10-Q

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D. C. 20549

_______________________________________________

Form 10-Q

_______________________________________________

x QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

FOR QUARTERLY PERIOD ENDED December 31, 2012

¨ 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 incorporation or organization)	(I.R.S. Employer Identification No.)
15835 Park Ten Place Drive Houston, Texas	77084
(Address of principal executive offices)	(Zip Code)

281-749-7800

(Registrant’s telephone number, including area code)

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 has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).

Yes x No ¨

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act.

Large accelerated filer	x	Accelerated filer	¨
Non-accelerated filer	¨	Smaller reporting company	¨

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).

Yes ¨ No x

Indicate the number of shares outstanding of each of the issuer’s classes of common stock, as of January 30, 2013: 65,641,866 shares of common stock, $1.00 par value

ATWOOD OCEANICS, INC.

FORM 10-Q

For the Quarter Ended December 31, 2012

INDEX

Part I. Financial Information
Item 1.	Unaudited Condensed Consolidated Financial Statements	Page
a)	Unaudited Condensed Consolidated Statements of Operations for the Three Months ended December 31, 2012 and 2011	3
b)	Unaudited Condensed Consolidated Statements of Comprehensive Income for the Three Months Ended December 31, 2012 and 2011	4
c)	Unaudited Condensed Consolidated Balance Sheets as of December 31, 2012 and September 30, 2012	5
d)	Unaudited Condensed Consolidated Statements of Cash Flows for the Three Months Ended December 31, 2012 and 2011	6
e)	Unaudited Condensed Consolidated Statement of Changes in Shareholders’ Equity for the Three Months Ended December 31, 2012	7
f)	Notes to Unaudited Condensed Consolidated Financial Statements	8
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	14
Item 3.	Quantitative and Qualitative Disclosures about Market Risk	23
Item 4.	Controls and Procedures	24
Part II. Other Information
Item 1.	Legal Proceedings	25
Item 1A.	Risk Factors	25
Item 6.	Exhibits	25
Signatures

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PART I. FINANCIAL INFORMATION

ITEM I. FINANCIAL STATEMENTS

Atwood Oceanics, Inc. and Subsidiaries

UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

	Three Months Ended December 31,
(In thousands, except per share amounts)	2012			2011
REVENUES:
Contract drilling	$	245,093		$	184,672
COSTS AND EXPENSES:
Contract drilling	111,916			78,344
Depreciation	27,578			15,363
General and administrative	17,221			14,094
Other, net	7			—
	156,722			107,801
OPERATING INCOME	88,371			76,871
OTHER INCOME (EXPENSE):
Interest expense, net of capitalized interest	(4,408		)	(603		)
Interest income	124			86
Other	—			1,577
	(4,284		)	1,060
INCOME BEFORE INCOME TAXES	84,087			77,931
PROVISION FOR INCOME TAXES	11,256			12,463
NET INCOME	$	72,831		$	65,468
EARNINGS PER COMMON SHARE (NOTE 2):
Basic	1.11			1.01
Diluted	1.10			1.00
AVERAGE COMMON SHARES OUTSTANDING (NOTE 2):
Basic	65,528			65,024
Diluted	66,092			65,541

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

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Atwood Oceanics, Inc. and Subsidiaries

UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

	Three Months Ended December 31,
(In thousands)	2012		2011
Net income	$	72,831	$	65,468
Other comprehensive income (loss)
Interest rate swaps	372		(208		)
Other comprehensive income (loss)	372		(208		)
Total comprehensive income	$	73,203	$	65,260

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

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Atwood Oceanics, Inc. and Subsidiaries

UNAUDITED CONDENSED CONSOLIDATED BALANCE SHEETS

(In thousands)	December 31, 2012			September 30, 2012
ASSETS
Current assets:
Cash and cash equivalents	$	108,341		$	77,871
Accounts receivable, net of allowance for doubtful accounts of $1,871 and $0 at December 31, 2012 and September 30, 2012, respectively	142,934			167,186
Income tax receivable	5,609			5,750
Inventories of materials and supplies	80,367			80,290
Prepaid expenses and deferred costs	31,117			39,437
Total current assets	368,368			370,534
Property and equipment, net	2,854,515			2,537,340
Other receivables	11,868			11,875
Deferred costs and other assets	24,195			24,013
Total assets	$	3,258,946		$	2,943,762
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Accounts payable	$	78,420		$	83,592
Accrued liabilities	29,261			24,478
Notes payable	—			5,148
Income tax payable	13,314			9,711
Deferred credits	15,095			13,738
Total current liabilities	136,090			136,667
Long-term debt	1,070,000			830,000
Deferred income taxes	8,571			8,791
Deferred credits	7,659			8,928
Other	20,300			19,954
Total long-term liabilities	1,106,530			867,673
Commitments and contingencies (Note 10)
Shareholders’ equity:
Preferred stock, no par value, 1,000 shares authorized, none outstanding	—			—
Common stock, $1.00 par value, 90,000 shares authorized with 65,632 and 65,452 issued and outstanding at December 31, 2012 and September 30, 2012, respectively	65,632			65,452
Paid-in capital	164,061			160,540
Retained earnings	1,789,272			1,716,441
Accumulated other comprehensive loss	(2,639		)	(3,011		)
Total shareholders' equity	2,016,326			1,939,422
Total liabilities and shareholders' equity	$	3,258,946		$	2,943,762

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

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Atwood Oceanics, Inc. and Subsidiaries

UNAUDITED CONDENSED CONSOLIDATED

STATEMENTS OF CASH FLOWS

	Three Months Ended December 31,
(In thousands)	2012			2011
Cash flows from operating activities:
Net income	$	72,831		$	65,468
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation	27,578			15,363
Amortization of debt issuance costs	1,036			681
Amortization of deferred items	(32		)	393
Provision for doubtful accounts	1,871			—
Provision for inventory obsolescence	181			255
Deferred income tax benefit	(220		)	(186		)
Share-based compensation expense	3,048			1,790
Other, net	7			—
Changes in assets and liabilities:
(Increase) decrease in accounts receivable	22,388			(32,511		)
Decrease in income tax receivable	141			1,640
(Increase) decrease in inventory	(257		)	6,106
Decrease in prepaid expenses	5,470			1,378
Increase in deferred costs and other assets	(4,039		)	(1,040		)
Increase (decrease) in accounts payable	(27,978		)	3,463
Increase (decrease) in accrued liabilities	4,937			(9,143		)
Increase in income tax payable	3,603			3,249
Increase in deferred credits and other liabilities	6,354			843
	44,088			(7,719		)
Net cash provided by operating activities	116,919			57,749
Cash flows from investing activities:
Capital expenditures	(321,995		)	(257,446		)
Proceeds from sale of assets	41			—
Net cash used by investing activities	(321,954		)	(257,446		)
Cash flows from financing activities:
Proceeds from bank credit facilities	240,000			—
Principal payments on notes payable	(5,148		)	(5,461		)
Proceeds from exercise of stock options	653			79
Net cash provided (used) by financing activities	235,505			(5,382		)
Net increase (decrease) in cash and cash equivalents	$	30,470		$	(205,079	)
Cash and cash equivalents, at beginning of period	$	77,871		$	295,002
Cash and cash equivalents, at end of period	$	108,341		$	89,923
Non-cash activities
Increase (decrease) in accounts payable and accrued liabilities related to capital expenditures	$	22,806		$	(83,190	)

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

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Atwood Oceanics, Inc. and Subsidiaries

UNAUDITED CONDENSED CONSOLIDATED

STATEMENT OF CHANGES IN SHAREHOLDERS’ EQUITY

	Common Stock			Paid-in			Retained		Accumulated Other Comprehensive			Total Stockholders’
(In thousands)	Shares	Amount		Capital			Earnings		Loss			Equity
September 30, 2012	65,452	$	65,452	$	160,540		$	1,716,441	$	(3,011	)	$	1,939,422
Net income	—	—		—			72,831		—			72,831
Other comprehensive gain	—	—		—			—		372			372
Restricted stock awards	142	142		(142		)	—		—			—
Exercise of employee stock options	38	38		615			—		—			653
Stock option and restricted stock award compensation expense		—		3,048			—		—			3,048
December 31, 2012	65,632	$	65,632	$	164,061		$	1,789,272	$	(2,639	)	$	2,016,326

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

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Atwood Oceanics, Inc. and Subsidiaries

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

NOTE 1—UNAUDITED INTERIM INFORMATION

The unaudited interim condensed consolidated financial statements of Atwood Oceanics, Inc. and its subsidiaries as of December 31, 2012, and for the three months endedDecember 31, 2012 and 2011, 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. Unless otherwise indicated, references to “we”, “us”, “our” and the “Company” refer collectively to Atwood Oceanics, Inc. and subsidiaries. The year-end condensed consolidated balance sheet data was derived from the audited financial statements as of September 30, 2012. 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 generally accepted accounting principles 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 fiscal year. It is suggested that these unaudited condensed consolidated financial statements be read in conjunction with the audited consolidated financial statements and the notes thereto included in our Annual Report on Form 10-K for the year ended September 30, 2012. In our opinion, the unaudited interim financial statements reflect all adjustments considered necessary for a fair statement of our financial position, results of operations and cash flows for the periods presented.

NOTE 2—EARNINGS PER COMMON SHARE

The computation of basic and diluted earnings per share for the three months endedDecember 31, 2012 and 2011 is as follows (in thousands, except per share amounts):

	Three Months Ended
	Net Income		Shares	Per Share Amount
December 31, 2012
Basic earnings per share	$	72,831	65,528	$	1.11
Effect of dilutive securities:
Stock options	—		409	$	(0.01	)
Restricted stock	—		155	$	—
Diluted earnings per share	$	72,831	66,092	$	1.10
December 31, 2011
Basic earnings per share	$	65,468	65,024	$	1.01
Effect of dilutive securities:
Stock options	—		348	$	(0.01	)
Restricted stock	—		169	$	—
Diluted earnings per share	$	65,468	65,541	$	1.00

The calculation of diluted earnings per share for the three months endedDecember 31, 2012 and 2011 excludes shares of common stock related to approximately 296,000 and 977,000 outstanding stock options, respectively, because such options were anti-dilutive. These options could potentially dilute basic earnings per share in the future.

NOTE 3—SHARE-BASED COMPENSATION

Share-based compensation cost is measured at the grant date, based on the calculated fair value of the award, and is recognized as an expense over the requisite service period, which is generally the vesting period of the equity award. As of December 31, 2012, unrecognized compensation cost, net of estimated forfeitures, related to stock options and restricted stock awards was approximately $5.6 million and $24.3 million, respectively, which we expect to recognize over a weighted average period of approximately 2.4 years.

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Stock Options

Under our stock incentive plans, the exercise price of each stock option must be equal to or greater than the fair market value of one share of our common stock on the date of grant, with all outstanding options having a maximum term of 10 years. Options vest ratably over a period ranging from the end of the first to the fourth year from the date of grant for stock options. Each option is for the purchase of one share of our common stock.

A summary of stock option activity during the three months endedDecember 31, 2012 is as follows:

	Number of Options (000s)	Wtd. Avg. Exercise Price		Wtd. Avg. Remaining Contractual Life (Years)	Aggregate Intrinsic Value (000s)
Outstanding at October 1, 2012	1,450	$	29.74	6.1	$	22,663
Granted	0	$	—
Exercised	(38)	$	16.25		$	1,181
Forfeited	(16)	$	38.96
Outstanding at December 31, 2012	1,396	$	29.98	5.9	$	22,058
Exercisable at December 31, 2012	1,023	$	26.44	5.0	$	19,785

Restricted Stock

We have awarded restricted stock under the Atwood Oceanics, Inc. 2007 Long-Term Incentive Plan (as amended, the "2007 Plan") to certain employees and to our non-employee directors. All current awards of restricted stock to employees are subject to a vesting and restriction period ranging from three to four years, subject to early termination as provided in the 2007 Plan. In addition, certain awards of restricted stock to employees are subject to market-based performance conditions. The number of shares that vest based on market-based performance conditions will depend on the degree of achievement of specified corporate performance criteria which are strictly market-based. All awards of restricted stock to non-employee directors are subject to a vesting and restriction period of a minimum of 13 months, subject to early termination as provided in the 2007 Plan. We value restricted stock awards based on the fair market value of our common stock on the date of grant and also adjust fair market value for any awards subject to market-based performance conditions, where applicable.

A summary of restricted stock activity for the three months endedDecember 31, 2012 is as follows:

	Number of Shares (000s)	Wtd. Avg. Fair Value
Unvested at October 1, 2012	701	$	38.54
Granted	323	$	46.46
Vested	(142)	$	34.77
Forfeited	(9)	$	39.62
Unvested at December 31, 2012	873	$	42.06

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NOTE 4—PROPERTY AND EQUIPMENT

A summary of property and equipment by classification is as follows (in thousands):

(In thousands)	December 31, 2012			September 30, 2012
Drilling vessels and equipment	$	2,727,429		$	2,523,895
Construction work in progress	575,820			438,081
Drill pipe	20,658			20,576
Office equipment and other	22,099			19,610
Cost	3,346,006			3,002,162
Less: Accumulated depreciation	(491,491		)	(464,822		)
Drilling and other property and equipment, net	$	2,854,515		$	2,537,340

Property and equipment are recorded at cost. Interest incurred related to property under construction is capitalized as a component of construction costs. Interest capitalized during the three months endedDecember 31, 2012 and 2011 was approximately $9.0 million and $4.8 million, respectively.

Construction Projects

As of December 31, 2012, we had expended approximately $564 million towards our four drilling units under construction. Total remaining firm commitments for our four drilling units currently under construction were approximately $1.2 billion at December 31, 2012.

NOTE 5—LONG-TERM DEBT

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

	December 31, 2012		September 30, 2012
Senior Notes, bearing fixed interest at 6.5% per annum	$	450,000	$	450,000
Credit Facility, bearing interest at approximately 3.0%(1) per annum at December 31, 2012 and 3.2%(1) per annum at September 30, 2012	620,000		380,000
(1) After the impact of our interest rate swaps.	$	1,070,000	$	830,000

Revolving Credit Facility

As of December 31, 2012, we had $620 million of outstanding borrowings under our five-year $750 million senior secured revolving credit facility. The credit facility was entered into in May 2011 and matures in May 2016. Our wholly-owned subsidiary, Atwood Offshore Worldwide Limited (“AOWL”), is the borrower under the credit facility, and we and certain of our other subsidiaries are guarantors under the facility. Borrowings under the credit facility bear interest at the Eurodollar rate plus a margin of 2.5%. Certain borrowings effectively bear interest at a fixed rate due to our interest rate swaps (See Note 6).

We were in compliance with all financial covenants under the credit facility at December 31, 2012.

NOTE 6—INTEREST RATE SWAPS

Our credit facility exposes us to short-term changes in market interest rates as our interest obligations on these instruments are periodically re-determined based on the prevailing Eurodollar rate. We enter into interest rate swaps to limit our exposure to fluctuations and volatility in interest rates. We do not engage in derivative transactions for speculative or trading purposes and we are not a party to leveraged derivatives.

At December 31, 2012, we had five$50 million notional interest rate swaps in effect. These interest rate swaps fix the interest rate on $250 million of borrowings under the credit facility at a weighted average interest rate of 3.4% through September 2014.

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Fair Value of Derivatives

The following table presents the carrying amount of our cash flow hedge derivative contracts included in the Consolidated Balance Sheets as of December 31, 2012 and September 30, 2012 (in thousands):

		December 31,		September 30,
Type of Contract	Balance Sheet Classification	2012		2012
Short term interest rate swaps	Accrued liabilities	$	1,751	$	1,705
Long term interest rate swaps	Other long-term liabilities	1,002		1,414
Total derivative contracts, net		$	2,753	$	3,119

We record the interest rate derivative contracts at fair value on our consolidated balance sheets (See Note 8). Hedging effectiveness is evaluated each quarter end using the “Dollar Off-Set Method”. Each quarter, changes in the fair values will adjust the balance sheet asset or liability, with an offset to Other Comprehensive Income (“OCI”) for the effective portion of the hedge.

For the three months endedDecember 31, 2012, we recognized a gain of approximately $0.4 million in OCI as a result of realized losses associated with effective portion of the hedge and classified as interest expense, net of capitalized interest on our Consolidated Statement of Operations.

For interest rate swaps, we compare all material terms between the swap and the underlying debt obligation to evaluate effectiveness. Any change in fair value resulting from ineffectiveness is recognized immediately in earnings. No loss was recognized during the quarters ended December 31, 2012 and 2011 due to hedge ineffectiveness.

NOTE 7—INCOME TAXES

Our consolidated effective income tax rate for the three months endedDecember 31, 2012 was approximately 13%. We record estimated accrued interest and penalties related to uncertain tax positions as income tax expense. At December 31, 2012, we had approximately $8.3 million of reserves for uncertain tax positions, including estimated accrued interest and penalties of $2.6 million, which are included in Other Long Term Liabilities in the Consolidated Balance Sheet. None of our reserves for uncertain tax positions relate to timing differences. All $8.3 million of the net uncertain tax liabilities would affect the effective tax rate if recognized.

Our United States tax returns for fiscal year 2009 and subsequent years remain subject to examination by tax authorities. As we conduct business globally, we have various tax years that remain open to examination in certain international tax jurisdictions. Although we cannot predict the outcome of ongoing or future tax examinations, we do not anticipate that the ultimate resolution of these examinations will have a material impact on our consolidated financial position, results of operations or cash flows.

NOTE 8—FAIR VALUE

We have certain assets and liabilities that are required to be measured and disclosed at fair value in accordance with generally accepted accounting principles (“GAAP”). Fair value is defined as the exchange price that would be received for an asset or paid to transfer a liability (an exit price) in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants on the measurement date.

The established GAAP fair value hierarchy prioritizes inputs to valuation techniques used to measure fair value into three levels. Priority is given to unadjusted quoted prices in active markets for identical assets or liabilities (Level 1) and the lowest priority to unobservable inputs (Level 3). Assets and liabilities measured at fair value are classified based on the lowest level of input that is significant to the fair value measurement. Our assessment of the significance of a particular input to the fair value measurement requires judgment, which may affect the valuation of the fair value of assets and liabilities and their placement within the fair value hierarchy levels. The determination of the fair values, stated below, takes into account the market for our financial assets and liabilities, the associated credit risk and other considerations.

We have classified and disclosed fair value measurements using the following levels of the fair value hierarchy:

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Level 1: Unadjusted quoted prices in active markets that are accessible at the measurement date for identical, unrestricted assets or liabilities.

Level 2: Quoted prices in markets that are not active, or inputs which are observable, either directly or indirectly, for substantially the full term of the asset or liability.

Level 3: Measurement based on prices or valuation models that require inputs that are both significant to the fair value measurement and less observable for objective sources (i.e., supported by little or no market activity).

