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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D. C. 20549
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Form 10-Q
|X| QUARTERLY REPORT UNDER SECTION 13 OR 15 (d)
OF THE SECURITIES EXCHANGE ACT OF 1934
FOR THE QUARTERLY PERIOD ENDED MARCH 31, 2005
|_| TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(D)
OF THE SECURITIES EXCHANGE ACT OF 1934
COMMISSION FILE NUMBER 1-13167
ATWOOD OCEANICS, INC.
(Exact name of registrant as specified in its charter)
TEXAS 74-1611874
(State or Other Jurisdiction of (I.R.S. Employer Identification No.)
Incorporation or Organization)
15835 Park Ten Place Drive 77084
Houston, Texas (Zip Code)
(Address of Principal Executive Offices)
Registrant's telephone number, including area code:
281-749-7800
------------
Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15 (d) of the Securities Exchange Act of 1934
during the preceding 12 months and (2) has been subject to such filings
requirements for the past 90 days. Yes X No___
Indicate by check mark whether the registrant is an accelerated filer (as
defined in Rule 12b-2 of the Exchange Act.) Yes X No __.
Indicate the number of shares outstanding of each of the issuer's classes of
common stock, as of May 4, 2005: 15,241,976 shares of common stock $1 par value
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ATWOOD OCEANICS, INC.
FORM 10-Q
For the Quarter Ended March 31, 2005
INDEX
Part I. Financial Information
Item 1. Unaudited Financial Statements Page
a) Condensed Consolidated Statements of Operations
For the Three Months and Six Months Ended March 31, 2005 and 2004.....6
b) Condensed Consolidated Balance Sheets
As of March 31, 2005 and September 30, 2004...........................7
c) Condensed Consolidated Statements of Cash Flows
For the Six Months Ended March 31, 2005 and 2004......................8
d) Condensed Consolidated Statement of Changes in Shareholders' Equity......9
e) Notes to Condensed Consolidated Financial Statements....................10
Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations....................... .15
Item 3. Quantitative and Qualitative Disclosures about Market Risk.........18
Item 4. Controls and Procedures............................................19
Part II. Other Information
Item 5. Submission of Matters to a Vote of Security Holders................20
Item 6. Exhibits ..........................................................21
Signatures....................................................................22
-2-
PART I. FINANCIAL INFORMATION
ATWOOD OCEANICS, INC. AND SUBSIDIARIES
This Form 10-Q for the quarterly period ended March 31, 2005 includes
statements about Atwood Oceanics, Inc. (which together with its subsidiaries is
identified as the "Company," "we" or "our," unless the context requires
otherwise) which are not historical facts (including any statements concerning
plans and objectives of management for future operations or economic
performance, or assumptions related thereto) which are forward-looking
statements. In addition, we and our representatives may from to time to time
make other oral or written statements which are also forward-looking statements.
These forward-looking statements are made based upon management's current
plans, expectations, estimates, assumptions and beliefs concerning future events
impacting us and therefore involve a number of risks and uncertainties. We
caution that forward-looking statements are not guarantees and that actual
results could differ materially from those expressed or implied in the
forward-looking statements.
Important factors that could cause our actual results of operations or our
actual financial conditions to differ include, but are not necessarily limited
to:
- our dependence on the oil and gas industry;
- the operational risks involved in drilling for oil and gas;
- changes in rig utilization and dayrates in response to the level of
activity in the oil and natural gas industry, which is significantly
affected by indications and expectations regarding the level and
volatility of oil and natural gas prices, which in turn are affected by
such things as political, economic and weather conditions affecting or
potentially affecting regional or worldwide demand for oil and natural
gas, actions or anticipated actions by OPEC, inventory levels,
deliverability constraints, and future market activity;
- the extent to which customers and potential customers continue to pursue
deepwater drilling;
- exploration success or lack of exploration success by our customers and
potential customers;
- the highly competitive and cyclical nature of our business, with periods
of low demand and excess rig availability;
- the impact of the war with Iraq or other military operations, terrorist
acts or embargoes elsewhere;
- our ability to enter into and the terms of future drilling contracts;
- the availability of qualified personnel;
- our failure to retain the business of one or more significant customers;
- the termination or renegotiation of contracts by customers;
-3-
- the availability of adequate insurance at a reasonable cost;
- the occurrence of an uninsured loss;
- the risks of international operations, including possible economic,
political, social or monetary instability, and compliance with foreign
laws;
- the effect SARS or other public health concerns could have on our
international operations and financial results;
- compliance with or breach of environmental laws;
- the incurrence of secured debt or additional unsecured indebtedness or
other obligations by us or our subsidiaries;
- the adequacy of sources of liquidity;
- currently unknown rig repair needs and/or additional opportunities to
accelerate planned maintenance expenditures due to presently
unanticipated rig downtime;
- higher than anticipated accruals for performance-based compensation due
to better than anticipated performance by us, higher than anticipated
severance expenses due to unanticipated employee terminations, higher
than anticipated legal and accounting fees due to unanticipated
financing or other corporate transactions and other factors that could
increase general and administrative expenses;
- the actions of our competitors in the oil and gas drilling industry,
which could significantly influence rig dayrates and utilization;
- changes in the geographic areas in which our customers plan to operate,
which in turn could change our expected effective tax rate;
- changes in oil and natural gas drilling technology or in our competitors'
drilling rig fleets that could make our drilling rigs less competitive or
require major capital investments to keep them competitive;
- rig availability;
- the effects and uncertainties of legal and administrative proceedings
and other contingencies;
- the impact of governmental laws and regulations and the uncertainties
involved in their administration, particularly in some foreign
jurisdictions;
- changes in accepted interpretations of accounting guidelines and other
accounting pronouncements and tax laws; and
- the risks involved in the construction and upgrade of our drilling units.
-4-
Undue reliance should not be placed on these forward-looking statements,
which are applicable only on the date hereof. Neither we nor our representatives
have a general obligation to revise or update these forward-looking statements
to reflect events or circumstances that arise after the date hereof or to
reflect the occurrence of unanticipated events.
