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Section 1: 8-K (8-K)

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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549

FORM 8-K

CURRENT REPORT
Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934

Date of Report (Date of earliest event reported): February 3, 2017

ATWOOD OCEANICS, INC.
(Exact name of registrant as specified in its charter)

Texas
1-13167
74-1611874
(State or other jurisdiction of incorporation)
(Commission File Number)
(I.R.S. Employer Identification No.)

15011 Katy Freeway, Suite 800, Houston, Texas
77094
(Address of principal executive offices)
(Zip Code)
 
 
 
 
 Registrant’s telephone number, including area code: (281) 749-7800

 
N/A
 
 
(Former Name, Former Address and Former Fiscal Year, if Changed Since Last Report)
 


Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:

¨ Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
¨ Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)
¨ Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))
¨ Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

 





ITEM 2.02 RESULTS OF OPERATIONS AND FINANCIAL CONDITION.

Our press release dated February 3, 2017, concerning financial results for the first quarter ended December 31, 2016, furnished as Exhibit 99.1, is incorporated herein by reference.

SECTION 9 - FINANCIAL STATEMENTS AND EXHIBITS

ITEM 9.01 FINANCIAL STATEMENTS AND EXHIBITS
(d)
EXHIBITS

The exhibits to this report furnished pursuant to item 9.01 are as follows:

99.1
Press Release dated February 3, 2017







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 hereunto duly authorized.


 
ATWOOD OCEANICS, INC.
 
(Registrant)
Date: February 3, 2017


 
/s/ Mark W. Smith
 
Mark W. Smith
 
Senior Vice President and Chief Financial Officer






EXHIBIT INDEX


EXHIBIT NO
DESCRIPTION
 
 
99.1
 
Press Release dated February 3, 2017




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Section 2: EX-99.1 (EXHIBIT 99.1)

Exhibit


Exhibit 99.1
FOR IMMEDIATE RELEASE - EARNINGS

HOUSTON, February 3, 2017 - Atwood Oceanics, Inc. (NYSE: ATW) ("Company"), announced today that it had earned net income of $9.7 million or $0.15 per diluted share, on revenues of $157.6 million for the quarter ended December 31, 2016, compared to net income of $4.2 million or $0.07 per diluted share on revenues of $188.7 million for the quarter ended September 30, 2016 and compared to net income of $39.1 million or $0.60 per diluted share on revenues of $307.8 million for the quarter ended December 31, 2015.

During the quarter ended December 31, 2015, the Company recorded a non-cash impairment charge of approximately $64.7 million ($64.7 million, net of tax, or $1.00 per diluted share) related to the Atwood Falcon. During the quarter ended December 31, 2016, the Company did not recognize any impairment.

During the quarter ended December 31, 2015, the Company recognized approximately $18.0 million ($18.0 million, net of tax, or $0.28 per diluted share) of expected insurance recoveries related to cyclone damage to the Atwood Osprey. This amount is included in Other income on the Unaudited Condensed Consolidated Statement of Operations and was subsequently collected.

In January 2017, the client for the Atwood Achiever exercised its option provided as part of the “blend and extend” agreement we entered into in October 2015 to revert the contract to the original operating day rate and original end date. Exercise of this option will result in a one-time payment to us of $48.1 million that includes the difference in day rates, taxes, and administrative fees covering the time periods for which the reduced day rate was previously invoiced. Effective February 1, 2017 and continuing until the contract end date of approximately November 12, 2017, the operating day rate is $595,000. 
In February 2017, we amended our drilling services contract with Woodside Energy Ltd (“Woodside”) to substitute the Atwood Condor for the Atwood Osprey for the Greater Enfield campaign. The contract is expected to commence between December 2017 and March 2018 at an operating rate of $222,295 per day for approximately 550 days. Depending on the commencement of the contract, Woodside will reimburse us for the mobilization of the Atwood Condor to Australia in an amount of either $34.5 million or $36.5 million. In addition, we entered into a new agreement with Woodside to utilize the Atwood Osprey for an additional exploration well with an estimated duration of approximately 100 days. The contract for the exploration well is expected to commence between March 2018 and May 2018 at an operating rate of $190,000 per day with a priced option for an additional well. We will receive a mobilization fee of $1.0 million if the option is exercised and a payment of $2.0 million if the option is not exercised.