Fair value of Certain Assets and Liabilities

The fair value of cash and cash equivalents, accounts receivable and accounts payable approximate fair value because of their short term maturities.

Fair Value of Financial Instruments

The fair value of financial instruments is determined by using quoted market prices when available. When quoted prices are not available, independent third party services may be used to determine the fair value with reference to observable inputs used.

The following table sets forth the estimated fair value of certain financial instruments at December 31, 2012 and September 30, 2012, which are measured and recorded at fair value on a recurring basis:

		December 31, 2012
		Fair Value Measurements
		Carrying Amount		Level 1		Level 2		Level 3		Estimated Fair  Value
Type of Contract	Balance Sheet Classification
Short term interest rate swaps	Accrued liabilities	$	1,751	$	—	$	1,751	$	—	$	1,751
Long term interest rate swaps	Other long-term liabilities	1,002		—		1,002		—		1,002
Total derivative contracts, net		$	2,753	$	—	$	2,753	$	—	$	2,753
		September 30, 2012
		Fair Value Measurements
		Carrying Amount		Level 1		Level 2		Level 3		Estimated Fair  Value
Type of Contract	Balance Sheet Classification
Short term interest rate swaps	Accrued liabilities	$	1,705	$	—	$	1,705	$	—	$	1,705
Long term interest rate swaps	Other long-term liabilities	1,414		—		1,414		—		1,414
Total derivative contracts, net		$	3,119	$	—	$	3,119	$	—	$	3,119

Interest rate swaps - The fair values of our interest rate swaps are based upon valuations calculated by an independent third party. The derivatives were valued according to the "Market approach" where possible, and the "Income approach" otherwise. A third party independently valued each instrument using forward price data supplied by dealers and the Chicago Mercantile Exchange (the exchange on which similar derivatives trade) indexed to one month USD LIBOR as of December 31, 2012, and broker quotes for credit default swaps or related credit instruments. It was determined that the contribution of the credit valuation adjustment to total fair value is less than 5.0% for all derivatives and is therefore not significant. Based on valuation inputs for fair value measurement and independent review performed by third party consultants, we have classified our derivative contracts as Level 2.

Long-term Debt – Our long-term debt consists of both our 6.5% Senior Notes due 2020 (the “Notes”) and our credit facility.

Credit Facility – The carrying amounts of our variable-rate debt approximates fair value because such debt bears short-term, market-based interest rates. We have classified this instrument as Level 2 as valuation inputs for purposes of determining our fair value disclosure are readily available published Eurodollar rates.

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Notes – The carrying value of our Notes is $450 million while the fair value of those Notes is $496 million, based upon a valuation calculated by an independent third party. The third party conducted independent research concerning interest rates and credit risk and relied on market sources to assess the LIBOR swap curve data as well as information provided in the debt purchase agreement. We have classified this instrument as Level 2 as valuation inputs for fair value measurements are quoted market prices that can only be obtained from independent third party sources on December 31, 2012. The fair value amount has been calculated using these quoted prices. However, no assurance can be given that the fair value would be the amount realized in an active market exchange.

NOTE 9—RECENTLY ISSUED ACCOUNTING PRONOUNCEMENTS

In December 2011, the FASB issued ASU 2011-11, "Balance Sheet (Topic 210): Disclosures about Offsetting Assets and Liabilities" for an entity to provide enhanced disclosures that will enable users of its financial statements to evaluate the effect or potential effect of netting arrangements on an entity's financial position. We adopted the accounting standards effective January 1, 2013, but we do not expect that our adoption will have a material effect on our financial statements.

NOTE 10—COMMITMENTS AND CONTINGENCIES

Litigation

We are party to a number of lawsuits which are ordinary, routine litigation incidental to our business, the outcome of which is not expected to have, either individually or in the aggregate, a material adverse effect on our financial position, results of operations, or cash flows.

Other Matters

The Atwood Beacon operated in India from early December 2006 to the end of July 2009. A service tax was enacted in India in 2004 on revenues derived from seismic and exploration activities. This service tax law was subsequently amended in June 2007 and again in May 2008 to state that revenues derived from mining services and drilling services were specifically subject to this service tax. The contract terms with our customer in India provided that any liability incurred by us related to any taxes pursuant to laws not in effect at the time the contract was executed in 2005 was to be reimbursed by our customer. We believe any service taxes assessed by the Indian tax authorities under the 2007 or 2008 amendments are an obligation of our customer. Our customer is disputing this obligation on the basis that revenues derived from drilling services were taxable under the initial 2004 law, and are, therefore, our obligation.

After reviewing the status of the drilling service we provided to our customer, the Indian tax authorities assessed service tax obligations on revenues derived from the Atwood Beacon commencing on June 1, 2007. The relevant Indian tax authority issued an extensive written ruling setting forth the application of the June 1, 2007 service tax regulation and confirming the position that drilling services, including the services performed under our contract with our customer prior to June 1, 2007, were not covered by the 2004 service tax law. In August 2012, the Indian Custom Excise and Service Tax Appellate Tribunal issued an Order in our favor confirming our position that service tax did not apply to drilling services performed prior to June 1, 2007. This ruling is subject to appeal to the Indian Supreme Court.

As of December 31, 2012, we had paid to the Indian government $10.1 million in service taxes and have accrued $1.8 million of additional service tax obligations in accrued liabilities on our consolidated balance sheets, for a total of $11.9 million relating to service taxes. We recorded a corresponding $11.9 million long-term other receivable due from our customer relating to service taxes due under the contract. We continue to pursue collection of such amounts from our customer and expect to collect the amount recorded as receivable.

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ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

Management’s Discussion and Analysis of Financial Condition and Results of Operations should be read in conjunction with the accompanying unaudited condensed consolidated financial statements as of December 31, 2012 and for the three months endedDecember 31, 2012 and 2011 included elsewhere herein, and with our Annual Report on Form 10-K for the fiscal year ended September 30, 2012. The following discussion and analysis contains forward-looking statements that involve risks and uncertainties. Our actual results may differ materially from those anticipated in these forward-looking statements as a result of certain factors, including those set forth under “Risk Factors” in Item 1A of our Annual Report on Form 10-K for the fiscal year ended September 30, 2012 and elsewhere in this Quarterly Report. See “Forward-Looking Statements” below.

OVERVIEW

The following discussion is intended to assist in understanding our financial position at December 31, 2012, and our results of operations for the three months endedDecember 31, 2012 and 2011. Financial and operating results for the three months ended December 31, 2012, include:

• Operating revenues totaling $245 million on 833 operating days as compared to $185 million on 644 operating days for the three months ended December 31, 2011;

• Net income of $73 million as compared to $65 million for the three months ended December 31, 2011;

• Net cash provided by operating activities of $117 millionas compared to $58 million for the three months ended December 31, 2011; and

• Capital expenditures of $322 million as compared to $257 million for the three months ended December 31, 2011.

MARKET OUTLOOK

Industry Conditions

Globally, the economic outlook is improving. Recent positive economic data from China coupled with the United States avoiding the “fiscal cliff” has provided a basis for moderate global economic growth expectations in 2013. However, many factors, including the European sovereign debt crisis, could negatively impact this positive outlook. Continued political unrest in the Middle East and North Africa poses another risk to sustained global economic growth and the related demand for oil and gas.

The demand for offshore drilling services as well as utilization levels remains high in all major global markets, reflecting the impact of sustained robust oil prices. The strong level of demand for offshore drilling rigs has led to improving day rates across all asset classes. In addition, contract term durations have generally lengthened. We continue to see more variability in day rates depending on geographic location, rig specifications and contract term.

The strength of the ultra-deepwater market is also being reflected in an increase of newbuild rig construction orders. Following a number of newbuild orders in 2011, the pace of new rig orders has remained measured as the majority of ultra-deepwater drilling rigs currently under construction have been ordered by established drilling companies rather than speculators. Similar to the ultra-deepwater market, the backlog of newbuild jackups is also increasing. Drivers of this increase include the ongoing entry of financial speculators and other new companies into the market as well as operator demand for newer, more capable jackup rigs to replace the existing aging fleet.

The high level of drilling activity, together with the backlog of rigs under construction, is creating capacity constraints in the global offshore rig equipment supply chain. As a result, equipment delivery lead times are being extended and equipment prices are increasing. Additionally, the industry is facing a shortage of skilled personnel which could increase operating costs in certain operating areas.

The increased rate of exploration success currently being experienced by operators is expected to translate into growth in development drilling. It may also result in a higher rate of exploration drilling in new frontier areas, especially West Africa (outside of Angola and Nigeria), East Africa and Southeast Asia. Further improvements in ultra-deepwater, deepwater and jackup rig utilization and day rates will depend in large part on projected oil prices, the continued strength of the global economy, the industry's ability to source qualified personnel and new regulatory, legislative and permitting requirements.

Ultra-deepwater and Deepwater Rigs

Industry-wide, the ultra-deepwater rig market remains at full utilization while deepwater rig utilization decreased

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modestly from 98% at the end of fiscal year 2012 to 94% currently. For calendar year 2013, the vast majority of both ultra-deepwater and deepwater available days are contracted for the respective industry-wide fleets and only four newbuild floaters are available through the end of 2013.

As of January 22, 2013, there were 95 drillships and semisubmersibles under construction for delivery through January 2020. This includes 28 ultra-deepwater rigs to be constructed in shipyards located in Brazil, all of which are under long-term contracts with Petrobras. Of the remaining 67 ultra-deepwater rigs under construction, 28 are currently contracted, with several others under announced letters of intent.

The Atwood Condor is operating in the U.S. Gulf of Mexico and is contracted through July 2014. The Atwood Osprey is operating offshore Australia and is contracted through May 2017. The Atwood Eagle and Atwood Falcon are both operating offshore Australia and are contracted through June 2014 and November 2014, respectively, while the Atwood Hunter is operating offshore Equatorial Guinea and is contracted through September 2013.

The Atwood Advantage, Atwood Achiever and Atwood Admiral are DP-3 dynamically-positioned, dual derrick, ultra-deepwater drillships rated to operate in water depths up to 12,000 feet, and are currently under construction at the Daewoo Shipbuilding and Marine Engineering Co., Ltd. (“DSME”) shipyard in South Korea. These drillships will have enhanced technical capabilities, including two seven-ram BOPs, three 100-ton knuckle boom cranes, a 165-ton active heave “tree-running” knuckle boom crane and 200 person accommodations. The Atwood Advantage, Atwood Achiever and Atwood Admiral are expected to be delivered in September 2013, June 2014 and March 2015, respectively, at a total cost, including project management, drilling, handling tools and spares, of approximately $635 million each. Upon delivery from the shipyard, the Atwood Advantage will mobilize to the Eastern Mediterranean Sea to commence a three-year drilling program with Noble Energy which extends through December 2016.

We retain an option to build an additional ultra-deepwater drillship with DSME that expires June 30, 2013. We have made no determination at this time as to whether the option will be exercised. In determining whether to exercise the option, we will consider several factors, including oil and natural gas prices, the magnitude of our contract drilling revenue backlog, current and prospective supply and demand dynamics of the ultra-deepwater drilling market, current ultra-deepwater contract day rates and newbuild drillship construction prices.

Although we do not have drilling contracts for the Atwood Achiever or the Atwood Admiral, we expect that the long-term demand for ultra-deepwater drilling services in established and emerging basins should provide us with opportunities to contract these two rigs prior to their delivery dates.

Jackup Rigs

Bifurcation in day rates and utilization continues to characterize contracting activity in the jackup market. Currently, higher specification jackup rigs are achieving marketed utilization levels of approximately 98% as compared to 92% for the remainder of the global jackup fleet. While higher specification rigs represent less than 30% of the global jackup fleet, we expect the bifurcation trend to continue. Despite the expected increase in supply due to the continued delivery of high specification newbuild rigs through the end of next year, we expect demand for higher specification jackup rigs to remain high as operators continue to prefer contracting newer, more capable high specification jackup rigs.

As a result of newbuild construction programs initiated during 2005 and continuing through 2012, the jackup supply continues to increase. As of January 22, 2013, there were 88 newbuild jackup rigs under construction. Forty-one of these jackups are scheduled for delivery during 2013, of which 13 are contracted and nine are not considered high specification (i.e., less than 350-foot water depth capability). The remaining 47 rigs are scheduled for delivery in 2014 and 2015.

The Atwood Mako and Atwood Manta are both operating offshore Thailand and are contracted through September 2014 and December 2013, respectively. The Atwood Aurora is operating offshore West Africa and is contracted through August 2013. The Atwood Beacon is operating in the eastern Mediterranean Sea and is contracted into May 2013. The Vicksburg is contracted through December 2013.

We currently have one remaining Pacific Class 400 jackup drilling unit, the Atwood Orca, similar in design to the Atwood Mako and Atwood Manta, under construction at the PPL Shipyard Pte. Ltd. shipyard in Singapore. This new rig will have a rated water depth of 400 feet, accommodations for 150 personnel and significant offline handling features. The rig is expected to cost approximately $190 million, including project management, drilling, handling tools and spares, and is expected to be delivered in early May 2013.Upon delivery from the shipyard, the Atwood Orca will begin a two-year contract with Mubadala Petroleum Limited offshore Thailand.

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Idled Rigs

The Atwood Southern Cross and Seahawk remain idle. We anticipate these two units will not return to service during fiscal year 2013 due to the lack of sufficient continuous demand, and thus, we are not actively marketing these rigs at this time.

Contract Backlog

We maintain a backlog of commitments for contract drilling revenues. Our contract backlog at December 31, 2012 was approximately $2.5 billion, representing a 47% increase compared to our contract backlog of $1.7 billion at December 31, 2011. We calculate our contract backlog by multiplying the day rate under our drilling contracts by the number of days remaining under the contract, assuming full utilization. The calculation does not include any revenues related to other fees such as for mobilization, demobilization, contract preparation, customer reimbursables and bonuses. The amount of actual revenues earned and the actual periods during which revenues are earned will be different from the amounts disclosed in our backlog calculations due to various factors, including unscheduled repairs, maintenance, weather and other factors. Such factors may result in lower applicable day rates than the full contractual day rate. In addition, under certain circumstances, our customers may seek to terminate or renegotiate our contracts. See “Risks Related to our Business-Our business may experience reduced profitability if our customers terminate or seek to renegotiate our drilling contracts” under Part I., Item 1A. in our Annual Report on Form 10-K for the fiscal year ended September 30, 2012.

The following table sets forth, as of December 31, 2012, the amount of our contract drilling revenue backlog and the percent of available operating days committed for our actively-marketed drilling units for the periods indicated (dollars in millions):

	Remaining Fiscal 2013			Fiscal 2014			Fiscal 2015			Fiscal 2016			Fiscal 2017 and thereafter			Total
Contract Drilling Revenue Backlog
Ultra-deepwater and Deepwater	$	595		$	758		$	404		$	386		$	156		$	2,299
Jackups	158			74			—			—			—			232
	$	753		$	832		$	404		$	386		$	156		$	2,531
Percent of Available Operating Days Committed	89		%	48		%	16		%	14		%	6		%

On January 22, 2013, we announced that one of our subsidiaries had been awarded a contract for the Atwood Orca. As a result of this contract, our backlog increased by approximately $116 million, bringing our total backlog to approximately $2.6 billion as of January 22, 2013.

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RESULTS OF OPERATIONS

Contract Drilling Revenues— Contract drilling revenues for the three months endedDecember 31, 2012 increased approximately $60.4 million, or 33% compared to the three months endedDecember 31, 2011. A comparative analysis of revenues is as follows:

	REVENUES (In millions)
	Three Months Ended December 31,
	2012		2011		Variance
Atwood Condor	$	40.4	$	—	$	40.4
Atwood Osprey	42.4		39.8		2.6
Atwood Eagle	27.5		34.7		(7.2		)
Atwood Falcon	35.4		28.6		6.8
Atwood Hunter	37.1		43.4		(6.3		)
Atwood Aurora	12.3		12.5		(0.2		)
Atwood Beacon	14.0		10.4		3.6
Atwood Mako	13.3		—		13.3
Atwood Manta	3.2		—		3.2
Vicksburg	9.2		8.7		0.5
Reimbursable/Other	10.3		6.6		3.7
	$	245.1	$	184.7	$	60.4

Our newest ultra-deepwater, semisubmersible drilling rig, the Atwood Condor, commenced its contract in the U.S. Gulf of Mexico at the end of fiscal year 2012, and thus earned no revenue during the three months ended December 31, 2011 as compared to three months of revenue in the current fiscal quarter.

The decrease in revenues for the Atwood Eagle during the three months ended December 31, 2012 is due primarily to the rig undergoing regulatory inspections, planned maintenance, and upgrades in December 2012 compared to no out-of-service time in the prior fiscal quarter. The rig commenced a new contract offshore Australia in late December 2012.

Revenues are higher for the Atwood Falcon for the three months ended December 31, 2012, as a result of working on a higher day rate contract offshore Australia compared to the prior fiscal quarter when the rig was working at a lower day rate offshore Malaysia.

The decrease in revenues for the Atwood Hunter for the three months ended December 31, 2012 is primarily due to the rig working at a lower day rate offshore West Africa under a new drilling contract as compared to the prior fiscal quarter when the rig was also working offshore West Africa.

The increase in revenues for the Atwood Beacon during the three months ended December 31, 2012 is primarily due to the rig working on a higher day rate contract in the Mediterranean Sea as compared to the prior fiscal quarter when the rig was working at a lower day rate offshore South America.

Our newest active jackup drilling units, the Atwood Mako and the Atwood Manta were delivered from the shipyard and commenced drilling operations offshore Thailand in September 2012 and December 2012, respectively, and thus earned no revenue in the prior fiscal quarter.

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Contract Drilling Costs—Contract drilling costs for the three months endedDecember 31, 2012, increased approximately $33.6 million, or 43% compared to the three months endedDecember 31, 2011. An analysis of contract drilling costs by rig is as follows:

	CONTRACT DRILLING COSTS (In millions)
	Three Months Ended December 31,
	2012		2011		Variance
Atwood Condor	$	14.3	$	—	$	14.3
Atwood Osprey	15.3		15.5		(0.2		)
Atwood Eagle	19.9		17.8		2.1
Atwood Falcon	14.2		6.9		7.3
Atwood Hunter	11.6		11.0		0.6
Atwood Aurora	6.4		8.6		(2.2		)
Atwood Beacon	10.2		6.7		3.5
Atwood Mako	5.1		—		5.1
Atwood Manta	2.1		—		2.1
Vicksburg	4.7		5.2		(0.5		)
Reimbursable/Other	8.1		6.6		1.5
	$	111.9	$	78.3	$	33.6

The Atwood Condor commenced its contract in the U.S. Gulf of Mexico at the end of fiscal year 2012 and thus incurred a full three months of contract drilling costs during the first quarter of fiscal year 2013 as compared to no drilling costs incurred during the first quarter of fiscal year 2012 while the rig was under construction.

