
agent, and (iii) such purchaser has reviewed the text above under "Resale
Restrictions".

RIGHTS OF ACTION AND ENFORCEMENT

The securities being offered are those of a foreign issuer, and Ontario
purchasers will not receive the contractual right of action prescribed by
section 32 of the Regulation under the Securities Act (Ontario). As a result,
Ontario purchasers must rely on other remedies that may be available, including
common law rights of action for damages or rescission or rights of action under
the civil liability provisions of the U.S. federal securities laws.

All of the issuer's directors and officers as well as the experts named
herein may be located outside of Canada and, as a result, it may not be possible
for Ontario purchasers to effect service of process within Canada upon the
issuer or such persons. All or a substantial portion of the assets of the issuer
and such persons may be located outside of Canada and, as a result, it may not
be possible to satisfy a judgment against the issuer or such persons in Canada
or to enforce a judgment obtained in Canadian courts against such issuer or
persons outside of Canada.

NOTICE TO BRITISH COLUMBIA RESIDENTS

A purchaser of Shares to whom the Securities Act (British Columbia) applies
is advised that such purchaser is required to file with the British Columbia
Securities Commission a report within ten days of the sale of any Shares
acquired by such purchaser pursuant to this Offering. Such report must be in the
form attached to British Columbia Securities Commission Blanket Order BOR
#95/17, a copy of which may be obtained from the Company. Only one such report
must be filed in respect of Shares acquired on the same date and under the same
prospectus exemption.

LEGAL MATTERS

Certain legal matters in connection with the Common Stock being offered
hereby will be passed upon for the Company by Griggs & Harrison, P.C., Houston,
Texas. Certain legal matters relating to this Offering will be passed upon for
the Underwriters by Vinson & Elkins L.L.P., Houston, Texas.

29
<PAGE>
EXPERTS

The audited financial statements included or incorporated by reference in
this Prospectus and elsewhere in the Registration Statement have been audited by
Arthur Andersen LLP, independent public accountants, as indicated in their
reports with respect thereto, and are included or incorporated by reference
herein in reliance upon the authority of said firm as experts in accounting and
auditing in giving said reports.

AVAILABLE INFORMATION

The Company is subject to the informational requirements of the Exchange
Act, and in accordance therewith, files reports, proxy statements and other
information with the Commission. Such reports, proxy statements and other
information may be inspected and copied at the public reference facilities
maintained by the Commission at Room 1024, Judiciary Plaza, 450 Fifth Street,
N.W., Washington, D.C. 20549-1004, and at the following Regional Offices of the
Commission: Chicago Regional Office, Citicorp Center, 500 West Madison Street,
Suite 1400, Chicago, Illinois 60661-2511; and New York Regional Office, 7 World
Trade Center, Suite 1300, New York, New York 10048. Copies of such material may
also be obtained at prescribed rates from the Public Reference Section of the
Commission at its principal office at 450 Fifth Street, N.W., Judiciary Plaza,
Washington, D.C. 20549-1004. The Commission maintains a World Wide Web site on
the Internet at http://www.sec.gov that contains reports, proxy and information
statements and other information regarding registrants that file electronically
with the Commission. The Common Stock of the Company is traded on The Nasdaq
Stock Market's National Market under the symbol "ATWD." The Company's
registration statements, reports, proxy statements and other information may
also be inspected at the offices of the National Association of Securities
Dealers, Inc., 1735 K Street, N.W., Washington, D.C. 20006.

This Prospectus, which constitutes a part of a registration statement (the
"Registration Statement") filed by the Company with the Commission under the
Securities Act, omits certain of the information set forth in the Registration
Statement. Reference is hereby made to the Registration Statement and to the
exhibits thereto for further information with respect to the Company and the
securities offered hereby. Any statements contained herein concerning the
provisions of contracts or other documents are not necessarily complete, and
each such statement is qualified in its entirety by reference to the copy of the
applicable contract or other document filed with the Commission. Copies of the
Registration Statement and the exhibits thereto are on file at the offices of
the Commission and may be obtained upon payment of the fee prescribed by the
Commission, or may be examined without charge at the public reference facilities
of the Commission described above.

INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE

The following documents have been filed by the Company with the Commission
pursuant to the Exchange Act (File No. 0-6352) and are incorporated herein by
reference: (i) the Company's Annual Report on Form 10-K for the fiscal year
ended September 30, 1996; and (ii) the description of the Company's Common Stock
contained in Amendment No. 3 to the Company's Registration Statement on Form S-1
filed with the Commission on March 22, 1990.

All documents filed by the Company pursuant to Section 13(a), 13(c), 14 or
15(d) of the Exchange Act subsequent to the date of this Prospectus and prior to
the termination of the offering of Common Stock covered by this Prospectus shall
be deemed to be incorporated by reference herein and to be a part hereof from
the date of filing thereof. Any statement contained in a document incorporated
or deemed to be incorporated by reference herein shall be deemed to be modified
or superseded for purposes of this Prospectus to the extent that a statement
contained herein, or in any other subsequently filed document that also is or is
deemed to be incorporated by reference herein, modifies or supersedes such
statement. Any such statement so modified or superseded shall not be deemed,
except as so modified or superseded, to constitute a part of this Prospectus.

30
<PAGE>
The Company hereby undertakes to provide without charge to each person,
including any beneficial owner, to whom a copy of this Prospectus has been
delivered, upon the written or oral request of such person, a copy of any or all
of the information that has been incorporated by reference in this Prospectus
(not including exhibits to the information that is incorporated by reference
herein unless such exhibits are specifically incorporated by reference in such
information). Requests for such copies should be directed to James M. Holland,
Senior Vice President and Secretary, Atwood Oceanics, Inc., P.O. Box 218350,
Houston, Texas 77218 (telephone number (281) 492-2929).

<PAGE>
INDEX TO FINANCIAL STATEMENTS

PAGE
----

Consolidated Financial Statements of
Atwood Oceanics, Inc.:

Report of Independent Public
Accountants.................... F-2

Consolidated Balance Sheet as of
September 30, 1995 and 1996 and
December 31, 1996
(unaudited).................... F-3

Consolidated Statement of
Operations for the Years Ended
September 30, 1994,
1995 and 1996 and for the
Three Months Ended December 31,
1995 (unaudited)
and 1996 (unaudited).......... F-5

Consolidated Statement of Cash
Flows for the Years Ended
September 30, 1994,
1995 and 1996 and for the
Three Months Ended December 31,
1995 (unaudited)
and 1996 (unaudited).......... F-6

Consolidated Statement of
Changes in Shareholders' Equity
for the Years Ended
September 30, 1994, 1995 and
1996 and for the Three Months
Ended
December 31, 1996
(unaudited).................... F-7

Notes to Consolidated Financial
Statements..................... F-8

F-1
<PAGE>
REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS

To Board of Directors of Atwood Oceanics, Inc.:

We have audited the accompanying consolidated balance sheet of Atwood
Oceanics, Inc. (a Texas corporation) and subsidiaries as of September 30, 1995
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, 1996. 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, 1995 and 1996, and the results of their
operations and their cash flows for each of the three years in the period ended
September 30, 1996, in conformity with generally accepted accounting principles.