-5-
PART I. ITEM I - FINANCIAL STATEMENTS
ATWOOD OCEANICS, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(In thousands, except per share amounts)
Three Months Ended Six Months Ended
March 31, March 31,
--------------------------- ---------------------------
2005 2004 2005 2004
-------- ------- ------- -------
(Unaudited) (Unaudited)
REVENUES:
Contract drilling $ 39,801 $ 36,810 $ 78,787 $ 72,135
Business interruption proceeds 1,216 - 7,656 -
-------- -------- -------- --------
41,017 36,810 86,443 72,135
-------- -------- -------- --------
COSTS AND EXPENSES:
Contract drilling 23,601 21,414 48,804 43,947
Depreciation 6,639 7,847 13,165 15,689
General and administrative 3,019 2,987 6,590 5,675
-------- -------- -------- --------
33,259 32,248 68,559 65,311
-------- -------- -------- --------
OPERATING INCOME 7,758 4,562 17,884 6,824
-------- -------- -------- --------
OTHER INCOME (EXPENSE)
Interest expense (1,727) (2,334) (3,745) (4,668)
Interest income 69 7 104 15
-------- -------- -------- --------
(1,658) (2,327) (3,641) (4,653)
-------- -------- -------- --------
INCOME BEFORE INCOME TAXES 6,100 2,235 14,243 2,171
PROVISION FOR INCOME TAXES 1,389 1,773 882 3,613
-------- -------- -------- --------
NET INCOME (LOSS) $ 4,711 $ 462 $ 13,361 $ (1,442)
======== ======== ======== ========
EARNINGS (LOSS) PER COMMON SHARE:
Basic $ 0.31 $ 0.03 $ 0.88 $ (0.10)
Diluted 0.30 0.03 0.86 (0.10)
AVERAGE COMMON SHARES OUTSTANDING:
Basic 15,213 13,855 15,146 13,855
Diluted 15,642 14,019 15,532 13,855
The accompanying notes are an integral part of these condensed consolidated
financial statements.
-6-
PART I. ITEM I - FINANCIAL STATEMENTS
ATWOOD OCEANICS, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(In thousands)
March 31, September 30,
2005 2004
------------ -------------
(Unaudited)
ASSETS
CURRENT ASSETS:
Cash and cash equivalents $ 23,946 $ 16,416
Accounts receivable 27,664 32,475
Insurance receivable 11,126 25,433
Inventories of materials and supplies 13,660 12,648
Deferred tax assets 40 290
Prepaid expenses and other 2,444 5,704
-------- --------
Total Current Assets 78,880 92,966
-------- --------
NET PROPERTY AND EQUIPMENT 407,257 401,141
-------- --------
DEFERRED COSTS AND OTHER ASSETS 3,185 4,829
-------- --------
$489,322 $498,936
======== ========
LIABILITIES AND SHAREHOLDERS' EQUITY
CURRENT LIABILITIES:
Current maturities of notes payable $36,000 $36,000
Accounts payable 3,857 9,398
Accrued liabilities 5,955 13,822
Deferred Credits 0 833
-------- --------
Total Current Liabilities 45,812 60,053
-------- --------
LONG-TERM DEBT,
net of current maturities: 77,000 145,000
-------- --------
77,000 145,000
-------- --------
OTHER LONG TERM LIABILITIES:
Deferred income taxes 19,580 18,930
Deferred credits and other 2,443 3,364
-------- --------
22,023 22,294
-------- --------
SHAREHOLDERS' EQUITY:
Preferred stock, no par value;
1,000 shares authorized, none outstanding 0 0
Common stock, $1 par value, 20,000 shares
authorized with 15,240 and 13,873 issued
and outstanding at March 31, 2005 and
September 30, 2004, respectively 15,240 13,873
Paid-in capital 116,087 57,917
Retained earnings 213,160 199,799
-------- --------
Total Shareholders' Equity 344,487 271,589
-------- --------
$489,322 $498,936
======== ========
The accompanying notes are an integral part of these condensed consolidated
financial statements.
-7-
PART I. ITEM I - FINANCIAL STATEMENTS
ATWOOD OCEANICS, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(In thousands)
Six Months Ended March 31,
--------------------------
2005 2004
-------- -------
(Unaudited)
CASH FLOW FROM OPERATING ACTIVITIES:
Net Income (loss) $ 13,361 $ (1,442)
Adjustments to reconcile net income (loss) to net cash
provided (used) by operating activities:
Depreciation 13,165 15,689
Amortization of debt issuance costs 402 344
Amortization of deferred items 280 239
Deferred income tax expense (benefit) 900 (750)
Changes in assets and liabilities:
Decrease in insurance receivable 5,907 -
Decrease (increase) in accounts receivable 4,811 (1,846)
Decrease (increase) in inventory (1,012) 224
Decrease in deferred costs and other assets 4,245 2,547
Decrease in accounts payable (5,541) (6,219)
Decrease in accrued liabilities (7,867) (525)
Net mobilization fees and credits (1,777) (4,714)
-------- -------
Net cash provided by operating activities 26,874 3,547
-------- -------
CASH FLOW FROM INVESTING ACTIVITIES:
Capital expenditures (19,386) (2,394)
Collection of insurance receivable 8,400 -
Other 105 (17)
-------- -------
Net cash used by investing activities (10,881) (2,411)
-------- -------
CASH FLOW FROM FINANCING ACTIVITIES:
Debt issuance costs paid - (369)
Proceeds from stock offering 53,607 -
Proceeds from exercise of stock options 5,930 51
Proceeds from debt 10,000 -
Principal payments on debt (78,000) (12,000)
-------- -------
Net cash used by financing activities (8,463) (12,318)
-------- -------
NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS 7,530 (11,182)
CASH AND CASH EQUIVALENTS, at beginning of period $ 16,416 $ 21,551
-------- --------
CASH AND CASH EQUIVALENTS, at end of period $ 23,946 $ 10,369
======== ========
-----------------------------
The accompanying notes are an integral part of these condensed consolidated
financial statements.
-8-
PART I. ITEM I - FINANCIAL STATEMENTS
ATWOOD OCEANICS, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENT OF CHANGES
IN SHAREHOLDERS' EQUITY
(unaudited)
-------------------------------------------------------------------------------------------------------------
Total
Common Stock Paid-in Retained Stockholders'
(In thousands) Shares Amount Capital Earnings Equity
-------------------------------------------------------------------------------------------------------------
September 30, 2004 13,873 $ 13,873 $ 57,917 $199,799 $ 271,589
Net income - - - 13,361 13,361
Exercise of employee stock options 192 192 5,738 - 5,930
Stock offering 1,175 1,175 52,432 - 53,607
------- -------- -------- -------- ---------
March 31, 2005 15,240 $ 15,240 $116,087 $213,160 $ 344,487
======= ======== ======== ======== =========
The accompanying notes are an integral part of these condensed consolidated
financial statements.