The increase in contract drilling costs for the Atwood Falcon for the three months ended December 31, 2012 is primarily the result of working offshore Australia which has significantly higher personnel costs as compared to working offshore Malaysia in the prior fiscal quarter.

The decrease in contract drilling costs for the Atwood Aurora for the three months ended December 31, 2012 is primarily attributable to amortization charges relating to mobilization to West Africa in the prior fiscal quarter as compared to the current fiscal quarter.

The increase in contract drilling costs for the Atwood Beacon is primarily due to monthly amortization charges relating to mobilization from South America to the Mediterranean Sea in the current fiscal quarter as compared to none in the prior fiscal quarter.

The Atwood Mako and the Atwood Manta were delivered from the shipyard and commenced drilling operations offshore Thailand in September 2012 and December 2012, respectively, and thus incurred no contract drilling costs during the three months ended December 31, 2011 while the rigs were under construction.

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Depreciation—Depreciation expense for the three months endedDecember 31, 2012 increased approximately $12.3 million, or 80%, compared to the three months endedDecember 31, 2011. A comparative analysis of depreciation expense by rig is as follows:

	DEPRECIATION EXPENSE (In millions)
	Three Months Ended December 31,
	2012		2011		Variance
Atwood Condor	$	8.0	$	—	$	8.0
Atwood Osprey	6.6		6.2		0.4
Atwood Eagle	1.4		1.4		—
Atwood Falcon	2.0		1.3		0.7
Atwood Hunter	1.7		1.6		0.1
Atwood Aurora	1.8		1.8		—
Atwood Beacon	1.3		1.2		0.1
Atwood Mako	1.9		—		1.9
Atwood Manta	0.6		—		0.6
Vicksburg	0.5		0.5		—
Other	1.8		1.3		0.5
	$	27.6	$	15.3	$	12.3

The Atwood Condor, the Atwood Mako, and the Atwood Manta, placed into service at the beginning of July 2012, September 2012, and December 2012, respectively, incurred no depreciation expense in the first quarter of fiscal year 2012.

The increase in depreciation for the Atwood Falcon is due to certain upgrades made to the rig during the shipyard project that was completed in May 2012.

General and Administrative—For the three months endedDecember 31, 2012, general and administrative expenses increased by approximately $3.1 million, or 22%, compared to the three months endedDecember 31, 2011. This is primarily due to higher personnel-related costs resulting from an increase in headcount and higher professional fees to support our larger fleet.

Interest Expense, net of capitalized interest—For the three months endedDecember 31, 2012, interest expense increased due to higher outstanding debt and related interest rates, partially offset by increased capitalized interest expense as compared to the prior fiscal quarter.

Income Taxes—Our effective tax rate was 13% for the three months endedDecember 31, 2012, respectively, compared to 16% for the three months endedDecember 31, 2011. The effective tax rate for the three months endedDecember 31, 2012 was lower primarily due to increased profitability in jurisdictions with lower tax rates as compared to the prior fiscal quarter. Our effective tax rates were lower than the statutory rate of 35% as a result of working in certain foreign nontaxable and deemed profit tax jurisdictions.

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LIQUIDITY AND CAPITAL RESOURCES

Capital expenditures totaled $322 million for the three months endedDecember 31, 2012. During the three months endedDecember 31, 2012, our capital expenditures and working capital needs were funded by cash flows from operations, borrowings under our credit facility, and cash on hand. Working capital as of December 31, 2012 remained relatively consistent when compared to September 30, 2012.

To date, general inflationary trends have not had a material effect on our operating revenues or expenses.

Revolving Credit Facility

As of December 31, 2012, we had $620 million of outstanding borrowings under our five-year $750 million senior secured revolving credit facility. The credit facility was entered into in May 2011 and matures in May 2016. Including the $450 million aggregate principal amount of our senior notes, we had a total debt to capitalization ratio of 35%. Our wholly-owned subsidiary, Atwood Offshore Worldwide Limited, is the borrower under the credit facility, and we and certain of our other subsidiaries are guarantors under the facility. Borrowings under the credit facility bear interest at the Eurodollar rate plus a margin of 2.5%. Certain borrowings effectively bear interest at a fixed rate due to our interest rate swaps. The average interest rate for borrowings under the credit facility was approximately 3.0% per annum at December 31, 2012, after considering the impact of our interest rate swaps. The credit facility also provides for the issuance, when requested, of standby letters of credit. The credit facility has a commitment fee of 1.0% per annum on the unused portion of the underlying commitment. Subject to the satisfaction of certain conditions precedent and the agreement by the lenders, the credit facility includes an “accordion” feature which, if exercised, will increase total commitments by up to $550 million for a total commitment of up to $1.3 billion.

We were in compliance with all financial covenants under the credit facility as of December 31, 2012.

Senior Notes

In 2012, we issued $450 million aggregate principal amount of 6.5% Senior Notes due 2020 (the “Notes”). The Notes are our senior unsecured obligations and are not currently guaranteed by any of our subsidiaries. Interest is payable on the Notes semi-annually in arrears. The indenture governing the Notes contains provisions that limit our ability and the ability of our restricted subsidiaries to incur or guarantee additional indebtedness or issue preferred stock; pay dividends or make other restricted payments; sell assets; make investments; create liens; enter into agreements that restrict dividends or other payments from our restricted subsidiaries to us; and consolidate, merge or transfer all or substantially all of our assets. Many of these restrictions will terminate if the Notes become rated investment grade. The indenture governing the Notes also contains customary events of default, including payment defaults; defaults for failure to comply with other covenants in the indenture; cross-acceleration and entry of final judgments in excess of $50.0 million; and certain events of bankruptcy, in certain cases subject to notice and grace periods. We are required to offer to repurchase the Notes in connection with specified change in control events or with excess proceeds of asset sales not applied for permitted purposes.

Capital Expenditures

We estimate that our total capital expenditures, including maintenance capital expenditures, for fiscal year 2013 will be approximately $624 million, substantially all of which is contractually committed. As of December 31, 2012, we had incurred approximately $322 million of our total expected capital expenditures for fiscal year 2013. The remaining capital expenditures are expected to be funded with cash on hand and cash flows from operations.

As of December 31, 2012, we had expended approximately $564 million on our four newbuild drilling units. The expected costs for the four remaining drilling units currently under construction are as follows (in millions):

Remaining Fiscal 2013		Fiscal 2014		Fiscal 2015		Fiscal 2016		Total
$	235	$	820	$	410	$	—	$	1,465

We believe that we will be able to fund all additional construction costs with cash flow from operations and borrowings under our revolving credit facility, which has provisions to increase the total commitment to $1.3 billion as described above.

Other

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From time to time, we may seek possible expansion and acquisition opportunities relating to our business, which may include the construction or acquisition of rigs or other businesses in addition to those described in this Quarterly Report. Such determinations will depend on market conditions and opportunities existing at that time, including with respect to the market for drilling contracts and day rates and the relative costs associated with such expansions or acquisitions. The timing, realization or terms of any such efforts and the associated capital commitments are not currently known. In addition to our existing sources of funding which include cash on hand, cash flow from operations and borrowings under our revolving credit facility, we may seek to access the capital markets to fund such opportunities. Our ability to access the capital markets depends on a number of factors, including, among others, our credit rating, industry conditions, general economic conditions, market conditions and market perceptions of us and our industry. In addition, we continually review the possibility of disposing of assets that we do not consider core to our long-term business plan.

In addition, in the future, we may seek to redeploy our assets to more active regions if we have the opportunity to do so on attractive terms. We frequently bid for or negotiate with customers regarding multi-year contracts that could require significant capital expenditures and mobilization costs. We expect to fund these opportunities primarily with cash on hand, cash flow from operations and borrowings under our revolving credit facility.

Off-Balance Sheet Arrangements

We have no off-balance sheet arrangements as that term is defined in Item 303(a)(4)(ii) of Regulation S-K.

Commitments and Contractual Obligations

For additional information about our commitments and contractual obligations as of December 31, 2012, see “Management’s Discussion and Analysis of Financial Condition and Results of Operations—Commitments and Contractual Obligations” in our Annual Report on Form 10-K for the fiscal year ended September 30, 2012. As of December 31, 2012, other than additional borrowings under our credit facility and payments with respect to our new build construction contracts, there were no material changes to this disclosure regarding our commitments and contractual obligations.

FORWARD-LOOKING STATEMENTS

Statements included in this Quarterly Report regarding future financial performance, capital sources and results of operations and other statements, other than statements of historical fact, that address activities, events or developments that we expect, believe or anticipate will or may occur in the future are forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, and Section 21E of the Securities Exchange Act of 1934. Such statements are those concerning strategic plans, expectations and objectives for future operations and performance. When used in this report, the words “believes,” “expects,” “anticipates,” “plans,” “intends,” “estimates,” “projects,” “could,” “should,” “may,” or similar expressions are intended to be among the statements that identify forward-looking statements.

Such statements are subject to numerous risks, uncertainties and assumptions that are beyond our ability to control, including, but not limited to:

• prices of oil and natural gas and industry expectations about future prices;

• market conditions, expansion and other development trends in the drilling industry and the global economy in general;

• the operational risks involved in drilling for oil and gas;

• the highly competitive and volatile nature of our business;

• the impact of governmental or industry regulation, both in the United States and internationally;

• the risks of and disruptions to international operations, including political instability and the impact of terrorist acts, acts of piracy, embargoes, war or other military operations;

• our ability to obtain and retain qualified personnel to operate our vessels;

• our ability to enter into, and the terms of, future drilling contracts, including contracts for our newbuild units and for rigs whose contracts are expiring;

• timely access to spare parts, equipment and personnel to maintain and service our fleet;

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• customer requirements for drilling capacity and customer drilling plans;

• the adequacy of sources of liquidity for us and for our customers;

• changes in tax laws, treaties and regulations;

• the risks involved in the construction, upgrade, and repair of our drilling units;

• unplanned downtime and repairs on our rigs;

• the termination or renegotiation of contracts by customers or payment or other delays by our customers; and

• such other risks discussed under “Risk Factors” in our Annual Report on Form 10-K for the fiscal year ended September 30, 2012 and in our other reports filed with the SEC.

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. Undue reliance should not be placed on these forward-looking statements, which are applicable only on the date hereof. We undertake no 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.

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ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

We are exposed to market risk, interest rate risk and foreign currency exchange risk as discussed below:

Interest Rate Risk

The provisions of our credit facility provide for a variable interest rate cost on our $620 million outstanding as of December 31, 2012. However, we employed an interest rate risk management strategy that utilizes derivative instruments with respect to $250 million of our debt as of December 31, 2012 in order to minimize or eliminate unanticipated fluctuations in earnings and cash flows arising from changes in, and volatility of, interest rates. Effectively, only $370 million of our variable long-term debt outstanding at December 31, 2012 is subject to changes in interest rates. Thus, a 10% change in the interest rate on the floating rate debt would have an immaterial impact on our annual earnings and cash flows.

Foreign Currency Risk

As a multinational company, we conduct business in numerous foreign countries. Our functional currency is the U.S. dollar. Certain of our subsidiaries have monetary assets and liabilities that are denominated in a currency other than our functional currency. Based on December 31, 2012 amounts, a decrease in the value of 10% in foreign currencies relative to the U.S. dollar would not have a material effect on our annual earnings and cash flows. We did not have any open derivative contracts relating to foreign currencies at December 31, 2012.

Market Risk

Our Notes bear interest at a fixed interest rate whose fair value will fluctuate based on changes in prevailing market interest rates and market perceptions of our credit risk. The fair value of our Notes, was approximately $496 million at December 31, 2012, compared to the carrying amount of $450 million. If prevailing market interest rates had been 10% lower at December 31, 2012, the change in fair value of our Notes, would have been immaterial.

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ITEM 4. 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 effective at the reasonable assurance level so 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 and have been accumulated and communicated to our management, including executive and financial officers, as appropriate, to allow timely decisions regarding required disclosures. 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) Change in Internal Control over Financial Reporting

As of October 1, 2012, we implemented the use of SAP software across our Finance and Human Resource departments at our headquarters in Houston, Texas as well as our support offices in Australia, Malaysia, Singapore, and the United Kingdom. As appropriate, we are modifying the design and documentation of internal control processes and procedures relating to the new system and interfaces to simplify and synchronize our existing internal control over financial reporting. There were no additional changes in our internal control over financial reporting during the most recent fiscal quarter covered by this report that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

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PART II. OTHER INFORMATION

ITEM 1. LEGAL PROCEEDINGS

We have certain actions, claims and other matters pending as set forth in Note 10 to Unaudited Condensed Consolidated Financial Statements included in Item 1 of Part I of this Quarterly Report, which is incorporated by reference in response to this item. As of December 31, 2012, we were also involved in a number of lawsuits which have arisen in the ordinary course of business and for which we do not expect the liability, if any, resulting from these lawsuits to have a material adverse effect on our current consolidated financial position, results of operations or cash flows. We cannot predict with certainty the outcome or effect of any of these matters described above or any such other proceeding or threatened litigation or legal proceedings. There can be no assurance that our beliefs or expectations as to the outcome or effect of any lawsuit or other matters will prove correct and the eventual outcome of these matters could materially differ from management’s current estimates.

ITEM 1A. RISK FACTORS

For additional information about our risk factors, see Item 1A of our Annual Report on Form 10-K for the fiscal year ended September 30, 2012.

ITEM 6. EXHIBITS

(a) Exhibits

3.1	Amended and Restated Certificate of Formation dated February 9, 2006 (Incorporated by reference to Exhibit 3.1 of our Form 10-Q filed for the quarter ended March 31, 2008).
3.2	Amendment No. 1 to Amended and Restated Certificate of Formation dated February 14, 2008 (Incorporated herein by reference to Exhibit 3.2 of our Form 10-Q for the quarter ended March 31, 2008).
3.3	Certificate of Correction dated December 12, 2012 (Incorporated herein by reference to Exhibit 3.1 to our Form 8-K filed on December 18, 2012).
3.4	Statement of Resolutions dated December 12, 2012 (Incorporated herein by reference to Exhibit 3.2 to our Form 8-K filed on December 18, 2012).
*†10.1	Atwood Oceanics, Inc. Benefit Equalization Plan (Amended and Restated Effective as of January 1, 2013).
*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.
**101	Interactive data files.
*	Filed herewith
**	Furnished herewith
†	Management contract or compensatory plan or arrangement

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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: February 1, 2013	/S/ MARK L. MEY
	Mark L. Mey
	Senior Vice President and Chief Financial Officer

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EX-10.1

ATWOOD OCEANICS

BENEFIT EQUALIZATION PLAN

(Amended and Restated Effective as of January 1, 2013)

TABLE OF CONTENTS

		Page
ARTICLE 1 DEFINITIONS		4
1.1	Account	4
1.2	Active Member	5
1.3	Adjusted Beginning Balance	5
1.4	Allocation Date	5
1.5	Allocation Period	5
1.6	Beneficiary	5
1.7	Board	5
1.8	Change in Control	5
1.9	Code	6
1.10	Code Limitation	6
1.11	Committee	7
1.12	Compensation	7
1.13	Deferral Agreement	7
1.14	Deferral Agreement Effective Date	7
1.15	Disability	7
1.16	Elective Deferral	7
1.17	Elective Deferral Account	7
1.18	Eligible Class	7
1.19	Employee	7
1.20	Employer	7
1.21	Employer Matching Account	7
1.22	Employer Matching Allocation Date	7
1.23	Employer Matching Credit	7
1.24	ERISA	8
1.25	Investment Fund	8
1.26	Investment Gain or Loss	8
1.27	Member	8
1.28	Plan	8
1.29	Plan Document	8
1.30	Plan Year	8
1.31	President	8
1.32	Prior Plan	8
1.33	Prior Plan Contributions	8
1.34	Qualified Domestic Relations Order	8
1.35	Retirement	8
1.36	Retirement Eligibility Date	8
1.37	Regulation	8
1.38	Retirement Plan	8
1.39	Separation	9

1

1.40	Sponsor	9
1.41	Unforeseeable Emergency	9
1.42	Valuation Date	9
1.43	Valuation Period	9
1.44	Years of Service	9
ARTICLE 2 PARTICIPATION		9
2.1	Designation of Active Members by President	9
2.2	Commencement of Participation	9
2.3	Cessation of Participation	10
2.4	Recommencement of Participation by Former Members	10
2.5	Frozen Accounts	10
ARTICLE 3 PARTICIPANT DEFERRALS AND EMPLOYER MATCHING ALLOCATIONS		10
3.1	Deferral Agreements	10
3.2	Elective Deferrals	11
3.3	Employer Matching Credits	11
ARTICLE 4 ALLOCATIONS AND VESTING		11
4.1	Information Statements from Employer	11
4.2	Allocation of Elective Deferrals	11
4.3	Allocation of Employer Matching Credit	11
4.4	Member Direction of Investments	11
4.5	Allocation of Investment Gain or Loss	12
4.6	Effective Date of Allocations and Adjustments	12
4.7	No Vesting Unless Otherwise Prescribed	12
ARTICLE 5 BENEFITS AND EVENTS ENTITLING PARTICIPANTS TO DISTRIBUTION OF BENEFITS		12
5.1	Benefit upon Separation	12
5.2	Benefit upon Change in Control	13
5.3	Time for Determining Account Balances	13
5.4	Accounting for Distributions	13
5.5	Receipt of Domestic Relations Order	13
5.6	Withdrawal for Unforeseeable Emergency	13
ARTICLE 6 DISTRIBUTION OF BENEFITS		13
6.1	Distribution Methods Available	13
6.2	Elections Regarding Form of Distribution	14
6.3	Prior Plan Contributions	15
6.4	Qualified Domestic Relations Orders	15
6.5	Distributions to Disabled Members	15
6.6	Designation of Beneficiary	15
6.7	No Duplication of Benefits	15
6.8	Missing Distributees	15

2

6.9	Claims Procedure	16
6.10	Claims Appeal Procedure	16
6.11	Member’s Right to Arbitration	16
6.12	Limitations	17
ARTICLE 7 COMMITTEE		17
7.1	Appointment, Term, Resignation, and Removal	17
7.2	Powers	17
7.3	Organization	18
7.4	Quorum and Majority Action	18
7.5	Signatures	18
7.6	Disqualification of Committee Members	18
7.7	Disclosure to Members	18
7.8	Standard of Performance	18
7.9	Liability of Committee	18
7.10	Indemnification of Committee Members	19
7.11	Bonding	19
7.12	Compensation	19
7.13	Persons serving in Dual Fiduciary Roles	19
7.14	Administrator	19
7.15	Standard of Judicial Review of Committee Actions	19
ARTICLE 8 ADOPTION OF PLAN BY OTHER EMPLOYERS		19
8.1	Adoption Procedure	19
8.2	No Joint Venture Implied	20
ARTICLE 9 AMENDMENT AND TERMINATION		20
9.1	Sponsor’s Right to Amend	20
9.2	Limitations on Right to Amend	20
9.3	Retroactive Amendments to Meet Labor or Tax Requirements	20
9.4	Sponsor’s Right to Terminate	20
ARTICLE 10 MISCELLANEOUS		21
10.1	Establishment of Trust Fund not Required	21
10.2	Plan Does Not Constitute an Employment Contract	21
10.3	Spendthrift Clause	21
10.4	Form of Elections	22
10.5	Governing Laws; Parties to Legal Actions	22
10.6	Plan Document Controlling	22
10.7	Severability of Clauses	22
10.8	Cross References	22
10.9	Securities Law Considerations	22
10.10	Taxation	24

3

ATWOOD OCEANICS

BENEFIT EQUALIZATION PLAN

(Amended and Restated Effective as of January 1, 2013)

BACKGROUND AND PURPOSE

A.    Background & Purpose. Effective as of January 1, 2001, the Sponsor established the Atwood Oceanics Benefit Equalization Plan to provide certain executive employees with (i) an opportunity to elect to defer a portion of their compensation and (ii) employer matching contributions to the extent that employer matching contributions cannot be made for such employees under the Atwood Oceanics Retirement Plan (the “Retirement Plan”), a plan qualified under Sections 401(a) and 401(k) of the Internal Revenue Code of 1986, as amended (the “Code”), due to certain Code limits that apply to Retirement Plan contributions and benefits.