/s/ Arthur Andersen LLP
ARTHUR ANDERSEN LLP

Houston, Texas
November 15, 1996

F-2
<PAGE>
ATWOOD OCEANICS, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEET
(IN THOUSANDS)

SEPTEMBER 30,
---------------------- DECEMBER 31,
1995 1996 1996
---------- ---------- ------------
(UNAUDITED)
ASSETS
CURRENT ASSETS:
Cash and cash equivalents....... $ 11,984 $ 17,565 $ 17,412
Accounts receivable............. 13,425 16,687 18,547
Inventories of materials and
supplies, at lower of average
cost or market................ 4,904 5,454 5,933
Deferred tax assets............. 1,200 1,510 1,510
Prepaid expenses................ 2,753 2,954 2,282
---------- ---------- ------------
Total Current Assets....... 34,266 44,170 45,684
---------- ---------- ------------
SECURITIES HELD FOR INVESTMENT:
Held-to-maturity, at amortized
cost.......................... 22,422 22,576 22,577
Available-for-sale, at fair
value......................... 3,516 351 351
---------- ---------- ------------
25,938 22,927 22,928
---------- ---------- ------------
PROPERTY AND EQUIPMENT, at cost:
Drilling vessels, equipment and
drill pipe.................... 183,171 191,801 198,057
Other........................... 4,569 4,810 4,882
---------- ---------- ------------
187,740 196,611 202,939
Less -- accumulated
depreciation.................. 96,313 105,487 107,635
---------- ---------- ------------
Net Property and
Equipment............... 91,427 91,124 95,304
---------- ---------- ------------
DEFERRED COSTS AND OTHER ASSETS...... 1,222 1,088 752
---------- ---------- ------------
$ 152,853 $ 159,309 $164,668
========== ========== ============

The accompanying notes are an integral part of these consolidated financial
statements.

F-3
<PAGE>
ATWOOD OCEANICS, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEET
(IN THOUSANDS, EXCEPT SHARE DATA)

SEPTEMBER 30, DECEMBER 31,
---------------------- ------------
1995 1996 1996
---------- ---------- ------------
(UNAUDITED)
LIABILITIES AND SHAREHOLDERS' EQUITY
CURRENT LIABILITIES:
Estimated current maturities of
long-term notes payable....... $ 3,750 $ 7,933 $ 22,750
Short-term note payable......... 1,500 -- --
Accounts payable................ 6,260 2,615 3,220
Accrued liabilities............. 8,995 7,471 8,902
---------- ---------- ------------
Total Current
Liabilities............. 20,505 18,019 34,872
---------- ---------- ------------
LONG-TERM NOTES PAYABLE, net of
estimated current maturities....... 35,569 26,540 8,040
---------- ---------- ------------
DEFERRED CREDITS:
Income taxes.................... 1,334 2,289 2,287
Other........................... 553 6,907 9,747
---------- ---------- ------------
1,887 9,196 12,034
---------- ---------- ------------
SHAREHOLDERS' EQUITY:
Preferred stock, no par value;
1,000,000 shares authorized,
none outstanding.............. -- -- --
Common stock, $1 par value;
10,000,000 shares authorized
with 6,629,000, 6,691,000 and
6,710,000 shares issued and
outstanding at September 30,
1995 and 1996 and December 31,
1996, respectively............ 6,629 6,691 6,710
Paid-in capital................. 54,771 55,470 55,698
Net unrealized holding gain
(loss) on available-for-sale
securities.................... 1,328 (139) (137)
Retained earnings............... 32,164 43,532 47,451
---------- ---------- ------------
Total Shareholders'
Equity.................. 94,892 105,554 109,722
---------- ---------- ------------
$ 152,853 $ 159,309 $164,668
========== ========== ============

The accompanying notes are an integral part of these consolidated financial
statements.

F-4
<PAGE>
ATWOOD OCEANICS, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENT OF OPERATIONS
(IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)

<TABLE>
<CAPTION>
THREE MONTHS ENDED
YEARS ENDED SEPTEMBER 30, DECEMBER 31,
------------------------------- --------------------
1994 1995 1996 1995 1996
--------- --------- --------- --------- ---------
(UNAUDITED)
<S> <C> <C> <C> <C> <C>
REVENUES:
Contract drilling............... $ 63,640 $ 70,715 $ 78,555 $ 17,943 $ 21,667
Contract management............. 2,335 1,516 900 195 426
--------- --------- --------- --------- ---------
65,975 72,231 79,455 18,138 22,093
--------- --------- --------- --------- ---------
COSTS AND EXPENSES:
Contract drilling............... 42,799 50,241 50,912 12,888 12,406
Contract management............. 1,529 585 628 146 254
Depreciation.................... 13,618 11,134 9,742 2,635 2,302
General and administrative...... 4,324 4,485 5,113 1,060 1,511
--------- --------- --------- --------- ---------
62,270 66,445 66,395 16,729 16,473
--------- --------- --------- --------- ---------
OPERATING INCOME..................... 3,705 5,786 13,060 1,409 5,620
--------- --------- --------- --------- ---------
OTHER INCOME (EXPENSE):
Interest expense................ (2,892) (2,936) (2,522) (690) (532)
Investment income............... 2,819 2,804 2,510 589 646
Realized gain on sale of
securities.................... -- 2,370 2,795 -- --
--------- --------- --------- --------- ---------
(73) 2,238 2,783 (101) 114
--------- --------- --------- --------- ---------
INCOME BEFORE MINORITY INTEREST AND
INCOME TAXES....................... 3,632 8,024 15,843 1,308 5,734
MINORITY INTEREST IN LOSS OF
PARTNERSHIPS....................... 3,303 908 -- -- --
--------- --------- --------- --------- ---------
INCOME BEFORE INCOME TAXES........... 6,935 8,932 15,843 1,308 5,734
PROVISION FOR INCOME TAXES........... 726 1,872 4,475 646 1,815
--------- --------- --------- --------- ---------
NET INCOME........................... $ 6,209 $ 7,060 $ 11,368 $ 662 $ 3,919
========= ========= ========= ========= =========
EARNINGS PER COMMON SHARE............ $ .94 $ 1.07 $ 1.71 $ .10 $ .58
========= ========= ========= ========= =========
WEIGHTED AVERAGE NUMBER OF COMMON
SHARES OUTSTANDING................. 6,582 6,591 6,664 6,632 6,707
========= ========= ========= ========= =========
</TABLE>

The accompanying notes are an integral part of these consolidated financial
statements.