-9-
PART I. ITEM 1 - FINANCIAL STATEMENTS
ATWOOD OCEANICS, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
1. UNAUDITED INTERIM INFORMATION
The unaudited interim condensed consolidated financial statements as of
March 31, 2005 and for each of the three month periods ended March 31, 2005 and
2004, included herein, have been prepared in accordance with accounting
principles generally accepted in the United States of America for interim
financial information and with the instructions for Form 10-Q and Article 10 of
Regulation S-X. The year end condensed consolidated balance sheet data was
derived from the audited financial statements as of September 30, 2004. Although
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 accounting principles generally
accepted in the United States of America have been condensed or omitted, we
believe that the note disclosures are adequate to make the information not
misleading. The interim financial results may not be indicative of results that
could be expected for a full year. It is suggested that these condensed
consolidated financial statements be read in conjunction with the consolidated
financial statements and the notes thereto included in our Annual Report to
Shareholders for the year ended September 30, 2004. In our opinion, the
unaudited interim financial statements reflect all adjustments (consisting of
normal recurring adjustments) considered necessary for a fair presentation of
our financial position and results of operations for the periods presented.
2. SIGNIFICANT ACCOUNTING POLICIES
Statement of Financial Accounting Standards ("SFAS") No. 123, "Accounting
for Stock-Based Compensation" allows companies the choice of either using a fair
value method of accounting for options, which would result in expense
recognition for all options granted, or using an intrinsic value method as
prescribed by Accounting Principles Board ("APB") Opinion No. 25, "Accounting
for Stock Issued to Employees", with pro forma disclosure of the impact on net
income (loss) of using the fair value option expense recognition method.
We apply the recognition and measurement principles of APB Opinion No. 25
and related interpretations. Accordingly, no compensation costs have been
recognized in net income from the granting of options pursuant to our stock
option plans, as all options granted under those plans had an exercise price
equal to the market value of the underlying common stock on the date of grant.
Had compensation costs been determined based on the fair value at the grant
dates consistent with the method of SFAS No. 123, our net income (loss) and
earnings (loss) per share would have been reduced to the pro forma amounts
indicated below (in thousands, except for per share amounts):
-10-
Three Months Ended Six Months Ended
March 31, March 31,
---------------------- -----------------------
2005 2004 2005 2004
-------- ------- -------- -------
Net income (loss), as reported $ 4,711 $ 462 $ 13,361 $ (1,442)
------- ------ -------- --------
Deduct: Total stock-based employee
compensation expense determined under
fair value based method for all
awards, net of related tax effects (648) (625) (1,296) (1,250)
------- ------ -------- -------
Pro Forma, net income (loss) $ 4,063 $ (163) $ 12,065 $ (2,692)
======= ====== ======== ========
Earnings (loss) per share:
Basic - as reported $ 0.31 $ 0.03 $ 0.88 $ (0.10)
Basic - pro forma 0.27 (0.01) 0.80 (0.19)
Diluted - as reported $ 0.30 $ 0.03 $ 0.86 $ (0.10)
Diluted - pro forma 0.26 (0.01) 0.78 (0.19)
The fair value of grants made during the current fiscal year-to-date period
were estimated on the date of grant using the Black-Scholes option pricing model
with the following weighted-average assumptions: risk-free interest rate -
4.27%, expected volatility - 35%, expected life - 6 years, and no dividend
yield.
In December 2004, the Financial Accounting Standards Board (FASB) issued
SFAS No. 123 (Revised 2004), "Share-Based Payment" (SFAS 123(R)). This Statement
revises SFAS No. 123 by eliminating the option to account for employee stock
options under APB No. 25 and generally requires companies to recognize the cost
of employee services received in exchange for awards of equity instruments based
on the grant-date fair value of those awards (the "fair-value-based" method).
Originally, SFAS No. 123R was to become effective for public entities as of the
beginning of the first interim reporting period that begins after June 15, 2005.
On April 14, 2005, the SEC announced it would permit companies to implement SFAS
123(R) at the beginning of their first fiscal year beginning after June 15,
2005. Accordingly, we plan to adopt SFAS 123(R) on October 1, 2006 and will use
the modified prospective method. The impact of adopting SFAS 123(R) will be to
record expense for previously-issued but unvested employee stock options and any
employee stock options that we issue in the future. We expect the dollar impact
on our financial statements to be consistent with the impact previously
disclosed above in the pro forma disclosure requirements of SFAS No. 123,
beginning with the first quarter of fiscal year 2006.
-11-
3. EARNINGS (LOSS) PER COMMON SHARE
The computation of basic and diluted earnings (loss) per share is as
follows (in thousands, except per share amounts):
Three Months Ended Six Months Ended
------------------ ----------------
Net Per Share Net Per Share
Income Shares Amount Income (Loss) Shares Amount
------ ------ --------- ------------- ------ ---------
March 31, 2005:
Basic earnings per share $ 4,711 15,213 $ 0.31 $ 13,361 15,146 $ 0.88
Effect of dilutive securities
Stock options --- 429 $(0.01) --- 386 $ (0.02)
------- -------- ------ -------- ------- --------
Diluted earnings per share $ 4,711 15,642 $ 0.30 $ 13,361 15,532 $ 0.86
======= ====== ====== ======== ====== ======
March 31, 2004:
Basic earnings(loss) per share $ 462 13,855 $ 0.03 ($1,442) 13,855 $ (0.10)
Effect of dilutive securities
Stock options --- 164 --- --- --- ---
------- ------ ------ -------- ------ -------
Diluted earnings (loss) per share $ 462 14,019 $ 0.03 $ (1,442) 13,855 $(0.10)
======= ====== ====== ======== ====== ======
-12-
4. PROPERTY AND EQUIPMENT
A summary of property and equipment by classification is as follows (in
thousands):
March 31, September 30,
2005 2004
---------- -----------
Drilling vessels and related equipment
Cost $ 627,371 $ 608,584
Accumulated depreciation (224,055) (211,544)
--------- ---------
403,316 397,040
--------- ---------
Drill pipe
Cost 10,649 10,240
Accumulated depreciation (7,812) (7,259)
--------- ---------
Net book value 2,837 2,981
--------- ---------
Furniture and other
Cost 7,578 7,635
Accumulated depreciation (6,474) (6,515)
--------- ---------
Net book value 1,104 1,120
--------- ---------
NET PROPERTY AND EQUIPMENT $ 407,257 $ 401,141
========= =========
Effective October 1, 2004, we extended the remaining depreciable life of
the SEAHAWK from 2 months to 5 years, due to a recent contract that extends the
rig's commercial viability for up to 5 years. We believe that this change in
depreciable life provides a better matching of the revenues and expenses of this
asset over its anticipated remaining useful life and will continue to depreciate
this rig on a straight-line method for the remainder of the extended period. As
a result of the change in depreciable life from 2 months to 5 years,
depreciation expense was increased and net income was reduced by approximately
$0.1 million, or $.01 per share, for the three month period ended March 31,
2005, and depreciation expense was reduced and net income was increased by
approximately $0.8 million, or $.05 per share for the six month period ended
March 31, 2005. Depreciation expense going forward will be higher than it
otherwise would have been because if not for this extension of the SEAHAWK's
useful life, this asset would have been fully depreciated in the first quarter
of fiscal year 2005.
