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, 2013

¨ 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.)
15011 Katy Freeway, Suite 800 Houston, Texas	77094
(Address of principal executive offices)	(Zip Code)

281-749-7800

(Registrant’s telephone number, including area code)

15835 Park Ten Place Drive

Houston, Texas 77084

(Registrant’s former address)

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 ofJanuary 31, 2014: 64,209,000 shares of common stock, $1.00 par value

ATWOOD OCEANICS, INC.

FORM 10-Q

For the Quarter Ended December 31, 2013

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, 2013 and 2012	3
b)	Unaudited Condensed Consolidated Statements of Comprehensive Income for the Three Months Ended December 31, 2013 and 2012	4
c)	Unaudited Condensed Consolidated Balance Sheets as of December 31, 2013 and September 30, 2013	5
d)	Unaudited Condensed Consolidated Statement of Changes in Shareholders' Equity for the Three Months Ended December 31, 2013	6
e)	Unaudited Condensed Consolidated Statements of Cash Flows for the Three Months Ended December 31, 2013 and 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	16
Item 3.	Quantitative and Qualitative Disclosures about Market Risk	26
Item 4.	Controls and Procedures	27
Part II. Other Information
Item 1.	Legal Proceedings	28
Item 1A.	Risk Factors	28
Item 6.	Exhibits	28
Signatures		29

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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)	2013			2012
REVENUES:
Contract drilling	$	273,557		$	234,760
Revenues related to reimbursable expenses	11,149			10,333
Total revenues	$	284,706		$	245,093
COSTS AND EXPENSES:
Contract drilling	123,162			105,938
Reimbursable expenses	8,414			5,978
Depreciation	32,544			27,578
General and administrative	19,822			17,221
Other, net	(1,637		)	7
	182,305			156,722
OPERATING INCOME	$	102,401		$	88,371
OTHER INCOME (EXPENSE):
Interest expense, net of capitalized interest	(8,211		)	(4,408		)
Interest income	70			124
	(8,141		)	(4,284		)
INCOME BEFORE INCOME TAXES	94,260			84,087
PROVISION FOR INCOME TAXES	10,863			11,256
NET INCOME	$	83,397		$	72,831
EARNINGS PER COMMON SHARE (NOTE 2):
Basic	$	1.30		$	1.11
Diluted	$	1.28		$	1.10
WEIGHTED AVERAGE COMMON SHARES OUTSTANDING (NOTE 2):
Basic	64,112			65,528
Diluted	65,026			66,092

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)	2013			2012
Net income	$	83,397		$	72,831
Other comprehensive gains (losses), net of tax:
Derivative financial instruments:
Unrealized holding gain (loss)	(743		)	(66		)
Loss reclassified to net income	381			438
Total other comprehensive gain (loss)	(362		)	372
Comprehensive income	$	83,035		$	73,203

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, 2013			September 30, 2013
ASSETS
Cash and cash equivalents	$	132,326		$	88,770
Accounts receivable	172,821			199,689
Income tax receivable	5,531			4,672
Inventories of materials and supplies	110,561			121,833
Prepaid expenses and deferred costs	30,721			38,796
Total current assets	451,960			453,760
Property and equipment, net	3,583,267			3,164,724
Other receivables	11,831			11,831
Deferred costs and other assets	31,661			26,951
Total assets	$	4,078,719		$	3,657,266
LIABILITIES AND SHAREHOLDERS' EQUITY
Accounts payable	$	71,179		$	95,827
Accrued liabilities	17,578			17,653
Notes payable	2,025			8,071
Interest payable	19,404			7,945
Income tax payable	12,787			16,554
Deferred credits	21,714			10,822
Total current liabilities	144,687			156,872
Long-term debt	1,602,961			1,263,232
Deferred income taxes	681			485
Deferred credits	5,356			1,176
Other	30,451			28,130
Total long-term liabilities	1,639,449			1,293,023
Commitments and contingencies (Note 9)
Preferred stock, no par value, 1,000 shares authorized, none outstanding	—			—
Common stock, $1.00 par value, 90,000 shares authorized with 64,208 and 64,057 issued and outstanding at December 31, 2013 and September 30, 2013, respectively	64,208			64,057
Paid-in capital	187,416			183,390
Retained earnings	2,044,802			1,961,405
Accumulated other comprehensive loss	(1,843		)	(1,481		)
Total shareholders' equity	2,294,583			2,207,371
Total liabilities and shareholders' equity	$	4,078,719		$	3,657,266

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, 2013	64,057	$	64,057	$	183,390		$	1,961,405	$	(1,481	)	$	2,207,371
Net income	—	—		—			83,397		—			83,397
Other comprehensive loss	—	—		—			—		(362		)	(362		)
Restricted stock awards	127	127		(127		)	—		—			—
Exercise of employee stock options	24	24		799			—		—			823
Stock option and restricted stock award compensation expense	—	—		$	3,354		—		$	—		3,354
December 31, 2013	64,208	$	64,208	$	187,416		$	2,044,802	$	(1,843	)	$	2,294,583

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)	2013			2012
Cash flows from operating activities:
Net income	$	83,397		$	72,831
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation	32,544			27,578
Amortization of debt issuance costs and bond premium, net	1,176			1,036
Amortization of deferred items	(4		)	(32		)
Provision for doubtful accounts	—			1,871
Provision for inventory obsolescence	430			181
Deferred income tax expense/(benefit)	196			(220		)
Share-based compensation expense	3,354			3,048
Other, net	392			7
Changes in assets and liabilities:
Accounts receivable	26,868			22,388
Income tax receivable	(859		)	141
Inventory	10,842			(257		)
Prepaid expenses	6,458			5,470
Deferred costs and other assets	(8,167		)	(4,039		)
Accounts payable	(13,556		)	(27,978		)
Accrued liabilities	11,195			4,937
Income tax payable	(3,767		)	3,603
Deferred credits and other liabilities	9,695			6,354
Net cash provided by operating activities	160,194			116,919
Cash flows from investing activities:
Capital expenditures	(462,620		)	(321,995		)
Installment proceeds from pending sale of asset	11,200			—
Proceeds from sale of assets	77			41
Net cash used in investing activities	(451,343		)	(321,954		)
Cash flows from financing activities:
Proceeds from bank credit facilities	340,000			240,000
Principal payments on notes payable	(6,046		)	(5,148		)
Proceeds from exercise of stock options	823			653
Debt issuance costs paid	(72		)	—
Net cash provided by financing activities	334,705			235,505
Net increase in cash and cash equivalents	$	43,556		$	30,470
Cash and cash equivalents, at beginning of period	$	88,770		$	77,871
Cash and cash equivalents, at end of period	$	132,326		$	108,341

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, 2013, and for the three months endedDecember 31, 2013 and 2012, 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, 2013. 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, 2013. 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, 2013 and 2012 is as follows:

	Three Months Ended
(In thousands, except per share amounts)	Net Income		Shares	Per Share Amount
December 31, 2013
Basic earnings per share	$	83,397	64,112	$	1.30
Effect of dilutive securities:
Stock options	—		307	$	(0.01	)
Restricted stock	—		607	$	(0.01	)
Diluted earnings per share	$	83,397	65,026	$	1.28
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

For the three months endedDecember 31, 2013, there were no anti-dilutive options. The calculation of diluted earnings per share for the three months endedDecember 31, 2012 excludes 296,000 anti-dilutive options.

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, 2013, unrecognized compensation cost, net of estimated forfeitures, related to stock options and restricted stock awards was approximately $2.8 million and $27.4 million, respectively, which we expect to recognize over a weighted average period of approximately 2.3 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, 2013 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, 2013	989	$	33.21	5.9	$	21,592
Granted	—	$	—
Exercised	(24)	$	34.63		$	476
Forfeited	(17)	$	40.26
Outstanding at December 31, 2013	948	$	33.04	5.6	$	19,178
Exercisable at December 31, 2013	761	$	31.29	5.1	$	15,355

Restricted Stock

We have awarded restricted stock 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 acceleration upon certain events as set forth in the terms of the grant. 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 acceleration upon certain events as set forth in the terms of the grant. We value restricted stock awards based on the fair market value of our common stock on the date of grant and also adjust to 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, 2013 is as follows:

	Number of Shares (000s)	Wtd. Avg. Fair Value
Unvested at October 1, 2013	849	$	42.42
Granted	297	$	54.62
Vested	(132)	$	37.29
Forfeited	(34)	$	41.17
Unvested at December 31, 2013	980	$	46.85

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NOTE 4—PROPERTY AND EQUIPMENT

A summary of property and equipment by classification is as follows:

(In thousands)	December 31, 2013			September 30, 2013
Drilling vessels and equipment	$	3,632,897		$	2,979,503
Construction work in progress	501,486			715,320
Drill pipe	32,804			26,743
Office equipment and other	29,672			24,439
Cost	4,196,859			3,746,005
Less: Accumulated depreciation	(613,592		)	(581,281		)
Drilling and other property and equipment, net	$	3,583,267		$	3,164,724

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 ended December 31, 2013 and 2012 was approximately $9.8 million and $9.0 million, respectively.

Recently Completed Construction Projects

Our first ultra-deepwater drillship, Atwood Advantage, was delivered from the Daewoo Shipbuilding and Marine Engineering Co., Ltd. yard in South Korea in December 2013.

Ongoing Construction Projects

As of December 31, 2013, we had expended approximately $500 million towards our three ultra-deepwater drillships under construction. Total remaining firm commitments for these three drilling units under construction were approximately $1.2 billion at December 31, 2013.

NOTE 5—LONG-TERM DEBT

A summary of long-term debt is as follows:

(In thousands)	December 31, 2013		September 30, 2013
6.5% Senior Notes due 2020, bearing fixed interest at 6.5% per annum, net of unamortized premium	$	657,961	$	658,232
Revolving Credit Facility, bearing interest at approximately 2.8%(1) per annum at December 31, 2013 and 3.0%(1) per annum at September 30, 2013	945,000		605,000
(1) After the impact of our interest rate swaps.	$	1,602,961	$	1,263,232

Revolving Credit Facility

As of December 31, 2013, we had $945 million of outstanding borrowings under our five-year $1.1 billion 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, is the borrower under the credit facility, and we and certain of our other subsidiaries are guarantors under the facility. Except as described below, borrowings under the credit facility bear interest at the Eurodollar rate plus a margin ranging from 2.00% to 2.50% based on our corporate credit ratings. Currently, certain borrowings effectively bear interest at a fixed rate due to our interest rate swaps. See Note 6. The average interest rate for borrowings under the credit facility was approximately 2.8% per annum at December 31, 2013, after considering the impact of our interest rate swaps. Subsequent to December 31, 2013, we made $90 million in prepayments and incurred no additional borrowings under the credit facility.

As of December 31, 2013, we were in compliance with all financial covenants under the credit facility.

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Subject to the satisfaction of certain conditions precedent and the agreement by the lenders, the credit facility accordion may be exercised to increase commitments by up to an additional $200 million for a total commitment of up to $1.3 billion.

NOTE 6—DERIVATIVE FINANCIAL INSTRUMENTS

Interest Rate Swap Contracts

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.

At December 31, 2013, we had interest rate swaps that effectively 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. In December 2013, we entered into additional interest rate swaps which extend the Company's current hedging program and effectively fix the interest rate on $250 million of borrowings at a weighted average interest rate of 3.1% from September 2014 to March 2016. As of December 31, 2013, these interest rate swaps are designated as cash flow hedging instruments.

Foreign Currency Forward Exchange Contracts

We conduct business in numerous foreign countries. Our functional currency is the U.S. dollar and thus our international operations expose us to foreign currency risk associated with cash flows from transactions denominated in currencies other than our functional currency. We enter into foreign currency forward exchange contracts to limit our exposure to fluctuations and volatility in the euro/U.S. dollar exchange rate.

In December 2013, we executed foreign currency forward exchange contracts for a portion of our anticipated euro receipts associated with revenues earned on a drilling contract from December 2013 through November 2015. These forward contracts effectively fix the euro/U.S. dollar exchange rate at1.365905on an aggregate notional amount of 72 million euro and settle monthly from March 2014 through February 2016. As of December 31, 2013, these forward contracts are designated as cash flow hedging instruments.

We do not engage in derivative transactions for speculative or trading purposes and we are not a party to leveraged derivatives.

Condensed Consolidated Balance Sheets

We record our derivative contracts at fair value on our consolidated balance sheets. See Note 8. The following table presents the fair value of our derivative contracts designated as cash flow hedging instruments included in our Condensed Consolidated Balance Sheets as of December 31, 2013 and September 30, 2013:

	Asset Derivatives					Liability Derivatives
(In thousands)		December 31, 2013		September 30, 2013			December 31, 2013		September 30, 2013
Derivative contracts designated as cash flow hedging instruments	Balance Sheet Location	Fair Value		Fair Value		Balance Sheet Location	Fair Value		Fair Value
Short-term interest rate swaps	Prepaid expenses and deferred costs	$	—	$	—	Accrued liabilities	$	1,361	$	1,586
Long-term interest rate swaps	Deferred costs and other assets	255		—		Other long-term liabilities	—		—
Short-term foreign exchange forward currency contracts	Prepaid expenses and deferred costs	—		—		Accrued liabilities	309		—
Long-term foreign exchange forward currency contracts	Deferred costs and other assets	—		—		Other long-term liabilities	455		—
Total derivatives designated as cash flow hedging instruments		$	255	$	—		$	2,125	$	1,586

We do not have any derivative contracts not designated as hedging instruments.