The Sponsor desires to (i) bifurcate the plan provisions such that effective as of December 31, 2012, all contributions to and benefits earned under the Atwood Oceanics Benefit Equalization Plan prior to January 1, 2013, along with the earnings, gains and losses attributable thereto, will be subject to and paid from such plan as in effect on December 31, 2012 (the “Prior Plan”), and (ii) amend and restate the Prior Plan in the form set forth herein (the “Plan”), effective as of January 1, 2013, to provide designated key management employees with an opportunity to maximize savings benefits or provide for a regular stream of income during retirement by (a) continuing to provide certain executive employees with an opportunity to elect to defer compensation earned for services provided to an Employer on and after January 1, 2013, and (b) providing restoration contributions based on their compensation in excess of the limit under Code Section 401(a)(17), as such limit is adjusted for cost‑of‑living increases.

B.    Type of Plan. The Plan constitutes an unfunded, nonqualified deferred compensation plan that benefits certain designated employees who are within a select group of key management or highly compensated employees. The Plan is intended to qualify for the exemptions provided under Title I of the Employee Retirement Income Security Act of 1974, as amended, for plans that are not tax‑qualified and that are maintained primarily to provide deferred compensation for a select group of management or highly compensated employees.

ARTICLE 1

DEFINITIONS

The terms defined in this Article shall have the meanings attributed to them unless the context obviously requires another meaning:

1.1Account. “Account” shall mean any of the ledger accounts pertaining to a Member that are maintained by the Committee to reflect the Member’s interest in the Plan. The Committee shall establish the Accounts specifically described in the Plan and any additional Accounts that the Committee considers to be necessary in order to reflect the entire interest of the Member in the Plan. Each of the Accounts shall reflect any Elective Deferrals, Employer Matching Credits, and Investment Gain or Loss allocable to the Account. Separate sub‑accounts attributable to Prior Plan

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Contributions, if any, and the earnings, gains and losses attributable thereto, will be maintained within a Member’s or Beneficiary’s Account, as applicable.

1.2Active Member. “Active Member” shall mean an individual designated as such by the President.

1.3Adjusted Beginning Balance. “Adjusted Beginning Balance” shall mean the balance of an Account as of the last Valuation Date preceding the current Valuation Period, reduced by the amount of any distributions allocable to that Account made during the current Valuation Period.

1.4Allocation Date. “Allocation Date” shall mean the day specified by the Committee for the allocation of amounts to the Members’ Elective Deferral Accounts, which shall occur no less frequently than once a month.

1.5Allocation Period. “Allocation Period” shall mean the period beginning on the day following an Allocation Date (or on the first day of the first Plan Year, in the case of the first Allocation Period) and ending on the immediately succeeding Allocation Date.

1.6Beneficiary. “Beneficiary” shall mean any person(s), trust(s), or other entity(ies), including the Member’s estate, entitled to receive the benefits payable hereunder upon the Member’s death.

1.7Board. “Board” shall mean the Board of Directors of the Sponsor.

1.8Change in Control. shall mean each of the following:

(i) the acquisition after January 1, 2013 by any “person” (within the meaning of Section 13(d)(3) or 14(d)(2) of the Securities Exchange Act of 1934, as amended (the “Exchange Act”)) (a “Person”) of beneficial ownership (within the meaning of Rule 13d-3 promulgated under the Exchange Act) of 20% or more of the combined voting power of the then outstanding capital stock of the Sponsor entitled to vote generally in the election of directors (the “Outstanding Company Voting Securities”); provided, however, that the following acquisitions shall not constitute a Change in Control: (i) any acquisition directly from the Sponsor, (ii) any acquisition by the Sponsor, (iii) any acquisition by any employee benefit plan (or related trust) sponsored or maintained by the Sponsor or any entity controlled by the Sponsor, (iv) any acquisition approved by at least a majority of the members of the Incumbent Board (as such term is hereinafter defined) either prior to such acquisition or within five business days after the Sponsor has notice of such acquisition, provided that, after such acquisition, such Person does not beneficial own more than 50% of the combined voting power of the Outstanding Company Voting Securities,or (v) any acquisition by any Person pursuant to a transaction which complies with clauses (A), (B) and (C) of subsection (c) of this Section 1.8;

(ii) the first day on which individuals who, as of January 1, 2013, constitute the Board (the “Incumbent Board”) cease for any reason to constitute at least a majority of the Board; provided, however, that any individual becoming a director subsequent to January 1, 2013whose election or appointment, or whose nomination for election by

5

the Sponsor’s shareholders, was approved by at least a majority of the directors then comprising the Incumbent Board shall be considered as though such individual were a member of the Incumbent Board, but excluding, for purposes of this definition, any such individual whose initial assumption of office occurs as a result of an actual or threatened election contest with respect to the election or removal of directors or other actual or threatened solicitation of proxies or consents by or on behalf of a Person other than the Board;

(iii) the consummation of (x) a reorganization, share exchange or merger involving the Sponsor or (y) a sale of all or substantially all of the assets of the Sponsor and its subsidiaries taken as a whole (other than by way of reorganization, share exchange or merger) to any Person other than a subsidiary of the Sponsor (a transaction referred to in clause (x) or (y) is referred to as a “Business Combination”), in each case, unless, following such Business Combination, (A) all or substantially all of the individuals and entities who were the beneficial owners, respectively, of the outstanding shares of common stock of the Sponsor (the “Outstanding Company Common Stock”) and Outstanding Company Voting Securities immediately prior to such Business Combination beneficially own, directly or indirectly, more than 50% of the combined voting power of the then outstanding capital stock entitled to vote generally in the election of directors (or comparable governing persons) of the Sponsor or an entity that, as a result of such Business Combination, owns, directly or indirectly through one or more wholly owned subsidiaries, the Sponsor or all or substantially all of its assets (the “Resulting Entity”; such capital stock is referred to as the “Outstanding Successor Voting Securities”), (B) no Person (excluding any employee benefit plan (or related trust) of the Sponsor or the Resulting Entity and excluding any Person that beneficially owns 20% or more of the combined voting power of the Outstanding Company Voting Securities prior to such Business Combination, provided that such Person’s percentage ownership of the combined voting power of the Outstanding Successor Voting Securities does not increase as a result of such Business Combination) will beneficially own, directly or indirectly, 20% or more of the combined voting power of the then Outstanding Successor Voting Securities, and (C) at least a majority of the members of the board of directors (or comparable governing body) of the Resulting Entity were members of the Incumbent Board immediately prior to consummation of such Business Combination; or

(iv) the adoption of a plan relating to the complete liquidation or dissolution of the Sponsor;

provided, however, that an event described in this Section 1.8 shall only constitute a Change in Control if such transaction or event also constitutes a “change in control event,” as defined in Treasury Regulation Section 1.409A-3(i)(5).

1.9Code. “Code” shall mean the Internal Revenue Code of 1986, as amended.

1.10Code Limitation. “Code Limitation” shall mean a limitation or restriction set forth in the Retirement Plan that is required to be included in the Retirement Plan under Section 401(a)(17) of the Code.

6

1.11Committee. “Committee” shall mean the committee appointed by the President and Chief Executive Officer of the Sponsor to administer the Plan.

1.12Compensation. “Compensation” shall mean Considered Compensation as defined in the Retirement Plan.

1.13Deferral Agreement. “Deferral Agreement” shall mean an agreement of the type described in Section 3.1.

1.14Deferral Agreement Effective Date. “Deferral Agreement Effective Date” shall mean, except as otherwise provided in this Section, the first day of the calendar year beginning after the properly completed and executed Deferral Agreement is received by the Committee. As applicable to an Employee who has been designated as an Active Member for the first time, “Deferral Agreement Effective Date” shall mean the date the Deferral Agreement is executed, if the Deferral Agreement is executed within the thirty-day period immediately following such designation. The Deferral Agreement shall be effective with respect to any Compensation earned and payable on or after the Deferral Agreement Effective Date.

1.15Disability. “Disability” shall mean a Member’s eligibility for disability income payments under an Employer’s long term disability insurance policy or plan for employees as then in effect.

1.16Elective Deferral. “Elective Deferral” shall mean the Member’s compensation deferral made pursuant to the provisions of Section 3.2, if any.

1.17Elective Deferral Account. “Elective Deferral Account” shall mean the ledger account maintained by the Committee for each Member that reflects the Elective Deferral made by the Member and any Investment Gain or Loss attributable to such deferral.

1.18Eligible Class. “Eligible Class” shall mean, with respect to a Plan Year, all Employees who receive compensation from an Employer in excess of Code Limitation.

1.19Employee. “Employee” shall mean an individual who is reflected as a common law employee of the Employer in the records of the Employer.

1.20Employer. “Employer” shall mean the Sponsor and any other business organization that has adopted the Plan, as the case may be.

1.21Employer Matching Account. “Employer Matching Account” shall mean the ledger account maintained by the Committee for each Member that reflects any portion of the Employer Matching Credits allocated to the Member and any Investment Gain or Loss attributable to such credits.

1.22Employer Matching Allocation Date. “Employer Matching Allocation Date” shall mean (i) with respect to an Active Member, December 31 of the applicable Plan Year, and (ii) with respect to a Member incurring a Separation due to death, Disability or Retirement, the date of Separation.

1.23Employer Matching Credit. “Employer Matching Credit” shall mean the credit made pursuant to the provisions of Section 3.4, if any.

7

1.24ERISA. “ERISA” shall mean the Employee Retirement Income Security Act of 1974, as amended.

1.25Investment Fund. “Investment Fund” shall mean the investment funds available under the Retirement Plan and/or such other investment funds that may be selected from time to time by the Committee for purposes of determining the rate of return on amounts deemed invested pursuant to the terms of the Plan.

1.26Investment Gain or Loss. “Investment Gain or Loss” shall mean the increase or decrease in the value of a Member’s Account determined under the procedures used by the managers of the Investment Funds in which the Member’s Account is invested.

1.27Member. “Member” shall mean a person who qualifies as such under the provisions of Article 2.

1.28Plan. “Plan” shall mean the Atwood Oceanics, Inc. Benefit Equalization Plan, as amended and restated effective January 1, 2013.

1.29Plan Document. “Plan Document” shall mean this agreement, as amended from time to time.

1.30Plan Year. “Plan Year” shall mean the 12-consecutive-month annual accounting period of the Plan, which shall end on the last day of December of each calendar year.

1.31President. “President” shall mean the President of the Sponsor.

1.32Prior Plan. “Prior Plan” shall mean the Atwood Oceanics Benefit Equalization Plan, as in effect immediately prior to January 1, 2013.

1.33Prior Plan Contributions. “Prior Plan Contributions” shall mean amounts contributed to the Prior Plan by individuals or an Employer for services provided to an Employer prior to January 1, 2013.

1.34Qualified Domestic Relations Order. “Qualified Domestic Relations Order” shall mean any order determined by the Committee to be a qualified domestic relations order within the meaning of Section 414(p) of the Code.

1.35Retirement. “Retirement” shall mean, with respect to a Member, such Member’s Separation on or after his or her Retirement Eligibility Date for any reason other than Disability or death.

1.36Retirement Eligibility Date. “Retirement Eligibility Date” shall mean the date a Member has attained age sixty‑two.

1.37Regulation. “Regulation” shall mean the Internal Revenue Service regulation specified, as it may be changed from time to time.

1.38Retirement Plan. “Retirement Plan” shall mean the Atwood Oceanics Retirement Plan, as amended from time to time, or any replacement or successor plan adopted by the Sponsor. Any reference to a specific provision of the Retirement Plan shall be deemed to include a reference to

8

the corresponding provision of any amended, replacement, or successor Retirement Plan.

1.39Separation. “Separation” shall mean a “separation from service” within the meaning of Code Section 409A(a)(2)(A)(i) and Treasury Regulation § 1.409A‑1(h) (or any successor regulations or guidance thereto), including separation due to death.

1.40Sponsor. “Sponsor” shall mean Atwood Oceanics, Inc., a Texas corporation, or any other business organization that assumes the primary responsibility for maintaining the Plan with the consent of the last preceding Sponsor.

1.41Unforeseeable Emergency. “Unforeseeable Emergency” shall mean a severe financial hardship to the Member resulting from a sudden and unexpected illness or accident of the Member or of a dependent (as defined in Section 152(a) of the Code) of Member, loss of the Member’s property due to casualty, or other similar extraordinary and unforeseeable circumstances arising as a result of events beyond the control of the Member. Circumstances which constitute an unforeseeable emergency will depend upon the facts of each case, but, in any case, no emergency withdrawal may be made to the extent that such financial hardship is or may be relieved (i) through reimbursement or compensation by insurance or otherwise, (ii) by liquidation of the Member’s assets, to the extent that liquidation of such assets would not itself cause severe financial hardship, or (iii) by cessation of Elective Deferrals. The term “unforeseeable emergency” does not include the need to send the Member’s child to college or the desire to purchase a home.

1.42Valuation Date. “Valuation Date” shall mean the last day of the month prior to the relevant date or more frequently as determined by the recordkeeper.

1.43Valuation Period. “Valuation Period” shall mean the period beginning at the commencement of trading on the day following a Valuation Date (or on the first day of the first Plan Year, in the case of the first Valuation Period) and ending at the close of trading on the immediately succeeding Valuation Date.

1.44Years of Service. “Years of Service” shall meanone Year of Vesting Service as defined in the Retirement Plan.

ARTICLE 2

PARTICIPATION

2.1Designation of Active Members by President. The President may designate from time to time such members of the Eligible Class as he shall from time to time determine to be Active Members; provided, however, that in order to receive Employer Matching Credits for a Plan Year, Active Members must satisfy the Deferral Agreement procedures described in Section 3.1. An Active Member shall continue as such until the earlier of (i) the date the individual ceases to be a member of the Eligible Class, or (ii) the date specified by the President as the date on which the individual shall no longer be an Active Member.

2.2Commencement of Participation.

9

(a) Annual Participation. A Member of the Eligible Class shall become an Active Member on the later of (i) the effective date of the adoption of the Plan by such individual’s Employer, or (ii) the date on which such individual is first designated as an Active Member by the President.

(b) Interim Plan Year Participation. An Employee who (i) first becomes a Member of the Eligible Class during a Plan Year and (ii) is designated by the President an Active Member within the thirty‑day period following the date the Employee first becomes a Member of the Eligible Class shall be eligible to participate in the Plan for the remainder of such Plan Year, as determined by the President, in his discretion; provided, however, that such Employee is not otherwise eligible for, or a participant in, a “plan” which is aggregated with the Plan for purposes of Code Section 409A and otherwise satisfies the requirements of Treasury Regulation § 1.409A‑2(a)(7). Such individual shall be eligible to receive Employer Matching Credits if he satisfies the Deferral Agreement procedures described in Section 3.1; provided, however, that in all events such procedures must be satisfied within the thirty‑day period following the date the Employee first becomes an Active Member. For purposes of this Section 2.2(b), such Active Member’s Deferral Agreement and Employer Matching Credits shall only apply with respect to Compensation earned after such designation and election, as applicable.

2.3Cessation of Participation. An individual who has become a Member shall cease to be a Member on the later of (i) the first date on which he or she ceases to be an Active Member, or (ii) the first date on which no portion of his or her Accounts remains to be distributed and no amounts remain to be credited to his or her Accounts.

2.4Recommencement of Participation by Former Members. A former Member shall again become a Member on the date, if any, on which such individual is again designated as an Active Member by the President.

2.5Frozen Accounts. A Member’s Accounts shall be frozen as of the date that he or she is no longer an Active Member. A Member whose Accounts have been frozen shall not be permitted to make additional deferrals under the Plan, nor shall his or her Accounts share in the allocation of any Employer Matching Credits which are allocated to Members’ Accounts as of a date on or after the date as of which his or her Account is frozen. Such a Member’s Accounts, however, shall continue to share in any Investment Gain or Loss of the Plan during the period of time that his or her Accounts are frozen. The Accounts of such a Member shall be unfrozen immediately upon his or her redesignation as an Active Member, and he or she shall thereupon participate in the Plan in accordance with the terms thereof.

ARTICLE 3

PARTICIPANT DEFERRALS AND EMPLOYER MATCHING ALLOCATIONS

3.1Deferral Agreements. А Deferral Agreement shall be an agreement in a form satisfactory to the Committee to prospectively receive one or more items of compensation from the Employer in a reduced amount and to have the Committee credit an amount equal to the amount of the reduction to the Member’s Account. The Deferral Agreement shall specify (i) the amount, if any, of the

10

Member’s Elective Deferral, and (ii) the form of payment of amounts attributable to the Member’s Accounts for the Plan Year. Any such Deferral Agreement shall be revocable or irrevocable in accordance with its terms, provided that no revocation shall be effective prior to the Deferral Agreement Effective Date that would apply if the revocation were treated as a new Deferral Agreement or permit payment to the Member of any amount deferred prior to the date of revocation. A Member shall be entitled to prospectively modify his or her Deferral Agreement at least once a year. The Committee shall establish and announce to the Members the rules governing the administration of Elective Deferrals, including any limitations upon the amount that may be deferred and the procedures for and any limitations upon a Member’s right to revoke or change his or her designation. Elective Deferrals may be made by periodic payroll deductions or by other methods, as determined from time to time by the Committee.