 
For the Three Months Ended
 
(Unaudited)
(In thousands, except per share amounts)
December 31,
2016
 
September 30,
2016
 
December 31,
2015
Revenues
$
157,556

 
$
188,677

 
$
307,819

 
 
 
 
 
 
Income before Income Taxes
12,064

 
5,918

 
50,295

Provision for Income Taxes
(2,393
)
 
(1,669
)
 
(11,214
)
Net Income
$
9,671

 
$
4,249

 
$
39,081

 
 
 
 
 
 
Earnings per Common Share -
 
 
 
 
 
Basic
$
0.15

 
$
0.07

 
$
0.60

Diluted
$
0.15

 
$
0.07

 
$
0.60



5




ATWOOD OCEANICS, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(UNAUDITED)

 
Three Months Ended December 31,
(In thousands, except per share amounts)
2016
 
2015
 
(Unaudited)
REVENUES:
 
 
 
Contract drilling
$
149,863

 
$
294,615

Revenues related to reimbursable expenses
7,693

 
13,204

Total revenues
157,556

 
307,819

 
 
 
 
COSTS AND EXPENSES:
 
 
 
Contract drilling
65,670

 
130,652

Reimbursable expenses
6,602

 
8,286

Depreciation
41,808

 
42,827

General and administrative
15,190

 
15,177

Asset impairment

 
64,724

(Gain) loss on sale of assets
(67
)
 
77

 
129,203

 
261,743

 
 
 
 
OPERATING INCOME
28,353

 
46,076

 
 
 
 
OTHER INCOME (EXPENSE):
 
 
 
Interest expense, net of capitalized interest
(16,291
)
 
(13,761
)
Interest income
2

 
4

Other income

 
17,976

 
(16,289
)
 
4,219

 
 
 
 
INCOME BEFORE INCOME TAXES
12,064

 
50,295

PROVISION FOR INCOME TAXES
2,393

 
11,214

NET INCOME
$
9,671

 
$
39,081

 
 
 
 
EARNINGS PER COMMON SHARE (NOTE 3):
 
 
 
Basic
$
0.15

 
$
0.60

Diluted
$
0.15

 
$
0.60

WEIGHTED AVERAGE COMMON SHARES OUTSTANDING (NOTE 3):
 
 
 
Basic
64,879

 
64,765

Diluted
65,171

 
64,921



6



ATWOOD OCEANICS, INC. AND SUBSIDIARIES
UNAUDITED ANALYSIS OF REVENUES AND DRILLING COSTS

 
REVENUES
 
Three Months Ended
(In millions)
December 31,
2016
 
September 30,
2016
 
December 31,
2015
Ultra-Deepwater
$
148

 
$
155

 
$
182

Deepwater

 

 
72

Jackups
2

 
27

 
41

Reimbursable
8

 
7

 
13

 
158

 
189

 
308



 
DRILLING COSTS
 
Three Months Ended
(In millions)
December 31,
2016
 
September 30,
2016
 
December 31,
2015
Ultra-Deepwater
$
50

 
$
58

 
$
61

Deepwater

 
2

 
43

Jackups
14

 
17

 
26

Reimbursable
7

 
5

 
8

Other
1

 

 
1

 
$
72

 
$
82

 
$
139





7



ATWOOD OCEANICS, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS


(In thousands, except par value)
December 31,
2016
 
September 30,
2016
 
(Unaudited)
 
 
 ASSETS
 
 
 
Cash
$
160,110

 
$
145,427

Accounts receivable, net
95,464

 
113,091

Income tax receivable
6,471

 
6,095

Inventories of materials and supplies, net
110,462

 
109,925

Prepaid expenses, deferred costs and other current assets
15,745

 
18,504

Total current assets
388,252

 
393,042

 
 
 
 
Property and equipment, net
4,223,156

 
4,127,696

 
 
 
 
Other receivables
11,831

 
11,831

Deferred income taxes
165

 
165

Deferred costs and other assets
6,253

 
7,058

Total assets
$
4,629,657

 
$
4,539,792

 
 
 
 
LIABILITIES AND SHAREHOLDERS' EQUITY
 
 
 
Accounts payable
22,290

 
25,299

Accrued liabilities
9,076

 
7,868

Interest payable
14,896

 
7,096

Income tax payable
8,313

 
8,294

Deferred credits and other liabilities
285

 
799

 Total current liabilities
54,860

 
49,356

 
 
