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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D. C. 20549
----------------
Form 10-Q
|X| QUARTERLY REPORT UNDER SECTION 13 OR 15 (d)
OF THE SECURITIES EXCHANGE ACT OF 1934
FOR THE QUARTERLY PERIOD ENDED JUNE 30, 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 August 3, 2005: 15,290,951 shares of common stock $1 par
value
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ATWOOD OCEANICS, INC.
FORM 10-Q
For the Quarter Ended June 30, 2005
INDEX
Part I. Financial Information
Item 1. Unaudited Financial Statements Page
a) Condensed Consolidated Statements of Operations
For the Three Months and Nine Months Ended June 30, 2005 and 2004......6
b) Condensed Consolidated Balance Sheets
As of June 30, 2005 and September 30, 2004......................... ...7
c) Condensed Consolidated Statements of Cash Flows
For the Nine Months Ended June 30, 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.......20
Item 4. Controls and Procedures..........................................21
Part II. Other Information
Item 6. Exhibits ........................................................22
Signatures...................................................................23
2
PART I. FINANCIAL INFORMATION
ATWOOD OCEANICS, INC. AND SUBSIDIARIES
This Form 10-Q for the quarterly period ended June 30, 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 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 Nine Months Ended
June 30, June 30,
--------------------------- ---------------------------
2005 2004 2005 2004
-------- -------- -------- ---------
(Unaudited) (Unaudited)
REVENUES:
Contract drilling $ 43,589 $ 48,386 $ 122,376 $ 120,521
Business interruption proceeds - - 7,656 -
-------- -------- --------- ---------
43,589 48,386 130,032 120,521
-------- -------- --------- ---------
COSTS AND EXPENSES:
Contract drilling 25,863 26,572 74,667 70,519
Depreciation 6,764 7,898 19,929 23,587
General and administrative 3,224 3,008 9,814 8,683
-------- -------- --------- ---------
35,851 37,478 104,410 102,789
-------- -------- --------- ---------
OPERATING INCOME 7,738 10,908 25,622 17,732
-------- -------- --------- ---------
OTHER INCOME (EXPENSE)
Interest expense (1,913) (2,330) (5,658) (6,998)
Interest income 108 11 212 26
-------- -------- --------- ---------
(1,805) (2,319) (5,446) (6,972)
-------- -------- --------- ---------
INCOME BEFORE INCOME TAXES 5,933 8,589 20,176 10,760
PROVISION (BENEFIT) FOR INCOME TAXES (56) 2,904 826 6,517
-------- -------- --------- ---------
NET INCOME $ 5,989 $ 5,685 $ 19,350 $ 4,243
======== ======== ========= =========
EARNINGS PER COMMON SHARE:
Basic $ 0.39 $ 0.41 $ 1.27 $ 0.31
Diluted 0.38 0.40 1.24 0.30
AVERAGE COMMON SHARES OUTSTANDING:
Basic 15,242 13,860 15,178 13,858
Diluted 15,650 14,073 15,572 13,999
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)
June 30, September 30,
2005 2004
------------ ------------
(Unaudited)
ASSETS
CURRENT ASSETS:
Cash and cash equivalents $26,018 $16,416
Accounts receivable 30,258 32,475
Insurance receivable 1,111 25,433
Inventories of materials and supplies 15,138 12,648
Deferred tax assets 20 290
Prepaid expenses and other 3,726 5,704
-------- --------
Total Current Assets 76,271 92,966
--------- --------
NET PROPERTY AND EQUIPMENT 402,870 401,141
--------- --------
DEFERRED COSTS AND OTHER ASSETS 3,611 4,829
--------- --------
$482,752 $498,936
========= ========
LIABILITIES AND SHAREHOLDERS' EQUITY
CURRENT LIABILITIES:
Current maturities of notes payable $36,000 $36,000
Accounts payable 3,974 9,398
Accrued liabilities 6,233 13,822
Deferred Credits 1,199 833
--------- --------
Total Current Liabilities 47,406 60,053
--------- --------
LONG-TERM DEBT,
net of current maturities: 63,000 145,000
--------- --------
63,000 145,000
---------- --------
OTHER LONG TERM LIABILITIES:
Deferred income taxes 18,330 18,930
Deferred credits and other 2,454 3,364
--------- --------
20,784 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 15,242 and 13,873 issued
and outstanding at June 30, 2005 and
September 30, 2004, respectively 15,242 13,873