5. COMMITMENTS AND CONTINGENCIES
We are party to a number of lawsuits which are ordinary, routine litigation
incidental to our business, the outcome of which, individually, or in the
aggregate, is not expected to have a material adverse effect on our financial
position, results of operations, or cash flows.
-13-
6. CAPITAL STOCK
In October 2004, we sold in a public offering 1,175,000 shares of our
common stock at an effective net price (before expenses) of $45.83 for net
proceeds of approximately $53.6 million. We used these proceeds and cash on hand
to repay the $55 million outstanding as of September 30, 2004 under the
revolving portion of our senior secured credit facility.
7. ATWOOD BEACON
The ATWOOD BEACON incurred damage to all three legs and the derrick while
positioning for a well offshore of Indonesia in July 2004. The rig and its
damaged legs were transported to the builder's shipyard in Singapore for
inspections and repairs. At September 30, 2004, the book basis of the ATWOOD
BEACON was reduced by $16.3 million which was the estimated reduction in value
caused by the incident. An insurance receivable totaling $25.4 million was
recorded for such estimated damage, as well as estimated recovery costs and
business interruption loss incurred through September 30, 2004.
During the first half of fiscal year 2005, approximately $15.8 million of
capitalized costs were incurred to restore the rig to its condition prior to the
incident of which $8.4 million has been reimbursed by the insurance carrier as
of March 31, 2005. In addition, we also collected $6.4 million of business
interruption proceeds during the current fiscal year and $7.5 million related to
recovery and transportation costs. We expect to collect the remaining $11.1
million insurance receivable during fiscal year 2005.
8. INCOME TAXES
Virtually all of our tax provision for each of the three months and six
months ended March 31, 2005 and 2004 relates to taxes in foreign jurisdictions.
Accordingly, due to the high level of operating losses in certain nontaxable
jurisdictions during the three and six months ended March 31, 2004, our
effective tax rate for fiscal year 2004 periods exceeded the U.S. statutory
rate.
In December 2004, we received a $1.7 million tax refund in Malaysia related
to a previously reserved tax receivable. In addition, we earned revenue from our
loss of hire insurance coverage on the ATWOOD BEACON in a zero tax jurisdiction
during the three and six months ended March 31, 2005. Our operating losses in
certain nontaxable jurisdictions during the three and six months ended March 31,
2005 are significantly less as compared to the same periods in fiscal year 2004.
As a result, our effective tax rate for the current fiscal year periods were
significantly less than the U.S. statutory rate.
-14-
PART I. ITEM 2
ATWOOD OCEANICS, INC. AND SUBSIDIARIES
MANAGEMENT'S DISCUSSION AND ANALYSIS
OF FINANCIAL CONDITIONS AND RESULTS OF OPERATIONS
All non-historical information set forth herein is based upon expectations
and assumptions we deem reasonable by the Company. We can give no assurance that
such expectations and assumptions will prove to be correct, and actual results
could differ materially from the information presented herein. Our periodic
reports filed with the SEC should be consulted for a description of risk factors
associated with an investment in us.
MARKET OUTLOOK AND FINANICIAL CONDITION
Current worldwide utilization of offshore drilling units is approximately
88% compared to approximately 82% in April 2004. Recent contract awards for some
of our drilling units reflect the highest dayrate levels that these units have
ever received. We continue to experience high bid activity levels for our
drilling units. We believe that our eight key drilling units (seven units
upgraded since 1996 and one newly constructed unit which commenced operation in
August 2003) are well placed to take advantage of strengthening market
conditions.
During the quarter ended March 31, 2005, the ATWOOD SOUTHERN CROSS and the
SEAHAWK incurred 12 days and 27 days, respectively, of idle time, with our other
six drilling units being 100% utilized. The ATWOOD SOUTHERN CROSS is currently
working in Myanmar under a contract which should be completed in May 2005. It
will then be relocated to the Mediterranean Sea to work for three different
customers, which is expected to take around six months to complete. The SEAHAWK
will be idle until early May 2005 when it returns to work offshore Malaysia.
Upon the SEAHAWK returning to work, we expect to have all of our eight drilling
units almost fully booked for the remainder of fiscal year 2005. We currently
have approximately 50% of available rig days in fiscal year 2006 contractually
committed.
We remain optimistic about the long-term outlook and fundamentals of the
offshore drilling market. Compared to fiscal year 2004, we expect fiscal year
2005 will reflect increasing earnings and cash flows. Based upon current
contract commitments, we expect high utilization of our drilling units through
fiscal year 2006. For fiscal year 2006, the ATWOOD EAGLE, ATWOOD HUNTER and
SEAHAWK have contractually committed dayrates of $170,000, $125,000 and $68,430
respectively, which will be the highest dayrates these units have ever received.
With an improved market environment, current capital ratio to total debt of 25%,
current annual capital commitments for maintenance of our eight active drillings
units expected to only be $6 to $10 million and expected high utilization of our
drilling units during the remainder of fiscal year 2005 and all of fiscal year
2006, we anticipate that our balance sheet and liquidity will continue to
strengthen.