 
 
Long-term debt
1,297,995

 
1,227,919

Deferred income taxes
1,403

 
1,202

Deferred credits
350

 

Other
30,613

 
30,929

 Total long-term liabilities
1,330,361

 
1,260,050

 
 
 
 
Commitments and contingencies (Note 9)
 
 
 
 
 
 
 
Preferred stock, no par value, 1,000 shares authorized, none outstanding
$

 
$

Common stock, $1.00 par value, 180,000 shares authorized with 64,942 issued and outstanding as of December 31, 2016 and 180,000 shares authorized and 64,799 shares issued and outstanding as of September 30, 2016
$
64,942

 
$
64,799

 Paid-in capital
$
241,558

 
$
237,542

 Retained earnings
$
2,938,546

 
$
2,929,839

 Accumulated other comprehensive loss
$
(610
)
 
$
(1,794
)
Total shareholders' equity
3,244,436

 
3,230,386

Total liabilities and shareholders' equity
$
4,629,657

 
$
4,539,792




8



ATWOOD OCEANICS, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(UNAUDITED)


 
Three Months Ended December 31,
(In thousands)
2016
 
2015
Cash flows from operating activities:
 
 
 
Net income
$
9,671

 
$
39,081

Adjustments to reconcile net income to net cash provided by operating activities:
 
 
 
Depreciation
41,808

 
42,827

Amortization
922

 
1,250

Provision for doubtful accounts
2,369

 
757

Deferred income tax benefit
(185
)
 
(714
)
Share-based compensation expense
3,655

 
2,371

Asset impairment

 
64,724

(Gain) loss on sale of assets
(67
)
 
77

Changes in assets and liabilities:
 
 
 
Accounts receivable
15,258

 
60,883

Income tax receivable
(376
)
 
(829
)
Inventories of materials and supplies
(537
)
 
11,023

Prepaid expenses, deferred costs and other current assets
2,759

 
7,462

Deferred costs and other assets
(496
)
 
(1,050
)
Accounts payable
(1,396
)
 
(17,615
)
Accrued liabilities
9,191

 
8,570

Income tax payable
19

 
(642
)
Deferred credits and other liabilities
902

 
1,973

Net cash provided by operating activities
83,497

 
220,148

 
 
 
 
Cash flows from investing activities:
 
 
 
Capital expenditures
(138,814
)
 
(131,547
)
Net cash used in investing activities
(138,814
)
 
(131,547
)
 
 
 
 
Cash flows from financing activities:
 
 
 
Proceeds from issuance of long-term debt
125,000

 
45,000

Principal payments on long-term debt
(55,000
)
 
(115,000
)
Dividends paid

 
(16,316
)
Payments related to exercise of stock options

 
(599
)
Net cash provided by (used in) or financing activities
70,000

 
(86,915
)
Net increase in cash and cash equivalents
14,683

 
1,686

Cash and cash equivalents, at beginning of period
145,427

 
113,983

Cash and cash equivalents, at end of period
160,110

 
115,669

 
 
 
 
Non-cash activities:
 
 
 
Decrease (increase) in accounts payable related to capital expenditures
$
(1,613
)
 
$
10,530

Dividends payable
$

 
$
4,858





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Atwood Oceanics, Inc. is a leading offshore drilling company engaged in the drilling and completion of exploration and development wells for the global oil and gas industry. The Company currently owns 10 mobile offshore drilling units and is constructing 2 ultra-deepwater drillships. The Company was founded in 1968 and is headquartered in Houston, Texas. Atwood Oceanics, Inc. common stock is traded on the New York Stock Exchange under the symbol "ATW." For more information about the Company, please visit www.atwd.com.

Conference Call

The Company has scheduled a conference call and webcast related to its first quarter 2017 results on Monday, February 6, 2017, at 9:00 A.M. CDT (10:00 A.M. EDT). Interested parties are invited to listen to the call by dialing 1-800-894-5910, or internationally 1-785-424-1052, Conference ID - ATWOOD/ Password 25965. Interested parties may also listen over the Internet through a link posted in the Investor Relations section of the Company's Web site.

A replay of the conference call will be available on the Company's Web site following the end of the live call.

Contact: Mark W. Smith
Senior Vice President and Chief Financial Officer
(281) 749-7840



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