Paid-in capital 117,171 57,917
Retained earnings 219,149 199,799
--------- --------
Total Shareholders' Equity 351,562 271,589
---------- --------
$482,752 $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)
Nine Months Ended June 30,
---------------------------------
2005 2004
------------- -----------
(Unaudited)
CASH FLOW FROM OPERATING ACTIVITIES:
Net Income $ 19,350 $ 4,243
Adjustments to reconcile net income to net cash
provided by operating activities:
Depreciation 19,929 23,587
Amortization of debt issuance costs 603 524
Amortization of deferred items 475 425
Deferred income tax benefit (330) (700)
Changes in assets and liabilities:
Decrease in insurance receivable 8,572 -
Decrease (increase) in accounts receivable 2,217 (2,340)
Decrease (increase) in inventory (2,490) 560
Decrease in deferred costs and other assets 4,076 3,596
Decrease in accounts payable (5,424) (6,155)
Decrease in accrued liabilities (7,589) (1,210)
Net mobilization fees and credits (2,502) (4,755)
Tax benefit from the exercise of employee stock options 1,025 -
-------- --------
Net cash provided by operating activities 37,912 17,775
-------- --------
CASH FLOW FROM INVESTING ACTIVITIES:
Capital expenditures (21,643) (3,729)
Collection of insurance receivable 15,750 -
Other (15) 15
-------- --------
Net cash used by investing activities (5,908) (3,714)
-------- --------
CASH FLOW FROM FINANCING ACTIVITIES:
Debt issuance costs paid - (392)
Proceeds from stock offering 53,607 -
Proceeds from exercise of stock options 5,991 288
Proceeds from debt 10,000 -
Principal payments on debt (92,000) (18,000)
-------- --------
Net cash used by financing activities (22,402) (18,104)
-------- --------
NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS 9,602 (4,043)
CASH AND CASH EQUIVALENTS, at beginning of period $ 16,416 $ 21,551
-------- --------
CASH AND CASH EQUIVALENTS, at end of period $ 26,018 $ 17,508
-------- --------
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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 Shareholders'
(In thousands) Shares Amount Capital Earnings Equity
-------------------------------------------------------------------------------------------------------------------
September 30, 2004 13,873 $ 13,873 $ 57,917 $ 199,799 $ 271,589
Net income - - - 19,350 19,350
Exercise of employee stock options 194 194 5,797 - 5,991
Tax benefit from exercise of employee
stock options 1,025 1,025
Stock offering 1,175 1,175 52,432 - 53,607
------ ------- -------- --------- ---------
June 30, 2005 15,242 $ 15,242 $117,171 $ 219,149 $ 351,562
====== ======= ======== ========= =========
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
June 30, 2005 and for each of the three and nine month periods ended June 30,
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 fiscal year ended September 30, 2004. In our opinion, the
unaudited interim financial statements include all normal and recurring
adjustments necessary for a fair statement 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 and earnings
per share would have been reduced to the pro forma amounts indicated below (in
thousands, except for per share amounts):
10
Three Months Ended Nine Months Ended
June 30, June 30,
-------------------- --------------------
2005 2004 2005 2004
------ ------ ------- -----
Net income, as reported $ 5,989 $ 5,685 $ 19,350 $ 4,243
Deduct: Total stock-based employee
compensation expense determined under
fair value based method for all
awards, net of related tax effects (421) (625) (1,264) (1,875)
------- -------- -------- ------
Pro Forma, net income $ 5,568 $ 5,060 $ 18,086 $ 2,368
======= ======= ======== =======
Earnings per share:
Basic - as reported $ 0.39 $ 0.41 $ 1.27 $ 0.31
Basic - pro forma 0.37 0.37 1.19 0.17
Diluted - as reported $ 0.38 $ 0.40 $ 1.24 $ 0.30
Diluted - pro forma 0.36 0.36 1.16 0.17
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 fair value on the grant date 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, 2005 and will use the modified prospective method without restatement
of prior periods. 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.