-15-
RESULTS OF OPERATIONS
Revenues for the three and six months ended March 31, 2005 increased 11%
and 20%, respectively, compared to the three and six months ended March 31,
2004. A comparative analysis of revenue by rig is as follows:
REVENUES
(In millions)
------------------------------------------------------------------------------
Three Months Ended March 31, Six Months Ended March 31,
------------------------------------ -----------------------------------
2005 2004 Variance 2005 2004 Variance
---------- --------- ---------- --------- --------- ----------
ATWOOD EAGLE $ 9.4 $ 3.3 $ 6.1 $17.9 $ 8.0 $ 9.9
ATWOOD BEACON 5.9 4.7 1.2 12.3 9.1 3.2
ATWOOD SOUTHERN CROSS 2.7 1.8 0.9 6.3 5.6 0.7
RICHMOND 2.7 2.3 0.4 5.4 4.5 0.9
VICKSBURG 6.1 6.3 (0.2) 12.0 12.2 (0.2)
ATWOOD HUNTER 5.2 5.8 (0.6) 10.8 8.4 2.4
SEAHAWK 2.8 4.3 (1.5) 7.2 9.5 (2.3)
ATWOOD FALCON 5.4 7.8 (2.4) 13.1 13.8 (0.7)
OTHER 0.8 0.5 0.3 1.4 1.0 0.4
----- ----- ----- ----- ----- -----
$41.0 $36.8 $ 4.2 $86.4 $72.1 $14.3
===== ===== ===== ===== ===== =====
The increase in revenue for the ATWOOD EAGLE for the current quarter is due
to 100% utilization compared to only 25% utilization plus amortization of
mobilization revenues of approximately $900,000 in the prior fiscal year quarter
as the rig was being relocated from West Africa to Australia. Along with the
current quarter difference, year-to-date revenues are higher compared to the
prior year-to-date period as the rig was only 70% utilized during the first
quarter of the prior fiscal year compared to full utilization in the current
quarter. The average dayrates for the ATWOOD BEACON were approximately $65,000
and $68,000, which included 18 and 110 days of loss of hire insurance, for the
three and six months ended March 31, 2005, respectively, compared to average
dayrates of approximately $52,000 and $50,000 for the three and six months ended
March 31, 2004. The increase in revenue for the ATWOOD SOUTHERN CROSS for the
current quarter is due to approximately 90% utilization at a dayrate of $35,000
compared to approximately 35% utilization at dayrates ranging from $30,000 -
35,000 plus amortization of mobilization revenues of approximately $700,000 in
the prior fiscal year quarter as the rig was being relocated from India to
Malaysia. The average dayrate for the RICHMOND was approximately $30,000 for the
three and six months ended March 31, 2005, compared to an average dayrate of
approximately $25,000 for the three and six months ended March 31, 2004.
Revenues for the VICKSBURG for the current quarter and year-to-date period were
consistent for the same periods in the prior fiscal year, while the decrease in
revenue for the ATWOOD HUNTER for the quarter ended March 31, 2005 was due to
approximately one week of downtime for repairs and maintenance compared to full
utilization for the quarter ended March 31, 2004. However, the year-to-date
increase is due to approximately 95% utilization at a dayrate of $62,000
compared to approximately 90% utilization at dayrates ranging from $40,000 -
$62,000 for the prior fiscal year-to-date period. Revenue for the SEAHAWK
decreased due to 70% utilization during the current quarter compared to 100%
utilization during the same period in fiscal year 2004. The year-to-date
decrease also includes three months amortization of deferred upgrade revenue of
approximately $1.3 million during the first quarter of the prior fiscal year
compared to no amortization of such revenue during the first quarter of the
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current fiscal year as amortization of the upgrade revenue ended November 2003.
The average dayrate for the ATWOOD FALCON was approximately $68,000 for the
current quarter compared to an average dayrate of approximately $83,000 for the
prior fiscal year quarter, while year-to-date revenues are consistent with the
prior fiscal year period.
Contract drilling costs for the three and six months ended March 31, 2005
increased 10% and 11%, respectively, as compared to the three and six months
ended March 31, 2004. A comparative analysis of contract drilling costs by rig
is as follows:
CONTRACT DRILLING COSTS
(In millions)
------------------------------------------------------------------------
Three Months Ended March 31, Six Months Ended March 31,
--------------------------------- --------------------------------
2005 2004 Variance 2005 2004 Variance
------- -------- -------- ------- -------- --------
ATWOOD EAGLE $ 5.5 $ 3.0 $ 2.5 $10.8 $ 6.7 $ 4.1
SEAHAWK 2.4 2.1 0.3 4.8 4.2 0.6
RICHMOND 2.1 2.0 0.1 4.2 3.9 0.3
ATWOOD HUNTER 2.7 2.9 (0.2) 5.6 5.8 (0.2)
VICKSBURG 2.0 2.2 (0.2) 4.4 4.4 -
ATWOOD SOUTHERN CROSS 2.2 2.4 (0.2) 5.2 6.8 (1.6)
ATWOOD BEACON 1.9 2.3 (0.4) 4.3 4.5 (0.2)
ATWOOD FALCON 2.8 3.9 (1.1) 6.1 6.2 (0.1)
OTHER 2.0 0.6 1.4 3.3 1.4 1.9
----- ----- ----- ----- ----- -----
$23.6 $21.4 $ 2.2 $48.7 $43.9 $ 4.8
===== ===== ===== ===== ===== =====
The increase in drilling costs for the ATWOOD EAGLE during the current
quarter is due to a full quarter of operating costs compared to approximately 30
days of operating costs along with amortization of mobilization expenses of
approximately $900,000 in the prior fiscal year quarter as the rig was being
relocated from West Africa to Australia. The year-to-date increase also includes
an approximate $20,000 per day higher salary expense attributable to higher
Australian labor costs and additional rig personnel required due to local
operating requirements in Australia during the quarter ended December 31, 2004,
compared to operating in West Africa where labor costs are lower, its location
in the first quarter of the prior fiscal year. The increase in drilling costs
for the SEAHAWK were due to higher repair and maintenance expenses incurred on
the rig during the three and six months ended March 31, 2005 compared to the
three and six months ended March 31, 2004. Drilling costs for the RICHMOND,
ATWOOD HUNTER and VICKSBURG remained consistent for the current quarter and
year-to-date period as compared to the same periods in the prior fiscal year. In
addition, the current quarter drilling costs for the ATWOOD SOUTHERN CROSS are
also comparable to the prior fiscal year quarter. However, the year-to-date
drilling costs have decreased when compared to the prior fiscal year-to-date
period due to the fact the rig incurred approximately $1.6 million of boat
towing costs while relocating from Egypt to India during the quarter ended
December 31, 2003 compared to no such costs in the quarter ended December 31,
2004. Despite being under repair during the current fiscal year until January,
the ATWOOD BEACON incurred labor, insurance, supplies and other drilling costs
during that period and thus, current quarter and year-to-date drilling costs are
relatively consistent with the prior fiscal year periods. Current quarter
drilling costs for the ATWOOD FALCON have decreased as the prior fiscal year
quarter included amortization of mobilization expenses of $1.4 million resulting
from the rig's relocation from Malaysia to Japan while year-to-date revenues are
consistent with the prior fiscal year period. Other drilling costs have
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increased for the three and six months ended March 31, 2005 as the prior fiscal
year quarter includes the settlement of a dispute with a customer which resulted
in a reduction to drilling costs of approximately $600,000 and the prior
year-to-date period includes an insurance premium refund of $500,000.