F-5
<PAGE>
ATWOOD OCEANICS, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENT OF CASH FLOWS
(IN THOUSANDS)

<TABLE>
<CAPTION>
THREE MONTHS ENDED
YEARS ENDED SEPTEMBER 30, DECEMBER 31,
-------------------------------- --------------------
1994 1995 1996 1995 1996
--------- ---------- --------- --------- ---------
(UNAUDITED)
<S> <C> <C> <C> <C> <C>
CASH FLOW FROM OPERATING ACTIVITIES:
Net income...................... $ 6,209 $ 7,060 $ 11,368 $ 662 $ 3,919
Adjustments to reconcile net
income to net cash provided by
operating activities:
Depreciation............... 13,618 11,134 9,742 2,635 2,302
Amortization of deferred
items................... 531 429 604 149 287
Deferred federal income tax
provision (benefit)..... (150) (400) 1,400 -- --
Gain on sale of
securities.............. -- (2,370) (2,795) -- --
Gain on sale of equity in
Indian joint venture.... (201) -- -- -- --
Minority interest in loss
of partnerships......... (3,303) (908) -- -- --
Changes in assets and
liabilities:
Decrease (increase) in
accounts receivable..... (3,147) 490 (3,412) (878) (1,860)
Increase (decrease) in
accounts payable........ 670 2,532 (3,645) (333) 605
Increase (decrease) in
accrued liabilities..... 731 2,422 (1,524) 888 1,431
Prepayment of mobilization
fees.................... -- -- 3,000 3,000 4,500
Other...................... (358) (1,192) 2,216 1,166 (1,523)
--------- ---------- --------- --------- ---------
8,391 12,137 5,586 6,627 5,742
--------- ---------- --------- --------- ---------
Net Cash Provided by
Operating
Activities......... 14,600 19,197 16,954 7,289 9,661
--------- ---------- --------- --------- ---------
CASH FLOW FROM INVESTING ACTIVITIES:
Proceeds from sale of
securities.................... -- 3,343 3,738 -- --
Capital expenditures............ (6,412) (4,545) (6,660) (651) (6,000)
Investment in RIG-200........... (310) (7,872) (2,866) (1,474) (378)
Acquisition of interest in
partnerships.................. -- (13,275) -- -- --
Proceeds from sale of equity in
Indian joint venture.......... 1,300 -- -- -- --
Payments received on notes
receivable.................... 404 202 -- -- --
--------- ---------- --------- --------- ---------
Net Cash Used by
Investing
Activities......... (5,018) (22,147) (5,788) (2,125) (6,378)
--------- ---------- --------- --------- ---------
CASH FLOW FROM FINANCING ACTIVITIES:
Proceeds from exercises of stock
options....................... -- 545 761 83 247
Principal payments on long-term
notes......................... (3,000) (3,130) (4,846) (1,500) (3,683)
Net payments to limited
partner....................... (550) (100) -- -- --
Proceeds (repayment) of
short-term note payable....... -- 1,500 (1,500) (500) --
--------- ---------- --------- --------- ---------
Net Cash Used by
Financing
Activities......... (3,550) (1,185) (5,585) (1,917) (3,436)
--------- ---------- --------- --------- ---------
NET INCREASE (DECREASE) IN CASH AND
CASH EQUIVALENTS................... 6,032 (4,135) 5,581 3,247 (153)
CASH AND CASH EQUIVALENTS, at
beginning of period................ 10,087 16,119 11,984 11,984 17,565
--------- ---------- --------- --------- ---------
CASH AND CASH EQUIVALENTS, at end of
period............................. $ 16,119 $ 11,984 $ 17,565 $ 15,231 $ 17,412
========= ========== ========= ========= =========
Supplemental disclosure of cash flow
information:
Cash paid during the period for
domestic and foreign income
taxes........................... $ 1,657 $ 1,558 $ 2,660 $ -- $ --
========= ========== ========= ========= =========
Cash paid during the period for
interest........................ $ 2,380 $ 2,552 $ 2,478 $ 738 $ 659
========= ========== ========= ========= =========
</TABLE>

The accompanying notes are an integral part of these consolidated financial
statements.

F-6
<PAGE>
ATWOOD OCEANICS, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENT OF CHANGES IN SHAREHOLDERS' EQUITY
(IN THOUSANDS)

<TABLE>
<CAPTION>
UNREALIZED
COMMON STOCK HOLDING
----------------- PAID-IN GAIN RETAINED
SHARES AMOUNT CAPITAL (LOSS) EARNINGS
------ ------ ------- ---------- --------
<S> <C> <C> <C> <C> <C>
September 30, 1993................... 6,582 $6,582 $54,273 $ -- $ 18,895
Net income...................... -- -- -- -- 6,209
------ ------ ------- ---------- --------
September 30, 1994................... 6,582 6,582 54,273 -- 25,104
Unrealized holding gain......... -- -- -- 1,328 --
Exercises of employee stock
options....................... 47 47 498 -- --
Net income...................... -- -- -- -- 7,060
------ ------ ------- ---------- --------
September 30, 1995................... 6,629 6,629 54,771 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 -- --
Net income...................... -- -- -- -- 11,368
------ ------ ------- ---------- --------
September 30, 1996................... 6,691 6,691 55,470 (139) 43,532
Decrease in unrealized holding
loss (unaudited).............. -- -- -- 2 --
Exercise of employee stock
options (unaudited)........... 19 19 228 -- --
Net Income (unaudited).......... -- -- -- -- 3,919
------ ------ ------- ---------- --------
December 31, 1996 (unaudited)........ 6,710 $6,710 $55,698 $ (137) $ 47,451
====== ====== ======= ========== ========
</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.

F-7

<PAGE>
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. 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 Malaysian/Thailand Joint Development Area.

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 natural 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

UNAUDITED INTERIM INFORMATION --

The unaudited interim financial statements as of December 31, 1996 and for
each of the three month periods ended December 31, 1995 and 1996, included
herein, have been prepared by the Company, pursuant to the rules and regulations
of the Securities and Exchange Commission for interim financial reporting.
Accordingly, these financial statements and related information have been
prepared without audit, and certain information and note disclosures normally
included in financial statements prepared in accordance with generally accepted
accounting principles have been condensed or omitted, although management
believes that the note disclosures are adequate to make the information not
misleading. In the opinion of the Company's management, the unaudited interim
financial statements reflect all adjustments (consisting of normal recurring
adjustments) considered necessary for a fair presentation of the financial
position and results of operations of the Company for the periods presented. The
interim financial results may not be indicative of results that could be
expected for a full year.

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 50 percent undivided 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.
("Falcon Ltd."), the accounts of which were included in the Company's
consolidated financial statements. The 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".

F-8
<PAGE>
ATWOOD OCEANICS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
(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 a foreign exchange gain of $240,000 in fiscal
year 1996, with foreign exchange losses of $155,000 and $417,000 incurred in
fiscal years 1995 and 1994, respectively.

DEPRECIATION, MAINTENANCE AND RETIREMENT POLICIES --

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,
1995 or 1996.

The Company defers the cost of scheduled drydocking and the cost is charged
to expense over the period to the next scheduled drydocking (normally 30
months). Deferred drydocking costs totaled $1,037,000 and $880,000 at September
30, 1995 and 1996, respectively.

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, 1996, deferred revenues totaling $3 million were included in other
deferred credits on the accompanying consolidated balance sheet. There were no
deferred revenues at September 30, 1995.