In May 2005, the FASB issued SFAS No.154, "Accounting Changes and Error
Corrections - a replacement of APB Opinion No.20 and FASB Statement No.3," which
is effective for reporting a change in accounting principle for fiscal years
beginning after December 15, 2005. The Statement changes the reporting of a
change in accounting principle to require retrospective application to prior
periods' financial statements, except for explicit transition provisions
provided for in new accounting pronouncements or existing accounting
pronouncements, including those in the transition phase when SFAS No.154 becomes
effective. We will apply SFAS No.154 as required.
11
3. EARNINGS PER COMMON SHARE
The computation of basic and diluted earnings per share is as follows (in
thousands, except per share amounts):
Three Months Ended Nine Months Ended
------------------------ ----------------------
Net Per Share Net Per Share
Income Shares Amount Income Shares Amount
------- -------- --------- ------- ------ ---------
June 30, 2005:
Basic earnings per share $ 5,989 15,242 $ 0.39 $ 19,350 15,178 $ 1.27
Effect of dilutive securities
stock options options --- 408 $(0.01) --- 394 $(0.03)
------- ------ ------ -------- ------ ------
Diluted earnings per share $ 5,989 15,650 $ 0.38 $ 19,350 15,572 $ 1.24
June 30, 2004:
Basic earnings per share $ 5,685 13,860 $ 0.41 $4,243 13,858 $ 0.31
Effect of dilutive securities
stock options --- 213 $(0.01) --- 141 $(0.01)
------- ------- ------ ------- ------- ------
Diluted earnings per share $ 5,685 14,073 $ 0.40 $ 4,243 13,999 $ 0.30
12
4. PROPERTY AND EQUIPMENT
A summary of property and equipment by classification is as follows
(in thousands):
June 30, September 30,
2005 2004
---------- -------------
Drilling vessels and related equipment
Cost $ 629,632 $ 608,584
Accumulated depreciation (230,580) (211,544)
-------- ---------
399,052 397,040
-------- ---------
Drill pipe
Cost 10,746 10,240
Accumulated depreciation (8,021) (7,259)
-------- ---------
Net book value 2,725 2,981
-------- ---------
Furniture and other
Cost 7,447 7,635
Accumulated depreciation (6,354) (6,515)
-------- ---------
Net book value 1,093 1,120
-------- ---------
NET PROPERTY AND EQUIPMENT $402,870 $ 401,141
======== =========
Effective October 1, 2004, we extended the remaining depreciable life of
the SEAHAWK from 2 months to 5 years, due to entry into a contract that extended
the rig's commercial viability for up to 5 years. We believe that the change in
depreciable life provided and continues to provide a better matching of the
revenues and expenses of this asset over its anticipated remaining useful life.
We 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 $0.2 million, or $.01 per share, for the three month
period ended June 30, 2005, and depreciation expense was reduced and net income
was increased by approximately $0.6 million, or $.04 per share for the nine
month period ended June 30, 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.
As of June 30, 2005, all costs incurred to date related to this incident
had been reimbursed by the insurance carrier with the exception of $0.1 million
which has since been reimbursed. During fiscal year 2006, we plan to complete
the remaining work to restore the rig to its pre-incident condition at which
time we expect to collect the remaining $0.6 million insurance receivable
associated therewith.
8. INCOME TAXES
Virtually all of our tax provision for each of the three months and nine
months ended June 30, 2005 and 2004 relates to taxes in foreign jurisdictions.