3.2Elective Deferrals. Each Active Member may specify in his or her Deferral Agreement a dollar amount or percentage of his or her Compensation to be deferred under the Plan as an Elective Deferral. The Committee may require or permit the Member to make separate specifications for different types of Compensation. Such deferrals shall commence on the Deferral Agreement Effective Date.

3.3Employer Matching Credits. The Employer shall, for each Plan Year that an Active Member elects to make Elective Deferrals, make an Employer Matching Credit on behalf of each Active Member in an amount equal to two times the excess of (i) 5% of the Member’s Compensation over (ii) 5% of the Member’s Compensation less his or her Elective Deferrals, but not to exceed the Code Limitation; provided, however, that such Active Member is an Employee as of the Employer Matching Allocation Date.

ARTICLE 4

ALLOCATIONS AND VESTING

4.1Information Statements from Employer. As soon as practical after each Allocation Date, the Employer shall provide the Committee with a schedule setting forth the names of its Active Members and other Members; the amount of its Employer Matching Credit for each Active Member; the amount and type of Elective Deferral(s) of each of its Active Members; and the amount of Compensation paid to each Active Member. Such schedules shall be conclusive evidence of such facts.

4.2Allocation of Elective Deferrals. The Committee shall allocate to each Member an amount equal to his or her Elective Deferrals for each Allocation Period.

4.3Allocation of Employer Matching Credit. The Committee shall separately allocate the Employer Matching Credit for each Plan Year to the Employer Matching Account of Active Members by allocating to each such Member an amount equal to the Employer Matching Credit made on his or her behalf effective as of the Employer Matching Allocation Date.

4.4Member Direction of Investments. Each Member shall be permitted to direct the portion of his or her Accounts to be deemed invested in each Investment Fund. The deemed investments in each Investment Fund are only for the purposes of determining the Sponsor’s payment obligation under the Plan. Once the Committee has selected or changed the selection of Investment Funds, it

11

shall establish rules pertaining to the administration thereof, including but not limited to rules for making selections effective, establishing the frequency of permitted changes, the minimum percentage in any Investment Funds, and all other necessary or appropriate regulations.

4.5Allocation of Investment Gain or Loss. Each valuation and determination of Investment Gain or Loss provided for hereunder shall reflect the value of the Investment Funds in which the Member’s Account is invested separately. The Committee shall allocate Investment Gain or Loss attributable to each Investment Fund among the Members’ various Accounts (each type of Account being considered separately).

4.6Effective Date of Allocations and Adjustments. The Committee shall credit to each Member’s Accounts such Member’s Elective Deferrals and Employer Matching Credits, so that all such amounts shall be entered in the Member’s Accounts as soon as administratively practicable following the date on which they would have been paid to the Member or the Retirement Plan, or otherwise been includable in gross income for federal income tax purposes in the absence of a deferral election. The Committee shall credit to each Member’s Accounts such Member’s portion of the adjustments and allocations required by Section 4.6, so that all such allocations shall become effective and be entered in such Member’s Accounts as of the Valuation Date with respect to which they are attributable.

4.7No Vesting Unless Otherwise Prescribed. No allocations, adjustments, credits, or transfers shall ever vest in any Member any right, title, or interest in the Plan except at the times and upon the terms and conditions herein set forth. Notwithstanding the above, the following vesting schedule shall apply to a Member’s Employer Matching Account:

Years of Service	Vested Interest
Less than 3	0	%
3 or more	100	%

Except as provided in Section 5.2, a Member whose Separation occurs prior to attainment of three Years of Service shall forfeit all amounts in his or her Employer Matching Account (and the Investment Gain or Loss attributable thereto).

ARTICLE 5

BENEFITS AND EVENTS ENTITLING PARTICIPANTS

TO DISTRIBUTION OF BENEFITS

5.1Benefit upon Separation. A Member who incurs а Separation other than on account of death shall be entitled to a benefit equal to the total amount credited to all of his or her Accounts paid six months following the Member’s Separation in accordance with the distribution method elected in Section 6.1 The Beneficiary of a Member whose Separation occurs on account of death shall be entitled to a benefit equal to the total amount credited to all of such Member’s Accounts paid ninety days after the Member’s death.

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5.2Benefit upon Change in Control. Upon a Change in Control, all amounts credited to a Member’s Employer Matching Account (including any earnings thereon) shall be fully vested.

5.3Time for Determining Account Balances. The amount credited to a Member’s Accounts shall be determined, for purposes of this Article, as of the Valuation Date.

5.4Accounting for Distributions. The balance of an Account shall be reduced as of the first day of the Valuation Period by the amount of any withdrawals, payments, distributions, or other amounts properly chargeable to such Account during such Valuation Period.

5.5Receipt of Domestic Relations Order. The receipt of a judicial decree or order shall constitute an event permitting distribution under the Plan, provided that such judicial decree or order would constitute a Qualified Domestic Relations Order if the requirement that such an order not require a plan to make distribution to an alternate payee prior to a Members earliest retirement age, as defined in Section 414(р)(4)(В) of the Code, were disregarded.

5.6Withdrawal for Unforeseeable Emergency. Any Member may make application to the Committee to withdraw in a single sum from his or her Elective Deferral and vested Employer Matching Accounts such amount, and not more than that amount, as is reasonably needed to satisfy the emergency need. Whether or not a Member has incurred an Unforeseeable Emergency shall be determined by the Committee on the basis of all relevant facts available to the Committee and in accordance with written procedures established by the Committee. Such written procedures shall specify the requirements for requesting and receiving distributions on account of Unforeseeable Emergency, including what forms must be submitted and to whom. The Committee shall uniformly and consistently apply such written procedures so that all Members in similar circumstances are treated alike. All determinations regarding Unforeseeable Emergency must be made in accordance with objective nondiscretionary criteria. Such determinations must also comply with applicable Department of Treasury regulations and rulings. An application for a withdrawal made pursuant to this Section must be in writing and must state the reason or reasons for the need of such Member to make such a withdrawal. Such application must specify the amount necessary to satisfy the Member’s Unforeseeable Emergency. The Committee shall be entitled to rely upon the Member’s representations set forth in his or her application, to the extent that such reliance is reasonable. A distribution made pursuant to this Section shall not exceed the amount necessary to meet the Unforeseeable Emergency of the Member. The amount of an Unforeseeable Emergency withdrawal may include any amounts necessary to pay any federal, state, or local income taxes reasonably anticipated to result from the distribution. Applications under this Section shall be processed as soon as administratively feasible. The Committee shall direct the Employer when to disburse any funds as an Unforeseeable Emergency withdrawal.

ARTICLE 6

DISTRIBUTION OF BENEFITS

6.1Distribution Methods Available. Distributions shall be paid in cash under either of the following distribution methods:

(a) a single sum payment; or

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(b) a maximum of five annual installments. Each installment after the first shall be paid on the anniversary of the payment of the first installment. The Member’s Account from which such installments are payable shall continue to be maintained and credited with Investment Gain or Loss. The amount of each installment payment shall be the quotient obtained by dividing the balance of the Account by the number of installment payments remaining. Such balance shall be determined by the Committee as of an administratively convenient date that is within ten days prior to the date on which the installment payment is made. The right to the series of installment payments shall be treated as a right to a series of separate payments for purposes of any Regulation issued under Section 409А of the Code. Notwithstanding an election of installment payments in this Section 6.1(b), a Member’s Deferral Agreement may specify that annual installment payments be paid in a lump sum (an “Installment Cash-Out”) if (i) a Change in Control occurs during the applicable installment period or if the Member’s Separation occurs within the two‑year period following a Change in Control, or (ii) the Member’s death occurs during the applicable installment period.

6.2Elections Regarding Form of Distribution. Subject to the terms of this Section 6.2 and except as provided in Section 6.3 regarding an Active Member’s Prior Plan Contributions (and the Investment Gain or Loss attributable thereto), each Member shall have the right to elect the form of distribution applicable to the Member or the Member’s Beneficiary under the Plan.

(a) Distribution Election. The Member’s Deferral Agreement shall specify a form of payment available under Section 6.1. The Member shall specify the number of installment payments (not in excess of five) if the annual installment option is elected and shall designate if an Installment Cash-Out is elected pursuant to Section 6.1(b). In each subsequently‑filed Deferral Agreement, the Member shall make a new election regarding the form of payment of amounts attributable to Elective Deferrals made under such Deferral Agreement and Employer Matching Credits (and the Investment Gain or Loss attributable thereto) for the applicable Plan Year. Amounts contributed to the Plan pursuant to each Deferral Agreement and Employer Matching Credits (and the Investment Gain or Loss attributable thereto) will be distributed in accordance with the terms of the Distribution Election attributable to each Plan Year.

(b) Failure to Make Valid Distribution Election. A Member who fails to make a valid and timely election regarding the form of distribution applicable to the Member or the Member’s Beneficiary with respect to amounts attributable to any Elective Deferrals and Employer Matching Credits shall be deemed to have made the following elections with respect to such amounts:

(i) in the event of the Member’s Separation other than on account of death, payment shall be made in the form of a lump sum payment six months following the Member’s Separation;

(ii) in the event of Separation on account of death, payment shall be made to the Beneficiary ninety days after the Member’s death; and

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(iii) in any event, the distribution shall be made in a single sum payment, except that amounts attributable to Elective Deferrals made prior to January 1, 2009 shall be paid in five annual installments in the event of the Member’s Separation other than on account of death.

(c) Subsequent Changes in Time or Form of Distribution. Each Member shall have the right from time to time to elect that the time and form of distribution applicable to the Member or the Member’s Beneficiary under the Plan be changed. Notwithstanding the immediately preceding sentence, (i) any such election shall not take effect until 12 months after the date on which the election is made; and (ii) in the case of an election related to a payment not on account of death, the payment with respect to which such election is made must be deferred for a period of not less than five years from the date such payment would otherwise have been paid.

(d) Manner of Election. An election available under this Section shall be made by executing and properly filing with the Committee the Deferral Agreement or other form or forms approved by the Committee.

6.3Prior Plan Contributions. An Active Member’s Prior Plan Contributions (and the Investment Gain or Loss attributable thereto) shall continue to be subject to the terms and conditions of the Prior Plan as in effect at the time such amounts were contributed, including, but not limited to, the applicable Prior Plan distribution timing and form of payment provisions.

6.4Qualified Domestic Relations Orders. Payment shall be made in accordance with the provisions of any Qualified Domestic Relations Order.

6.5Distributions to Disabled Members. If the Committee determines that any person to whom a payment is due is unable to care for his or her affairs because of physical or mental disability, it shall have the authority to cause the payments to be made to the spouse, brother, sister, or other person the Committee determines to have incurred, or to be expected to incur, expenses for that person unless a prior claim is made by a qualified guardian or other legal representative. The Committee shall not be responsible to oversee the application of those payments. Payments made pursuant to this power shall be a complete discharge of all liability under the Plan.

6.6Designation of Beneficiary. Each Member has the right to designate and to revoke the designation of his or her Beneficiary pursuant to the terms of the Retirement Plan.

6.7No Duplication of Benefits. There shall be no duplication of benefits under the Plan.

6.8Missing Distributees. The Committee shall make reasonable efforts to locate any person entitled to a distribution. Such efforts shall include utilization of the services of the Social Security Administration to attempt to ascertain the current mailing address of any such person or for the purpose of forwarding correspondence from the Plan to any such person. If the efforts to locate a person entitled to a distribution are unsuccessful, the Committee may instruct the Employer to distribute such benefits into an interest-bearing federally-insured bank account opened in such person’s name. Such person shall have an unconditional right to withdraw funds from any such bank account. All ordinary and reasonable expenses incurred in connection with attempting to

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locate a person entitled to benefits under the Plan and in establishing an account for a person who cannot be located shall be deducted from the benefit payable to such person.

If a person entitled to a distribution cannot be located within one year of the date any benefits payable under the Plan should be paid or commence to be paid, the Member’s Account may be forfeited. Notwithstanding the preceding sentence, if at any time prior to termination of the Plan, the Member or Beneficiary files а valid claim for the forfeited benefits payable under the Plan, then (a) as soon as administratively practicable, the forfeited benefits payable to such former Member or Beneficiary shall be reinstated effective as of the date or receipt of the claim and (b) as soon as administratively practicable following the reinstatement of such forfeited benefits, the value of the reinstated benefits shall be paid pursuant to the provisions of this Article to the Member or Beneficiary thereof.

In the event of the termination of the Plan, amounts payable to persons who cannot be located that have not previously been forfeited and reallocated shall be used to establish a bank account or individual retirement account for such person.

6.9Claims Procedure. Submission of a claim for benefits by the Member or Beneficiary is not a condition to payment of benefits due hereunder. However, if the Member or Beneficiary believes that benefits have not been properly paid, he must submit a claim for proper payment to the Committee. Under normal circumstances, a final decision shall be made as to a claim within 90 days after receipt of the claim. If the Committee notifies the claimant in writing during the initial 90-day period, it may extend the period up to 180 days after the initial receipt of the claim. The written notice must contain the circumstances necessitating the extension and the anticipated date for the final decision. If a claim is denied during the claims period, the Committee must notify the claimant in writing. The denial must include the specific reasons for it, the Plan provisions upon which the denial is based, and the claims review procedure. If no action is taken during the claims period, the claim is treated as if it were denied on the last day of the claims period.

6.10Claims Appeal Procedure. If a Member’s or Beneficiary’s claim is denied and he wants a review, he must apply to the Committee in writing. That application can include any comment or argument the claimant wants to make. The claimant can either represent himself or herself or appoint a representative, either of whom has the right to inspect all documents pertaining to the claim and its denial. The Committee can schedule any meeting with the claimant or his or her representative that it finds necessary or appropriate to complete its review. The request for review must be filed within 90 days after the denial. If it is not, the denial becomes final. If a timely request is made, the Committee must make its decision, under normal circumstances, within 60 days of the receipt of the request for review. However, if the Committee notifies the claimant prior to the expiration of the initial review period, it can extend the period of review up to 120 days following the initial receipt of the request for a review. All decisions of the Committee must be in writing and must include the specific reasons for its action and the Plan provisions on which its decision is based. If a decision is not given to the claimant within the review period, the claim is treated as if it were denied on the last day of the review period.

6.11Member’s Right to Arbitration. If a Member’s claim is not resolved to his or her satisfaction under the foregoing provisions of this Article, the Member may elect to have his or her claim decided

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by binding arbitration under applicable rules of the American Arbitration Association. The decision in any such arbitration shall be final and binding on the Sponsor, the Committee, the Member, and all other interested parties.

6.12Limitations. Benefits under the Plan will be paid only if the Committee decides in its discretion that a Participant or Beneficiary is entitled to benefits. Notwithstanding the foregoing or any provision of the Plan or the Prior Plan to the contrary, a Participant must exhaust all administrative remedies set forth in this Article VI or otherwise established by the Committee before bringing any action at law or equity. Any claim based on a denial of a claim under the Plan or the Prior Plan must be brought no later than the date which is two years after the date of the final denial of a claim under Section 6.10. Any claim not brought within such time shall be waived and forever barred.

ARTICLE 7

COMMITTEE

7.1Appointment, Term, Resignation, and Removal. The President shall appoint a Committee to administer the Plan. The members of the Committee shall serve until their resignation, death, or removal. Any member of the Committee may resign at any time by giving written notice of such resignation to the President. Any member of the Committee may be removed by the President, with or without cause. Vacancies in the Committee arising by resignation, death, removal, or otherwise shall be filled by such persons as may be appointed by the President.

7.2Powers. The Committee shall have exclusive responsibility for the administration of the Plan, according to the terms and provisions thereof, and shall have all powers necessary to accomplish such purposes, including, but not by way of limitation, the right, power, and authority:

(v) To make rules and regulations for the administration of the Plan which are not inconsistent with the terms and provisions thereof, provided such rules and regulations are evidenced in writing;

(vi) To construe all terms, provisions, conditions, and limitations of the Plan; and its construction thereof made in good faith and without discrimination in favor of or against any Member shall be final and conclusive on all persons;

(vii) To correct any defect, supply any omission, or reconcile any inconsistency which may appear in the Plan in such manner and to such extent as it shall deem expedient to carry out the intent of the Sponsor in establishing and maintaining the Plan, and its judgment in such matters shall be final and conclusive as to all persons;

(viii) To select, employ, and compensate from time to time such consultants, accountants, attorneys, and other agents and employees as the Committee may deem necessary or advisable for the proper and efficient administration of the Plan;

(ix) To resolve all questions relating to the eligibility of Employees to become Members, and to determine the Member’s vested percentage and the amount of compensation upon which the benefits of each Member shall be calculated;

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(x) To resolve all controversies relating to the administration of the Plan, including but not limited to (a) differences of opinion arising between the Employer and a Member, and (b) any questions it deems advisable to determine in order to promote the uniform and nondiscriminatory administration of the Plan;

(xi) To direct and instruct the Employer in all matters relating to the payment of Plan benefits and to determine a Member’s entitlement to a benefit should he or she appeal a denial of his or her claim for a benefit or any portion thereof; and

(xii) To delegate such of its clerical and recordation duties under the Plan as it may deem necessary or advisable for the proper and efficient administration of the Plan.

7.3Organization. The Committee shall select from among its members a chairman, who shall preside at all of its meetings, and shall select a secretary, without regard as to whether that person is a member of the Committee, who shall keep the minutes of its proceedings and all records, documents, and data pertaining to its supervision of the administration of the Plan.

7.4Quorum and Majority Action. А majority of the members of the Committee shall constitute a quorum for the transaction of business, and the vote of a majority of the members present at any meeting shall decide any question brought before that meeting. In addition, the Committee may decide any question by a vote, taken without a meeting, of a majority of its members.

7.5Signatures. The chairman, the secretary and any one or more of the members of the Committee to which the Committee has delegated the power, shall each, severally, have the power to execute any document on behalf of the Committee, and to execute any certificate or other written evidence of the action of the Committee.

7.6Disqualification of Committee Members. A member of the Committee who is also a Member in the Plan shall not vote or act upon any matter relating solely to himself or herself, unless he or she is the sole member of the Committee.

7.7Disclosure to Members. The Committee shall make available to each Member and Beneficiary for his or her examination such records, documents, and other data as are required under ERISA, but only at reasonable times during business hours. No Member or Beneficiary shall have the right to examine any data or records reflecting the compensation paid to any other Member or Beneficiary, and the Committee shall be required to make no data or records available other than those required by ERISA.

7.8Standard of Performance. The Committee and each of its members shall act in good faith when carrying out their responsibilities hereunder.

7.9Liability of Committee. No member of the Committee shall be liable for any act or omission of any other member of the Committee, any Member, or other agent appointed by the Committee. No member of the Committee shall be liable for any act or omission on his or her own part, unless such act or omission is the result of the Committee member’s gross negligence or willful misconduct. In this connection, each provision hereof is severable and if any provision is found to be void as against public policy, it shall not affect the validity of any other provision hereof.