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 given the provisions of
enacted tax laws. For interim periods, the Company records income taxes using
the expected effective tax rate for the fiscal year.

F-9
<PAGE>
ATWOOD OCEANICS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

CASH AND CASH EQUIVALENTS --

Cash and cash equivalents consist of cash in banks and certificates of
deposit 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.

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, 1995 and 1996, investments in
available-for-sale securities are carried at fair value with the unrealized
holding gain or 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.

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.

RECLASSIFICATIONS --

Certain reclassifications have been made to fiscal 1995 and fiscal 1994
financial statements to conform to the fiscal 1996 classifications.

NOTE 3 -- SECURITIES HELD FOR INVESTMENT

At the beginning of fiscal year 1995, the Company adopted SFAS No. 115,
"Accounting for Certain Investments in Debt and Equity Securities", which had
an immaterial effect on the consolidated balance sheet and had no effect on
reported earnings. All of the Company's investments in equity securities are
classified as "available-for-sale" and accordingly, are reflected in the
September 30, 1995 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, 1995
and 1996 Consolidated Balance Sheets at amortized cost.

F-10
<PAGE>
ATWOOD OCEANICS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

During fiscal 1995 and fiscal 1996, 33,000 shares and 32,000 shares of
Mobil Corporation common stock were sold for $3.3 million and $3.7 million,
resulting in realized gains, using average cost, of $2.4 million and $2.8
million, respectively. An analysis of the Company's investment in marketable
securities at September 30, 1995 and 1996 is as follows (in thousands):

AMORTIZED UNREALIZED
COST GAIN (LOSS) FAIR VALUE
--------- ----------- ----------
Fiscal Year 1995
Equity Securities............... $ 1,504 $ 2,012 $ 3,516
United States Treasury Bonds.... 22,422 2,204 24,626
--------- ----------- ----------
$23,926 $ 4,216 $ 28,142
========= =========== ==========
Fiscal Year 1996
Equity Securities............... $ 561 $ (210) $ 351
United States Treasury Bonds.... 22,576 1,387 23,963
--------- ----------- ----------
$23,137 $ 1,177 $ 24,314
========= =========== ==========

NOTE 4 -- PROPERTY AND EQUIPMENT

RIG-200 --

In August 1994, Atwood Oceanics West Tuna Pty. Ltd. ("West Tuna"), an
Australian Company 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), was awarded a term contract for the design, construction and
operation of a new generation platform rig. The Company and H&P entered into a
joint venture agreement to construct, install and operate the new rig. RIG-200
was constructed in the United States during calendar year 1995; however, due to
project delays in Australia unrelated to the Company's and H&P's activities,
West Tuna was advised to delay shipment of the rig to Australia until September
1996. Under terms of the contract, a holding dayrate has been received since
January 1, 1996. In addition, West Tuna received a $6 million partial prepayment
of a $10 million mobilization fee originally due upon commencement of operations
in Australia. The Company's $3 million portion of this prepayment is reflected
in "Other Deferred Credits" in the September 30, 1996 Consolidated Balance
Sheet.

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 $11 million investment in RIG-200 at September 30, 1996, 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 year 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
aggregate 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.

When the Company acquired its initial interest in these rigs in fiscal
1990, their estimated useful lives for depreciation purposes were ten years. The
Company acquired the remaining 50 percent interest in these

F-11
<PAGE>
ATWOOD OCEANICS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
rigs on the basis that they will remain long-term productive assets; therefore,
effective January 1995 management increased the estimated useful lives of these
rigs by an additional five years. The effect of the change in depreciable lives
was a $2.7 million reduction in depreciation for the last nine months of fiscal
1995 compared to fiscal 1994 and a corresponding increase in net income of $1.8
million or $.27 per share.

ATWOOD HUNTER --

In June 1996, the Company entered into a contract with British-Borneo
Petroleum Inc. for the use of the ATWOOD HUNTER on a firm two year plus a
one-year option Gulf of Mexico deep water drilling program commencing in
mid-1997. The option for the third year has subsequently been exercised. To
enable the ATWOOD HUNTER to perform this contract, the Company has committed to
upgrade equipment and relocate the rig from Southeast Asia to the United States
Gulf of Mexico at an aggregate cost of approximately $42 to $45 million. The
contract also requires the payment of a $10 million mobilization fee which will
offset some of the Company's costs. See Note 13.

ATWOOD SOUTHERN CROSS --

The ATWOOD SOUTHERN CROSS, a second-generation semisubmersible which was
purchased by the Company for $1.5 million in fiscal 1994, remains idle in
Australia as the Company continues to pursue a future contract opportunity. The
Company believes upgrade expenditures of approximately $25 million will be
required to upgrade, refurbish and mobilize the rig to drill in water depths up
to 2,000 feet. The Company has incurred approximately $1.8 million in
capitalized costs to prepare the rig for various utilization alternatives and
has made commitments to purchase approximately $5 million of long lead-time
equipment for such an upgrade. The Company continues to actively market the rig
and remains optimistic that a profitable contract opportunity will be identified
for the rig. See Note 13.

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".
Since adoption, SFAS No. 121 has had no impact on the Company's financial
statements.

NOTE 5 -- NOTES PAYABLE

LONG-TERM NOTES PAYABLE --

A summary of long-term notes payable is as follows (in thousands):

SEPTEMBER 30,
--------------------
1995 1996
--------- ---------
Notes payable to bank group by Deep
Seas, bearing interest (market
adjustable) at approximately 7
percent per annum at September 30,
1996............................... $ 36,319 $ 32,223
Term note, bearing interest at 6
percent per annum.................. 3,000 2,250
--------- ---------
39,319 34,473
Less -- estimated current
maturities......................... 3,750 7,933
--------- ---------
$ 35,569 $ 26,540
========= =========

Required principal payments on the bank group debt are $750,000 per quarter
through December 31, 1997, with a final balloon payment of the remaining balance
payable in March 1998. The loan documents with the bank group require that
additional principal payments be made each quarter if quarterly cash flow
exceeds a defined level. Due to a significant improvement in Deep Seas'
operating results, Deep Seas made additional principal payments to the bank
group of approximately $1.1 million and $2.2 million in July 1996 and October
1996, respectively. The October 1996 payment is reflected in year-end estimated
current

F-12
<PAGE>
ATWOOD OCEANICS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
maturities as of September 30, 1996. Estimated additional principal payments of
approximately $2 million will be required based on the estimated excess cash
flow of Deep Seas during the first quarter of fiscal year 1997 (included in
estimated current maturities of long-term debt as of September 30, 1996). The
bank group's collateral for the long-term notes consists principally of
preferred mortgages on the ATWOOD HUNTER and ATWOOD EAGLE. The loan documents
also prohibit the cash payment of management fees, profits and other cash
disbursements by Deep Seas prior to the time the notes are paid in full. There
is also an annual limit on the amount of capital expenditures that can be made
by Deep Seas. In fiscal 1995, Deep Seas obtained a waiver from the bank group
with respect to expenditures which exceeded the capital expenditures limit, and
it is anticipated that a similar waiver will be required in fiscal 1997 in
connection with the upgrade of the ATWOOD HUNTER. See Note 4 for a discussion of
the ATWOOD HUNTER upgrade. See Note 13 for a discussion of modifications to the
bank debt subsequent to September 30, 1996.