Accordingly, due to the low level of operating income in certain nontaxable and
deemed profit tax jurisdictions during the nine months ended June 30, 2004, our
effective tax rate for fiscal year 2004 period 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, a $1.0 million deferred
tax benefit was recognized in June 2005 due to the filing, and subsequent
acceptance by the local tax authority, of amended prior year tax returns. Also,
our operating income in certain nontaxable and deemed profit tax jurisdictions
during the three and nine months ended June 30, 2005 is significantly higher
when 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. 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
Effective utilization of worldwide offshore drilling units today is around
97% compared to around 90% one year ago. High equipment utilization has resulted
in significantly increasing dayrates. Currently, we have approximately 70% of
rig-days for fiscal year 2006 firmly committed. For calendar year 2006, we have
approximately 55% of rig-days firmly committed. Several of our drilling rigs
have current dayrate commitments that represent historically high dayrate levels
for those rigs while operated by us. Revenues, operating cash flows and net
income for fiscal year 2005 are expected to be significantly higher than they
were in fiscal year 2004. With our current dayrate commitments, operating
results for fiscal year 2006 should also reflect significant improvement over
expected results for fiscal year 2005.
During the quarter ended June 30, 2005, the SEAHAWK incurred approximately
40 zero rate days before returning to work offshore Malaysia. The ATWOOD
SOUTHERN CROSS incurred approximately 20 zero rate days at the end of that
quarter while it was being prepared for its relocation to the Eastern
Mediterranean, and where it will return to work around mid-September, 2005. All
of our other six active drilling units were 100% utilized during the quarter
ended June 30, 2005.
We remain optimistic about the long-term outlook and fundamentals of the
offshore drilling market. For fiscal year 2006, the ATWOOD EAGLE, ATWOOD HUNTER,
VICKSBURG, SEAHAWK and RICHMOND have contractually committed dayrates of
$180,000, $125,000, $92,000, $68,430 and $45,000 respectively, which will be the
highest dayrates these units have ever received while operated by us. With an
improved market environment, a current capital ratio to total debt of 22%, a
current annual capital commitments for maintenance of our eight active drilling
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 nine months ended June 30, 2005 decreased 10%
and increased 8%, respectively, compared to the three and nine months ended June
30, 2004. A comparative analysis of revenue by rig is as follows:
REVENUES
(In millions)
-------------------------------------------------------------------------------
Three Months Ended June 30, Nine Months Ended June 30,
------------------------------------ ------------------------------------
2005 2004 Variance 2005 2004 Variance
---------- --------- ---------- --------- --------- ----------
RICHMOND $ 3.0 $ 2.4 $ 0.6 $ 8.3 $ 6.9 $ 1.4
ATWOOD HUNTER 5.6 5.6 - 16.4 14.1 2.3
ATWOOD FALCON 7.7 7.8 (0.1) 20.8 21.6 (0.8)
VICKSBURG 5.8 6.0 (0.2) 17.8 18.2 (0.4)
ATWOOD BEACON 5.9 6.1 (0.2) 18.2 15.2 3.0
ATWOOD SOUTHERN CROSS 2.8 3.5 (0.7) 9.1 9.1 -
SEAHAWK 2.4 4.6 (2.2) 9.6 14.0 (4.4)
ATWOOD EAGLE 8.7 11.9 (3.2) 26.7 19.9 6.8
OTHER 1.7 0.5 1.2 3.1 1.5 1.6
----- ----- ----- ------ ------ -----
$43.6 $48.4 $(4.8) $130.0 $120.5 $ 9.5
The average dayrates for the RICHMOND were approximately $33,000 and
$31,000 for the three and nine months ended June 30, 2005, compared to average
dayrates of approximately $27,000 and $26,000 for the three and nine months
ended June 30, 2004. While revenues for the ATWOOD HUNTER for the current
quarter were consistent with the prior fiscal year quarter, the year-to-date
increase is due to approximately 100% utilization at a dayrate of $62,000
compared to approximately 95 % utilization at dayrates ranging from $40,000 -
$62,000 for the prior fiscal year-to-date period. Revenues for the ATWOOD FALCON
and VICKSBURG for the current quarter and year-to-date period were relatively
consistent for the same periods in the prior fiscal year. The ATWOOD BEACON's
revenue for the current quarter was also relatively consistent with the prior