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7.10Indemnification of Committee Members. The Sponsor shall indemnify each member of the Committee and his or her heirs, successors, and assigns against all expenses (including, without limitation, taxes of every kind and character, the costs of investigating and responding to claims, the amount of judgments, the amount of settlements made with a view to the curtailment of costs of litigation, attorney’s fees, interest, penalties, and all costs, expenses, losses, and damages of every kind) incurred by such member, his or her heirs, successors, or assigns in connection with or arising out of his or her having served as a member of the Committee.

7.11Bonding. No member of the Committee shall be required to give bond for the performance of his or her duties hereunder unless required by a law which cannot be waived.

7.12Compensation. The Committee shall serve without compensation for their services, but shall be reimbursed by the Employers for all expenses properly and actually incurred in the performance of their duties under the Plan.

7.13Persons serving in Dual Fiduciary Roles. Any person, group of persons, corporations, firm, or other entity may serve in more than one fiduciary capacity with respect to the Plan.

7.14Administrator. For all purposes of ERISA, the Administrator of the Plan shall be the Committee. The Administrator of the Plan shall have final responsibility for compliance with all reporting and disclosure requirements imposed with respect to the Plan under any federal or state law, or any regulations promulgated thereunder.

7.15Standard of Judicial Review of Committee Actions. The Committee has full and absolute discretion in the exercise of each and every aspect of its authority under the Plan, including without limitation, the authority to determine any person’s right to benefits under the Plan, the correct amount and form of any such benefits, the authority to decide any appeal, the authority to review and correct the actions of any prior administrative committee, and all of the rights, powers, and authorities specified in Article 6 and Section 7.2. Notwithstanding any provision of law or any explicit or implicit provision of the Plan, any action taken, or ruling or decision made, by the Committee in the exercise of any of its powers and authorities under the Plan shall be final and conclusive as to all persons other than the Sponsor, including without limitation all Members and Beneficiaries, regardless of whether the Committee or one or more members thereof may have an actual or potential conflict of interest with respect to the subject matter of such action, ruling, or decision. No such final action, ruling, or decision of the Committee shall be subject to de novo review in any judicial proceeding; and no such final action, ruling, or decision of the Committee may be set aside unless it is held to have been arbitrary and capricious by a final judgment of a court having jurisdiction with respect to the issue.

ARTICLE 8

ADOPTION OF PLAN BY OTHER EMPLOYERS

8.1Adoption Procedure. Any business organization may, with the approval of the Sponsor, adopt the Plan by:

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(xiii) executing an authorized adoption instrument agreeing to be bound as an Employer by all the terms, conditions, and limitations of the Plan except those, if any, specifically described in the adoption instrument; and

(xiv) providing all information required by the Committee.

An adoption may be retroactive to the beginning of a Plan Year if these conditions are complied with on or before the last day of that Plan Year.

8.2No Joint Venture Implied. The document which evidences the adoption of the Plan by an Employer shall become a part of the Plan. However, neither the adoption of the Plan by an Employer nor any act performed by it in relation to the Plan shall ever create a joint venture or partnership relation between it and any other Employer.

ARTICLE 9

AMENDMENT AND TERMINATION

9.1Sponsor’s Right to Amend. Subject to the limitations prescribed by Section 9.2, the Sponsor may at any time and from time to time modify or amend the Plan in whole or in part. In addition, the Sponsor may at any time combine, transfer the sponsorship of or make any alternative arrangements as it may deem necessary or desirable with regard to the Plan. Further, the President may at any time and from time to time modify or amend the Plan in any manner that is not expected to substantially increase the number of Members, materially increase the administrative costs of the Plan, or have a material financial effect on any Employer. Any amendment shall be made by an instrument in writing, executed by the appropriate officer, setting forth the nature of the amendment and its effective date.

9.2Limitations on Right to Amend. No amendment shall decrease the Account balance of a Member or adversely affect any Member or Beneficiary with respect to his or her right to receive any amount that was vested prior to such amendment. The elimination of one or more forms of benefit payment, whether with respect to benefits attributable to service before the amendment or service after the amendment, shall not be prohibited under this Section.

9.3Retroactive Amendments to Meet Labor or Tax Requirements. It is the intention of the Sponsor that distributions under the Plan be deductible under the applicable provisions of the Code and that the Plan meet all requirements of ERISA. The Sponsor shall make such amendments to the Plan as may be necessary to carry out this intention. All such amendments may be made retroactively as limited by the applicable federal law.

9.4Sponsor’s Right to Terminate. The Sponsor may terminate the Plan by appropriate action evidenced in writing and delivered to the other Employers. The Plan shall terminate as to an Employer upon the happening of any of the following events:

(i) Delivery to the Sponsor of a notice of termination executed by the Employer, based on the action described in the preceding sentence and specifying the date as of which the Plan shall terminate;

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(ii) Adjudication of the Employer as a bankrupt, general assignment by the Employer, based on the action described in the preceding sentence, to or for the benefit of creditors, or cessation of business of the Employer; and

(iii) Termination of the business of the Employer or the transfer by the Employer of all or substantially all of its assets and business without provision for continuing the Plan, except that, in any such event, the Plan may be continued by any successor to the Employer or any transferee of all or substantially all of its assets and business, and in the event election is made to continue the Plan, such successor or transferee shall automatically become substituted for the Employer hereunder upon receipt by the Sponsor of written notice of such election and delivery of the Sponsor’s written consent to the successor or transferee.

ARTICLE 10

MISCELLANEOUS

10.1Establishment of Trust Fund not Required. No property is required to be set aside nor is а trust fund of any kind required to be established to secure the rights of any Member hereunder. All amounts credited to the Member’s Account at any time shall be solely a charge upon the Member’s Employer and all Members shall at all times rely solely upon the general credit of their respective Employers for the payment of any benefit which becomes payable hereunder. Notwithstanding the foregoing provisions of this Section, the Sponsor may, in its discretion, contribute funds to a grantor trust for the purpose, as it deems appropriate, of paying benefits under the Plan. Such trust may be irrevocable, but assets of the trust shall be subject to the claims of creditors of the Employer. To the extent any benefits provided under the Plan are actually paid from the trust, the Employer shall have no further obligation with respect thereto, but to the extent not so paid, such benefits shall remain the obligation of and shall be paid by, the Employer. The Members shall have the status of unsecured creditors insofar as their legal claim for benefits under the Plan and the Members shall have no security interest in the grantor trust.

10.2Plan Does Not Constitute an Employment Contract. The adoption and maintenance of the Plan shall not be deemed to be a contract between any Employer and any Member. Nothing contained herein shall be deemed to give any Member the right to be retained in the employment of the Employer or to interfere with the rights of the Employer to discharge any Member at any time, nor shall it interfere with the Member’s right to terminate his or her employment at any time.

10.3Spendthrift Clause. Except as otherwise specifically provided, no principal or income payable or to become payable under the Plan shall be subject to anticipation or assignment by any Member or by any Beneficiary or be subject to attachment by, or to the interference or control of, any creditor of a Member or Beneficiary, or be taken or reached by any legal or equitable process in satisfaction of any debt or liability of a Member or Beneficiary prior to its actual receipt by such Member or Beneficiary. The interests of the Employer in any assets, earnings and profits related to the Plan shall not be subject to garnishment, attachment, levy, or execution of any kind for debts or defaults of any person, natural or legal, having an interest in the Plan. Any attempted conveyance, transfer, assignment, mortgage, pledge, or encumbrance of an interest in the Plan by a Member or Beneficiary, prior to distribution as herein provided, shall be absolutely and wholly void, regardless

21

of when such conveyance, transfer, assignment, mortgage, pledge or encumbrance is intended to take place or become effective. The Employer shall never under any circumstances be required to recognize any conveyance, transfer, assignment, mortgage, or pledge by a Member or Beneficiary hereunder, of any interest in the Plan, and the Employer shall never be required to pay any money or thing of value thereon or therefor to any creditor of a Member or Beneficiary, nor upon any debt created by a Member or Beneficiary for any cause whatsoever. This Section shall also apply to the creation, assignment, or recognition of a right to any benefit payable with respect to a Member pursuant to a domestic relations order, unless (i) such order is determined to be a Qualified Domestic Relations Order, or (ii) such order was entered before January 1, 1985, and the Committee determines that sufficient uncontroverted information is available to permit such order to be treated in the same manner as a Qualified Domestic Relations Order.

10.4Form of Elections. Except as otherwise specifically provided in the Plan, in order to be effective, any election by a Member or Beneficiary that is required or permitted under the Plan shall be in writing on a form provided or approved by the Committee, signed by the person entitled to make the election, and filed with the Committee. Any permitted revocation of such an election shall be irrevocable except to the extent specifically provided otherwise in the applicable provision of the Plan.

10.5Governing Laws; Parties to Legal Actions. The provisions of the Plan shall be construed, administered and enforced according to the laws of the United States and, to the extent not preempted, the state of Texas. The Employer may at any time initiate any legal action or proceeding for the determination of any questions, including questions of construction which may arise, or for instruction, and the only necessary parties to such action or proceeding shall be the Employer, except that any other person or persons may be included as parties defendant at the election of the Employer.

10.6Plan Document Controlling. In the event that there is a discrepancy between the terms of this document and the terms of any policy or contract issued under the Plan, the provisions of this document shall control.

10.7Severability of Clauses. Each provision of the Plan Document is severable and if any provision is found to be unenforceable for any reason, it shall not affect the validity of any other provision.

10.8Cross References. All Section references are to Sections of this document, unless otherwise specified.

10.9Securities Law Considerations.

THE PLAN AND PARTICIPATIONS THEREUNDER HAVE NOT BEEN REGISTERED WITH OR APPROVED BY THE UNITED STATES SECURITIES AND EXCHANGE COMMISSION OR THE SECURITIES REGULATORY AUTHORITY OF ANY STATE, NOR HAS SUCH COMMISSION OR THE REGULATORY AUTHORITY OF ANY STATE PASSED UPON THE ACCURACY OR ADEQUACY OF THE PLAN DOCUMENT. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.

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THE PLAN AND PARTICIPATIONS THEREUNDER ARE BEING OFFERED IN RELIANCE UPON AN EXEMPTION FROM REGISTRATION PROVIDED BY REGULATION D UNDER THE SECURITIES ACT. NO PUBLIC OR OTHER MARKET WILL DEVELOP FOR THE PLAN OR PARTICIPATION THEREUNDER.

THE PLAN AND PARTICIPATIONS THEREUNDER ARE SUBJECT TO RESTRICTIONS ON TRANSFERABILITY AND RESALE AND MAY NOT BE TRANSFERRED OR RESOLD UNLESS REGISTERED UNDER THE SECURITIES ACT OF 1933 AND APPLICABLE STATE SECURITIES LAWS OR PURSUANT TO AN EXEMPTION FROM REGISTRATION THEREUNDER.

PARTICIPATIONS IN THE PLAN WILL BE ILLIQUID. AS A RESULT, PROSPECTIVE PARTICIPANTS SHOULD INVEST IN THE PLAN ONLY IF THEY CAN BEAR FOR AN INDEFINITE PERIOD OF TIME THE ECONOMIC RISKS ASSOCIATED WITH AN ILLIQUID INVESTMENT.

IN MAKING AN INVESTMENT DECISION, PROSPECTIVE PLAN PARTICIPANTS MUST RELY ON THEIR OWN EXAMINATION OF THE PLAN AND THE TERMS THEREOF, INCLUDING THE MERITS AND RISKS INVOLVED. PARTICIPATION IN THE PLAN HAS NOT BEEN RECOMMENDED BY ANY FEDERAL OR STATE SECURITIES COMMISSION OR REGULATORY AUTHORITY.

PROSPECTIVE PARTICIPANTS ARE NOT TO CONSTRUE THE CONTENTS OF THE PLAN DOCUMENT AS INVESTMENT, TAX OR LEGAL ADVICE. THE PLAN DOCUMENT, AS WELL AS THE NATURE OF THE INVESTMENT, SHOULD BE REVIEWED BY EACH PROSPECTIVE PARTICIPANT’S INVESTMENT AND TAX ADVISER, ACCOUNTANT AND LEGAL COUNSEL. EACH PARTICIPANT WILL BE REQUIRED TO REPRESENT IN SUCH PARTICIPANT’S LETTER OF PARTICIPATION THAT SUCH PARTICIPANT UNDERSTANDS THE RISKS ASSOCIATED WITH AN INVESTMENT IN THE PLAN, IS CAPABLE OF BEARING SUCH RISKS AND HAS NOT RELIED UPON THE PLAN’S SPONSOR FOR INVESTMENT, TAX, ACCOUNTING OR LEGAL ADVICE, AND THAT THE PARTICIPANT HAS RELIED ONLY ON SUCH PARTICIPANT’S OWN ADVISERS FOR SUCH ADVICE.

THIS PLAN DOCUMENT HAS BEEN PREPARED SOLELY FOR THE BENEFIT OF PROSPECTIVE PARTICIPANTS IN THE PLAN AND CONSTITUTES AN OFFER ONLY TO THE PROSPECTIVE PARTICIPANT TO WHOM IT WAS DELIVERED BY THE SPONSOR. EACH PROSPECTIVE PLAN PARTICIPANT, BY ACCEPTING DELIVERY OF THIS PLAN DOCUMENT, AGREES TO RETURN IT AND ALL OTHER RELATED DOCUMENTS TO THE SPONSOR AT ITS REQUEST IF THE PROSPECTIVE PARTICIPANT DECIDES NOT TO INVEST IN THE PLAN, IF THE PROSPECTIVE PARTICIPANT’S SUBSCRIPTION IS NOT ACCEPTED OR IF THE PLAN IS TERMINATED.

THIS PLAN DOCUMENT SHALL NOT BE CONSIDERED AN OFFER BY THE PLAN, THE PLAN SPONSOR OR ANY OTHER PERSON IN ANY JURISDICTION IN WHICH SUCH AN OFFER IS UNLAWFUL OR PROHIBITED.

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10.10Taxation. It is the intention of the Sponsor that the benefits payable hereunder shall not be deductible by the Employers or taxable for federal income tax purposes to Members or Beneficiaries until such benefits are paid by the Employers, or the Trust, as the case may be, to such Members or Beneficiaries. The provisions of the Plan shall be construed and interpreted and the Plan shall be operated in a manner consistent with the requirements of Code Section 409A and the accompanying treasury regulations and guidance issued by the Internal Revenue Service. Specifically, no provision of the Plan that would provide for a distribution that is subject to the additional tax under Code Section 409A shall be permitted and any provision of the Plan which would result in a failure to meet the requirements of Code Section 409A shall be deemed null and void.

IN WITNESS WHEREOF, Atwood Oceanics, Inc. has executed the Plan this 27th day of December, 2012, to be effective as of January 1, 2013, except as otherwise specified or as otherwise required to comply with applicable provisions of the Code, any statute amending the Code, or any other applicable statute, regulation, or ruling.

ATWOOD OCEANICS, INC.
/s/ Robert J. Saltiel
By:	Robert J. Saltiel
	President and Chief Executive Officer

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EX-31.1

EXHIBIT 31.1

CERTIFICATIONS

I, Robert J. Saltiel, 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)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) 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) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

(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

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:	February 1, 2013	/s/ ROBERT J. SALTIEL
		Robert J. Saltiel
		Chief Executive Officer

EX-31.2

EXHIBIT 31.2

CERTIFICATIONS

I, Mark L. Mey, 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)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) 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) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

(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

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:	February 1, 2013	/s/ MARK L. MEY
		Mark L. Mey
		Chief Financial Officer

EX-32.1

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 December 31, 2012, as filed with the Securities and Exchange Commission on the date hereof (the “Report”), I, Robert J. Saltiel, 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:	February 1, 2013	/S/ ROBERT J. SALTIEL
		Robert J. Saltiel
		President and Chief Executive Officer

EX-32.2

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 December 31, 2012, as filed with the Securities and Exchange Commission on the date hereof (the “Report”), I, Mark L. Mey, 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:	February 1, 2013	/S/ MARK L. MEY
		Mark L. Mey
		Senior Vice President and Chief Financial Officer

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Interest Rate Swaps (Fair Value Of Cash Flow Hedge Derivative Contracts Included In The Consolidated Balance Sheets) (Details) (Interest Rate Swap [Member], USD $) In Thousands, unless otherwise specified	Dec. 31, 2012	Sep. 30, 2011
Summary of Derivative Instruments by Risk Exposure [Line Items]
Total derivative contracts, net	$ 2,753	$ 3,119
Accrued liabilities [Member]
Summary of Derivative Instruments by Risk Exposure [Line Items]
Total derivative contracts, net	1,751	1,705
Other long-term liabilities [Member]
Summary of Derivative Instruments by Risk Exposure [Line Items]
Total derivative contracts, net	$ 1,002	$ 1,414

XML

Share-Based Compensation (Narrative) (Details) (USD $) In Millions, unless otherwise specified	3 Months Ended
	Dec. 31, 2012
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Weighted average recognition period (in years)	2 years 4 months 24 days
Outstanding options, maximum term (in years)	10 years
Stock Options [Member]
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Unrecognized compensation cost	5.6
Restricted Stock [Member]
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Unrecognized compensation cost	24.3
2007 Stock Incentive Plan [Member] | Restricted Stock [Member]
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Vesting and restriction period, minimum (in months)	13 months
2007 Stock Incentive Plan [Member] | Restricted Stock [Member] | Minimum [Member]
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Vesting and restriction period minimum (in years)	3 years
2007 Stock Incentive Plan [Member] | Restricted Stock [Member] | Maximum [Member]
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Vesting and restriction period minimum (in years)	4 years

XML

Commitments And Contingencies (Details) (USD $) In Millions, unless otherwise specified	3 Months Ended
	Dec. 31, 2012
Commitments and Contingencies Disclosure [Abstract]
Service taxes paid	$ 10.1
Accrued additional service tax	1.8
Total service taxes	11.9
Long-term other receivable due from our customer	$ 11.9

XML

Earnings Per Common Share

3 Months Ended

Dec. 31, 2012

Earnings Per Common Share [Abstract]

Earnings Per Common Share

EARNINGS PER COMMON SHARE

The computation of basic and diluted earnings per share for the three months endedDecember 31, 2012 and 2011 is as follows (in thousands, except per share amounts):

	Three Months Ended
	Net Income		Shares	Per Share Amount
December 31, 2012
Basic earnings per share	$	72,831	65,528	$	1.11
Effect of dilutive securities:
Stock options	—		409	$	(0.01	)
Restricted stock	—		155	$	—
Diluted earnings per share	$	72,831	66,092	$	1.10
December 31, 2011
Basic earnings per share	$	65,468	65,024	$	1.01
Effect of dilutive securities:
Stock options	—		348	$	(0.01	)
Restricted stock	—		169	$	—
Diluted earnings per share	$	65,468	65,541	$	1.00

The calculation of diluted earnings per share for the three months endedDecember 31, 2012 and 2011 excludes shares of common stock related to approximately 296,000 and 977,000 outstanding stock options, respectively, because such options were anti-dilutive. These options could potentially dilute basic earnings per share in the future.