A portion of the purchase price 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 estimated maturities of long-term debt as of September 30, 1996 are as
follows (in thousands):

FISCAL
YEAR AMOUNT
- ------------------------------------- -------
1997................................. $ 7,933*
1998................................. 25,790
1999................................. 750
-------
$34,473
=======

- ------------

* Increased by a $10 million prepayment subsequent to September 30, 1996. See
Note 13.

LINES OF CREDIT --

The Company has a $10 million short-term line of credit with a bank that is
secured by the pledge of a portion of the Company's United States treasury
bonds. This line of credit is used to satisfy short-term working capital
requirements. At September 30, 1996, there were no outstanding borrowings under
this line of credit. At September 30, 1995, $1.5 million bearing interest of 6
percent was borrowed under this line of credit. See Note 13.

The Company also 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, 1996, standby letters of
guarantee in the aggregate amount of approximately $1 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 ended September 30, 1996 are as follows (in
thousands):

FISCAL FISCAL FISCAL
1994 1995 1996
--------- --------- ---------
Domestic income (loss)............... $ (2,869) $ 6,237 $ 17,508
Foreign income (loss)................ 6,501 1,787 (1,665)
--------- --------- ---------
$ 3,632 $ 8,024 $ 15,843
========= ========= =========

F-13
<PAGE>
ATWOOD OCEANICS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

The provision (benefit) for domestic and foreign taxes on income consists
of the following (in thousands):

FISCAL FISCAL FISCAL
1994 1995 1996
------- --------- ---------
Current domestic provision........... $ 400 $ 700 $ 452
Deferred domestic provision
(benefit).......................... (150) (400) 1,400
Current foreign provision............ 476 1,572 2,623
------- --------- ---------
$ 726 $ 1,872 $ 4,475
======= ========= =========

Effective October 1, 1993, the Company adopted SFAS No. 109, "Accounting
for Income Taxes". As of October 1, 1993, there was no cumulative effect of the
accounting change for income taxes reflected in the Company's statement of
operations. The components of the deferred income tax assets (liabilities) as of
September 30, 1995 and 1996 are summarized as follows (in thousands):

SEPTEMBER 30,
--------------------
1995 1996
--------- ---------
Deferred tax assets --
Net operating loss
carryforwards................. $ 4,570 $ 2,950
Investment tax credit
carryforwards................. 3,620 2,460
Book reserves................... 1,730 1,530
Difference in book and tax basis
of equipment.................. 5,590 2,980
--------- ---------
15,510 9,920
--------- ---------
Deferred tax liabilities --
Income recognized for tax in
excess of book................ 7,870 5,970
Deferred charges................ 430 450
Unrealized holding gain (loss)
on available-for-sale
securities.................... 684 (71)
--------- ---------
8,984 6,349
--------- ---------
Net deferred tax assets before
valuation allowance................ 6,526 3,571
Valuation allowances................. (6,660) (4,350)
--------- ---------
Net deferred tax asset
(liability)................... $ (134) $ (779)
========= =========
Net current deferred tax assets...... $ 1,200 $ 1,510
Net noncurrent deferred tax
liabilities........................ (1,334) (2,289)
--------- ---------
Net deferred tax asset
(liability)................... $ (134) $ (779)
========= =========

U.S. deferred taxes have not been provided on foreign earnings totaling
approximately $3.8 million which are permanently invested abroad. Foreign tax
credits totaling approximately $600,000 are available to reduce the U.S. taxes
on such amounts.

F-14
<PAGE>
ATWOOD OCEANICS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

The differences between the statutory and the effective income tax rate are
as follows:

FISCAL FISCAL FISCAL
1994 1995 1996
------ ------ ------
Statutory income tax rate............ 34% 34% 34%
Increase (decrease) in tax rate
resulting from --
Foreign tax rate differentials,
net of foreign tax credit
utilization................... (18) 1 12
Book depreciation on
partnerships' assets with no
tax basis..................... 19 -- --
Investment tax credits.......... (14) -- --
Change in valuation allowance... -- (10) (15)
Financial income not subject to
domestic income taxes......... (2) (1) --
Other, net...................... (9) (3) (3)
------ ------ ------
Effective income tax rate............ 10% 21% 28%
====== ====== ======

The Company has United States net operating loss carryforwards totaling
$8.7 million which expire in fiscal years 2001 through 2003 and investment tax
credit carryforwards totaling $2.5 million which expire in fiscal years 1997
through 2001. Due to various utilization limitations, management estimates that
a significant portion of these tax attributes will not be available to reduce
future tax obligations; accordingly, a $4.4 million valuation allowance is
recorded as of September 30, 1996.

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 a tax
refund in fiscal year 1994 of $639,000 (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

The Company has a stock option plan ("Stock Plan") under which
non-qualified and incentive stock options may be granted to officers and key
employees through December 5, 2000. The maximum number of shares of common stock
that may be granted under the Stock Plan is 330,000. The Company also has
options outstanding to purchase 23,100 shares under an incentive stock option
plan ("Incentive Plan") which expired for future grant purposes on November
17, 1991. Under both 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 Incentive Plan, options vest over a
period from the fifth to the tenth year from the date of grant and under the
Stock Plan, options vest over a period from the second to the fifth year from
the date of grant.

F-15
<PAGE>
ATWOOD OCEANICS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

A summary of the status of the Company's plans as of September 30, 1994,
1995 and 1996, and changes during the years ended on those dates is presented
below:

<TABLE>
<CAPTION>
FISCAL 1994 FISCAL 1995 FISCAL 1996
-------------------------- -------------------------- --------------------------
WEIGHTED- WEIGHTED- WEIGHTED-
NUMBER OF AVERAGE NUMBER OF AVERAGE NUMBER OF AVERAGE
OPTIONS EXERCISE PRICE OPTIONS EXERCISE PRICE OPTIONS EXERCISE PRICE
--------- -------------- --------- -------------- --------- --------------
<S> <C> <C> <C> <C> <C> <C>
Outstanding at beginning of year..... 258,800 $12.44 254,500 $12.19 240,100 $12.29
Granted.............................. 44,000 13.38 32,000 13.13 75,500 34.49
Exercised............................ -- -- (46,400) 11.75 (62,200) 12.23
Forfeited............................ (18,000) 12.79 -- -- -- --
Expired.............................. (30,300) 16.25 -- -- -- --
--------- --------- ---------
Outstanding at end of year........... 254,500 $12.19 240,100 $12.29 253,400 $18.92
========= ========= =========
Exercisable at end of year........... 58,300 $12.48 79,987 $12.12 82,338 $12.04
========= ========= =========
Available for grant at end of year... 107,500 75,500 --
========= ========= =========
Weighted-average fair value of
options granted during the year.... $ 13.35
=========
</TABLE>