fiscal year quarter. However, the increase in revenue for the nine months ended
June 30, 2005 was due to an average dayrate of $67,000 which includes 110 days
of loss of hire insurance, compared to an average dayrate of approximately
$56,000 for the nine months ended June 30, 2004. The decrease in revenues for
the ATWOOD SOUTHERN CROSS for the current quarter was due to approximately 80%
utilization as the rig commenced its relocation to the Mediterranean during June
compared to 100% utilization in the prior fiscal year quarter while revenues for
the year-to-date periods were consistent. Utilization rates for the SEAHAWK were
approximately 60% and 80% for the three month and nine months ended June 30,
2005, respectively as the rig was awaiting commencement of its next contract,
while utilization during the prior fiscal year was 100%. The fiscal 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 current fiscal year as
amortization of the upgrade revenue ended November 2003. The decrease in revenue
for the ATWOOD EAGLE for the current quarter was due to amortization of
mobilization revenues of approximately $2.7 million in the prior fiscal year
quarter compared to none in the current quarter. Fiscal year-to-date revenues
were higher compared to the prior fiscal year-to-date period as the rig has been
100% utilized during the current fiscal year compared to approximately 60%
16
utilization during the prior fiscal year as the rig was relocating to Australia.
Other revenues are higher than the prior fiscal year periods due to the recent
increase in activity with one of our managed platform rigs in Australia.
Contract drilling costs for the three and nine months ended June 30, 2005
decreased 3% and increased 6%, respectively, as compared to the three and nine
months ended June 30, 2004. A comparative analysis of contract drilling costs by
rig is as follows:
CONTRACT DRILLING COSTS
(In millions)
------------------------------------------------------------------------------
Three Months Ended June 30, Nine Months Ended June 30,
------------------------------------ -----------------------------------
2005 2004 Variance 2005 2004 Variance
---------- --------- ---------- --------- --------- ----------
SEAHAWK $ 2.5 $ 2.0 $ 0.5 $ 7.3 $ 6.2 $ 1.1
RICHMOND 2.5 2.1 0.4 6.6 6.0 0.6
ATWOOD FALCON 3.9 3.7 0.2 10.0 9.9 0.1
VICKSBURG 2.2 2.2 - 6.6 6.6 -
ATWOOD HUNTER 3.1 3.1 - 8.6 8.9 (0.3)
ATWOOD SOUTHERN CROSS 2.7 2.8 (0.1) 8.0 9.6 (1.6)
ATWOOD BEACON 2.1 2.3 (0.2) 6.4 6.8 (0.4)
ATWOOD EAGLE 5.3 7.3 (2.0) 16.0 14.1 1.9
OTHER 1.6 1.1 0.5 5.2 2.4 2.8
----- ----- ----- ----- ----- -----
$25.9 $26.6 $(0.7) $74.7 $70.5 $ 4.2
===== ===== ===== ===== ===== =====
The increase in drilling costs for the SEAHAWK and RICHMOND were primarily
due to higher repair and maintenance expenses incurred on the rigs during the
three and nine months ended June 30, 2005 compared to the three and nine months
ended June 30, 2004. Drilling costs for the ATWOOD FALCON, VICKSBURG, ATWOOD
HUNTER, ATWOOD SOUTHERN CROSS, and ATWOOD BEACON remained relatively consistent
for the current quarter and fiscal year-to-date period as compared to the same
periods in the prior fiscal year with the exception of the decrease of fiscal
year-to-date costs for the ATWOOD SOUTHERN CROSS. That decrease was due to the
fact that 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. The decrease
in drilling costs for the ATWOOD EAGLE during the current quarter was due to
several factors. We amortized ATWOOD EAGLE mobilization expenses of
approximately $2.6 million in the prior fiscal year quarter compared to none in
the current fiscal year quarter. ATWOOD EAGLE fiscal year-to-date drilling costs
have increased due to an approximate $20,000 per day higher salary expense
attributable to additional rig personnel required due to local operating
requirements in Australia during the current fiscal year and higher Australian
labor costs in comparison to labor costs in West Africa, its location during the
first quarter of the prior fiscal year. Other drilling costs were higher for the
three and nine months ended June 30, 2005 due to the recent increase in activity
with one of our managed platform rigs in Australia. The prior fiscal
year-to-date period also includes the settlement of a dispute with a customer
which resulted in a reduction to drilling costs of approximately $600,000 and an
insurance premium refund of $450,000.