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Property and Equipment (A Summary of Property and Equipment by Classification) (Details) (USD $) In Thousands, unless otherwise specified	Dec. 31, 2012	Sep. 30, 2012
Property, Plant and Equipment [Line Items]
Cost	$ 3,346,006	$ 3,002,162
Less: Accumulated depreciation	(491,491)	(464,822)
Drilling and other property and equipment, net	2,854,515	2,537,340
Drilling vessels and equipment [Member]
Property, Plant and Equipment [Line Items]
Cost	2,727,429	2,523,895
Construction work in progress [Member]
Property, Plant and Equipment [Line Items]
Cost	575,820	438,081
Drill pipe [Member]
Property, Plant and Equipment [Line Items]
Cost	20,658	20,576
Office equipment and other [Member]
Property, Plant and Equipment [Line Items]
Cost	$ 22,099	$ 19,610

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Property and Equipment (Narrative) (Details) (USD $)	3 Months Ended
	Dec. 31, 2012 DrillingUnits	Dec. 31, 2011
Property, Plant and Equipment [Abstract]
Interest capitalized	$ 9,000,000	$ 4,800,000
Expenditure towards construction of drilling units currently under construction	564,000,000
Number of drilling units	4
Number of drilling units with upaid firm commitments	4
Commitments on drilling units under construction	$ 1,200,000,000

XML

Long-Term Debt (Narrative) (Details) (Line of Credit [Member], 2011 Credit Facility [Member], USD $)	3 Months Ended
	Dec. 31, 2012	Sep. 30, 2012
Line of Credit [Member] | 2011 Credit Facility [Member]
Line of Credit Facility [Line Items]
Outstanding credit facility	$ 620,000,000	$ 380,000,000
Revolving credit facility, term	5 years
Maximum borrowing capacity	$ 750,000,000
Revolving credit facility, initiation date	May 31, 2011
Credit facility variable rate	Eurodollar
Credit facility basis spread on variable rate	2.50%

XML

Long-Term Debt (Summary of Long-Term Debt) (Details) (USD $) In Thousands, unless otherwise specified	Dec. 31, 2012		Sep. 30, 2012
Line of Credit Facility [Line Items]
Long-term debt	$ 1,070,000		$ 830,000
Senior Notes [Member] | 6.5% Senior Notes [Member]
Line of Credit Facility [Line Items]
Principal amount	450,000		450,000
Interest rate	6.50%
Line of Credit [Member] | 2011 Credit Facility [Member]
Line of Credit Facility [Line Items]
Outstanding credit facility	$ 620,000		$ 380,000
Market adjustable interest rate (per annum)	3.00%	[1]	3.20%	[1]

[1] After the impact of our interest rate swaps.

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Unaudited Interim Information

3 Months Ended

Dec. 31, 2012

Quarterly Financial Information Disclosure [Abstract]

Unaudited Interim Information

UNAUDITED INTERIM INFORMATION

The unaudited interim condensed consolidated financial statements of Atwood Oceanics, Inc. and its subsidiaries as of December 31, 2012, and for the three months endedDecember 31, 2012 and 2011, 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. Unless otherwise indicated, references to “we”, “us”, “our” and the “Company” refer collectively to Atwood Oceanics, Inc. and subsidiaries. The year-end condensed consolidated balance sheet data was derived from the audited financial statements as of September 30, 2012. 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 generally accepted accounting principles 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 fiscal year. It is suggested that these unaudited condensed consolidated financial statements be read in conjunction with the audited consolidated financial statements and the notes thereto included in our Annual Report on Form 10-K for the year ended September 30, 2012. In our opinion, the unaudited interim financial statements reflect all adjustments considered necessary for a fair statement of our financial position, results of operations and cash flows for the periods presented.

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Interest Rate Swaps (Narrative) (Details) (USD $)	3 Months Ended
	Dec. 31, 2012 Swap	Dec. 31, 2011
Summary of Derivative Instruments by Risk Exposure [Line Items]
Number of interest rate swap agreements	5
Notional amount of interest rate swap agreements	$ 50,000,000
Unrealized loss recognized in OCI	400,000
Unrealized loss recognized on statement of operations	0	0
3.4% Interest Rate Swaps Due 2014 [Member]
Summary of Derivative Instruments by Risk Exposure [Line Items]
Outstanding credit facility	$ 250,000,000
Interest rate fixed as result of interest rate swap hedges	3.40%

XML

Condensed Consolidated Statements Of Operations (USD $) In Thousands, except Per Share data, unless otherwise specified	3 Months Ended
	Dec. 31, 2012	Dec. 31, 2011
REVENUES:
Contract drilling	$ 245,093	$ 184,672
COSTS AND EXPENSES:
Contract drilling	111,916	78,344
Depreciation	27,578	15,363
General and administrative	17,221	14,094
Other, net	7	0
Total costs and expenses	156,722	107,801
OPERATING INCOME	88,371	76,871
OTHER INCOME (EXPENSE):
Interest expense, net of capitalized interest	(4,408)	(603)
Interest income	124	86
Other	0	1,577
Other income (expense) total	(4,284)	1,060
INCOME BEFORE INCOME TAXES	84,087	77,931
PROVISION FOR INCOME TAXES	11,256	12,463
NET INCOME	$ 72,831	$ 65,468
EARNINGS PER COMMON SHARE (NOTE 2):
Basic (in dollars per share)	$ 1.11	$ 1.01
Diluted (in dollars per share)	$ 1.10	$ 1.00
AVERAGE COMMON SHARES OUTSTANDING (NOTE 2):
Basic (in shares)	65,528	65,024
Diluted (in shares)	66,092	65,541

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Condensed Consolidated Statements Of Cash Flows (USD $) In Thousands, unless otherwise specified	3 Months Ended
	Dec. 31, 2012	Dec. 31, 2011
Cash flows from operating activities:
Net income	$ 72,831	$ 65,468
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation	27,578	15,363
Amortization of debt issuance costs	1,036	681
Amortization of deferred items	(32)	393
Provision for doubtful accounts	1,871	0
Provision for inventory obsolescence	181	255
Deferred income tax benefit	(220)	(186)
Share-based compensation expense	3,048	1,790
Other, net	7	0
Changes in assets and liabilities:
(Increase) decrease in accounts receivable	22,388	(32,511)
Decrease in income tax receivable	141	1,640
(Increase) decrease in inventory	(257)	6,106
Decrease in prepaid expenses	5,470	1,378
Increase in deferred costs and other assets	(4,039)	(1,040)
Increase (decrease) in accounts payable	(27,978)	3,463
Increase (decrease) in accrued liabilities	4,937	(9,143)
Increase in income tax payable	3,603	3,249
Increase in deferred credits and other liabilities	6,354	843
Increase in Operating Capital	44,088	(7,719)
Net cash provided by operating activities	116,919	57,749
Cash flows from investing activities:
Capital expenditures	(321,995)	(257,446)
Proceeds from sale of assets	41	0
Net cash used by investing activities	(321,954)	(257,446)
Cash flows from financing activities:
Proceeds from bank credit facilities	240,000	0
Principal payments on notes payable	(5,148)	(5,461)
Proceeds from exercise of stock options	653	79
Net cash provided (used) by financing activities	235,505	(5,382)
Net increase (decrease) in cash and cash equivalents	30,470	(205,079)
Cash and cash equivalents, at beginning of period	77,871	295,002
Cash and cash equivalents, at end of period	108,341	89,923
Non-cash activities
Increase (decrease) in accounts payable and accrued liabilities related to capital expenditures	$ 22,806	$ (83,190)

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Fair Value (Narrative) (Details) (USD $) In Millions, unless otherwise specified	Dec. 31, 2012
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Credit valuation adjustment to total fair value percentage	5.00%
6.5% Senior Notes [Member] | Level 2 [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Debt instrument carrying amount	450
Long-term debt, fair value	496

XML

Interest Rate Swaps (Tables)

3 Months Ended

Dec. 31, 2012

Derivative Instruments and Hedging Activities Disclosure [Abstract]

Fair Value of Cash Flow Hedge Derivative Contracts Included in the Consolidated Balance Sheets

The following table presents the carrying amount of our cash flow hedge derivative contracts included in the Consolidated Balance Sheets as of December 31, 2012 and September 30, 2012 (in thousands):

		December 31,		September 30,
Type of Contract	Balance Sheet Classification	2012		2012
Short term interest rate swaps	Accrued liabilities	$	1,751	$	1,705
Long term interest rate swaps	Other long-term liabilities	1,002		1,414
Total derivative contracts, net		$	2,753	$	3,119

XML

Fair Value (Estimated Fair Value of Financial Instruments) (Details) (Fair Value, Measurements, Recurring [Member], Interest Rate Swap [Member], USD $) In Thousands, unless otherwise specified	Dec. 31, 2012	Sep. 30, 2012
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Total derivative contracts, net	$ 2,753	$ 3,119
Accrued liabilities [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Total derivative contracts, net	1,751	1,705
Other long-term liabilities [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Total derivative contracts, net	1,002	1,414
Carrying Amount [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Total derivative contracts, net	2,753	3,119
Carrying Amount [Member] | Accrued liabilities [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Total derivative contracts, net	1,751	1,705
Carrying Amount [Member] | Other long-term liabilities [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Total derivative contracts, net	1,002	1,414
Level 1 [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Total derivative contracts, net	0	0
Level 1 [Member] | Accrued liabilities [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Total derivative contracts, net	0	0
Level 1 [Member] | Other long-term liabilities [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Total derivative contracts, net	0	0
Level 2 [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Total derivative contracts, net	2,753	3,119
Level 2 [Member] | Accrued liabilities [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Total derivative contracts, net	1,751	1,705
Level 2 [Member] | Other long-term liabilities [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Total derivative contracts, net	1,002	1,414
Level 3 [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Total derivative contracts, net	0	0
Level 3 [Member] | Accrued liabilities [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Total derivative contracts, net	0	0
Level 3 [Member] | Other long-term liabilities [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Total derivative contracts, net	$ 0	$ 0

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Earnings Per Common Share (Computation of Basic and Diluted Earnings Per Share) (Details) (USD $) In Thousands, except Per Share data, unless otherwise specified	3 Months Ended
	Dec. 31, 2012	Dec. 31, 2011
Earnings Per Common Share [Abstract]
Net income, Basic earnings per share	$ 72,831	$ 65,468
Shares, Basic earnings per share	65,528	65,024
Per Share Amount, Basic earnings per share	$ 1.11	$ 1.01
Effect of dilutive securities:
Shares, stock options	409	348
Per Share Amount, Stock options	$ (0.01)	$ (0.01)
Shares, restricted stock	155	169
Per Share Amount, Restricted Stock	$ 0.00	$ 0.00
Net Income, Diluted earnings per share	$ 72,831	$ 65,468
Diluted earnings per share, Shares	66,092	65,541
Per Share Amount, Diluted earnings per share	$ 1.10	$ 1.00
Outstanding stock options, excluded in the calculation of earnings per share	296	977

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Condensed Consolidated Statement Of Changes In Shareholders' Equity (USD $) In Thousands	Total	Common Stock	Paid-in Capital	Retained Earnings	Accumulated Other Comprehensive Loss
Beginning Balance at Sep. 30, 2012	$ 1,939,422	$ 65,452	$ 160,540	$ 1,716,441	$ (3,011)
Beginning Balance (in shares) at Sep. 30, 2012		65,452
Net income	72,831			72,831
Other comprehensive gain	372				372
Restricted stock awards		142	(142)
Restricted stock awards (in shares)		142
Exercise of employee stock options	653	38	615
Exercise of employee stock options (in shares)	38	38
Stock option and restricted stock award compensation expense	3,048		3,048
Ending Balance at Dec. 31, 2012	$ 2,016,326	$ 65,632	$ 164,061	$ 1,789,272	$ (2,639)
Ending Balance (in shares) at Dec. 31, 2012		65,632

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Condensed Consolidated Statement Of Comprehensive Income (USD $) In Thousands, unless otherwise specified	3 Months Ended
	Dec. 31, 2012	Dec. 31, 2011
Statement of Other Comprehensive Income [Abstract]
Net income	$ 72,831	$ 65,468
Other comprehensive income (loss)
Interest rate swaps	372	(208)
Other comprehensive income (loss)	372	(208)
Total comprehensive income	$ 73,203	$ 65,260

XML

Commitments And Contingencies

3 Months Ended

Dec. 31, 2012

Commitments and Contingencies Disclosure [Abstract]

Commitments And Contingencies

COMMITMENTS AND CONTINGENCIES

Litigation

We are party to a number of lawsuits which are ordinary, routine litigation incidental to our business, the outcome of which is not expected to have, either individually or in the aggregate, a material adverse effect on our financial position, results of operations, or cash flows.

Other Matters

The Atwood Beacon operated in India from early December 2006 to the end of July 2009. A service tax was enacted in India in 2004 on revenues derived from seismic and exploration activities. This service tax law was subsequently amended in June 2007 and again in May 2008 to state that revenues derived from mining services and drilling services were specifically subject to this service tax. The contract terms with our customer in India provided that any liability incurred by us related to any taxes pursuant to laws not in effect at the time the contract was executed in 2005 was to be reimbursed by our customer. We believe any service taxes assessed by the Indian tax authorities under the 2007 or 2008 amendments are an obligation of our customer. Our customer is disputing this obligation on the basis that revenues derived from drilling services were taxable under the initial 2004 law, and are, therefore, our obligation.

After reviewing the status of the drilling service we provided to our customer, the Indian tax authorities assessed service tax obligations on revenues derived from the Atwood Beacon commencing on June 1, 2007. The relevant Indian tax authority issued an extensive written ruling setting forth the application of the June 1, 2007 service tax regulation and confirming the position that drilling services, including the services performed under our contract with our customer prior to June 1, 2007, were not covered by the 2004 service tax law. In August 2012, the Indian Custom Excise and Service Tax Appellate Tribunal issued an Order in our favor confirming our position that service tax did not apply to drilling services performed prior to June 1, 2007. This ruling is subject to appeal to the Indian Supreme Court.

As of December 31, 2012, we had paid to the Indian government $10.1 million in service taxes and have accrued $1.8 million of additional service tax obligations in accrued liabilities on our consolidated balance sheets, for a total of $11.9 million relating to service taxes. We recorded a corresponding $11.9 million long-term other receivable due from our customer relating to service taxes due under the contract. We continue to pursue collection of such amounts from our customer and expect to collect the amount recorded as receivable.

XML

Document And Entity Information	3 Months Ended
	Dec. 31, 2012	Jan. 30, 2013
Document And Entity Information [Abstract]
Entity Registrant Name	ATWOOD OCEANICS INC
Entity Central Index Key	0000008411
Current Fiscal Year End Date	--09-30
Entity Filer Category	Large Accelerated Filer
Entity Common Stock, Shares Outstanding		65,641,866
Document Fiscal Year Focus	2013
Document Fiscal Period Focus	Q1
Document Type	10-Q
Amendment Flag	false
Document Period End Date	Dec. 31, 2012
Trading Symbol	atw

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Earnings Per Common Share (Tables)

3 Months Ended

Dec. 31, 2012

Earnings Per Common Share [Abstract]

Computation of Basic and Diluted Earnings Per Share

The computation of basic and diluted earnings per share for the three months endedDecember 31, 2012 and 2011 is as follows (in thousands, except per share amounts):

	Three Months Ended
	Net Income		Shares	Per Share Amount
December 31, 2012
Basic earnings per share	$	72,831	65,528	$	1.11
Effect of dilutive securities:
Stock options	—		409	$	(0.01	)
Restricted stock	—		155	$	—
Diluted earnings per share	$	72,831	66,092	$	1.10
December 31, 2011
Basic earnings per share	$	65,468	65,024	$	1.01
Effect of dilutive securities:
Stock options	—		348	$	(0.01	)
Restricted stock	—		169	$	—
Diluted earnings per share	$	65,468	65,541	$	1.00

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Condensed Consolidated Balance Sheets (USD $) In Thousands, unless otherwise specified	Dec. 31, 2012	Sep. 30, 2012
Current assets:
Cash and cash equivalents	$ 108,341	$ 77,871
Accounts receivable, net of allowance for doubtful accounts of $1,871 and $0 at December 31, 2012 and September 30, 2012, respectively	142,934	167,186
Income tax receivable	5,609	5,750
Inventories of materials and supplies	80,367	80,290
Prepaid expenses and deferred costs	31,117	39,437
Total current assets	368,368	370,534
Property and equipment, net	2,854,515	2,537,340
Other receivables	11,868	11,875
Deferred costs and other assets	24,195	24,013
Total assets	3,258,946	2,943,762
Current liabilities:
Accounts payable	78,420	83,592
Accrued liabilities	29,261	24,478
Notes payable	0	5,148
Income tax payable	13,314	9,711
Deferred credits	15,095	13,738
Total current liabilities	136,090	136,667
LONG TERM LIABILITIES:
Long-term debt	1,070,000	830,000
Deferred income taxes	8,571	8,791
Deferred credits	7,659	8,928
Other	20,300	19,954
Total long-term liabilities	1,106,530	867,673
Shareholders’ equity:
Preferred stock, no par value, 1,000 shares authorized, none outstanding	0	0
Common stock, $1.00 par value, 90,000 shares authorized with 65,632 and 65,452 issued and outstanding at December 31, 2012 and September 30, 2012, respectively	65,632	65,452
Paid-in capital	164,061	160,540
Retained earnings	1,789,272	1,716,441
Accumulated other comprehensive loss	(2,639)	(3,011)
Total shareholders' equity	2,016,326	1,939,422
Total liabilities and shareholders' equity	$ 3,258,946	$ 2,943,762

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Long-Term Debt

3 Months Ended

Dec. 31, 2012

Debt Disclosure [Abstract]

Long-Term Debt

LONG-TERM DEBT

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

	December 31, 2012		September 30, 2012
Senior Notes, bearing fixed interest at 6.5% per annum	$	450,000	$	450,000
Credit Facility, bearing interest at approximately 3.0%(1) per annum at December 31, 2012 and 3.2%(1) per annum at September 30, 2012	620,000		380,000
(1) After the impact of our interest rate swaps.	$	1,070,000	$	830,000

Revolving Credit Facility

As of December 31, 2012, we had $620 million of outstanding borrowings under our five-year $750 million senior secured revolving credit facility. The credit facility was entered into in May 2011 and matures in May 2016. Our wholly-owned subsidiary, Atwood Offshore Worldwide Limited (“AOWL”), is the borrower under the credit facility, and we and certain of our other subsidiaries are guarantors under the facility. Borrowings under the credit facility bear interest at the Eurodollar rate plus a margin of 2.5%. Certain borrowings effectively bear interest at a fixed rate due to our interest rate swaps (See Note 6).