An analysis of depreciation expense by rig for the three and six months
ended March 31, 2005 compared to the three and six months ended March 31, 2005
is as follows:
DEPRECIATION EXPENSE DEPRECIATION EXPENSE
(In millions)
------------------------------------------------------------------------------
Three Months Ended March 31, Six Months Ended March 31,
------------------------------------ -----------------------------------
2005 2004 Variance 2005 2004 Variance
---------- --------- ---------- --------- --------- ----------
ATWOOD SOUTHERN CROSS $ 1.1 $ 1.0 $ 0.1 $ 2.2 $ 2.1 $ 0.1
ATWOOD FALCON 0.7 0.7 - 1.4 1.3 0.1
VICKSBURG 0.7 0.7 - 1.3 1.3 -
RICHMOND 0.2 0.2 - 0.5 0.4 0.1
ATWOOD EAGLE 1.2 1.2 - 2.3 2.5 (0.2)
ATWOOD BEACON 1.3 1.3 - 2.5 2.6 (0.1)
ATWOOD HUNTER 1.3 1.4 (0.1) 2.7 2.7 -
SEAHAWK 0.1 1.2 (1.1) 0.2 2.5 (2.3)
OTHER 0.0 0.1 (0.1) 0.1 0.3 (0.2)
----- ----- ----- ----- ----- -----
$ 6.6 $ 7.8 $(1.2) $13.2 $15.7 $(2.5)
===== ===== ===== ===== ===== =====
Effective October 1, 2004, we extended the remaining depreciable life of
the SEAHAWK from 2 months to 5 years, as discussed in Note 4, which resulted in
a current quarter and year-to-date reduction of depreciation expense. The
depreciable life of this rig was extended based upon a recent contract that
extends the rig's commercial viability for up to 5 years, coupled with our
intent to continue marketing and operating the rig beyond 2 months.
-18-
LIQUIDITY AND CAPITAL RESOURCES
Due to the cyclical nature of the offshore drilling industry, maintaining
high equipment utilization of our eight active drilling units in up, as well as
down, cycles is a key factor in generating cash to satisfy current and future
obligations. Since fiscal year 2000, net cash provided by operating activities
ranged from a low of approximately $14 million in fiscal year 2003 to a high of
approximately $62 million in fiscal year 2001, with net cash provided by
operating activities in fiscal year 2004 of approximately $26 million. Net cash
provided by operating activities for the first half of fiscal year 2005 was
approximately $26.9 million. We expect that in fiscal year 2005, net cash
provided by operating activities will be approximately $50 to $55 million for
the full fiscal year period. Our operating cash flows are primarily driven by
our operating income, which reflects dayrate and rig utilization. Assuming
higher dayrates and strengthening market conditions, we should have higher cash
flows and earnings in fiscal year 2005 compared to fiscal year 2004. Currently,
our existing cash commitments for the remainder of fiscal year 2005 and beyond,
outside of funding current rig operations, includes annual capital expenditures
of $6 to $10 million for maintenance of our eight active drilling rigs and
quarterly repayments of $9 million under the term portion of our senior secured
credit facility. We expect to generate sufficient cash flows from operations to
satisfy these obligations.
At March 31, 2005, we had $108 million outstanding under the term portion
and $5 million outstanding under the revolving portion of our senior secured
credit facility. In October 2004, upon concluding our 1,175,000 common shares
stock offering, we repaid the $55 million then outstanding under the revolving
portion of our senior secured credit facility with proceeds from the offering
and cash on hand. We currently have approximately $94 million of available
borrowing capacity and with a debt to total capitalization ratio currently
around 25%, we expect to remain in compliance with all financial covenants
during the remainder of fiscal year 2005. The collateral for our senior secured
credit facility consists primarily of preferred mortgages on all eight of our
active drilling units (with an aggregate net book value at March 31, 2005
totaling approximately $391 million). We are required to pay a fee of
approximately .80% per annum on the unused portion of the revolving loan
facility and certain other administrative costs.
The SEASCOUT, a semisubmersible hull planned for future conversion and
upgrade to a semisubmersible tender assist vessel, continues to be cold-stacked.
We expect that the cost to convert and upgrade the SEASCOUT could range from $70
million to $80 million. We have no current capital commitments on the SEASCOUT,
as we do not expect to undertake a conversion and upgrade until an acceptable
contract opportunity has been secured and adequate financing is in place. We
continue to periodically increase and adjust our planned capital expenditures
and financing of such expenditures in light of current market conditions.
Our portfolio of accounts receivable is comprised of major international
corporate entities with stable payment experience. Historically, we have not
encountered significant difficulty in collecting receivables and typically do
not require collateral for our receivables. The insurance receivable of $25.4
million at September 30, 2004 and $11.1 million at March 31, 2005 related to
repairs made to the ATWOOD BEACON. We expect to encounter no difficulty in
collecting the remaining $11.1 million due from the repairs made to the ATWOOD
BEACON.
-19-
PART I. ITEM 3
ATWOOD OCEANICS, INC. AND SUBSIDIARIES
QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
We are exposed to market risk, including adverse change in interest rates
and foreign currency exchange rates as discussed below.
INTEREST RATE RISK
With the interest rate on our long-term debt under our current credit
facilities at a floating rate, the outstanding long-term debt of $113 million at
March 31, 2005 approximates its fair value. The impact on annual cash flow of a
10% change in the floating rate (approximately 55 basis points) would be
approximately $0.6 million, which we do not believe to be material. We did not
have any open derivative contracts relating to our floating rate debt at March
31, 2005.