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Condensed Consolidated Statements of Operation and Statements of Comprehensive Income

The following table presents the gains and losses on our derivative contracts designated as cash flow hedging instruments on our Condensed Consolidated Statements of Operations and Condensed Statements of Comprehensive Income for three months endedDecember 31, 2013 and the three months endedDecember 31, 2012:

Derivative contracts designated as cash flow hedging instruments	Amount of Gain or (Loss) Recognized in AOCI on Derivative (Effective Portion)						Location of Gain or (Loss) Reclassified from AOCI in Income (Effective Portion)	Amount of Gain or (Loss) Reclassified from AOCI into Income (Effective Portion)
(In thousands)	Three Months Ended December 31,							Three Months Ended December 31,
	2013			2012				2013			2012
Interest rate swaps	$	21		$	(66	)	Interest expense, net of capitalized interest	$	(354	)	$	(438	)
Foreign exchange forward currency contracts	(764		)	—			Contract drilling revenue	(27		)	—
Total	$	(743	)	$	(66	)		$	(381	)	$	(438	)

Each quarter, changes in the fair values of our derivative instruments designated as cash flow hedging instruments will adjust the balance sheet asset or liability, with an offset to Accumulated Other Comprehensive Income (“AOCI”) for the effective portion of the hedge. The effective portion of the cash flow hedge will remain in AOCI until it is reclassified into earnings in the period or periods during which the hedged transaction affects earnings or when it is probable that the hedged forecasted transaction will not occur by the end of the originally specified time period.

Any change in fair value resulting from ineffectiveness is recognized immediately in earnings. For the quarters ended December 31, 2013 and December 31, 2012, no loss was recognized on our Consolidated Statement of Operations due to hedge ineffectiveness. Additionally, there were no gains or losses recognized in income as a result of excluding amounts from the assessment of hedge effectiveness or as a result of reclassifications to earnings following the discontinuance of any cash flow hedges.

As of December 31, 2013, the estimated amount of unrealized losses associated with our interest rate derivative contracts that will be reclassified to earnings during the next twelve months totals $1.4 million. As of December 31, 2013, the estimated amount of unrealized losses associated with our foreign exchange forward currency contracts that will be reclassified to earnings during the next twelve months is approximately $0.3 million.

Derivative Contract Agreements

None of our derivative contracts contain credit-risk related contingent features, and no amounts of cash collateral were posted by us related to net liability positions as of December 31, 2013. Our derivative contracts are secured by the collateral package of our revolving credit facility.

We report the fair value of our derivative contracts on our Consolidated Balance Sheets on a gross basis by type of contract as either short-term or long-term. We determine the short-term and long-term classification based on the timing of expected future cash flows. The following table represents our gross and net derivative assets and liabilities:

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(In thousands)	Gross Amount Presented on the Consolidated Balance Sheets			Netting Adjustments (a)			Net Amount
December 31, 2013
Derivative assets	$	255		$	(255	)	$	—
Derivative liabilities	(2,125		)	255			(1,870		)
September 30, 2013
Derivative assets	$	—		$	—		$	—
Derivative liabilities	(1,586		)	—			(1,586		)

(a) We have agreements in place with some of our financial trading counterparties that allow for the financial right of offset for derivative assets and derivative liabilities under the agreements.

NOTE 7—INCOME TAXES

Our consolidated effective income tax rate for the three months endedDecember 31, 2013 was approximately 12%, compared to 13% for the three months endedDecember 31, 2012. The effective tax rate for the three months endedDecember 31, 2013 was lower than the rate for the three months endedDecember 31, 2012 primarily due to a change in the geographical mix of our operations as well as the beneficial impact of discrete tax benefits recognized during the three months endedDecember 31, 2013. Our effective tax rate was lower than the U.S. statutory rate of 35% as a result of working in certain lower tax jurisdictions outside the United States. We record estimated accrued interest and penalties related to uncertain tax positions as income tax expense. At December 31, 2013, we had approximately $8.6 million of reserves for uncertain tax positions, including estimated accrued interest and penalties of $2.8 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 $8.6 million of the net uncertain tax liabilities would affect the effective tax rate if realized.

Our United States tax returns for fiscal year 2010 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, including tax returns in Australia for fiscal years 2008 through 2013 and tax returns in Equatorial Guinea for calendar years 2010 through 2013. 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:

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.

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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 carrying value of cash and cash equivalents, accounts receivable, accounts payable and short-term notes 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, 2013 and September 30, 2013, which are measured and recorded at fair value on a recurring basis:

		December 31, 2013
		Fair Value Measurements
(In thousands)	(Asset)/Liability	Carrying Amount			Level 1		Level 2			Level 3		Estimated Fair  Value
Type of Contract	Balance Sheet Classification
Short-term interest rate swaps	Accrued liabilities	$	1,361		$	—	$	1,361		$	—	$	1,361
Long-term interest rate swaps	Deferred costs and other assets	$	(255	)	—		$	(255	)	—		$	(255	)
Short-term foreign exchange forward currency contracts	Accrued liabilities	$	309				$	309				$	309
Long-term foreign exchange forward currency contracts	Other long term liabilities	$	455				$	455				$	455
Total derivative contracts, net		$	1,870		$	—	$	1,870		$	—	$	1,870
		September 30, 2013
		Fair Value Measurements
(In thousands)	(Asset)/Liability	Carrying Amount			Level 1		Level 2			Level 3		Estimated Fair  Value
Type of Contract	Balance Sheet Classification
Short-term interest rate swaps	Accrued liabilities	$	1,586		$	—	$	1,586		$	—	$	1,586
Total derivative contracts, net		$	1,586		$	—	$	1,586		$	—	$	1,586

Derivative financial instruments - Our derivative financial instruments consist of our interest rate swap contracts and our foreign currency forward exchange contracts.

The fair values of our interest rate swaps and our foreign currency forward exchange contracts 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 obtained from reputable data providers (e.g., Bloomberg and Reuters) and reviewed market activity and similarity of pricing terms to determine appropriate reliability level assertions for each instrument. It was determined that the contribution of the credit valuation adjustment to total fair value is less than 1% 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 as they were valued based upon observable inputs from dealer markets.

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

Revolving 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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Senior Notes – The carrying value of our Senior Notes, net of unamortized premium, is $658.0 million ($650 million principal amount) while the fair value of those Senior Notes is $698.8 million. The fair value is determined by a market approach using quoted period-end bond prices. We have classified this instrument as Level 2 as valuation inputs for fair value measurements are quoted market prices as of December 31, 2013 that can only be obtained from independent third party sources. 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—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 of its contention 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 services 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. The Indian Service Tax Authority has appealed this ruling to the Indian Supreme Court.

As of December 31, 2013, 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.

NOTE 10—SUBSEQUENT EVENTS

On January 17, 2014, we completed the sale of our standard jackup drilling unit, the Vicksburg, for a sales price of $55.4 million pursuant to a definitive sales agreement entered into on October 3, 2013. As of December 31, 2013, the carrying value of the rig and its related inventory was approximately $21.3 million.

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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, 2013 and for the three months endedDecember 31, 2013 and 2012 included elsewhere herein, and with our Annual Report on Form 10-K for the fiscal year ended September 30, 2013. 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, 2013 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, 2013, and our results of operations for the three months endedDecember 31, 2013 and 2012. Financial and operating results for the three months ended December 31, 2013, include:

• Operating revenues totaling $285 million on 1,009 operating days as compared to operating revenues of $245 million on 833 operating days for the three months ended December 31, 2012;

• Net income of $83 million as compared to net income of $73 million for the three months ended December 31, 2012;

• Net cash provided by operating activities of $160 million as compared to net cash provided by operating activities of $117 million for the three months ended December 31, 2012;

• Capital expenditures of $463 million as compared to capital expenditures of $322 million for the three months ended December 31, 2012; and

• Increase in debt outstanding of $340 million for the three months ended December 31, 2013 as well as increase in existing cash on hand of $44 million for the three months ended December 31, 2013.

MARKET OUTLOOK

Industry Conditions

The level of activity in the offshore drilling industry, which affects the drilling sector’s profitability, is highly correlated to the price of oil and, to a lesser extent, natural gas. The price of oil is determined by the balance between global and/or regional supply and demand. The state of the global economy and associated degree of economic growth are important factors in determining the level of demand for commodities, including oil and natural gas. The global economy, especially in developed countries, appears to be improving although the pace of economic growth remains uncertain for most emerging countries. The U.S. and Europe lead the improvement in economic growth for developed countries followed by stabilization and improved expectations for Japan.

The current geopolitical environment, particularly in North Africa and the Middle East, continues to negatively impact the global oil supply as regional conflicts have often targeted oil infrastructure and resulted in supply disruptions. Reduced oil production by these oil-rich countries has led to strengthening international crude oil prices. Oil prices, which historically have been volatile, remain relatively strong compared to historical price levels due to this reduction in production, with the price of Brent having been sustained at over $100 per barrel. However, the continued strength in oil prices at or above this level may be required in order to sustain the current level of activity for offshore drilling services.

Several recent industry reports indicate slower year over year growth for 2014 capital expenditure budgets of exploration and production companies compared to prior years. A slowdown in spending by our customers, coupled with the ongoing growth of the global drilling rig fleet, may disrupt the supply and demand balance and result in lower fleet utilization and potentially lower day rates. Although we have not seen a material reduction in the number of marketed rigs under contract to date, the pace of contracting has slowed and contract lead times have shortened over the past few quarters. For example, although the ultra-deepwater market remains fully contracted, 12 newbuild rigs currently under construction and scheduled for delivery in 2014 were not under contract as of January 31, 2014. Additionally, the deepwater floater market has recently seen a decrease in the percentage of marketed rigs under contract which may lead to lower day rates for this market in the future. We continue to see variability in day rates primarily based on rig capabilities and age, followed by rig location and contract term.

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 have lengthened and remain

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challenging, thus leading to delayed newbuild rig deliveries. For example, ultra-deepwater rigs experienced delivery delays of approximately 90 days based on 2013 performance results at three major floater shipyards in South Korea.

In contrast to the floater markets, most jackup regions are experiencing well balanced supply and demand with the percentage of marketed high specification jackup rigs under contract at approximately 95%. In an environment of modestly increasing day rates, the jackup market absorbed 55 newbuild rigs in 2012 and 2013. Globally, the strength in jackup rigs under contract and day rates is being driven by operator demand for newer, more capable rigs to replace the existing old and less capable fleet.

Ultra-deepwater and Deepwater Rig Markets

Industry-wide, the percentage of marketed ultra-deepwater rigs under contract remains at approximately 100%, while the percentage of marketed deepwater rigs under contract has reduced slightly to 93%. As of January 22, 2014, there were 87 ultra-deepwater drillships and semisubmersibles under construction for delivery through May 2020. Fifty-five of these are contracted, including 29 under long-term contracts with Petrobras that are primarily being constructed in shipyards located in Brazil. The number of new ultra-deepwater rig deliveries peaks in 2014 at 29, and declines to 23 and 15 units in 2015 and 2016, respectively. Of the newbuild rigs to be added between 2014 and 2016, 35 are already contracted, with 17, if delivered on time, available in 2014. With 88% of ultra-deepwater rigs operating in deepwater and mid-water water depths, demand for deepwater rigs and older, less capable ultra-deepwater rigs may be negatively impacted by the increased supply of newer ultra-deepwater rigs. This may result in the older, less capable rigs having to price more aggressively to avoid displacement by the newer, more capable rigs.

Our Ultra-deepwater Rigs and Deepwater Rigs

The Atwood Advantage, a dynamically positioned, ultra-deepwater drillship, was delivered from the shipyard in December 2013 and began mobilizing to the U.S. Gulf of Mexico under its three-year contract in the first quarter of fiscal year 2014. The rig is contracted through March 2017.

The Atwood Condor, an ultra-deepwater, dynamically-positioned semisubmersible, is operating in the U.S. Gulf of Mexico and is contracted through November 2016. The Atwood Osprey, an ultra-deepwater semisubmersible,is operating offshore Australia and is contracted through May 2017.

The Atwood Falcon and Atwood Eagle, both deepwater semisubmersibles, are operating offshore Australia and are contracted through January 2015 and June 2016, respectively. The Atwood Hunter, a deepwater semisubmersible, is currently undergoing a 110 day maintenance and upgrade project in Cameroon that is expected to be completed in April 2014. Once complete, the rig is scheduled to mobilize to Equatorial Guinea for a contract through August 2014.

The Atwood Achiever, Atwood Admiral and Atwood Archer 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 Achiever,Atwood Admiral and Atwood Archer are scheduled to be delivered in June 2014, March 2015 and December 2015, respectively, at a total cost, including project management, drilling and handling tools and spares, of approximately $635 million each.

Upon delivery from the shipyard, the Atwood Achiever will mobilize to Morocco to commence a three-year drilling program. Although we do not presently have drilling contracts for the Atwood Admiral or the Atwood Archer, we expect that the long-term demand for ultra-deepwater drilling services in established and emerging basins will provide us with opportunities to contract these two rigs prior to their respective delivery dates.

We have an option to build an additional ultra-deepwater drillship with DSME that expires March 31, 2014. At this time, we have not made any determination 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, newbuild drillship construction prices and our ability to incur debt financing to finance a portion of the construction contract.

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Jackup Rig Market

Bifurcation in day rates and utilization between high specification jackups and standard jackups continues to characterize contracting activity in the jackup market. We expect this bifurcation trend to become more pronounced in the future. The percentage of marketed high specification jackup rigs (i.e. rigs equal to or greater than 350-foot water depth capability) under contract is approximately 96% as compared to 94% for the remainder of the global jackup fleet. Despite the expected increase in global jackup supply due to the continued delivery of high specification newbuild rigs through the end of 2017, we expect demand for high specification jackup rigs to remain elevated as operators continue to prefer contracting newer, more capable rigs for their drilling programs.

As a result of newbuild jackup construction programs initiated in 2005 and continuing through 2014, the jackup supply continues to increase. As of January 22, 2014, there were 133 newbuild jackup rigs under construction. Thirty-nine jack-ups are scheduled for delivery in 2014, of which 11 are contracted and 13 are not considered high specification. The remaining 94 rigs are scheduled for delivery in 2015 through 2017. This increase in the marketed supply of high specification jackups may exceed customer demand leading to lower day rates for jackup rigs in the future.

Our High Specification Jackup Rigs

The Atwood Mako and the Atwood Orca are operating offshore Thailand and are contracted through September 2014 and May 2015, respectively. The Atwood Manta, which is identical to the Atwood Mako and the Atwood Orca, is operating offshore Malaysia and is contracted through December 2015. The Atwood Aurora is operating offshore West Africa and is contracted through July 2015. The Atwood Beacon is operating in the Mediterranean Sea and is contracted into January 2016. On January 17, 2014, we completed the sale of our standard jackup drilling unit, the Vicksburg, for a sales price of $55.4 million pursuant to a definitive sales agreement entered into on October 3, 2013.