17
An analysis of depreciation expense by rig for the three and nine months
ended June 30, 2005 compared to the three and nine months ended June 30, 2005 is
as follows:
DEPRECIATION EXPENSE
(In millions)
------------------------------------------------------------------------------
Three Months Ended June 30, Nine Months Ended June 30,
------------------------------------ -----------------------------------
2005 2004 Variance 2005 2004 Variance
---------- --------- ---------- --------- --------- ----------
ATWOOD BEACON $ 1.3 $ 1.3 $ - $ 3.9 $ 4.0 $(0.1)
VICKSBURG 0.7 0.7 - 2.0 2.0 -
ATWOOD SOUTHERN CROSS 1.1 1.1 - 3.3 3.1 0.2
ATWOOD HUNTER 1.3 1.3 - 4.0 4.0 -
ATWOOD FALCON 0.7 0.7 - 2.1 2.0 0.1
ATWOOD EAGLE 1.2 1.2 - 3.5 3.6 (0.1)
RICHMOND 0.2 0.2 - 0.7 0.6 0.1
SEAHAWK 0.2 1.3 (1.1) 0.4 3.8 (3.4)
OTHER 0.0 0.1 (0.1) 0.1 0.5 (0.4)
----- ----- ------ ------ ----- -----
$ 6.7 $ 7.9 $ (1.2) $ 20.0 $23.6 $(3.6)
===== ===== ====== ====== ===== =====
30
Effective October 1, 2004, we extended the remaining depreciable life of
the SEAHAWK from 2 months to 5 years, as discussed in Note 4 of our condensed
consolidated financial statements, which resulted in the current quarter and the
fiscal year-to-date reduction of depreciation expense. The depreciable life of
this rig was extended based upon entry into a contract that extended the rig's
commercial viability for up to 5 years, coupled with our intent to continue
marketing and operating the rig beyond 2 months.
General and administrative expenses for the current fiscal year have
increased compared to the prior three and nine month periods due to the fact
that $0.7 million in bonuses were paid during the current fiscal year versus no
bonus payments in the prior fiscal year and due to increased professional fees
resulting from compliance requirements of the Sarbanes-Oxley Act of 2002.
Although the level of our outstanding debt has been reduced significantly from
the prior fiscal year, interest expense has only decreased slightly due to
rising interest rates.
Virtually all of our tax provision for each of the three and nine months
ended June 30, 2005 and 2004 relates to taxes in foreign jurisdictions. In
December 2004, we received a $1.7 million tax refund in Malaysia related to a
previously reserved tax receivable. In addition, a $1.0 million deferred tax
benefit was recognized in June 2005 due to the filing, and subsequent acceptance
by the local tax authority, of amended prior year tax returns. As a result, our
effective tax rate for the current quarter and fiscal year-to-date period were
significantly less than the U.S. statutory rate. The effective tax rate for the
current fiscal year is also significantly less when compared to the prior fiscal
year due to the items mentioned above, and due to a higher operating income in
certain nontaxable and deemed profit tax jurisdictions during fiscal
year-to-date 2005 when compared to the same period in fiscal year 2004.
Excluding any other discrete items that may be incurred, we expect our effective
tax rate to be approximately 25% for the fourth quarter of fiscal year 2005 and
10% for the whole of fiscal year 2005 as a whole.