FOREIGN CURRENCY RISK
Certain of our subsidiaries have monetary assets and liabilities that are
denominated in a currency other than their functional currencies. Based on March
31, 2005 amounts, a decrease in the value of 10% in the foreign currencies
relative to the U.S. dollar from the year-end exchange rates would result in a
foreign currency transaction loss of approximately $0.6 million, which we do not
believe to be material. We did not have any open derivative contracts relating
to foreign currencies at March 31, 2005.
-20-
PART I. ITEM 4
ATWOOD OCEANICS, INC. AND SUBSIDIARIES
CONTROLS AND PROCEDURES
(a) Evaluation of Disclosure Controls and Procedures
Our management, with the participation of our Chief Executive Officer
and Chief Financial Officer, evaluated the effectiveness of our
disclosure controls and procedures as of the end of the period covered
by this report. Based on that evaluation, the Chief Executive Officer
and Chief Financial Officer concluded that our disclosure controls and
procedures as of the end of the period covered by this report have
been designed and are functioning effectively to provide reasonable
assurance that the information required to be disclosed by us in our
periodic SEC filings is recorded, process, summarized and reported
within the time periods specified in the SEC's rules, regulations and
forms. We believe that a controls system, no matter how well designed
and operated, cannot provide absolute assurance that the objectives of
the controls system are met, and no evaluation of controls can provide
absolute assurance that all control issues and instances of fraud,
if any, within a company have been detected.
(b) Changes in Internal Control over Financial Reporting
No change in our internal control over financial reporting occurred
during the fiscal quarter covered by this report that has materially
affected, or is reasonably likely to materially affect, our internal
control over financial reporting.
-21-
PART II. OTHER INFORMATION
ATWOOD OCEANICS, INC. AND SUBSIDIARIES
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
Our annual meeting of shareholders was held on February 10, 2005, at which
the shareholders voted on the election of six director nominees, all of whom
were incumbent directors and who were re-elected. No other matters were
presented for a vote at the annual meeting. Of the 14,093,499 shares of common
stock present in person or by proxy, the number of shares voted for or against
in connection with the election of each director are as follows:
NAME CAST FOR VOTES WITHHELD
--------------------- ---------- --------------
Deborah A. Beck 13,871,703 221,796
Robert W. Burgess 13,872,053 221,446
George S. Dotson 13,383,246 710,253
Hans Helmerich 13,382,776 710,723
John R. Irwin 13,872,303 221,196
William J. Morrissey 13,389,346 704,153
-22-
PART II. OTHER INFORMATION
ATWOOD OCEANICS, INC. AND SUBSIDIARIES
ITEM 6. EXHIBITS
(a) Exhibits
3.1.1 Restated Articles of Incorporation dated January 1972
(Incorporated herein by reference to Exhibit 3.1.1 of our Form
10-K for the year ended September 30, 2002).
3.1.2 Articles of Amendment dated March 1975 (Incorporated herein
by reference to Exhibit 3.1.2 of our Form 10-K for the
year ended September 30, 2002).
3.1.3 Articles of Amendment dated March 1992 (Incorporated herein by
reference to Exhibit 3.1.3 of our Form 10-K for the year ended
September 30, 2002).
3.1.4 Articles of Amendment dated November 1997 (Incorporated
herein by reference to Exhibit 3.1.4 of our Form 10-K for
the year ended September 30, 2002).
3.1.5 Certificate of Designations of Series A Junior Participating
Preferred Stock of Atwood Oceanics, Inc. dated October 17,
2002 (Incorporated herein by reference to Exhibit 3.1.5 of
our Form 10-K for the year ended September 30, 2002).
3.2 Bylaws, as amended and restated, dated January 1993
(Incorporated herein by reference to Exhibit 3.2 of our Form
10-K for the year ended September 30, 1993).
4.1 Rights Agreement dated effective October 18, 2002 between the
Company and Continental Stock & Transfer & Trust
Company (Incorporated herein by reference to Exhibit 4.1 of
our Form 8-A filed October 21, 2002).
*31.1 Certification of Chief Executive Officer
*31.2 Certification of Chief Financial Officer
*32.1 Certificate of Chief Executive Officer pursuant to Section
906 of Sarbanes - Oxley Act of 2002.
*32.2 Certificate of Chief Financial Officer pursuant to Section 906
of Sarbanes - Oxley Act of 2002.
*Filed herewith
-23-
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
ATWOOD OCEANICS, INC.
(Registrant)
Date: May 5, 2005 /s/JAMES M. HOLLAND_
James M. Holland
Senior Vice President,
Chief Financial Officer,
Chief Accounting Officer and Secretary
-24-
EXHIBIT INDEX
EXHIBIT NO. DESCRIPTION
3.1.1 Restated Articles of Incorporation dated January 1972
(Incorporated herein by reference to Exhibit 3.1.1 of our Form
10-K for the year ended September 30, 2002).
3.1.2 Articles of Amendment dated March 1975 (Incorporated herein
by reference to Exhibit 3.1.2 of our Form 10-K for the
year ended September 30, 2002).
3.1.3 Articles of Amendment dated March 1992 (Incorporated herein
by reference to Exhibit 3.1.3 of our Form 10-K for the year
ended September 30, 2002).
3.1.4 Articles of Amendment dated November 1997 (Incorporated
herein by reference to Exhibit 3.1.4 of our Form 10-K for
the year ended September 30, 2002).
3.1.5 Certificate of Designations of Series A Junior Participating
Preferred Stock of Atwood Oceanics, Inc. dated October
17, 2002 (Incorporated herein by reference to Exhibit 3.1.5
of our Form 10-K for the year ended September 30, 2002).
3.2 Bylaws, as amended and restated, dated January 1, 1993
(Incorporated herein by reference to Exhibit 3.2 of our Form
10-K for the year ended September 30, 1993).
4.1 Rights Agreement dated effective October 18, 2002 between the
Company and Continental Stock & Transfer & Trust
Company (Incorporated herein by reference to Exhibit 4.1 of
our Form 8-A filed October 21, 2002).
*31.1 Certification of Chief Executive Officer
*31.2 Certification of Chief Financial Officer
*32.1 Certificate of Chief Executive Officer pursuant to Section
906 of Sarbanes - Oxley Act of 2002.
*32.2 Certificate of Chief Financial Officer pursuant to Section
906 of Sarbanes - Oxley Act of 2002.