Idled Rigs

The Atwood Southern Cross and Seahawk were idle as of December 31, 2013. We anticipate that the Atwood Southern Cross will not return to service during fiscal year 2014 due to the lack of sufficient continuous demand, and thus, we are not actively marketing the rig at this time. The agreement to sell the Seahawk was terminated in December 2013 based on the buyer's failure to perform under the agreement. The Seahawk is also not being actively marketed at this time.

Contract Backlog

We maintain a backlog of commitments for contract drilling revenues. Our contract backlog at December 31, 2013 was approximately $3.6 billion, representing a 44% increase compared to our contract backlog of $2.5 billion at December 31, 2012. 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 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 a lack of predictability of various factors, including newbuild rig delivery dates, unscheduled repairs, maintenance requirements, weather delays and other factors. Such factors may result in lower applicable day rates than the full contractual day rate and/or delays in receiving the full contractual operating 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 Item 1A. of our Annual Report on Form 10-K for the fiscal year ended September 30, 2013.

The following table sets forth, as of December 31, 2013, 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:

Contract Drilling Revenue Backlog	Remaining Fiscal 2014		Fiscal 2015		Fiscal 2016		Fiscal 2017		Fiscal 2018		Total
(In millions)
Ultra-deepwater	$	439	$	819	$	809	$	458	$	22	$	2,547
Deepwater	265		206		122		—		—		593
Jackups	222		195		29		—		—		446
Total	$	926	$	1,220	$	960	$	458	$	22	$	3,586

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Percent of available operating days committed	Remaining Fiscal 2014		Fiscal 2015		Fiscal 2016		Fiscal 2017		Fiscal 2018
Ultra-deepwater	100	%	87	%	70	%	38	%	2	%
Deepwater	87	%	46	%	24	%	—	%	—	%
Jackups	98	%	63	%	9	%	—	%	—	%
Total	96	%	68	%	38	%	16	%	1	%

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RESULTS OF OPERATIONS

Revenues— Revenues for the three months endedDecember 31, 2013 increased approximately $39.6 million, or 16%, compared to the three months endedDecember 31, 2012. A comparative analysis of revenues by rig category is as follows:

	REVENUES
	Three Months Ended December 31,
(In millions)	2013		2012		Variance
Ultra-Deepwater	$	87.2	$	82.8	$	4.4
Deepwater	107.6		100.0		7.6
Jackups	78.8		52.0		26.8
Reimbursable	11.1		10.3		0.8
	$	284.7	$	245.1	$	39.6

Our ultra-deepwater fleet realized operating revenues of $87.2 million on 203 operating days for the three months ended December 31, 2013 as compared to operating revenues of $82.8 million on 184 operating days for the three months ended December 31, 2012. The increase in operating days is primarily attributable to the Atwood Advantage, the first of our four "A-Class" ultra-deepwater drillships, which was delivered and commenced mobilization to the U.S. Gulf of Mexico in December 2013 under its initial drilling contract. The average revenue per operating day for our ultra-deepwater fleet decreased to approximately $430,000 for the three months ended December 31, 2013 as compared to approximately $450,000 for the three months ended December 31, 2012 primarily due to downtime incurred by the Atwood Condor for blowout preventer repairs and maintenance in the first quarter of fiscal year 2014.

Our deepwater fleet realized operating revenues of $107.6 million on 254 operating days for the three months ended December 31, 2013 as compared to operating revenues of $100.0 million on 258 operating days for the three months ended December 31, 2012. This increase in revenues for our deepwater fleet is primarily due to higher average revenue per operating day realized by our deepwater rigs of approximately $420,000 for the three months ended December 31, 2013 as compared to approximately $390,000 for the three months ended December 31, 2012. The increase in average revenue per operating day is driven by the Atwood Hunter and the Atwood Eagle working on higher day rate contracts during the first quarter of fiscal year 2014 as compared to the first quarter of fiscal year 2013.

Our jackup fleet realized operating revenues of $78.8 million on 552 operating days for the three months ended December 31, 2013 as compared to $52.0 million on 391 operating days for the three months ended December 31, 2012. Overall, the jackup fleet realized higher average revenue per operating day of approximately $140,000 for the first quarter of fiscal year 2014 as compared to approximately $130,000 for the first quarter of fiscal year 2013. The increase in operating days is due to a full quarter of operations for the newly constructed, high specification jackups, Atwood Manta and Atwood Orca, which were delivered from the shipyard in December 2012 and May 2013, respectively.

Reimbursable revenues are primarily driven by our clients and contracts and are dependent on the timing of the clients' requests and work performed. Changes in the amount of these reimbursables generally do not have a material effect on our financial position, results of operations or cash flows.

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Drilling Costs—Drilling costs for the three months endedDecember 31, 2013, increased approximately $19.7 million, or 18%, compared to the three months endedDecember 31, 2012. An analysis of contract drilling costs by rig category is as follows:

	DRILLING COSTS
	Three Months Ended December 31,
(In millions)	2013		2012		Variance
Ultra-Deepwater	$	35.2	$	29.6	$	5.6
Deepwater	48.8		45.7		3.1
Jackups	36.6		28.5		8.1
Reimbursable	8.4		6.0		2.4
Other	2.6		2.1		0.5
	$	131.6	$	111.9	$	19.7

Ultra-deepwater drilling costs increased as a result of the addition of the Atwood Advantage, which resulted in higher average per calendar day drilling costs of our ultra-deepwater fleet of approximately $170,000 for the three months ended December 31, 2013, as compared to approximately $160,000 for the three months ended December 31, 2012.

Deepwater drilling costs increased for the three months ended December 31, 2013, as compared to the three months ended December 31, 2012. Average per calendar day drilling costs for our deepwater rigs increased from approximately $170,000 in the first quarter of fiscal year 2013 to approximately $180,000 in the first fiscal quarter of 2014 mainly due to the Atwood Falcon undergoing regulatory inspections and planned maintenance in December 2013.

Drilling costs for our jackup fleet increased for the three months ended December 31, 2013, as compared to the three months ended December 31, 2012, as a result of a full quarter of operations for the newly constructed Atwood Manta and Atwood Orca. Average per calendar day drilling costs remained relatively stable at approximately $70,000 for both the first quarter of fiscal year 2014 and the first quarter of fiscal year 2013.

Reimbursable costs are primarily driven by our clients and contracts and are dependent on the timing of the clients' requests and work performed. Changes in the amount of these reimbursables generally do not have a material effect on our financial position, results of operations or cash flows.

Depreciation—Depreciation expense for the three months endedDecember 31, 2013 increased approximately $4.9 million, or 18%, compared to the three months endedDecember 31, 2012. A comparative analysis of depreciation expense by rig category is as follows:

	DEPRECIATION EXPENSE
	Three Months Ended December 31,
(In millions)	2013		2012		Variance
Ultra-Deepwater	$	16.7	$	14.6	$	2.1
Deepwater	5.1		5.1		—
Jackups	9.7		6.1		3.6
Other	1.0		1.8		(0.8		)
	$	32.5	$	27.6	$	4.9

Ultra-deepwater depreciation increased by $2.1 million for the three months ended December 31, 2013, as compared to the three months ended December 31, 2012, due to the delivery of the Atwood Advantage which was placed into service in December 2013.

Jackup depreciation increased by $3.6 million for the three months ended December 31, 2013 as compared to the three months ended December 31, 2012, due to the addition of the Atwood Manta and the Atwood Orca, which were placed into service at the beginning of December 2012 and May 2013, respectively.

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General and Administrative—For the three months endedDecember 31, 2013, general and administrative expenses increased by approximately $2.6 million to $19.8 million, as compared to $17.2 million for the three months endedDecember 31, 2012. This was primarily due to higher personnel, information technology and rental and lease related costs resulting from an increase in our headcount and equipment to support our larger fleet.

Interest Expense, net of capitalized interest—For the three months endedDecember 31, 2013, interest expense, net of capitalized interest increased by approximately $3.8 million to $8.2 million, as compared to $4.4 million for the three months endedDecember 31, 2012. This increase was primarily due to a higher outstanding debt balance and higher weighted average borrowing costs associated with the issuance of an additional $200 million of our 6.50% Senior Notes due 2020 ("Senior Notes") in June 2013.

Income Taxes—Our effective tax rate was 12% for the three months endedDecember 31, 2013, compared to 13% for the three months endedDecember 31, 2012. The effective tax rate for the three months endedDecember 31, 2013 was lower than the rate for the three months endedDecember 31, 2012 primarily due to a change in the geographical mix of our operations as well as the beneficial impact of discrete tax benefits recognized this quarter. Our effective tax rates were lower than the U.S. statutory rate of 35% as a result of working in certain lower tax jurisdictions outside the United States.

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LIQUIDITY AND CAPITAL RESOURCES

At December 31, 2013, we had $132 million in cash and cash equivalents. At any time, we may require a significant portion of our cash on hand for working capital and other purposes.  During the three months endedDecember 31, 2013, we relied principally on our cash flows from operations, cash on hand, and borrowings under our credit facility to meet liquidity needs and fund our cash requirements, including our capital expenditures of $463 million.

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

Revolving Credit Facility

As of December 31, 2013, we had $945 million of outstanding borrowings under our five-year $1.1 billion 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, is the borrower under the credit facility, and we and certain of our other subsidiaries are guarantors under the facility. Except as described below, borrowings under the credit facility bear interest at the Eurodollar rate plus a margin ranging from 2.00% to 2.50%, based on our corporate credit ratings. Currently, certain borrowings effectively bear interest at a fixed rate due to our interest rate swaps. See Note 6 to the Unaudited Condensed Consolidated Financial Statements included in Item 1 of Part I of this Quarterly Report. The average interest rate for borrowings under the credit facility was approximately 2.8% per annum at December 31, 2013, after considering the impact of our interest rate swaps. Subsequent to December 31, 2013, we made $90 million in prepayments and incurred no additional borrowings under the credit facility.

As of December 31, 2013, we were in compliance with all financial covenants under the credit facility.

Subject to the satisfaction of certain conditions precedent and the agreement by the lenders, the credit facility accordion may be exercised to increase commitments by up to an additional $200 million for a total commitment of up to $1.3 billion.

Capital Expenditures

We estimate that our total capital expenditures, including maintenance capital expenditures, for fiscal year 2014 will be approximately $975 million, substantially all of which is contractually committed. As of December 31, 2013, we had incurred approximately $463 million of our total expected capital expenditures for fiscal year 2014. The remaining capital expenditures are expected to be funded with cash on hand, cash flows from operations and borrowings under our revolving credit facility including the provision to increase the credit facility commitment by an additional $200 million.

As of December 31, 2013, we had expended approximately $500 million towards our three newbuild drilling units contracted for construction. The expected costs including firm commitments, project management, capitalized interest and drilling and handling tools and spares for our three drilling units under construction are as follows (in millions):

Remaining Fiscal 2014		Fiscal 2015		Fiscal 2016		Total
$	460	$	480	$	450	$	1,390

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

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 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

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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, 2013, 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, 2013. As of December 31, 2013, other than additional borrowings under our credit facility there were no other 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;

• 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

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• such other risks discussed under “Risk Factors” in our Annual Report on Form 10-K for the fiscal year ended September 30, 2013 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.

25

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 $945 million outstanding as of December 31, 2013. 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, 2013 in order to minimize or eliminate unanticipated fluctuations in earnings and cash flows arising from changes in, and volatility of, interest rates. Effectively, only $695 million of our variable long-term debt outstanding at December 31, 2013 is subject to changes in interest rates. Thus, a 10% change in the interest rate on the floating rate debt would not have a material effect on our annual earnings and cash flows.

Foreign Currency Risk

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, 2013 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 enter into foreign currency forward exchange contracts to limit our exposure to fluctuations and volatility in the euro/U.S. dollar exchange rate. In December 2013, we executed foreign currency forward exchange contracts for a portion of our anticipated euro receipts associated with revenues earned on a drilling contract from December 2013 through November 2015.

Market Risk

Our Senior 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 Senior Notes was approximately $698.8 million at December 31, 2013, compared to the principal amount of $650 million. If prevailing market interest rates had been 10% lower at December 31, 2013, the change in fair value of our senior notes would have been immaterial.

26

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

No change in our internal control over financial reporting occurred during the most recent fiscal quarter covered by this report that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.

27

PART II. OTHER INFORMATION

ITEM 1. LEGAL PROCEEDINGS

We have certain actions, claims and other matters pending as set forth in Note 10 to the 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, 2013, 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, 2013.

ITEM 6. EXHIBITS

(a) Exhibits

†*10.1	Second Amendment to Atwood Oceanics, Inc. Amended and Restated 2007 Long-Term Incentive Plan, effective November 21, 2013
†*10.2	Revised Form of Notice of Restricted Stock Unit Award - 2013 Long-Term Incentive Plan
†*10.3	Revised Form of Notice of Performance Unit Grant - 2013 Long-Term Incentive Plan
†*10.4	Revised Form of Notice of Non-Employee Director Restricted Stock Unit Award - 2013 Long-Term Incentive Plan
*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

28

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 6, 2014	/S/ MARK L. MEY
		Mark L. Mey
		Senior Vice President and Chief Financial Officer

29

EX-10.1

EXHIBIT 10.1

SECOND AMENDMENT TO

ATWOOD OCEANICS, INC.

AMENDED AND RESTATED 2007 LONG-TERM INCENTIVE PLAN

WHEREAS, Atwood Oceanics, Inc., a Texas corporation (the “Company”), has established and maintains the Atwood Oceanics, Inc. Amended and Restated 2007 Long-Term Incentive Plan (the “Plan”); and

WHEREAS, pursuant to Section 10.1 of the Plan, the Company has the right to amend the Plan at any time by action of the Board of Directors of the Company (the “Board”), subject to prior approval by the Company’s stockholders to the extent such approval is determined to be required by applicable legal and/or stock exchange requirements; and

WHEREAS, the Company desires to amend the Plan to allow for certain awards thereunder to extend dividend equivalent rights; and

WHEREAS, this amendment is not a material modification that is subject to prior stockholder approval;

NOW, THEREFORE, the Plan is amended as follows:

1.Section 3.3 shall be added to the Plan, effective as of November 21, 2013, to read as follows:

“SECTION 3.3Dividends.