We were in compliance with all financial covenants under the credit facility at December 31, 2012.

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Property And Equipment

3 Months Ended

Dec. 31, 2012

Property, Plant and Equipment [Abstract]

Property and Equipment

PROPERTY AND EQUIPMENT

A summary of property and equipment by classification is as follows (in thousands):

(In thousands)	December 31, 2012			September 30, 2012
Drilling vessels and equipment	$	2,727,429		$	2,523,895
Construction work in progress	575,820			438,081
Drill pipe	20,658			20,576
Office equipment and other	22,099			19,610
Cost	3,346,006			3,002,162
Less: Accumulated depreciation	(491,491		)	(464,822		)
Drilling and other property and equipment, net	$	2,854,515		$	2,537,340

Property and equipment are recorded at cost. Interest incurred related to property under construction is capitalized as a component of construction costs. Interest capitalized during the three months endedDecember 31, 2012 and 2011 was approximately $9.0 million and $4.8 million, respectively.

Construction Projects

As of December 31, 2012, we had expended approximately $564 million towards our four drilling units under construction. Total remaining firm commitments for our four drilling units currently under construction were approximately $1.2 billion at December 31, 2012.

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Fair Value (Tables)

3 Months Ended

Dec. 31, 2012

Fair Value Disclosures [Abstract]

Estimated Fair Value Of Financial Instruments

The following table sets forth the estimated fair value of certain financial instruments at December 31, 2012 and September 30, 2012, which are measured and recorded at fair value on a recurring basis:

		December 31, 2012
		Fair Value Measurements
		Carrying Amount		Level 1		Level 2		Level 3		Estimated Fair  Value
Type of Contract	Balance Sheet Classification
Short term interest rate swaps	Accrued liabilities	$	1,751	$	—	$	1,751	$	—	$	1,751
Long term interest rate swaps	Other long-term liabilities	1,002		—		1,002		—		1,002
Total derivative contracts, net		$	2,753	$	—	$	2,753	$	—	$	2,753
		September 30, 2012
		Fair Value Measurements
		Carrying Amount		Level 1		Level 2		Level 3		Estimated Fair  Value
Type of Contract	Balance Sheet Classification
Short term interest rate swaps	Accrued liabilities	$	1,705	$	—	$	1,705	$	—	$	1,705
Long term interest rate swaps	Other long-term liabilities	1,414		—		1,414		—		1,414
Total derivative contracts, net		$	3,119	$	—	$	3,119	$	—	$	3,119

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Share-Based Compensation (Tables)

3 Months Ended

Dec. 31, 2012

Disclosure of Compensation Related Costs, Share-based Payments [Abstract]

Summary of Stock Option Activity

A summary of stock option activity during the three months endedDecember 31, 2012 is as follows:

	Number of Options (000s)	Wtd. Avg. Exercise Price		Wtd. Avg. Remaining Contractual Life (Years)	Aggregate Intrinsic Value (000s)
Outstanding at October 1, 2012	1,450	$	29.74	6.1	$	22,663
Granted	0	$	—
Exercised	(38)	$	16.25		$	1,181
Forfeited	(16)	$	38.96
Outstanding at December 31, 2012	1,396	$	29.98	5.9	$	22,058
Exercisable at December 31, 2012	1,023	$	26.44	5.0	$	19,785

Schedule of Restricted Stock Activity

A summary of restricted stock activity for the three months endedDecember 31, 2012 is as follows:

	Number of Shares (000s)	Wtd. Avg. Fair Value
Unvested at October 1, 2012	701	$	38.54
Granted	323	$	46.46
Vested	(142)	$	34.77
Forfeited	(9)	$	39.62
Unvested at December 31, 2012	873	$	42.06

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Fair Value

3 Months Ended

Dec. 31, 2012

Fair Value Disclosures [Abstract]

Fair Value

FAIR VALUE

We have certain assets and liabilities that are required to be measured and disclosed at fair value in accordance with generally accepted accounting principles (“GAAP”). Fair value is defined as the exchange price that would be received for an asset or paid to transfer a liability (an exit price) in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants on the measurement date.

The established GAAP fair value hierarchy prioritizes inputs to valuation techniques used to measure fair value into three levels. Priority is given to unadjusted quoted prices in active markets for identical assets or liabilities (Level 1) and the lowest priority to unobservable inputs (Level 3). Assets and liabilities measured at fair value are classified based on the lowest level of input that is significant to the fair value measurement. Our assessment of the significance of a particular input to the fair value measurement requires judgment, which may affect the valuation of the fair value of assets and liabilities and their placement within the fair value hierarchy levels. The determination of the fair values, stated below, takes into account the market for our financial assets and liabilities, the associated credit risk and other considerations.

We have classified and disclosed fair value measurements using the following levels of the fair value hierarchy:

Level 1: Unadjusted quoted prices in active markets that are accessible at the measurement date for identical, unrestricted assets or liabilities.

Level 2: Quoted prices in markets that are not active, or inputs which are observable, either directly or indirectly, for substantially the full term of the asset or liability.

Level 3: Measurement based on prices or valuation models that require inputs that are both significant to the fair value measurement and less observable for objective sources (i.e., supported by little or no market activity).

Fair value of Certain Assets and Liabilities

The fair value of cash and cash equivalents, accounts receivable and accounts payable approximate fair value because of their short term maturities.

Fair Value of Financial Instruments

The fair value of financial instruments is determined by using quoted market prices when available. When quoted prices are not available, independent third party services may be used to determine the fair value with reference to observable inputs used.

The following table sets forth the estimated fair value of certain financial instruments at December 31, 2012 and September 30, 2012, which are measured and recorded at fair value on a recurring basis:

		December 31, 2012
		Fair Value Measurements
		Carrying Amount		Level 1		Level 2		Level 3		Estimated Fair  Value
Type of Contract	Balance Sheet Classification
Short term interest rate swaps	Accrued liabilities	$	1,751	$	—	$	1,751	$	—	$	1,751
Long term interest rate swaps	Other long-term liabilities	1,002		—		1,002		—		1,002
Total derivative contracts, net		$	2,753	$	—	$	2,753	$	—	$	2,753
		September 30, 2012
		Fair Value Measurements
		Carrying Amount		Level 1		Level 2		Level 3		Estimated Fair  Value
Type of Contract	Balance Sheet Classification
Short term interest rate swaps	Accrued liabilities	$	1,705	$	—	$	1,705	$	—	$	1,705
Long term interest rate swaps	Other long-term liabilities	1,414		—		1,414		—		1,414
Total derivative contracts, net		$	3,119	$	—	$	3,119	$	—	$	3,119

Interest rate swaps - The fair values of our interest rate swaps are based upon valuations calculated by an independent third party. The derivatives were valued according to the "Market approach" where possible, and the "Income approach" otherwise. A third party independently valued each instrument using forward price data supplied by dealers and the Chicago Mercantile Exchange (the exchange on which similar derivatives trade) indexed to one month USD LIBOR as of December 31, 2012, and broker quotes for credit default swaps or related credit instruments. It was determined that the contribution of the credit valuation adjustment to total fair value is less than 5.0% for all derivatives and is therefore not significant. Based on valuation inputs for fair value measurement and independent review performed by third party consultants, we have classified our derivative contracts as Level 2.

Long-term Debt – Our long-term debt consists of both our 6.5% Senior Notes due 2020 (the “Notes”) and our credit facility.

Credit Facility – The carrying amounts of our variable-rate debt approximates fair value because such debt bears short-term, market-based interest rates. We have classified this instrument as Level 2 as valuation inputs for purposes of determining our fair value disclosure are readily available published Eurodollar rates.

Notes – The carrying value of our Notes is $450 million while the fair value of those Notes is $496 million, based upon a valuation calculated by an independent third party. The third party conducted independent research concerning interest rates and credit risk and relied on market sources to assess the LIBOR swap curve data as well as information provided in the debt purchase agreement. We have classified this instrument as Level 2 as valuation inputs for fair value measurements are quoted market prices that can only be obtained from independent third party sources on December 31, 2012. The fair value amount has been calculated using these quoted prices. However, no assurance can be given that the fair value would be the amount realized in an active market exchange.

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Interest Rate Swaps

3 Months Ended

Dec. 31, 2012

Derivative Instruments and Hedging Activities Disclosure [Abstract]

Interest Rate Swaps

INTEREST RATE SWAPS

Our credit facility exposes us to short-term changes in market interest rates as our interest obligations on these instruments are periodically re-determined based on the prevailing Eurodollar rate. We enter into interest rate swaps to limit our exposure to fluctuations and volatility in interest rates. We do not engage in derivative transactions for speculative or trading purposes and we are not a party to leveraged derivatives.

At December 31, 2012, we had five$50 million notional interest rate swaps in effect. These interest rate swaps fix the interest rate on $250 million of borrowings under the credit facility at a weighted average interest rate of 3.4% through September 2014.

Fair Value of Derivatives

The following table presents the carrying amount of our cash flow hedge derivative contracts included in the Consolidated Balance Sheets as of December 31, 2012 and September 30, 2012 (in thousands):

		December 31,		September 30,
Type of Contract	Balance Sheet Classification	2012		2012
Short term interest rate swaps	Accrued liabilities	$	1,751	$	1,705
Long term interest rate swaps	Other long-term liabilities	1,002		1,414
Total derivative contracts, net		$	2,753	$	3,119

We record the interest rate derivative contracts at fair value on our consolidated balance sheets (See Note 8). Hedging effectiveness is evaluated each quarter end using the “Dollar Off-Set Method”. Each quarter, changes in the fair values will adjust the balance sheet asset or liability, with an offset to Other Comprehensive Income (“OCI”) for the effective portion of the hedge.

For the three months endedDecember 31, 2012, we recognized a gain of approximately $0.4 million in OCI as a result of realized losses associated with effective portion of the hedge and classified as interest expense, net of capitalized interest on our Consolidated Statement of Operations.

For interest rate swaps, we compare all material terms between the swap and the underlying debt obligation to evaluate effectiveness. Any change in fair value resulting from ineffectiveness is recognized immediately in earnings. No loss was recognized during the quarters ended December 31, 2012 and 2011 due to hedge ineffectiveness.

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Income Taxes

3 Months Ended

Dec. 31, 2012

Income Tax Disclosure [Abstract]

Income Taxes

INCOME TAXES

Our consolidated effective income tax rate for the three months endedDecember 31, 2012 was approximately 13%. We record estimated accrued interest and penalties related to uncertain tax positions as income tax expense. At December 31, 2012, we had approximately $8.3 million of reserves for uncertain tax positions, including estimated accrued interest and penalties of $2.6 million, which are included in Other Long Term Liabilities in the Consolidated Balance Sheet. None of our reserves for uncertain tax positions relate to timing differences. All $8.3 million of the net uncertain tax liabilities would affect the effective tax rate if recognized.

Our United States tax returns for fiscal year 2009 and subsequent years remain subject to examination by tax authorities. As we conduct business globally, we have various tax years that remain open to examination in certain international tax jurisdictions. Although we cannot predict the outcome of ongoing or future tax examinations, we do not anticipate that the ultimate resolution of these examinations will have a material impact on our consolidated financial position, results of operations or cash flows.

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Recently Issued Accounting Pronouncements

3 Months Ended

Dec. 31, 2012

New Accounting Pronouncements and Changes in Accounting Principles [Abstract]

Recently Issued Accounting Pronouncements

RECENTLY ISSUED ACCOUNTING PRONOUNCEMENTS

In December 2011, the FASB issued ASU 2011-11, "Balance Sheet (Topic 210): Disclosures about Offsetting Assets and Liabilities" for an entity to provide enhanced disclosures that will enable users of its financial statements to evaluate the effect or potential effect of netting arrangements on an entity's financial position. We adopted the accounting standards effective January 1, 2013, but we do not expect that our adoption will have a material effect on our financial statements.

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Income Taxes (Details) (USD $) In Millions, unless otherwise specified	3 Months Ended
	Dec. 31, 2012
Income Tax Disclosure [Abstract]
Effective income tax rate	13.00%
Reserves for uncertain tax positions	$ 8.3
Estimated accrued interest and penalties	$ 2.6

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Long-Term Debt (Tables)

3 Months Ended

Dec. 31, 2012

Debt Disclosure [Abstract]

Summary of Long-Term Debt

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

	December 31, 2012		September 30, 2012
Senior Notes, bearing fixed interest at 6.5% per annum	$	450,000	$	450,000
Credit Facility, bearing interest at approximately 3.0%(1) per annum at December 31, 2012 and 3.2%(1) per annum at September 30, 2012	620,000		380,000
(1) After the impact of our interest rate swaps.	$	1,070,000	$	830,000

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Share-Based Compensation (Summary of Stock Option Activity) (Details) (USD $) In Thousands, except Per Share data, unless otherwise specified	3 Months Ended	12 Months Ended
	Dec. 31, 2012	Sep. 30, 2012
Number of Options:
Outstanding at October 1, 2012	1,450
Granted	0
Exercised	(38)
Forfeited	(16)
Outstanding at December 31, 2012	1,396	1,450
Exercisable at December 31, 2012	1,023
Wtd. Avg. Exercise Price (in dollars per share):
Outstanding at October 1, 2012	$ 29.74
Granted	$ 0.00
Exercised	$ 16.25
Forfeited	$ 38.96
Outstanding at December 31, 2012	$ 29.98	$ 29.74
Exercisable at December 31, 2012	$ 26.44
Wtd. Avg. Remaining Contractual Life (Years), Outstanding at October 1, 2012	5 years 10 months 24 days	6 years 1 month 6 days
Wtd. Avg. Remaining Contractual Life (Years), Outstanding at December 31, 2012	5 years 10 months 24 days	6 years 1 month 6 days
Wtd. Avg. Remaining Contractual Life (Years), Exercisable at December 31, 2012	5 years
Aggregate Intrinsic Value, Outstanding at October 1, 2012	$ 22,663
Aggregate Intrinsic Value, Exercised	1,181
Aggregate Intrinsic Value, Outstanding at December 31, 2012	22,058	22,663
Aggregate Intrinsic Value, Exercisable at December 31, 2012	$ 19,785

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Condensed Consolidated Balance Sheets (Parenthetical) (USD $) In Thousands, except Share data, unless otherwise specified	Dec. 31, 2012	Sep. 30, 2012
Statement of Financial Position [Abstract]
Allowance for doubtful accounts	$ 1,871	$ 0
Preferred stock, par value	$ 0	$ 0
Preferred stock, shares authorized	1,000,000	1,000,000
Preferred stock, shares outstanding	0	0
Common stock, par value	$ 1	$ 1
Common stock, shares authorized	90,000,000	90,000,000
Common stock, shares issued	65,632,000	65,452,000
Common stock, shares outstanding	65,632,000	65,452,000

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Share-Based Compensation

3 Months Ended

Dec. 31, 2012

Disclosure of Compensation Related Costs, Share-based Payments [Abstract]

Share-Based Compensation

SHARE-BASED COMPENSATION

Share-based compensation cost is measured at the grant date, based on the calculated fair value of the award, and is recognized as an expense over the requisite service period, which is generally the vesting period of the equity award. As of December 31, 2012, unrecognized compensation cost, net of estimated forfeitures, related to stock options and restricted stock awards was approximately $5.6 million and $24.3 million, respectively, which we expect to recognize over a weighted average period of approximately 2.4 years.

Stock Options

Under our stock incentive plans, the exercise price of each stock option must be equal to or greater than the fair market value of one share of our common stock on the date of grant, with all outstanding options having a maximum term of 10 years. Options vest ratably over a period ranging from the end of the first to the fourth year from the date of grant for stock options. Each option is for the purchase of one share of our common stock.

A summary of stock option activity during the three months endedDecember 31, 2012 is as follows:

	Number of Options (000s)	Wtd. Avg. Exercise Price		Wtd. Avg. Remaining Contractual Life (Years)	Aggregate Intrinsic Value (000s)
Outstanding at October 1, 2012	1,450	$	29.74	6.1	$	22,663
Granted	0	$	—
Exercised	(38)	$	16.25		$	1,181
Forfeited	(16)	$	38.96
Outstanding at December 31, 2012	1,396	$	29.98	5.9	$	22,058
Exercisable at December 31, 2012	1,023	$	26.44	5.0	$	19,785

Restricted Stock

We have awarded restricted stock under the Atwood Oceanics, Inc. 2007 Long-Term Incentive Plan (as amended, the "2007 Plan") to certain employees and to our non-employee directors. All current awards of restricted stock to employees are subject to a vesting and restriction period ranging from three to four years, subject to early termination as provided in the 2007 Plan. In addition, certain awards of restricted stock to employees are subject to market-based performance conditions. The number of shares that vest based on market-based performance conditions will depend on the degree of achievement of specified corporate performance criteria which are strictly market-based. All awards of restricted stock to non-employee directors are subject to a vesting and restriction period of a minimum of 13 months, subject to early termination as provided in the 2007 Plan. We value restricted stock awards based on the fair market value of our common stock on the date of grant and also adjust fair market value for any awards subject to market-based performance conditions, where applicable.

A summary of restricted stock activity for the three months endedDecember 31, 2012 is as follows:

	Number of Shares (000s)	Wtd. Avg. Fair Value
Unvested at October 1, 2012	701	$	38.54
Granted	323	$	46.46
Vested	(142)	$	34.77
Forfeited	(9)	$	39.62
Unvested at December 31, 2012	873	$	42.06

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Share-Based Compensation (Summary of Restricted Stock Activity) (Details) (Restricted Stock [Member], USD $) In Thousands, except Per Share data, unless otherwise specified	3 Months Ended
	Dec. 31, 2012
Restricted Stock [Member]
Number of Shares:
Unvested at October 1, 2012	701
Granted	323
Vested	(142)
Forfeited	(9)
Unvested at December 31, 2012	873
Wtd. Avg. Fair Value (in dollars per share):
Unvested at October 1, 2012	$ 38.54
Granted	$ 46.46
Vested	$ 34.77
Forfeited	$ 39.62
Unvested at December 31, 2012	$ 42.06

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Property and Equipment (Tables)

3 Months Ended

Dec. 31, 2012

Property, Plant and Equipment [Abstract]

A Summary of Property and Equipment by Classification

A summary of property and equipment by classification is as follows (in thousands):

(In thousands)	December 31, 2012			September 30, 2012
Drilling vessels and equipment	$	2,727,429		$	2,523,895
Construction work in progress	575,820			438,081
Drill pipe	20,658			20,576
Office equipment and other	22,099			19,610
Cost	3,346,006			3,002,162
Less: Accumulated depreciation	(491,491		)	(464,822		)
Drilling and other property and equipment, net	$	2,854,515		$	2,537,340