The following table summarizes information about stock options outstanding
at September 30, 1996:

<TABLE>
<CAPTION>
OPTIONS OUTSTANDING
- ----------------------------------------------------------------------- OPTIONS EXERCISABLE
WEIGHTED- ------------------------------
NUMBER AVERAGE WEIGHTED- NUMBER WEIGHTED-
RANGE OF OUTSTANDING REMAINING AVERAGE EXERCISABLE AVERAGE
EXERCISE PRICES AT 9/30/96 CONTRACTUAL LIFE EXERCISE PRICE AT 9/30/96 EXERCISE PRICE
- ---------------- ----------- ---------------- -------------- ----------- --------------
<C> <C> <C> <C> <C> <C> <C>
$9.75 to $12.25 69,125 4.8 years $10.81 36,402 $10.53
13.00 to 14.75 108,775 6.4 years 13.28 45,936 13.24
33.25 to 37.94 75,500 9.5 years 34.49 -- --
----------- -----------
$9.75 to $37.94 253,400 6.9 years $18.92 82,338 $12.04
=========== ===========
</TABLE>

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 its stock option plans. Had
compensation costs been determined based on the fair value at the grant dates
for awards made in fiscal 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):

Net income............ As reported $ 11,368
Pro forma 11,291
Earnings per share.... As reported $1.71
Pro forma 1.69

The fair value of grants made in fiscal 1996 was estimated on the date of
grant using the Black-Scholes option pricing model with the following
weighted-average assumptions used: risk-free interest rate of 5.8 percent,
expected volatility of 33.7 percent, expected lives of 5 years and no dividend
yield.

F-16
<PAGE>
ATWOOD OCEANICS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

NOTE 8 -- RETIREMENT PLAN

The Company has a contributory retirement plan (the "Plan") under which
qualified participants may make contributions of up to 5 percent 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
$58,000 of forfeitures in fiscal 1996 and $112,000 of forfeitures in fiscal 1995
to reduce its cash contribution requirements, which resulted in actual
contributions of $738,000 in fiscal 1996 and $637,000 in fiscal 1995. In fiscal
1994, the Company made cash contributions of $702,000 and did not utilize any
forfeitures to reduce its contribution requirements. As of September 30, 1996,
there remains approximately $74,000 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 $32.2 million note payable to the bank group has a
market adjustable interest rate and a short maturity, the carrying value of this
instrument approximates fair value. Although the $2.25 million term note has a
fixed 6 percent interest rate at September 30, 1996, it also approximates fair
value. The Company's only financial instruments at September 30, 1995 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 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 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. Drilling revenues for fiscal 1994
included $24.8 million and $6.7 million in revenues received from Esso Australia
Limited/Esso Production Malaysia, Inc. and Western Mining Corporation Limited,
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

F-17
<PAGE>
ATWOOD OCEANICS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
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):

FISCAL FISCAL FISCAL
1994 1995 1996
---------- ---------- ----------
CONTRACT REVENUES:
United States................... $ 5,483 $ 4,981 $ 6,208
Australia....................... 31,192 35,314 31,043
Southeast Asia.................. 28,935 31,936 33,774
Africa.......................... -- -- 8,430
India/Middle East............... 365 -- --
---------- ---------- ----------
$ 65,975 $ 72,231 $ 79,455
========== ========== ==========
OPERATING INCOME:
United States................... $ 1,160 $ (603) $ 42
Australia....................... 6,013 6,562 8,018
Southeast Asia.................. 902 4,318 6,316
Africa.......................... -- -- 3,831
India/Middle East............... (46) (6) (34)
General corporate expense....... (4,324) (4,485) (5,113)
---------- ---------- ----------
$ 3,705 $ 5,786 $ 13,060
========== ========== ==========
IDENTIFIABLE ASSETS:
United States................... $ 19,132 $ 22,599 $ 31,071
Australia....................... 39,182 42,143 19,365
Southeast Asia.................. 63,024 62,166 64,163
Africa.......................... -- -- 21,780
India/Middle East............... 9 7 3
General corporate............... 32,113 25,938 22,927
---------- ---------- ----------
$ 153,460 $ 152,853 $ 159,309
========== ========== ==========

F-18
<PAGE>
ATWOOD OCEANICS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

NOTE 12 -- QUARTERLY FINANCIAL DATA (UNAUDITED)

Summarized quarterly results for fiscal years 1995 and 1996 are as follows
(in thousands, except per share amounts):

<TABLE>
<CAPTION>
QUARTERS ENDED
------------------------------------------------------
DECEMBER 31, MARCH 31, JUNE 30, SEPTEMBER 30,
------------ --------- -------- -------------
<S> <C> <C> <C> <C>
1995
Revenues............................. $ 18,306 $18,314 $ 18,548 $17,063
Income before income taxes........... 1,933 2,132 3,912(a) 955
Net income........................... 1,743 1,287 3,191 839
Earnings per common share............ .26 .20 .48 .13
1996
Revenues............................. $ 18,138 $19,086 $ 19,127 $23,104
Income before income taxes........... 1,308 2,281 3,638 8,616(b)
Net income........................... 662 1,331 2,379 6,996
Earnings per common share............ .10 .20 .36 1.05
</TABLE>

- ------------

(a) The Company sold 33,000 shares of Mobil Corporation common stock which
resulted in a $2.4 million positive effect on fiscal 1995 third quarter
results.

(b) 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.

NOTE 13 -- EVENTS (UNAUDITED) SUBSEQUENT TO DATE OF AUDITORS' REPORT

In January 1997, the Company executed a drilling contract for the ATWOOD
SOUTHERN CROSS which requires substantial refurbishment and upgrade of the rig.
The Company has previously committed to purchase $5 million of long lead-time
equipment for such an upgrade and will incur approximately $20 million of
additional costs to complete the refurbishment and upgrade. Management estimates
that this rig will commence drilling operations in Australia in late fiscal 1997
or early fiscal 1998.

In conjunction with the upgrade of the ATWOOD HUNTER, the bank group which
holds a mortgage lien on the rig has agreed to provide a waiver of the annual
capital expenditures limit for fiscal 1997, along with some other amendments to
the loan documents; and the Company has agreed to reduce the outstanding loan
amount through a $10 million prepayment, in addition to the quarterly and excess
cash flow payment requirements. For the calendar year 1997, the Company
estimates payments to the bank group will total $22 million, and, accordingly,
such amount has been included in current maturities of long-term notes payable
at December 31, 1996. In addition, the Company has agreed to guaranty $3 million
of the outstanding balance of such bank debt.

In December 1996, the Company increased its short-term line-of-credit from
a bank from $10 million to $30 million, secured by the pledge of all of the
Company's United States treasury bonds.

On February 4, 1997, the Company filed a Registration Statement on Form S-3
with the Securities and Exchange Commission with respect to a public offering by
the Company of 1,500,000 shares of common stock. The net proceeds from the
offering will be used by the Company to reduce bank debt and to provide funding
for various planned capital expenditure projects, including the ATWOOD HUNTER
upgrade and the ATWOOD SOUTHERN CROSS refurbishment and upgrade.