(a) Dividends and Dividend Equivalent Rights. Dividends or dividend equivalent rights may be extended to and made part of any Award, excluding SARs and Options, granted on or after November 21, 2013 that is denominated in Common Stock or units of Common Stock subject to such terms, conditions and restrictions as the Committee may establish.

(b) Extraordinary Stock and Cash Dividends. In the event of any Common Stock distribution or extraordinary distribution, (i) the number of shares of Common Stock reserved under this Plan and covered by outstanding Awards, (ii) the exercise price in respect of such Awards, (iii) the appropriate value and price determinations for such Awards, (iv) the per person limitation on Awards in Section 4.1 hereof and (v) the kind of shares covered thereby (including shares of another issuer) shall be adjusted as appropriate.”

Attested to by the Secretary of Atwood Oceanics, Inc. as adopted by the Board of Directors of Atwood Oceanics, Inc. this 21st day of November, 2013.

By: /s/Walter A. Baker

Walter A. Baker, Vice President, General Counsel and Corporate Secretary

EX-10.2

EXHIBIT 10.2

[Date]

TO:

FROM:

RE:Restricted Stock Unit Award

Atwood Oceanics, Inc. (the “Company”) hereby awards to you, effective as of ____________, 201__ (the “Date of Grant”), ______ restricted stock units (“Restricted Stock Units”) evidencing the right to receive an equivalent number of shares of Common Stock, $1.00 par value, of the Company, subject to adjustment as provided in Section 11 of the Atwood Oceanics, Inc. 2013 Long-Term Incentive Plan (the “Plan”).

Except as otherwise provided in Section 2 of the Terms and Conditions of Non-Employee Director Restricted Stock Unit Award, attached hereto as Appendix A (the “Terms and Conditions”), the Restricted Stock Units will vest on the thirteen month anniversary of the Date of Grant; provided you remain a director of the Company throughout the thirteen month period following the Date of Grant.

The award of Restricted Stock Units is governed by the terms and conditions of the Plan, any rules and regulations adopted by the Compensation and Human Resources Committee of the Board of Directors of the Company, and the Terms and Conditions which form a part of this award letter to you (the “Notice”).

Appendix A

ATWOOD OCEANICS, INC.

2013 LONG-TERM INCENTIVE PLAN

TERMS AND CONDITIONS OF

NON-EMPLOYEE DIRECTOR RESTRICTED STOCK UNIT AWARD

The restricted stock units (the “Restricted Stock Units”) awarded to you on the “Date of Grant” set forth in the award letter to you (the “Award Letter”) by Atwood Oceanics, Inc. (the “Company”) are subject to the 2013 Long-Term Incentive Plan (the “Plan”), these Terms and Conditions and any rules and regulations adopted by the Committee. Terms used herein and not otherwise defined shall have the meaning set forth in the Plan and the Award Letter.

1. Vesting/Forfeiture. Except as otherwise accelerated pursuant to Section 2 below, the Restricted Stock Units shall vest on the thirteen month anniversary of the Date of Grant (the “Restriction Period”). If your service as a director of the Company terminates for any reason, the unvested Restricted Stock Units shall be automatically forfeited on the date of your termination of service.

2. Change of Control. Notwithstanding the provisions of Section 1 of these Terms and Conditions, in the event of a Change of Control, the Restricted Stock Units shall automatically vest and the Restriction Period shall terminate.

3. Settlement and Delivery of Common Stock. Settlement of Restricted Stock Units shall be made no later than 15 days after the termination of the Restriction Period. In addition, upon the date of delivery of shares of Common Stock in settlement of Restricted Stock Units, you shall also be entitled to receive a lump sum cash payment equal to the Dividend Equivalent Amount. Notwithstanding the foregoing, the Company shall not be obligated to issue any shares of Common Stock if counsel to the Company determines that such sale or delivery would violate any applicable law or any rule or regulation of any governmental authority or any rule or regulation of, or agreement of the Company with, any securities exchange or association upon which the Common Stock is listed or quoted. The Company shall in no event be obligated to take any affirmative action in order to cause the issuance of shares of Common Stock to comply with any such law, rule, regulation or agreement. For purposes of this award of Restricted Stock Units, “Dividend Equivalent Amount” means the sum of all cash dividends, if any, declared on shares of Common Stock you receive in settlement of Restricted Stock Units where the record date is after the later of November 21, 2013 or the Date of Grant, but prior to the date such shares of Common Stock are distributed to you.

4. Transferability. You may not sell, transfer, pledge, exchange, hypothecate, or otherwise dispose of the Restricted Stock Units during the Restriction Period.

5. Rights as Shareholder. You shall not be entitled to any of the rights or privileges of a shareholder of the Company in respect of any shares of Common Stock unless and until the Restricted Stock Units have been settled by the issuance of Common Stock to you. If, from time to time during the Restriction Period, there is any capital adjustment affecting the outstanding Common Stock as a class without the Company’s receipt of consideration, the unvested Restricted Stock Units shall be adjusted in accordance with the provisions of Section 11 of the Plan.

6. Plan Governs. The Restricted Stock Units and the Notice are subject to all of the terms and conditions of the Plan, except that no amendment to the Plan shall adversely affect your rights under the Notice. All the terms and conditions of the Plan, as may be amended from time to time, and any rules, guidelines and

procedures which may from time to time be established pursuant to the Plan are hereby incorporated into the Notice. In the event of a discrepancy between the Notice and the Plan, the Plan shall govern.

7. Withholding. Upon settlement of the Restricted Stock Units, the market value of the shares on the date of settlement will be included with all other compensation paid during the year for services performed and reported on Internal Revenue Service Form 1099. You will be responsible for payment of all income taxes assessable on the Restricted Stock Unit Award.

8. Code Section 409A; No Guarantee of Tax Consequences. The award of Restricted Stock Units is intended to be (i) exempt from Section 409A of the Code (“Section 409A”) by compliance with the short-term deferral exemption as specified in Treas. Reg. § 1.409A-1(b)(4); or (ii) in compliance with Section 409A, and the provisions of the Notice will be administered, interpreted and construed accordingly. Notwithstanding the provisions of Section 2 of these Terms and Conditions, in the event of a Change of Control that does not meet the requirements of Treas. Reg. §1.409A-3(i)(5), any amounts that would otherwise be payable hereunder as nonqualified deferred compensation within the meaning of Section 409A shall be fully vested but shall be settled on the thirteen month anniversary of the Date of Grant. To the extent required to comply with Section 409A, you shall be considered to have terminated service with the Company when you incur a “separation from service” with the Company within the meaning of Section 409A(a)(2)(A)(i) of the Code. The Company makes no commitment or guarantee to you that any federal or state tax treatment will apply or be available to any person eligible for benefits under the Notice.

9. Governing Law. The Plan and the Notice shall be governed by, and construed in accordance with, the laws of the State of Texas, without regard to conflicts of laws. The courts in Harris County, Texas shall be the exclusive venue for any dispute regarding the Plan or the Notice.

EX-10.3

EXHIBIT 10.3

[Date]

TO:

FROM:

RE:Performance Unit Grant

Atwood Oceanics, Inc. (the “Company”) hereby grants to you, effective as of __________, 201__ (the “Date of Grant”), ________ performance units (each a “Performance Unit”) (the “Target Amount”) under the Atwood Oceanics, Inc. 2013 Long-Term Incentive Plan (the “Plan”), subject to the Terms and Conditions of Performance Unit Grant, attached hereto as Appendix A (the “Terms and Conditions”). The Performance Units represent the opportunity to receive a number of shares of Common Stock based on the “Payout Percentage” as defined in the Terms and Conditions. The number of Performance Units that become “Earned Performance Units”, as defined in the Terms and Conditions, will be between 0% and 200% of the Target Amount. The number of Performance Units is subject to adjustment as provided in Section 11 of the Plan.

Except as otherwise provided in Sections 3 or 4 of the Terms and Conditions, the Performance Units shall vest on the “Determination Date”, as defined in the Terms and Conditions; provided you remain continuously employed by the Company, its subsidiary or an affiliate throughout the three‑year period following the Date of Grant.

The grant of Performance Units is governed by the terms and conditions of the Plan, any rules and regulations adopted by the Compensation and Human Resources Committee of the Board of Directors of the Company (“Committee”), and the Terms and Conditions which form a part of this award letter to you (the “Notice”).

[Name of signing officer]

Appendix A

ATWOOD OCEANICS, INC.

2013 LONG-TERM INCENTIVE PLAN

TERMS AND CONDITIONS OF

PERFORMANCE UNIT GRANT

The performance units (the “Performance Units”) granted to you on the “Date of Grant” set forth in the award letter to you (the “Award Letter”) by Atwood Oceanics, Inc. (the “Company”) are subject to the 2013 Long‑Term Incentive Plan (the “Plan”), these Terms and Conditions, including Exhibit A hereto, and any rules and regulations adopted by the Committee. Terms used herein and not otherwise defined shall have the meaning set forth in the Plan and the Award Letter.

1. Determination of Earned Performance Units. The exact number of Performance Units that shall actually be earned by and issued to you shall be based upon the achievement by the Company of the performance standards as set forth in Exhibit A hereto over the three-year period beginning on ____________ and ending on ____________ (the “Performance Period”). The determination by the Committee with respect to the achievement of such performance standards shall be made as soon as administratively practicable following the Performance Period after all necessary Company and peer information is available. The specific date on which such determination is formally made and approved by the Committee is referred to as the “Determination Date”. After the Determination Date, the Company shall notify you of the number of Performance Units, if any, that have become “Earned Performance Units” in accordance with Exhibit A and the corresponding number of shares of Common Stock to be issued to you in satisfaction of the award, subject to withholding as described in Section 11 below. The shares of Common Stock shall be issued to you on March 15 following the expiration of the Performance Period (the “Settlement Date”).

The performance standards and the number of Performance Units which may be earned are based on your Target Amount specified in the Award Letter and the Company’s Total Shareholder Return compared against the Peer Group. The methodology for calculating the number of Earned Performance Units, including the definitions used therefor, is set forth in Exhibit A hereto.

2. Vesting/Forfeiture. Except as otherwise provided in Sections 3 or 4 below, the Performance Units shall vest on the Determination Date, provided you are continuously employed by the Company Group throughout the Performance Period. If your employment with the Company, its subsidiary or an affiliate (collectively, the “Company Group”) terminates for any reason other than by reason of your death or your inability to continue to actively work due to Disability, the Performance Units shall be automatically forfeited on the date of your termination of employment. Furthermore, the Performance Units are subject to forfeiture, in whole or in part, if the Committee or its designee, based on the recommendation of the Chief Executive Officer, determines, in its sole discretion, that you have taken any unlawful action detrimental to the Company or have violated Company policy.

3. Death or Disability. If during the Performance Period your employment with the Company Group is terminated by reason of your death or you become Disabled, the Performance Units shallautomatically become fully vested and the number of Earned Performance Units shall equal your Target Amount. The shares of Common Stock in respect of the EarnedPerformance Units shall be issued to you thirty (30) days after yourdeath or the date of your Disability, as applicable. For purposes of this award of Performance Units, you are considered to be “Disabled” or have a “Disability” on the date that you become eligible for long-term disability benefits pursuant to the Company’s long-term disability plan.

4. Change of Control. Notwithstanding the provisions of Sections 2 or 3 of these Terms and Conditions, in the event of a Change of Control during the Performance Period and prior to your termination of employment with the Company Group, the Performance Units shall automatically vest and the number of Earned Performance Units shall be equal to your Target Amount. Your shares of Common Stock in respect of the Earned Performance Units shall be issued to you thirty (30) days after the effective date of the Change of Control.

5. Dividend Equivalents. Upon the date of delivery of shares of Common Stock in settlement of Earned Performance Units, you shall also be entitled to receive a lump sum cash payment equal to the Dividend Equivalent Amount. For purposes of this award of Performance Units, “Dividend Equivalent Amount” means the sum of all cash dividends, if any, declared on shares of Common Stock you receive in settlement of Earned Performance Units where the record date is after the later of November 21, 2013 or the Date of Grant, but prior to the date such shares of Common Stock are distributed to you. Any Earned Performance Units shall be subject to adjustment under Section 11 of the Plan with respect to dividends or other distributions that are paid in shares of Common Stock.

6. Transferability. You may not sell, transfer, pledge, exchange, hypothecate, or otherwise dispose of the shares of Common Stock subject to the Performance Units until and unless you receive a distribution of shares of Common Stock in respect of the Earned Performance Units.

7. No Right to Continued Employment. The award of Performance Units shall not create any right to remain in the employ of the Company Group. The Company Group retains the right to terminate your employment at will, for due cause or otherwise. Your employment, as it relates to the Performance Period, shall be deemed to continue during any leave of absence that has been authorized by the Company Group.

8. Other Plans. Nothing herein contained shall affect your right to participate in and receive benefits under and in accordance with the then current provisions of any pension, insurance, profit sharing or other plan or program of the Company Group.

9. Rights as Shareholder. You shall not be entitled to any of the rights or privileges of a shareholder of the Company, including the right to vote in respect of the shares of Common Stock, until and unless you receive a distribution of shares of Common Stock in respect of the Earned Performance Units.

10. Plan Governs. The Performance Units and the Notice are subject to all of the terms and conditions of the Plan, except that no amendment to the Plan shall adversely affect your rights under the Notice. All the terms and conditions of the Plan, as may be amended from time to time, and any rules, guidelines and procedures which may from time to time be established pursuant to the Plan are hereby incorporated into the Notice. In the event of a discrepancy between the Notice and the Plan, the Plan shall govern.