*Filed herewith
-25-
EXHIBIT 31.1
CERTIFICATIONS
I, John R. Irwin, certify that:
1. I have reviewed this quarterly report on Form 10-Q of Atwood
Oceanics, Inc.;
2. Based on my knowledge, this report does not contain any
untrue statement of a material fact or omit to state a material
fact necessary to make the statements made, in light of the
circumstances under which such statements were made, not
misleading with respect to the period covered by this report;
3. Based on my knowledge, the financial statements, and other
financial information included in this report, fairly present
in all material respects the financial condition, results of
operations and cash flows of the registrant as of, and
for, the periods presented in this report;
4. The registrant's other certifying officer(s) and I are
responsible for establishing and maintaining disclosure
controls and procedures (as defined in Exchange Act Rules
13a-15(e) and 15d-15(e)) for the registrant and have:
(a) Designed such disclosure controls and procedures, or
caused such disclosure controls and procedures to be
designed under our supervision, to ensure that material
information relating to the registrant, including its
consolidated subsidiaries, is made known to us by others
within those entities, particularly during the period in
which this report is being prepared;
(b) [Paragraph omitted in accordance with SEC transition
instructions contained in SEC Release 34-47986]; and
(c) Evaluated the effectiveness of the registrant's
disclosure controls and procedures and presented in this
report our conclusions about the effectiveness of the
disclosure controls and procedures, as of the end of the
period covered by this report based on such evaluation; and
(d) Disclosed in this report any change in the registrant's
internal control over financial reporting that occurred
during the registrant's most recent fiscal quarter (the
registrant's fourth fiscal quarter in the case of an annual
report) that has materially affected, or is reasonably likely
to materially affect, the registrant's internal control over
financial reporting; and
-26-
5. The registrant's other certifying officer(s) and I have
disclosed, based on our most recent evaluation of internal
control over financial reporting, to the registrant's auditors
and the audit committee of the registrant's board of directors
(or persons performing the equivalent functions):
(a) All significant deficiencies and material weaknesses in
the design or operation of internal control over
financial reporting which are reasonably likely to adversely
affect the registrant's ability to record, process,
summarize and report financial information; and
(b) Any fraud, whether or not material, that involves
management or other employees who have a significant role in
the registrant's internal control over financial reporting.
Date: May 5, 2005
/s/ JOHN R. IRWIN
John R. Irwin
Chief Executive Officer
-27-
EXHIBIT 31.2
CERTIFICATIONS
I, James M. Holland, certify that:
1. I have reviewed this quarterly report on Form 10-Q of Atwood
Oceanics, Inc.;
2. Based on my knowledge, this report does not contain any untrue
statement of a material fact or omit to state a material fact
necessary to make the statements made, in light of the
circumstances under which such statements were made, not
misleading with respect to the period covered by this report;
3. Based on my knowledge, the financial statements, and other
financial information included in this report, fairly present
in all material respects the financial condition, results of
operations and cash flows of the registrant as of, and for,
the periods presented in this report;
4. The registrant's other certifying officer(s) and I are
responsible for establishing and maintaining disclosure
controls and procedures (as defined in Exchange Act Rules
13a-15(e) and 15d-15(e)) for the registrant and have:
(a) Designed such disclosure controls and procedures, or
caused such disclosure controls and procedures to be
designed under our supervision, to ensure that material
information relating to the registrant, including its
consolidated subsidiaries, is made known to us by others
within those entities, particularly during the period in
which this report is being prepared;
(b) [Paragraph omitted in accordance with SEC transition
instructions contained in SEC Release 34-47986]; and
(c) Evaluated the effectiveness of the registrant's
disclosure controls and procedures and presented in this
report our conclusions about the effectiveness of the
disclosure controls and procedures, as of the end of the
period covered by this report based on such evaluation; and
(d) Disclosed in this report any change in the registrant's
internal control over financial reporting that occurred
during the registrant's most recent fiscal quarter (the
registrant's fourth fiscal quarter in the case of an annual
report) that has materially affected, or is reasonably likely
to materially affect, the registrant's internal
control over financial reporting; and
-28-
5. The registrant's other certifying officer(s) and I have
disclosed, based on our most recent evaluation of internal
control over financial reporting, to the registrant's
auditors and the audit committee of the registrant's board of
directors (or persons performing the equivalent functions):
(a) All significant deficiencies and material weaknesses in
the design or operation of internal control over
financial reporting which are reasonably likely to adversely
affect the registrant's ability to record, process,
summarize and report financial information; and
(b) Any fraud, whether or not material, that involves
management or other employees who have a significant role in
the registrant's internal control over financial reporting.
Date: May 5, 2005
/s/ JAMES M. HOLLAND
James M. Holland
Chief Financial Officer
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EXHIBIT 32.1
CERTIFICATION OF CHIEF EXECUTIVE OFFICER
PURSUANT TO 18 U.S.C. SECTION 1350,
AS ADOPTED PURSUANT TO
SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002
In connection with the Quarterly Report of Atwood Oceanics, Inc. (the
"Company") on Form 10-Q for the period ended March 31, 2005, as filed with the
Securities and Exchange Commission on the date hereof (the "Report"), I, John R.
Irwin, Chief Executive Officer of the Company, certify, pursuant to 18 U.S.C.
1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002,
that, to the best of my knowledge:
(1) The Report fully complies with the requirements of Section 13(a) or
15(d) of the Securities Exchange Act of 1934; and
(2) The information contained in the Report fairly presents, in all
material respects, the financial condition and results of operations of the
Company for the periods presented.
Date: May 5, 2005 /s/ JOHN R. IRWIN
John R. Irwin
President and Chief Executive Officer
-30-
EXHIBIT 32.2
CERTIFICATION OF CHIEF FINANCIAL OFFICER
PURSUANT TO 18 U.S.C. SECTION 1350,
AS ADOPTED PURSUANT TO
SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002
In connection with the Quarterly Report of Atwood Oceanics, Inc. (the
"Company") on Form 10-Q for the period ended March 31, 2005, as filed with the
Securities and Exchange Commission on the date hereof (the "Report"), I, James
M. Holland, Chief Financial Officer of the Company, certify, pursuant to 18
U.S.C. 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of
2002, that, to the best of my knowledge:
(1) The Report fully complies with the requirements of Section 13(a) or
15(d) of the Securities Exchange Act of 1934; and
(2) The information contained in the Report fairly presents, in all
material respects, the financial condition and results of operations of the
Company for the periods presented.
Date: May 5, 2005 /s/JAMES M. HOLLAND
James M. Holland
Senior Vice President and
Chief Financial Officer
-31-