F-19
<PAGE>
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
NO DEALER, SALESPERSON OR OTHER PERSON HAS BEEN AUTHORIZED TO GIVE ANY
INFORMATION OR TO MAKE ANY REPRESENTATION NOT CONTAINED IN THIS PROSPECTUS, AND,
IF GIVEN OR MADE, SUCH INFORMATION OR REPRESENTATION MUST NOT BE RELIED UPON AS
HAVING BEEN AUTHORIZED BY THE COMPANY OR ANY UNDERWRITER. THIS PROSPECTUS DOES
NOT CONSTITUTE AN OFFER TO SELL OR A SOLICITATION OF AN OFFER TO BUY ANY OF THE
SECURITIES OFFERED HEREBY IN ANY JURISDICTION TO ANY PERSON TO WHOM IT IS
UNLAWFUL TO MAKE SUCH AN OFFER IN SUCH JURISDICTION. NEITHER THE DELIVERY OF
THIS PROSPECTUS NOR ANY SALE MADE HEREUNDER SHALL, UNDER ANY CIRCUMSTANCES,
CREATE ANY IMPLICATION THAT THE INFORMATION CONTAINED HEREIN IS CORRECT AS OF
ANY TIME SUBSEQUENT TO THE DATE HEREOF OR THAT THERE HAS BEEN NO CHANGE IN THE
AFFAIRS OF THE COMPANY SINCE SUCH DATE.

------------------

TABLE OF CONTENTS

PAGE
----
Prospectus Summary................... 3
Risk Factors......................... 8
Use of Proceeds...................... 11
Price Range of Common Stock.......... 11
Capitalization....................... 12
Selected Historical Financial and
other Data......................... 13
Management's Discussion and
Analysis........................... 14
Business............................. 22
Management........................... 27
Underwriting......................... 28
Notice to Canadian Residents......... 29
Legal Matters........................ 29
Experts.............................. 30
Available Information................ 30
Incorporation of Certain Documents by
Reference.......................... 30
Index to Financial Statements........ F-1

- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------

[logo]

ATWOOD OCEANICS, INC.

1,500,000 SHARES

COMMON STOCK
($1.00 PAR VALUE)

P R O S P E C T U S

CREDIT SUISSE FIRST BOSTON
HOWARD, WEIL,
LABOUISSE, FRIEDRICHS
INCORPORATED

RAUSCHER PIERCE REFSNES, INC.

- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
<PAGE>

PART II
INFORMATION NOT REQUIRED IN THE PROSPECTUS

ITEM 14. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION.

Estimated expenses in connection with the issuance and distribution of the
securities to be registered, other than underwriting discounts and commissions,
are as follows:

Securities Exchange Commission
Registration Fee................... $ 33,128
NASD Filing Fee...................... 11,433
Printing and Engraving Expenses...... 100,000
Legal Fees and Expenses.............. 90,000
Accounting Fees and Expenses......... 150,000
Blue Sky Fees and Expenses........... 5,000
Transfer Agent Fees and Expenses..... 5,000
Miscellaneous........................ 5,439
----------
Total........................... $ 400,000

The foregoing expenses incident to the registration of the Shares of Common
Stock, including any underwriting discounts and commissions attributable to the
sale of the Shares, shall be paid by the Company.

ITEM 15. INDEMNIFICATION OF DIRECTORS AND OFFICERS.

Article IV, Section 3 of the Bylaws of the Company states that any person
who is or was a director or officer of the Company, or a director, officer,
partner, venturer, employee, agent or similar functionary of any other
corporation, partnership, joint venture, trust, employee benefit plan or other
enterprise which such person serves or served as such at the request of the
Company, shall be indemnified by the Company against any and all liability and
reasonable expenses (including but not limited to counsel fees and disbursements
and amounts paid in settlement or in satisfaction of judgments or as fines or
penalties) to the extent mandated or authorized by Article 2.02-1 of the Texas
Business Corporation Act. Article 2.02-1 of the Texas Business Corporation Act
permits, and in some cases requires, corporations to indemnify directors and
officers who are or have been a party or are threatened to be made a party to
litigation against judgments, penalties (including excise and similar taxes),
fines, settlements and reasonable expenses under certain circumstances.

ITEM 16. EXHIBITS.

The following instruments and documents are included as Exhibits to this
Registration Statement. Exhibits incorporated by reference are so indicated by
parenthetical information.

<TABLE>
<CAPTION>
EXHIBIT
NUMBER EXHIBIT
- ------------------------ ------------------------------------------------------------------------------------------
<S> <C>
*1.1 -- Form of Underwriting Agreement
4.1.1 -- 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)
4.1.2 -- 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)
4.1.3 -- 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)
4.2 -- 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)
4.3 -- Specimen certificate for the Company's common stock, $1.00 par value (Incorporated herein
by reference to Exhibit 5.1 of the Company's Registration Statement on Form S-3,
Registration No. 33-39993, filed April 19, 1991)
5.1 -- Opinion of Griggs & Harrison, P.C.
23.1 -- Consent of Arthur Andersen LLP
23.2 -- Consent of Griggs & Harrison, P.C. (Included in Exhibit 5.1)
27.1 -- Financial Data Schedule
</TABLE>

- ------------

* To be filed by amendment.

II-1
<PAGE>
ITEM 17. UNDERTAKINGS.

The Company hereby undertakes that, for purposes of determining any
liability under the Securities Act, each filing of the Company's annual report
pursuant to section 13(a) or section 15(d) of the Exchange Act (and, where
applicable, each filing of an employee benefit plan's annual report pursuant to
Section 15(d) of the Exchange Act) that is incorporated by reference in the
Registration Statement shall be deemed to be a new registration statement
relating to the securities offered therein, and the offering of such securities
at that time shall be deemed to be the initial bona fide offering thereof.

Insofar as indemnification for liabilities arising under the Securities Act
may be permitted to directors, officers and controlling persons of the Company
pursuant to the provisions described under Item 15 above, or otherwise, the
Company has been advised that, in the opinion of the Securities and Exchange
Commission, such indemnification is against public policy as expressed in the
Securities Act and is, therefore, unenforceable. In the event that a claim for
indemnification against such liabilities (other than the payment by the Company
of expenses incurred or paid by a director, officer or controlling person of the
Company in the successful defense of any action, suit or proceeding) is asserted
by such director, officer or controlling person in connection with the
securities being registered, the Company will, unless, in the opinion of its
counsel, the matter has been settled by controlling precedent, submit to a court
of appropriate jurisdiction the question whether such indemnification by it is
against public policy as expressed in the Securities Act and will be governed by
the final adjudication of such issue.

The Company hereby undertakes that:

(1) For purposes of determining any liability under the Securities
Act, the information omitted from the form of Prospectus filed as a part of
this Registration Statement in reliance upon Rule 430A and contained in a
form of Prospectus filed by the Company pursuant to Rule 424(b)(1) or (4)
or 497(h) under the Securities Act shall be deemed to be part of this
Registration Statement as of the time it was declared effective.