11. Withholding. Upon the delivery of shares of Common Stock to you, the Company Group shall withhold an appropriate number of shares of Common Stock, having a Fair Market Value determined in accordance with the Plan, equal to the amount necessary to satisfy the minimum federal, state and local tax withholding obligation with respect to your Earned Performance Units. In lieu of withholding of shares of Common Stock, the Committee may, in its discretion, authorize tax withholding to be satisfied by a cash payment to the Company or by such other method as the Committee determines may be appropriate to satisfy all obligations for withholding of such taxes.

12. Code Section 409A; No Guarantee of Tax Consequences. The award of Performance Units is intended to be (i) exempt from Section 409A of the Code (“Section 409A”), including, but not limited to, by reason of

compliance with the short-term deferral exemption as specified in Treas. Reg. § 1.409A-1(b)(4); or (ii) in compliance with Section 409A, and the provisions of the Notice shall be administered, interpreted and construed accordingly. Notwithstanding the foregoing provisions of the Notice, if you are a “specified employee” as such term is defined in Section 409A, any amounts that would otherwise be payable hereunder as nonqualified deferred compensation within the meaning of Section 409A on account of separation from service (other than by reason of death) to you shall not be payable before the earlier of (i) the date that is 6 months after the date of your separation from service, (ii) the date of your death, or (iii) the date that otherwise complies with the requirements of Section 409A. In addition, notwithstanding the provisions of Section 4 of these Terms and Conditions, in the event of a Change of Control that does not meet the requirements of Treas. Reg. §1.409A-3(i)(5), any amounts that would otherwise be payable hereunder as nonqualified deferred compensation within the meaning of Section 409A shall be fully vested at a number of Earned Performance Units equal to your Target Amount but shall be settled on the earlier of (i) the Settlement Date, (ii) the date determined in accordance with the provisions of Section 3 of these Terms and Conditions, and (iii) the date of any subsequent event that would constitute a “change of control” that meets the requirements of Treas. Reg. §1.409A-3(i)(5). To the extent required to comply with Section 409A, you shall be considered to have terminated employment with the Company when you incur a “separation from service” with the Company within the meaning of Section 409A(a)(2)(A)(i) of the Code, and you shall not be considered to be “Disabled” or to have a “Disability” unless the circumstances of the Disability meet the requirements of Treas. Reg. §1.409A-3(i)(4). The Company makes no commitment or guarantee to you that any federal or state tax treatment shall apply or be available to any person eligible for benefits under the Notice.

13. Governing Law. The Plan and the Notice shall be governed by, and construed in accordance with, the laws of the State of Texas, without regard to conflicts of laws. The courts in Harris County, Texas shall be the exclusive venue for any dispute regarding the Plan or the Notice.

Exhibit A

Methodology for Calculating Earned Performance Units

A. Definitions. For purposes of determining the number of shares of Common Stock issuable to you in respect of the Earned Performance Units, the following definitions shall apply:

(1)Ending Share Price means the average closing price of shares over nine trading days comprised of: four trading days prior to the Performance End Date, the Performance End Date, and the four trading days after the Performance End Date.

(2)Peer Group means Seadrill Ltd., Transocean Ltd., Ensco PLC, Noble Corporation, Diamond Offshore Drilling, Inc. and Rowan Companies to the extent such entities or their successors are in existence and publicly traded as of the Performance End Date.

(3)Performance Period means the period beginning on ___________ and ending ______________.

(4)Performance End Date means ______________.

(5)Starting Share Price means the average closing price of the shares over nine trading days comprised of: five trading days prior to _____________ and the four trading days after ______________.

(6)Total Shareholder Return means common stock price growth for each entity over the Performance Period, as measured by dividing the sum of the cumulative amount of dividends for the Performance Period, assuming dividend reinvestment, and the difference between the entity’s Ending Share Price and the Starting Share Price; by the entity’s Starting Share Price.

B. Committee Methodology. For purposes of determining the number of shares of Common Stock issuable to you in respect of the Earned Performance Units, the Committee shall:

(7)calculate the Total Shareholder Return for the Company and each company in the Peer Group;

(8)rank the Company and each member of the Peer Group based on Total Shareholder Return with the company having the highest Total Shareholder Return ranking in the first position and the company with the lowest Total Shareholder Return ranking in the seventh position.

(9)determine the number of Earned Performance Units based on the Seven Company Payout Schedule below:

Seven Company Payout Schedule
Atwood Ranking	Payout Percentage
1	200%
2	150%
3	100%
4	75%
5	50%
6	0%
7	0%

(10)multiply the Payout Percentage by your Target Amount.

If any calculation with respect to the Earned Performance Units would result in a fractional share, the number of shares of Common Stock to be issued shall be rounded down to the nearest whole share.

B. Peer Group Changes.

(a)If, as a result of merger, acquisition or a similar corporate transaction, a member of the Peer Group ceases to be publicly traded (an “Affected Peer Company”)

(i) prior to July 1, 201_, the Affected Peer Company shall not be included in the Seven Company Payout Schedule and the following alternative schedules shall be used in its place:

Six Company Payout Schedule
Atwood Ranking	Payout Percentage
1	200%
2	150%
3	100%
4	75%
5	50%
6	0%

Five Company Payout Schedule
Atwood Ranking	Payout Percentage
1	200%
2	150%
3	100%
4	50%
5	0%

Four Company Payout Schedule
Atwood Ranking	Payout Percentage
1	200%
2	100%
3	100%
4	0%

(ii) on or subsequent to July 1, 201_, the Affected Peer Company shall remain in the Peer Group and its Ending Share Price shall be determined by assuming that its performance for the remainder of the Performance Period was equivalent to the arithmetic average (up or down) of the remaining members of the Peer Group over the remainder of the Performance Period.

(b)If a member of the Peer Group declares bankruptcy, it shall be deemed to remain in the Peer Group until the Performance End Date and shall occupy the lowest ranking in the Payout Schedule.

EX-10.4

EXHIBIT 10.4    

[Date]

TO:

FROM:

RE:Restricted Stock Unit Award

Atwood Oceanics, Inc. (the “Company”) hereby awards to you, effective as of ____________, 201__ (the “Date of Grant”), ______ restricted stock units (“Restricted Stock Units”) evidencing the right to receive an equivalent number of shares of Common Stock, $1.00 par value, of the Company, subject to adjustment as provided in Section 11 of the Atwood Oceanics, Inc. 2013 Long-Term Incentive Plan (the “Plan”).

Except as otherwise provided in Section 2 of the Terms and Conditions of Non-Employee Director Restricted Stock Unit Award, attached hereto as Appendix A (the “Terms and Conditions”), the Restricted Stock Units will vest on the thirteen month anniversary of the Date of Grant; provided you remain a director of the Company throughout the thirteen month period following the Date of Grant.

The award of Restricted Stock Units is governed by the terms and conditions of the Plan, any rules and regulations adopted by the Compensation and Human Resources Committee of the Board of Directors of the Company, and the Terms and Conditions which form a part of this award letter to you (the “Notice”).

Appendix A

ATWOOD OCEANICS, INC.

2013 LONG-TERM INCENTIVE PLAN

TERMS AND CONDITIONS OF

NON-EMPLOYEE DIRECTOR RESTRICTED STOCK UNIT AWARD

The restricted stock units (the “Restricted Stock Units”) awarded to you on the “Date of Grant” set forth in the award letter to you (the “Award Letter”) by Atwood Oceanics, Inc. (the “Company”) are subject to the 2013 Long-Term Incentive Plan (the “Plan”), these Terms and Conditions and any rules and regulations adopted by the Committee. Terms used herein and not otherwise defined shall have the meaning set forth in the Plan and the Award Letter.

1. Vesting/Forfeiture. Except as otherwise accelerated pursuant to Section 2 below, the Restricted Stock Units shall vest on the thirteen month anniversary of the Date of Grant (the “Restriction Period”). If your service as a director of the Company terminates for any reason, the unvested Restricted Stock Units shall be automatically forfeited on the date of your termination of service.

2. Change of Control. Notwithstanding the provisions of Section 1 of these Terms and Conditions, in the event of a Change of Control, the Restricted Stock Units shall automatically vest and the Restriction Period shall terminate.

3. Settlement and Delivery of Common Stock. Settlement of Restricted Stock Units shall be made no later than 15 days after the termination of the Restriction Period. In addition, upon the date of delivery of shares of Common Stock in settlement of Restricted Stock Units, you shall also be entitled to receive a lump sum cash payment equal to the Dividend Equivalent Amount. Notwithstanding the foregoing, the Company shall not be obligated to issue any shares of Common Stock if counsel to the Company determines that such sale or delivery would violate any applicable law or any rule or regulation of any governmental authority or any rule or regulation of, or agreement of the Company with, any securities exchange or association upon which the Common Stock is listed or quoted. The Company shall in no event be obligated to take any affirmative action in order to cause the issuance of shares of Common Stock to comply with any such law, rule, regulation or agreement. For purposes of this award of Restricted Stock Units, “Dividend Equivalent Amount” means the sum of all cash dividends, if any, declared on shares of Common Stock you receive in settlement of Restricted Stock Units where the record date is after the later of November 21, 2013 or the Date of Grant, but prior to the date such shares of Common Stock are distributed to you.

4. Transferability. You may not sell, transfer, pledge, exchange, hypothecate, or otherwise dispose of the Restricted Stock Units during the Restriction Period.

5. Rights as Shareholder. You shall not be entitled to any of the rights or privileges of a shareholder of the Company in respect of any shares of Common Stock unless and until the Restricted Stock Units have been settled by the issuance of Common Stock to you. If, from time to time during the Restriction Period, there is any capital adjustment affecting the outstanding Common Stock as a class without the Company’s receipt of consideration, the unvested Restricted Stock Units shall be adjusted in accordance with the provisions of Section 11 of the Plan.

6. Plan Governs. The Restricted Stock Units and the Notice are subject to all of the terms and conditions of the Plan, except that no amendment to the Plan shall adversely affect your rights under the Notice. All the terms and conditions of the Plan, as may be amended from time to time, and any rules, guidelines and

procedures which may from time to time be established pursuant to the Plan are hereby incorporated into the Notice. In the event of a discrepancy between the Notice and the Plan, the Plan shall govern.

7. Withholding. Upon settlement of the Restricted Stock Units, the market value of the shares on the date of settlement will be included with all other compensation paid during the year for services performed and reported on Internal Revenue Service Form 1099. You will be responsible for payment of all income taxes assessable on the Restricted Stock Unit Award.

8. Code Section 409A; No Guarantee of Tax Consequences. The award of Restricted Stock Units is intended to be (i) exempt from Section 409A of the Code (“Section 409A”) by compliance with the short-term deferral exemption as specified in Treas. Reg. § 1.409A-1(b)(4); or (ii) in compliance with Section 409A, and the provisions of the Notice will be administered, interpreted and construed accordingly. Notwithstanding the provisions of Section 2 of these Terms and Conditions, in the event of a Change of Control that does not meet the requirements of Treas. Reg. §1.409A-3(i)(5), any amounts that would otherwise be payable hereunder as nonqualified deferred compensation within the meaning of Section 409A shall be fully vested but shall be settled on the thirteen month anniversary of the Date of Grant. To the extent required to comply with Section 409A, you shall be considered to have terminated service with the Company when you incur a “separation from service” with the Company within the meaning of Section 409A(a)(2)(A)(i) of the Code. The Company makes no commitment or guarantee to you that any federal or state tax treatment will apply or be available to any person eligible for benefits under the Notice.

9. Governing Law. The Plan and the Notice shall be governed by, and construed in accordance with, the laws of the State of Texas, without regard to conflicts of laws. The courts in Harris County, Texas shall be the exclusive venue for any dispute regarding the Plan or the Notice.

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 6, 2014	/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 6, 2014	/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, 2013, 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 6, 2014	/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, 2013, 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 6, 2014	/S/ MARK L. MEY
		Mark L. Mey
		Senior Vice President and Chief Financial Officer

XML

Fair Value (Narrative) (Details) (USD $)	Dec. 31, 2013	Sep. 30, 2013
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Long-term debt, carrying value	$ 1,602,961,000	$ 1,263,232,000
Senior Notes [Member] | 6.5% Senior Notes [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Stated interest rate	6.50%	6.50%
Long-term debt, carrying value	657,961,000	658,232,000
Principal amount	650,000,000
Long-term debt, fair value	$ 698,800,000
Maximum [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Credit valuation adjustment to total fair value percentage (less than 1%)	1.00%

XML

Derivative Financial Instruments (Narrative) (Details)	3 Months Ended
	Dec. 31, 2013 USD ($)	Dec. 31, 2012 USD ($)	Dec. 31, 2013 Cash Flow Hedging [Member] Foreign exchange forward currency contracts [Member] EUR (€)	Dec. 31, 2013 Revolving Credit Facility [Member] Cash Flow Hedging [Member] Interest rate swap one [Member] USD ($)	Dec. 31, 2013 Revolving Credit Facility [Member] Cash Flow Hedging [Member] Interest rate swap two [Member] USD ($)
Derivative [Line Items]
Amount of hedged item				$ 250,000,000	$ 250,000,000
Interest rate fixed as result of interest rate swap hedges				3.40%	3.10%
Exchange rate			1.365905
Notional amount			72,000,000
Gain (loss) on cash flow hedge ineffectiveness	0	0
Gain (loss) recognized in income as a result of excluding amounts from the assessment of hedge effectiveness or as a result of reclassifications to earnings following the discontinuance of any cash flow hedges	0	0
Interest rate derivative contracts that will be reclassified to earnings during the next twelve months	1,400,000
Foreign exchange forward currency contracts that will be reclassified to earnings during the next twelve months	$ 300,000

XML

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, 2013	Dec. 31, 2012
Net Income
Basic earnings per share	$ 83,397	$ 72,831
Stock options	0	0
Restricted stock	0	0
Diluted earnings per share	$ 83,397	$ 72,831
Shares
Basic earnings per share (in shares)	64,112	65,528
Stock options (in shares)	307	409
Restricted stock (in shares)	607	155
Diluted earnings per share (in shares)	65,026	66,092
Per Share Amount
Basic earnings per share (in dollars per share)	$ 1.30	$ 1.11
Stock options (in dollars per share)	$ (0.01)	$ (0.01)
Restricted stock (in dollars per share)	$ (0.01)	$ 0.00
Diluted earnings per share (in dollars per share)	$ 1.28	$ 1.10
Stock Options [Member]
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items]
Outstanding stock options, excluded in the calculation of earnings per share	0	296

XML

Income Taxes (Details) (USD $) In Millions, unless otherwise specified	3 Months Ended
	Dec. 31, 2013	Dec. 31, 2012
Income Tax Contingency [Line Items]
Effective income tax rate	12.00%	13.00%
Statutory income tax rate	35.00%
Unrecognized tax benefits	$ 8.6
Unrecognized tax benefits that would impact the effective tax rate	8.6
Other long-term liabilities [Member]
Income Tax Contingency [Line Items]
Estimated accrued interest and penalties	$ 2.8

XML

Earnings Per Common Share

3 Months Ended

Dec. 31, 2013

Earnings Per 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, 2013 and 2012 is as follows:

	Three Months Ended
(In thousands, except per share amounts)	Net Income		Shares	Per Share Amount
December 31, 2013
Basic earnings per share	$	83,397	64,112	$	1.30
Effect of dilutive securities:
Stock options	—		307	$	(0.01	)
Restricted stock	—		607	$	(0.01	)
Diluted earnings per share	$	83,397	65,026	$	1.28
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

For the three months endedDecember 31, 2013, there were no anti-dilutive options. The calculation of diluted earnings per share for the three months endedDecember 31, 2012 excludes 296,000 anti-dilutive options.