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 nine months of fiscal year 2005
was approximately $37.9 million. We expect that in fiscal year 2005, net cash
provided by operating activities will be approximately $50 million for the full
fiscal year period. Our operating cash flows are primarily driven by our
operating income, which reflects dayrate and rig utilization. With 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, $16
million upgrade of the SEAHAWK planned in fiscal year 2006 prior to the rig
commencing working under its long-term contract in West Africa, 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 June 30, 2005, we had $99 million outstanding under the term portion and
nothing outstanding under the $100 million revolving portion of our senior
secured credit facility. In October 2004, upon conclusion of 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 $99 million of
available borrowing capacity and with a debt to total capitalization ratio
currently around 22%, 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 June 30,
2005 totaling approximately $385 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. Effective June 15, 2005, we
amended our senior secured credit facility to clarify covenants relating to
insurance.
The SEASCOUT, a semisubmersible hull which could be converted and upgraded
to a semisubmersible tender assist vessel, continues to be cold-stacked. We
expect that the cost to convert and upgrade the SEASCOUT would range from $70
million to $80 million. We have no current capital commitments on the SEASCOUT,
and we would not plan to undertake a conversion and upgrade unless 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 $0.6 million of the $1.1 million at June 30,
2005 relates to repairs made or to be made to the ATWOOD BEACON. During fiscal
year 2006, we plan to complete the remaining work to restore the rig to its
pre-incident condition at which time we expect to collect the remaining $0.6
million insurance receivable associated therewith.
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 $99 million at
June 30, 2005 approximates its fair value. The impact on annual cash flow of a
10% change in the floating rate (approximately 50 basis points) would be
approximately $0.5 million. We did not have any open derivative contracts
relating to our floating rate debt as of June 30, 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 June
30, 2005 amounts, a decrease in the value of 10% in the foreign currencies
relative to the U.S. dollar from the prior fiscal year-end exchange rates would
result in a foreign currency transaction loss of approximately $0.3 million. We
did not have any open derivative contracts relating to foreign currencies as of
June 30, 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, processed, 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 6. EXHIBITS
(a) Exhibits
3.1.1 Restated Articles of Incorporation dated January 25, 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 28, 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 20, 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 7,1997 (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).
10.1 Fourth Amendment to Credit Agreement dated June 15, 2005
among Atwood Oceanics, Inc. Atwood Oceanics Pacific Limited
and Nordea Bank Finland Plc and other financial institutions
named therein (Incorporated herein by reference to
Exhibit 10.1 of our Form 8-K filed July 8, 2005).
*31.1 Certification of Chief Executive Officer
*31.2 Certification of Chief Financial Officer
*32.1 Certification of Chief Executive Officer pursuant to Section
906 of Sarbanes - Oxley Act of 2002.
*32.2 Certification of Chief Financial Officer pursuant to Section
906 of Sarbanes - Oxley Act of 2002.
*Filed herewith
22
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: August 8, 2005 /s/JAMES M. HOLLAND_
James M. Holland
Senior Vice President, Chief Financial
Officer, Chief Accounting Officer and
Secretary
23
EXHIBIT INDEX
EXHIBIT NO. DESCRIPTION
3.1.1 Restated Articles of Incorporation dated January 25, 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 28, 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 20, 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 7, 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).
10.1 Fourth Amendment to Credit Agreement dated June 15, 2005
among Atwood Oceanics, Inc. Atwood Oceanics Pacific Limited
and Nordea Bank Finland Plc and other financial institutions
named therein (Incorporated herein by reference to
Exhibit 10.1 of our Form 8-K filed July 8, 2005).
*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
24
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
25
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: August 8, 2005
/s/ JOHN R. IRWIN
John R. Irwin
Chief Executive Officer
26
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
27
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: August 8, 2005
/s/ JAMES M. HOLLAND
James M. Holland
Chief Financial Officer
28
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 June 30, 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: August 8, 2005 /s/ JOHN R. IRWIN
John R. Irwin
President and Chief Executive Officer
29
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 June 30, 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: August 8, 2005 /s/JAMES M. HOLLAND
James M. Holland
Senior Vice President and
Chief Financial Officer
30