(2) For the purpose of determining any liability under the Securities
Act, each post-effective amendment that contains a form of Prospectus shall
be deemed to be a new registration statement relating to the securities
offered therein, and the offering of such securities at that time shall be
deemed to be the initial bona fide offering thereof.

II-2
<PAGE>
SIGNATURES

Pursuant to the requirements of the Securities Act of 1933, the Company
certifies that it has reasonable grounds to believe that it meets all of the
requirements for filing on Form S-3 and has duly caused this Registration
Statement or Amendment to be signed on its behalf by the undersigned, thereunto
duly authorized, in the City of Houston, the State of Texas, on February 3,
1997.

ATWOOD OCEANICS, INC.
By: /s/ JOHN R. IRWIN
JOHN R. IRWIN
DIRECTOR, PRESIDENT AND
CHIEF EXECUTIVE OFFICER

POWER OF ATTORNEY

KNOW ALL MEN BY THESE PRESENTS, that each individual whose signature
appears below constitutes and appoints John R. Irwin and James M. Holland, or
either of them, his true and lawful attorney-in-fact and agent, with full power
of substitution and resubstitution, for him and in his name, place and stead, in
any and all capacities, to sign any and all amendments (including post-effective
amendments) to this Registration Statement and a second Registration Statement
pursuant to Rule 462 under the Securities Act of 1933, and to file the same and
all exhibits thereto, and all documents in connection therewith, with the
Securities and Exchange Commission, granting said attorney-in-fact and agent,
and any of them, full power and authority to do and perform each and every act
and thing requisite and necessary to be done in and about the premises, as fully
to all intents and purposes as he might or could do in person, hereby ratifying
and confirming all that said attorney-in-fact and agent, or any of them, or his
or their substitute or substitutes, may lawfully do or cause to be done by
virtue hereof.

Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement or Amendment has been signed by the following persons in
the capacities and on the dates indicated.

NAME TITLE DATE
- ------------------------ ------------------- -----------------

/s/JOHN R. IRWIN Director, President February 3, 1997
(JOHN R. IRWIN) and Chief Executive
Officer

/s/JAMES M. HOLLAND Senior Vice President, February 3, 1997
(JAMES M. HOLLAND) Secretary (Principal
Financial and Accounting
Officer)

/s/ROBERT W. BURGESS Director February 3, 1997
(ROBERT W. BURGESS)

/s/GEORGE S. DOTSON Director February 3, 1997
(GEORGE S. DOTSON)

/s/W. H. HELMERICH, III Director February 3, 1997
(W. H. HELMERICH, III)

/s/HANS HELMERICH Director February 3, 1997
(HANS HELMERICH)

/s/WILLIAM J. MORRISSEY Director February 3, 1997
(WILLIAM J. MORRISSEY)

II-3

EXHIBIT 5.1

GRIGGS & HARRISON, P.C.
1301 MCKINNEY, SUITE 3200
HOUSTON, TEXAS 77010-3033
(713) 651-0600
HOUSTON FACSIMILE (713) 651-1944

February 4, 1997

Atwood Oceanics, Inc.
15835 Park Ten Place Drive
Houston, Texas 77084
Gentlemen:

We have acted as counsel for Atwood Oceanics, Inc., a Texas corporation
(the "Company"), in connection with the proposed offer and sale by the Company
to Credit Suisse First Boston, Howard, Weil, Labouisse, Friedrichs Incorporated,
Rauscher Pierce Refsnes, Inc. and the other underwriters to be named in the
Underwriting Agreement to be executed in connection with such offering (the
"Underwriters"), pursuant to a Prospectus forming a part of the Registration
Statement on Form S-3 to be filed with the Securities and Exchange Commission on
February 4, 1997 (the "Registration Statement"), of up to an aggregate of
1,725,000 shares (the "Shares") of the Company's common stock, par value $1.00
per share (the "Common Stock"), including 225,000 shares of Common Stock which
may be sold to the Underwriters to cover over-allotments.

In connection therewith, we have examined, among other things, the
Certificate of Incorporation and Bylaws of the Company, each as amended to date,
and originals or copies certified or otherwise identified to our satisfaction of
records of corporate proceedings which have occurred prior to the date hereof
with respect to the offering, certificates of public officials and of
representatives of the Company, statutes and other instruments and documents, as
a basis for the opinions hereinafter expressed. In rendering such opinions, we
have relied upon certificates of certain public officials and officers of the
Company with respect to the accuracy of the material factual matters contained
in such certificates.

Based upon the foregoing examination and review, we hereby advise you that,
in our opinion, when (a) the Registration Statement has become effective under
the Securities Act of 1933, as amended, and (b) the Shares have been issued and
sold against payment therefor as contemplated in the Registration Statement and
the Underwriting Agreement, the Shares will be validly issued, fully paid and
nonassessable.

We hereby consent to the filing of this opinion as Exhibit 5.1 to the
Registration Statement and to the reference to our Firm under the caption
"Legal Matters" in the Prospectus forming a part of the Registration
Statement. In giving this consent, we do not hereby admit that we are within the
category of persons whose consent is required under Section 7 of the Securities
Act of 1933, as amended, and the rules and regulations of the Securities and
Exchange Commission promulgated thereunder.

Very truly yours,

/s/ GRIGGS & HARRISON, P.C.
GRIGGS & HARRISON, P.C.

EXHIBIT 23.1

CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS

As independent public accountants, we hereby consent to the incorporation
by reference in this registration statement of our report dated November 15,
1996, incorporated by reference in Atwood Oceanics, Inc.'s Annual Report on Form
10-K for the year ended September 30, 1996, and to all references to our Firm
included in this registration statement.

/s/ ARTHUR ANDERSEN LLP
ARTHUR ANDERSEN LLP

Houston, Texas
February 4, 1997

<ARTICLE> 5
<MULTIPLIER> 1,000
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> SEP-30-1997
<PERIOD-END> DEC-31-1996
<CASH> 17,412
<SECURITIES> 22,928
<RECEIVABLES> 18,547
<ALLOWANCES> 0
<INVENTORY> 5,933
<CURRENT-ASSETS> 45,684
<PP&E> 202,939
<DEPRECIATION> (107,635)
<TOTAL-ASSETS> 164,668
<CURRENT-LIABILITIES> 34,872
<BONDS> 8,040
0
0
<COMMON> 6,710
<OTHER-SE> 55,561
<TOTAL-LIABILITY-AND-EQUITY> 164,668
<SALES> 22,093
<TOTAL-REVENUES> 22,739
<CGS> 12,660
<TOTAL-COSTS> 12,660
<OTHER-EXPENSES> 3,813
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 532
<INCOME-PRETAX> 5,734
<INCOME-TAX> 1,815
<INCOME-CONTINUING> 3,919
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 3,919
<EPS-PRIMARY> .58
<EPS-DILUTED> .58

</TABLE>