XML

Property and Equipment (A Summary of Property and Equipment by Classification) (Details) (USD $) In Thousands, unless otherwise specified	Dec. 31, 2013	Sep. 30, 2013
Property, Plant and Equipment [Line Items]
Cost	$ 4,196,859	$ 3,746,005
Less: Accumulated depreciation	(613,592)	(581,281)
Drilling and other property and equipment, net	3,583,267	3,164,724
Drilling vessels and equipment [Member]
Property, Plant and Equipment [Line Items]
Cost	3,632,897	2,979,503
Construction work in progress [Member]
Property, Plant and Equipment [Line Items]
Cost	501,486	715,320
Drill pipe [Member]
Property, Plant and Equipment [Line Items]
Cost	32,804	26,743
Office equipment and other [Member]
Property, Plant and Equipment [Line Items]
Cost	$ 29,672	$ 24,439

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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, 2013
Restricted Stock [Member]
Number of Shares:
Unvested at October 1, 2013 (shares)	849
Granted (shares)	297
Vested (shares)	(132)
Forfeited (shares)	(34)
Unvested at December 31, 2013 (shares)	980
Wtd. Avg. Fair Value (in dollars per share):
Unvested at October 1, 2013 (dollars per share)	$ 42.42
Granted (dollars per share)	$ 54.62
Vested (dollars per share)	$ 37.29
Forfeited (dollars per share)	$ 41.17
Unvested at December 31, 2013 (dollars per share)	$ 46.85

XML

Property and Equipment (Narrative) (Details) (USD $)	3 Months Ended
	Dec. 31, 2013	Dec. 31, 2012
Property, Plant and Equipment [Line Items]
Interest capitalized	$ 9,800,000	$ 9,000,000
Construction in Progress, Newbuild Drilling Units [Member]
Property, Plant and Equipment [Line Items]
Expenditure towards construction of drilling units currently under construction	500,000,000
Number of drilling units	3
Capital Addition Purchase Commitments [Member] | Construction in Progress, Newbuild Drilling Units [Member]
Property, Plant and Equipment [Line Items]
Commitments on drilling units under construction	$ 1,200,000,000

XML

Long-Term Debt (Summary of Long-Term Debt) (Details) (USD $) In Thousands, unless otherwise specified	Dec. 31, 2013		Sep. 30, 2013
Debt Instrument [Line Items]
Long-term debt	$ 1,602,961		$ 1,263,232
Senior Notes [Member] | 6.5% Senior Notes [Member]
Debt Instrument [Line Items]
Long-term debt	657,961		658,232
Stated interest rate	6.50%		6.50%
Revolving Credit Facility [Member] | 2011 Revolving Credit Facility [Member]
Debt Instrument [Line Items]
Long-term debt	$ 945,000		$ 605,000
Market adjustable interest rate (per annum)	2.80%	[1]	3.00%	[1]

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

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Unaudited Interim Information

3 Months Ended

Dec. 31, 2013

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, 2013, and for the three months endedDecember 31, 2013 and 2012, 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, 2013. 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, 2013. 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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Long-Term Debt (Credit Facility Narrative) (Details) (USD $)	3 Months Ended				1 Months Ended
	Dec. 31, 2013	Dec. 31, 2012	Dec. 31, 2013 Revolving Credit Facility [Member] 2011 Revolving Credit Facility [Member]	Dec. 31, 2013 Revolving Credit Facility [Member] 2011 Revolving Credit Facility [Member] Eurodollar [Member]	Jul. 31, 2013 Revolving Credit Facility [Member] 2011 Revolving Credit Facility [Member] Eurodollar [Member] Minimum [Member]	Jul. 31, 2013 Revolving Credit Facility [Member] 2011 Revolving Credit Facility [Member] Eurodollar [Member] Maximum [Member]	Feb. 06, 2014 Subsequent Event [Member] Revolving Credit Facility [Member] 2011 Revolving Credit Facility [Member]
Line of Credit Facility [Line Items]
Outstanding credit facility			$ 945,000,000
Revolving credit facility, term			5 years
Maximum borrowing capacity			1,100,000,000.0
Credit facility variable rate				Eurodollar
Credit facility basis spread on variable rate					2.00%	2.50%
Interest rate at period end			2.80%
Repayments of credit facility							90,000,000
Proceeds from credit facility	340,000,000	240,000,000					0
Amount of accordion feature remaining			200,000,000
Maximum borrowing capacity, including accordion feature			$ 1,300,000,000

XML

Commitments And Contingencies (Details) (USD $) In Millions, unless otherwise specified	3 Months Ended
	Dec. 31, 2013
Loss Contingencies [Line Items]
Long-term other receivable related to service taxes	$ 11.9
Indian Tax Authority [Member]
Loss Contingencies [Line Items]
Service taxes paid	10.1
Accrued additional service tax	1.8
Total service taxes	$ 11.9

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Condensed Consolidated Statements Of Operations (USD $) In Thousands, except Per Share data, unless otherwise specified	3 Months Ended
	Dec. 31, 2013	Dec. 31, 2012
REVENUES:
Contract drilling	$ 273,557	$ 234,760
Revenues related to reimbursable expenses	11,149	10,333
Total revenues	284,706	245,093
COSTS AND EXPENSES:
Contract drilling	123,162	105,938
Reimbursable expenses	8,414	5,978
Depreciation	32,544	27,578
General and administrative	19,822	17,221
Other, net	(1,637)	7
Total costs and expenses	182,305	156,722
OPERATING INCOME	102,401	88,371
OTHER INCOME (EXPENSE):
Interest expense, net of capitalized interest	(8,211)	(4,408)
Interest income	70	124
Other income (expense) total	(8,141)	(4,284)
INCOME BEFORE INCOME TAXES	94,260	84,087
PROVISION FOR INCOME TAXES	10,863	11,256
NET INCOME	$ 83,397	$ 72,831
EARNINGS PER COMMON SHARE (NOTE 2):
Basic (in dollars per share)	$ 1.30	$ 1.11
Diluted (in dollars per share)	$ 1.28	$ 1.10
WEIGHTED AVERAGE COMMON SHARES OUTSTANDING (NOTE 2):
Basic (in shares)	64,112	65,528
Diluted (in shares)	65,026	66,092

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Condensed Consolidated Statement Of Changes In Shareholders' Equity (USD $) In Thousands, unless otherwise specified	Total	Common Stock	Paid-in Capital	Retained Earnings	Accumulated Other Comprehensive Loss
Beginning Balance at Sep. 30, 2013	$ 2,207,371	$ 64,057	$ 183,390	$ 1,961,405	$ (1,481)
Beginning Balance (in shares) at Sep. 30, 2013		64,057
Increase (Decrease) in Stockholders' Equity [Roll Forward]
Net income	83,397			83,397
Other comprehensive loss	(362)				(362)
Restricted stock awards	0	127	(127)
Restricted stock awards (in shares)		127
Exercise of employee stock options	823	24	799
Exercise of employee stock options (in shares)	24	24
Stock option and restricted stock award compensation expense	3,354		3,354
Ending Balance at Dec. 31, 2013	$ 2,294,583	$ 64,208	$ 187,416	$ 2,044,802	$ (1,843)
Ending Balance (in shares) at Dec. 31, 2013		64,208

XML

Derivative Financial Instruments (Consolidated Statements of Operation and Statements of Comprehensive Income) (Details) (Designated as Hedging Instrument [Member], Cash Flow Hedging [Member], USD $) In Thousands, unless otherwise specified	3 Months Ended
	Dec. 31, 2013	Dec. 31, 2012
Derivative Instruments, Gain (Loss) [Line Items]
Amount of Gain or (Loss) Recognized in AOCI on Derivative (Effective Portion)	$ (743)	$ (66)
Amount of Gain or (Loss) Reclassified from AOCI into Income (Effective Portion)	(381)	(438)
Interest expense, net of capitalized interest [Member]
Derivative Instruments, Gain (Loss) [Line Items]
Amount of Gain or (Loss) Reclassified from AOCI into Income (Effective Portion)	(354)	(438)
Contract drilling revenue [Member]
Derivative Instruments, Gain (Loss) [Line Items]
Amount of Gain or (Loss) Reclassified from AOCI into Income (Effective Portion)	(27)	0
Interest rate swaps [Member]
Derivative Instruments, Gain (Loss) [Line Items]
Amount of Gain or (Loss) Recognized in AOCI on Derivative (Effective Portion)	21	(66)
Foreign exchange forward currency contracts [Member]
Derivative Instruments, Gain (Loss) [Line Items]
Amount of Gain or (Loss) Recognized in AOCI on Derivative (Effective Portion)	$ (764)	$ 0

XML

Long-Term Debt (Tables)

3 Months Ended

Dec. 31, 2013

Debt Disclosure [Abstract]

Summary of Long-Term Debt

A summary of long-term debt is as follows:

(In thousands)	December 31, 2013		September 30, 2013
6.5% Senior Notes due 2020, bearing fixed interest at 6.5% per annum, net of unamortized premium	$	657,961	$	658,232
Revolving Credit Facility, bearing interest at approximately 2.8%(1) per annum at December 31, 2013 and 3.0%(1) per annum at September 30, 2013	945,000		605,000
(1) After the impact of our interest rate swaps.	$	1,602,961	$	1,263,232

XML

Derivative Financial Instruments (Balance Sheet Offsetting) (Details) (USD $) In Thousands, unless otherwise specified	Dec. 31, 2013		Sep. 30, 2013
Offsetting Derivative Assets [Abstract]
Derivative assets, Gross Amount Presented on the Consolidated Balance Sheets	$ 255		$ 0
Derivative assets, Netting Adjustments	(255)	[1]	0	[1]
Derivative assets, Net Amount	0		0
Offsetting Derivative Liabilities [Abstract]
Derivative liabilities, Gross Amount Presented on the Consolidated Balance Sheets Fair Value, Gross Liability	(2,125)		(1,586)
Derivative liabilities, Netting Adjustments	255	[1]	0	[1]
Derivative liabilities, Net Amount	$ (1,870)		$ (1,586)

[1] We have agreements in place with some of our financial trading counterparties that allow for the financial right of offset for derivative assets and derivative liabilities under the agreements.

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Fair Value (Tables)

3 Months Ended

Dec. 31, 2013

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, 2013 and September 30, 2013, which are measured and recorded at fair value on a recurring basis:

		December 31, 2013
		Fair Value Measurements
(In thousands)	(Asset)/Liability	Carrying Amount			Level 1		Level 2			Level 3		Estimated Fair  Value
Type of Contract	Balance Sheet Classification
Short-term interest rate swaps	Accrued liabilities	$	1,361		$	—	$	1,361		$	—	$	1,361
Long-term interest rate swaps	Deferred costs and other assets	$	(255	)	—		$	(255	)	—		$	(255	)
Short-term foreign exchange forward currency contracts	Accrued liabilities	$	309				$	309				$	309
Long-term foreign exchange forward currency contracts	Other long term liabilities	$	455				$	455				$	455
Total derivative contracts, net		$	1,870		$	—	$	1,870		$	—	$	1,870
		September 30, 2013
		Fair Value Measurements
(In thousands)	(Asset)/Liability	Carrying Amount			Level 1		Level 2			Level 3		Estimated Fair  Value
Type of Contract	Balance Sheet Classification
Short-term interest rate swaps	Accrued liabilities	$	1,586		$	—	$	1,586		$	—	$	1,586
Total derivative contracts, net		$	1,586		$	—	$	1,586		$	—	$	1,586

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Condensed Consolidated Statements Of Cash Flows (USD $) In Thousands, unless otherwise specified	3 Months Ended
	Dec. 31, 2013	Dec. 31, 2012
Cash flows from operating activities:
Net income	$ 83,397	$ 72,831
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation	32,544	27,578
Amortization of debt issuance costs and bond premium, net	1,176	1,036
Amortization of deferred items	(4)	(32)
Provision for doubtful accounts	0	1,871
Provision for inventory obsolescence	430	181
Deferred income tax expense/(benefit)	196	(220)
Share-based compensation expense	3,354	3,048
Other, net	392	7
Changes in assets and liabilities:
Accounts receivable	26,868	22,388
Income tax receivable	(859)	141
Inventory	10,842	(257)
Prepaid expenses	6,458	5,470
Deferred costs and other assets	(8,167)	(4,039)
Accounts payable	(13,556)	(27,978)
Accrued liabilities	11,195	4,937
Income tax payable	(3,767)	3,603
Deferred credits and other liabilities	9,695	6,354
Net cash provided by operating activities	160,194	116,919
Cash flows from investing activities:
Capital expenditures	(462,620)	(321,995)
Installment proceeds from pending sale of asset	11,200	0
Proceeds from sale of assets	77	41
Net cash used in investing activities	(451,343)	(321,954)
Cash flows from financing activities:
Proceeds from bank credit facilities	340,000	240,000
Principal payments on notes payable	(6,046)	(5,148)
Proceeds from exercise of stock options	823	653
Debt issuance costs paid	(72)	0
Net cash provided by financing activities	334,705	235,505
Net increase in cash and cash equivalents	43,556	30,470
Cash and cash equivalents, at beginning of period	88,770	77,871
Cash and cash equivalents, at end of period	$ 132,326	$ 108,341

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Condensed Consolidated Statement Of Comprehensive Income (USD $) In Thousands, unless otherwise specified	3 Months Ended
	Dec. 31, 2013	Dec. 31, 2012
Statement of Comprehensive Income [Abstract]
Net income	$ 83,397	$ 72,831
Other comprehensive gains (losses), net of tax:
Unrealized holding gain (loss)	(743)	(66)
Loss reclassified to net income	381	438
Total other comprehensive gain (loss)	(362)	372
Comprehensive income	$ 83,035	$ 73,203

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Subsequent Events

3 Months Ended

Dec. 31, 2013

Subsequent Events [Abstract]

Subsequent Events

SUBSEQUENT EVENTS

On January 17, 2014, we completed the sale of our standard jackup drilling unit, the Vicksburg, for a sales price of $55.4 million pursuant to a definitive sales agreement entered into on October 3, 2013. As of December 31, 2013, the carrying value of the rig and its related inventory was approximately $21.3 million.

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Document And Entity Information In Thousands, unless otherwise specified	3 Months Ended
	Dec. 31, 2013	Jan. 31, 2014
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		64,209
Document Fiscal Year Focus	2014
Document Fiscal Period Focus	Q1
Document Type	10-Q
Amendment Flag	false
Document Period End Date	Dec. 31, 2013
Trading Symbol	atw

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Unaudited Interim Information (Policies)

3 Months Ended

Dec. 31, 2013

Quarterly Financial Information Disclosure [Abstract]

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.

Property and Equipment

Property and equipment are recorded at cost. Interest incurred related to property under construction is capitalized as a component of construction costs.

Income Taxes

We record estimated accrued interest and penalties related to uncertain tax positions as income tax expense.

Fair Value Measurement

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).

Derivative Financial Instruments

Each quarter, changes in the fair values of our derivative instruments designated as cash flow hedging instruments will adjust the balance sheet asset or liability, with an offset to Accumulated Other Comprehensive Income (“AOCI”) for the effective portion of the hedge. The effective portion of the cash flow hedge will remain in AOCI until it is reclassified into earnings in the period or periods during which the hedged transaction affects earnings or when it is probable that the hedged forecasted transaction will not occur by the end of the originally specified time period.

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Condensed Consolidated Balance Sheets (USD $) In Thousands, unless otherwise specified	Dec. 31, 2013	Sep. 30, 2013
ASSETS
Cash and cash equivalents	$ 132,326	$ 88,770
Accounts receivable	172,821	199,689
Income tax receivable	5,531	4,672
Inventories of materials and supplies	110,561	121,833
Prepaid expenses and deferred costs	30,721	38,796
Total current assets	451,960	453,760
Property and equipment, net	3,583,267	3,164,724
Other receivables	11,831	11,831
Deferred costs and other assets	31,661	26,951
Total assets	4,078,719	3,657,266
LIABILITIES AND SHAREHOLDERS' EQUITY
Accounts payable	71,179	95,827
Accrued liabilities	17,578	17,653
Notes payable	2,025	8,071
Interest payable	19,404	7,945
Income tax payable	12,787	16,554
Deferred credits	21,714	10,822
Total current liabilities	144,687	156,872
LONG TERM LIABILITIES:
Long-term debt	1,602,961	1,263,232
Deferred income taxes	681	485
Deferred credits	5,356	1,176
Other	30,451	28,130
Total long-term liabilities	1,639,449	1,293,023
Commitments and contingencies (Note 9)
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 64,208 and 64,057 issued and outstanding at December 31, 2013 and September 30, 2013, respectively	64,208	64,057
Paid-in capital	187,416	183,390
Retained earnings	2,044,802	1,961,405
Accumulated other comprehensive loss	(1,843)	(1,481)
Total shareholders' equity	2,294,583	2,207,371
Total liabilities and shareholders' equity	$ 4,078,719	$ 3,657,266

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Long-Term Debt

3 Months Ended

Dec. 31, 2013

Debt Disclosure [Abstract]

Long-Term Debt

LONG-TERM DEBT

A summary of long-term debt is as follows:

(In thousands)	December 31, 2013		September 30, 2013
6.5% Senior Notes due 2020, bearing fixed interest at 6.5% per annum, net of unamortized premium	$	657,961	$	658,232
Revolving Credit Facility, bearing interest at approximately 2.8%(1) per annum at December 31, 2013 and 3.0%(1) per annum at September 30, 2013	945,000		605,000
(1) After the impact of our interest rate swaps.	$	1,602,961	$	1,263,232

Revolving Credit Facility

As of December 31, 2013, we had $945 million of outstanding borrowings under our five-year $1.1 billion 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, is the borrower under the credit facility, and we and certain of our other subsidiaries are guarantors under the facility. Except as described below, borrowings under the credit facility bear interest at the Eurodollar rate plus a margin ranging from 2.00% to 2.50% based on our corporate credit ratings. Currently, certain borrowings effectively bear interest at a fixed rate due to our interest rate swaps. See Note 6. The average interest rate for borrowings under the credit facility was approximately 2.8% per annum at December 31, 2013, after considering the impact of our interest rate swaps. Subsequent to December 31, 2013, we made $90 million in prepayments and incurred no additional borrowings under the credit facility.

As of December 31, 2013, we were in compliance with all financial covenants under the credit facility.

Subject to the satisfaction of certain conditions precedent and the agreement by the lenders, the credit facility accordion may be exercised to increase commitments by up to an additional $200 million for a total commitment of up to $1.3 billion.

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Property And Equipment

3 Months Ended

Dec. 31, 2013

Property, Plant and Equipment [Abstract]

Property and Equipment

PROPERTY AND EQUIPMENT

A summary of property and equipment by classification is as follows:

(In thousands)	December 31, 2013			September 30, 2013
Drilling vessels and equipment	$	3,632,897		$	2,979,503
Construction work in progress	501,486			715,320
Drill pipe	32,804			26,743
Office equipment and other	29,672			24,439
Cost	4,196,859			3,746,005
Less: Accumulated depreciation	(613,592		)	(581,281		)
Drilling and other property and equipment, net	$	3,583,267		$	3,164,724

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 ended December 31, 2013 and 2012 was approximately $9.8 million and $9.0 million, respectively.

Recently Completed Construction Projects

Our first ultra-deepwater drillship, Atwood Advantage, was delivered from the Daewoo Shipbuilding and Marine Engineering Co., Ltd. yard in South Korea in December 2013.

Ongoing Construction Projects

As of December 31, 2013, we had expended approximately $500 million towards our three ultra-deepwater drillships under construction. Total remaining firm commitments for these three drilling units under construction were approximately $1.2 billion at December 31, 2013.

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Derivative Financial Instruments (Tables)

3 Months Ended

Dec. 31, 2013

Derivative [Line Items]

Offsetting Assets and Liabilities

The following table represents our gross and net derivative assets and liabilities:

(In thousands)	Gross Amount Presented on the Consolidated Balance Sheets			Netting Adjustments (a)			Net Amount
December 31, 2013
Derivative assets	$	255		$	(255	)	$	—
Derivative liabilities	(2,125		)	255			(1,870		)
September 30, 2013
Derivative assets	$	—		$	—		$	—
Derivative liabilities	(1,586		)	—			(1,586		)

(a) We have agreements in place with some of our financial trading counterparties that allow for the financial right of offset for derivative assets and derivative liabilities under the agreements.

Cash Flow Hedging [Member] | Designated as Hedging Instrument [Member]

Derivative [Line Items]

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

The following table presents the fair value of our derivative contracts designated as cash flow hedging instruments included in our Condensed Consolidated Balance Sheets as of December 31, 2013 and September 30, 2013:

	Asset Derivatives					Liability Derivatives
(In thousands)		December 31, 2013		September 30, 2013			December 31, 2013		September 30, 2013
Derivative contracts designated as cash flow hedging instruments	Balance Sheet Location	Fair Value		Fair Value		Balance Sheet Location	Fair Value		Fair Value
Short-term interest rate swaps	Prepaid expenses and deferred costs	$	—	$	—	Accrued liabilities	$	1,361	$	1,586
Long-term interest rate swaps	Deferred costs and other assets	255		—		Other long-term liabilities	—		—
Short-term foreign exchange forward currency contracts	Prepaid expenses and deferred costs	—		—		Accrued liabilities	309		—
Long-term foreign exchange forward currency contracts	Deferred costs and other assets	—		—		Other long-term liabilities	455		—
Total derivatives designated as cash flow hedging instruments		$	255	$	—		$	2,125	$	1,586

Schedule of Cash Flow Hedges Included in Accumulated Other Comprehensive Income (Loss)

The following table presents the gains and losses on our derivative contracts designated as cash flow hedging instruments on our Condensed Consolidated Statements of Operations and Condensed Statements of Comprehensive Income for three months endedDecember 31, 2013 and the three months endedDecember 31, 2012:

Derivative contracts designated as cash flow hedging instruments	Amount of Gain or (Loss) Recognized in AOCI on Derivative (Effective Portion)						Location of Gain or (Loss) Reclassified from AOCI in Income (Effective Portion)	Amount of Gain or (Loss) Reclassified from AOCI into Income (Effective Portion)
(In thousands)	Three Months Ended December 31,							Three Months Ended December 31,
	2013			2012				2013			2012
Interest rate swaps	$	21		$	(66	)	Interest expense, net of capitalized interest	$	(354	)	$	(438	)
Foreign exchange forward currency contracts	(764		)	—			Contract drilling revenue	(27		)	—
Total	$	(743	)	$	(66	)		$	(381	)	$	(438	)

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Earnings Per Common Share (Tables)

3 Months Ended

Dec. 31, 2013

Earnings Per 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, 2013 and 2012 is as follows:

	Three Months Ended
(In thousands, except per share amounts)	Net Income		Shares	Per Share Amount
December 31, 2013
Basic earnings per share	$	83,397	64,112	$	1.30
Effect of dilutive securities:
Stock options	—		307	$	(0.01	)
Restricted stock	—		607	$	(0.01	)
Diluted earnings per share	$	83,397	65,026	$	1.28
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

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Fair Value

3 Months Ended

Dec. 31, 2013

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 carrying value of cash and cash equivalents, accounts receivable, accounts payable and short-term notes 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, 2013 and September 30, 2013, which are measured and recorded at fair value on a recurring basis:

		December 31, 2013
		Fair Value Measurements
(In thousands)	(Asset)/Liability	Carrying Amount			Level 1		Level 2			Level 3		Estimated Fair  Value
Type of Contract	Balance Sheet Classification
Short-term interest rate swaps	Accrued liabilities	$	1,361		$	—	$	1,361		$	—	$	1,361
Long-term interest rate swaps	Deferred costs and other assets	$	(255	)	—		$	(255	)	—		$	(255	)
Short-term foreign exchange forward currency contracts	Accrued liabilities	$	309				$	309				$	309
Long-term foreign exchange forward currency contracts	Other long term liabilities	$	455				$	455				$	455
Total derivative contracts, net		$	1,870		$	—	$	1,870		$	—	$	1,870
		September 30, 2013
		Fair Value Measurements
(In thousands)	(Asset)/Liability	Carrying Amount			Level 1		Level 2			Level 3		Estimated Fair  Value
Type of Contract	Balance Sheet Classification
Short-term interest rate swaps	Accrued liabilities	$	1,586		$	—	$	1,586		$	—	$	1,586
Total derivative contracts, net		$	1,586		$	—	$	1,586		$	—	$	1,586

Derivative financial instruments - Our derivative financial instruments consist of our interest rate swap contracts and our foreign currency forward exchange contracts.

The fair values of our interest rate swaps and our foreign currency forward exchange contracts 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 obtained from reputable data providers (e.g., Bloomberg and Reuters) and reviewed market activity and similarity of pricing terms to determine appropriate reliability level assertions for each instrument. It was determined that the contribution of the credit valuation adjustment to total fair value is less than 1% 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 as they were valued based upon observable inputs from dealer markets.

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

Revolving 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.

Senior Notes – The carrying value of our Senior Notes, net of unamortized premium, is $658.0 million ($650 million principal amount) while the fair value of those Senior Notes is $698.8 million. The fair value is determined by a market approach using quoted period-end bond prices. We have classified this instrument as Level 2 as valuation inputs for fair value measurements are quoted market prices as of December 31, 2013 that can only be obtained from independent third party sources. 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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Derivative Financial Instruments

3 Months Ended

Dec. 31, 2013

Derivative Instruments and Hedging Activities Disclosure [Abstract]

Derivative Financial Instruments

DERIVATIVE FINANCIAL INSTRUMENTS

Interest Rate Swap Contracts

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.

At December 31, 2013, we had interest rate swaps that effectively 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. In December 2013, we entered into additional interest rate swaps which extend the Company's current hedging program and effectively fix the interest rate on $250 million of borrowings at a weighted average interest rate of 3.1% from September 2014 to March 2016. As of December 31, 2013, these interest rate swaps are designated as cash flow hedging instruments.

Foreign Currency Forward Exchange Contracts

We conduct business in numerous foreign countries. Our functional currency is the U.S. dollar and thus our international operations expose us to foreign currency risk associated with cash flows from transactions denominated in currencies other than our functional currency. We enter into foreign currency forward exchange contracts to limit our exposure to fluctuations and volatility in the euro/U.S. dollar exchange rate.

In December 2013, we executed foreign currency forward exchange contracts for a portion of our anticipated euro receipts associated with revenues earned on a drilling contract from December 2013 through November 2015. These forward contracts effectively fix the euro/U.S. dollar exchange rate at1.365905on an aggregate notional amount of 72 million euro and settle monthly from March 2014 through February 2016. As of December 31, 2013, these forward contracts are designated as cash flow hedging instruments.

We do not engage in derivative transactions for speculative or trading purposes and we are not a party to leveraged derivatives.

Condensed Consolidated Balance Sheets

We record our derivative contracts at fair value on our consolidated balance sheets. See Note 8. The following table presents the fair value of our derivative contracts designated as cash flow hedging instruments included in our Condensed Consolidated Balance Sheets as of December 31, 2013 and September 30, 2013:

	Asset Derivatives					Liability Derivatives
(In thousands)		December 31, 2013		September 30, 2013			December 31, 2013		September 30, 2013
Derivative contracts designated as cash flow hedging instruments	Balance Sheet Location	Fair Value		Fair Value		Balance Sheet Location	Fair Value		Fair Value
Short-term interest rate swaps	Prepaid expenses and deferred costs	$	—	$	—	Accrued liabilities	$	1,361	$	1,586
Long-term interest rate swaps	Deferred costs and other assets	255		—		Other long-term liabilities	—		—
Short-term foreign exchange forward currency contracts	Prepaid expenses and deferred costs	—		—		Accrued liabilities	309		—
Long-term foreign exchange forward currency contracts	Deferred costs and other assets	—		—		Other long-term liabilities	455		—
Total derivatives designated as cash flow hedging instruments		$	255	$	—		$	2,125	$	1,586

We do not have any derivative contracts not designated as hedging instruments.

Condensed Consolidated Statements of Operation and Statements of Comprehensive Income

The following table presents the gains and losses on our derivative contracts designated as cash flow hedging instruments on our Condensed Consolidated Statements of Operations and Condensed Statements of Comprehensive Income for three months endedDecember 31, 2013 and the three months endedDecember 31, 2012:

Derivative contracts designated as cash flow hedging instruments	Amount of Gain or (Loss) Recognized in AOCI on Derivative (Effective Portion)						Location of Gain or (Loss) Reclassified from AOCI in Income (Effective Portion)	Amount of Gain or (Loss) Reclassified from AOCI into Income (Effective Portion)
(In thousands)	Three Months Ended December 31,							Three Months Ended December 31,
	2013			2012				2013			2012
Interest rate swaps	$	21		$	(66	)	Interest expense, net of capitalized interest	$	(354	)	$	(438	)
Foreign exchange forward currency contracts	(764		)	—			Contract drilling revenue	(27		)	—
Total	$	(743	)	$	(66	)		$	(381	)	$	(438	)

Each quarter, changes in the fair values of our derivative instruments designated as cash flow hedging instruments will adjust the balance sheet asset or liability, with an offset to Accumulated Other Comprehensive Income (“AOCI”) for the effective portion of the hedge. The effective portion of the cash flow hedge will remain in AOCI until it is reclassified into earnings in the period or periods during which the hedged transaction affects earnings or when it is probable that the hedged forecasted transaction will not occur by the end of the originally specified time period.

Any change in fair value resulting from ineffectiveness is recognized immediately in earnings. For the quarters ended December 31, 2013 and December 31, 2012, no loss was recognized on our Consolidated Statement of Operations due to hedge ineffectiveness. Additionally, there were no gains or losses recognized in income as a result of excluding amounts from the assessment of hedge effectiveness or as a result of reclassifications to earnings following the discontinuance of any cash flow hedges.

As of December 31, 2013, the estimated amount of unrealized losses associated with our interest rate derivative contracts that will be reclassified to earnings during the next twelve months totals $1.4 million. As of December 31, 2013, the estimated amount of unrealized losses associated with our foreign exchange forward currency contracts that will be reclassified to earnings during the next twelve months is approximately $0.3 million.

Derivative Contract Agreements

None of our derivative contracts contain credit-risk related contingent features, and no amounts of cash collateral were posted by us related to net liability positions as of December 31, 2013. Our derivative contracts are secured by the collateral package of our revolving credit facility.

We report the fair value of our derivative contracts on our Consolidated Balance Sheets on a gross basis by type of contract as either short-term or long-term. We determine the short-term and long-term classification based on the timing of expected future cash flows. The following table represents our gross and net derivative assets and liabilities:

(In thousands)	Gross Amount Presented on the Consolidated Balance Sheets			Netting Adjustments (a)			Net Amount
December 31, 2013
Derivative assets	$	255		$	(255	)	$	—
Derivative liabilities	(2,125		)	255			(1,870		)
September 30, 2013
Derivative assets	$	—		$	—		$	—
Derivative liabilities	(1,586		)	—			(1,586		)

(a) We have agreements in place with some of our financial trading counterparties that allow for the financial right of offset for derivative assets and derivative liabilities under the agreements.

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Income Taxes

3 Months Ended

Dec. 31, 2013

Income Tax Disclosure [Abstract]

Income Taxes

INCOME TAXES

Our consolidated effective income tax rate for the three months endedDecember 31, 2013 was approximately 12%, compared to 13% for the three months endedDecember 31, 2012. The effective tax rate for the three months endedDecember 31, 2013 was lower than the rate for the three months endedDecember 31, 2012 primarily due to a change in the geographical mix of our operations as well as the beneficial impact of discrete tax benefits recognized during the three months endedDecember 31, 2013. Our effective tax rate was lower than the U.S. statutory rate of 35% as a result of working in certain lower tax jurisdictions outside the United States. We record estimated accrued interest and penalties related to uncertain tax positions as income tax expense. At December 31, 2013, we had approximately $8.6 million of reserves for uncertain tax positions, including estimated accrued interest and penalties of $2.8 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 $8.6 million of the net uncertain tax liabilities would affect the effective tax rate if realized.

Our United States tax returns for fiscal year 2010 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, including tax returns in Australia for fiscal years 2008 through 2013 and tax returns in Equatorial Guinea for calendar years 2010 through 2013. 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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Commitments And Contingencies

3 Months Ended

Dec. 31, 2013

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 of its contention 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 services 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. The Indian Service Tax Authority has appealed this ruling to the Indian Supreme Court.

As of December 31, 2013, 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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Derivative Financial Instruments (Consolidated Balance Sheets) (Details) (USD $) In Thousands, unless otherwise specified	Dec. 31, 2013	Sep. 30, 2013
Derivatives, Fair Value [Line Items]
Asset Derivatives	$ 255	$ 0
Liability Derivatives	2,125	1,586
Designated as Hedging Instrument [Member] | Cash Flow Hedging [Member]
Derivatives, Fair Value [Line Items]
Asset Derivatives	255	0
Liability Derivatives	2,125	1,586
Designated as Hedging Instrument [Member] | Cash Flow Hedging [Member] | Interest rate swaps [Member] | Prepaid expenses and deferred costs [Member]
Derivatives, Fair Value [Line Items]
Asset Derivatives	0	0
Designated as Hedging Instrument [Member] | Cash Flow Hedging [Member] | Interest rate swaps [Member] | Deferred costs and other assets [Member]
Derivatives, Fair Value [Line Items]
Asset Derivatives	255	0
Designated as Hedging Instrument [Member] | Cash Flow Hedging [Member] | Interest rate swaps [Member] | Accrued liabilities [Member]
Derivatives, Fair Value [Line Items]
Liability Derivatives	1,361	1,586
Designated as Hedging Instrument [Member] | Cash Flow Hedging [Member] | Interest rate swaps [Member] | Other long-term liabilities [Member]
Derivatives, Fair Value [Line Items]
Liability Derivatives	0	0
Designated as Hedging Instrument [Member] | Cash Flow Hedging [Member] | Foreign exchange forward currency contracts [Member] | Prepaid expenses and deferred costs [Member]
Derivatives, Fair Value [Line Items]
Asset Derivatives	0	0
Designated as Hedging Instrument [Member] | Cash Flow Hedging [Member] | Foreign exchange forward currency contracts [Member] | Deferred costs and other assets [Member]
Derivatives, Fair Value [Line Items]
Asset Derivatives	0	0
Designated as Hedging Instrument [Member] | Cash Flow Hedging [Member] | Foreign exchange forward currency contracts [Member] | Accrued liabilities [Member]
Derivatives, Fair Value [Line Items]
Liability Derivatives	309	0
Designated as Hedging Instrument [Member] | Cash Flow Hedging [Member] | Foreign exchange forward currency contracts [Member] | Other long-term liabilities [Member]
Derivatives, Fair Value [Line Items]
Liability Derivatives	$ 455	$ 0

XML

Property and Equipment (Tables)

3 Months Ended

Dec. 31, 2013

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)	December 31, 2013			September 30, 2013
Drilling vessels and equipment	$	3,632,897		$	2,979,503
Construction work in progress	501,486			715,320
Drill pipe	32,804			26,743
Office equipment and other	29,672			24,439
Cost	4,196,859			3,746,005
Less: Accumulated depreciation	(613,592		)	(581,281		)
Drilling and other property and equipment, net	$	3,583,267		$	3,164,724

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Share-Based Compensation (Narrative) (Details) (USD $) In Millions, unless otherwise specified	3 Months Ended
	Dec. 31, 2013
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Weighted average recognition period	2 years 3 months 4 days
Stock Options [Member]
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Unrecognized compensation cost, stock options	$ 2.8
Outstanding options, maximum term	10 years
Stock Options [Member] | Minimum [Member]
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Employee, vesting period	1 year
Stock Options [Member] | Maximum [Member]
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Employee, vesting period	4 years
Restricted Stock [Member]
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Unrecognized compensation cost, restricted stock awards	$ 27.4
Restricted Stock [Member] | Minimum [Member]
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Employee, vesting period	3 years
Employee, restriction period	3 years
Non-employee directors, award vesting period	13 months
Non-employee directors, award recognition period	13 months
Restricted Stock [Member] | Maximum [Member]
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Employee, vesting period	4 years
Employee, restriction period	4 years

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Subsequent Events (Details) (Standard Jackup Drilling Unit [Member], USD $) In Millions, unless otherwise specified	Dec. 31, 2013	Jan. 17, 2014 Subsequent Event [Member]
Subsequent Event [Line Items]
Sales price		$ 55.4
Inventory and property and equipment, carrying value	$ 21.3

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Condensed Consolidated Balance Sheets (Parenthetical) (USD $) In Thousands, except Share data, unless otherwise specified	Dec. 31, 2013	Sep. 30, 2013
Statement of Financial Position [Abstract]
Allowance for doubtful accounts	$ 0	$ 0
Preferred stock, shares authorized	1,000,000	1,000,000
Preferred stock, shares outstanding	0	0
Common stock, par value (in dollars per share)	$ 1	$ 1
Common stock, shares authorized	90,000,000	90,000,000
Common stock, shares issued	64,208,000	64,057,000
Common stock, shares outstanding	64,208,000	64,057,000

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Share-Based Compensation

3 Months Ended

Dec. 31, 2013

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, 2013, unrecognized compensation cost, net of estimated forfeitures, related to stock options and restricted stock awards was approximately $2.8 million and $27.4 million, respectively, which we expect to recognize over a weighted average period of approximately 2.3 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, 2013 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, 2013	989	$	33.21	5.9	$	21,592
Granted	—	$	—
Exercised	(24)	$	34.63		$	476
Forfeited	(17)	$	40.26
Outstanding at December 31, 2013	948	$	33.04	5.6	$	19,178
Exercisable at December 31, 2013	761	$	31.29	5.1	$	15,355

Restricted Stock

We have awarded restricted stock 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 acceleration upon certain events as set forth in the terms of the grant. 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 acceleration upon certain events as set forth in the terms of the grant. We value restricted stock awards based on the fair market value of our common stock on the date of grant and also adjust to 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, 2013 is as follows:

	Number of Shares (000s)	Wtd. Avg. Fair Value
Unvested at October 1, 2013	849	$	42.42
Granted	297	$	54.62
Vested	(132)	$	37.29
Forfeited	(34)	$	41.17
Unvested at December 31, 2013	980	$	46.85

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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, 2013	Sep. 30, 2013
Number of Options:
Outstanding at October 1, 2013 (shares)	989
Granted (shares)	0
Exercised (shares)	(24)
Forfeited (shares)	(17)
Outstanding at December 31, 2013 (shares)	948	989
Exercisable at December 31, 2013 (shares)	761
Wtd. Avg. Exercise Price (in dollars per share):
Outstanding at October 1, 2013 (dollars per share)	$ 33.21
Granted (dollars per share)	$ 0.00
Exercised (dollars per share)	$ 34.63
Forfeited (dollars per share)	$ 40.26
Outstanding at December 31, 2013 (dollars per share)	$ 33.04	$ 33.21
Exercisable at December 31, 2013 (dollars per share)	$ 31.29
Share-based Compensation Arrangement by Share-based Payment Award, Options, Additional Disclosures [Abstract]
Wtd. Avg. Remaining Contractual Life (Years)	5 years 7 months 6 days	5 years 10 months 24 days
Wtd. Avg. Remaining Contractual Life (Years), Exercisable at December 31, 2013	5 years 1 month 6 days
Aggregate Intrinsic Value	$ 19,178	$ 21,592
Aggregate Intrinsic Value, Exercised	476
Aggregate Intrinsic Value, Exercisable at December 31, 2013	$ 15,355

XML

Fair Value (Estimated Fair Value of Financial Instruments) (Details) (Fair Value, Measurements, Recurring [Member], USD $) In Thousands, unless otherwise specified	Dec. 31, 2013	Sep. 30, 2013
Level 1 [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Total derivative contracts, liability (asset), net	$ 0
Level 1 [Member] | Interest rate swaps [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Total derivative contracts, liability (asset), net		0
Level 1 [Member] | Accrued liabilities [Member] | Interest rate swaps [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Derivative Liability	0	0
Level 1 [Member] | Deferred costs and other assets [Member] | Interest rate swaps [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Derivative Asset	0
Level 2 [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Total derivative contracts, liability (asset), net	1,870
Level 2 [Member] | Interest rate swaps [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Total derivative contracts, liability (asset), net		1,586
Level 2 [Member] | Accrued liabilities [Member] | Interest rate swaps [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Derivative Liability	1,361	1,586
Level 2 [Member] | Accrued liabilities [Member] | Foreign exchange forward currency contracts [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Derivative Liability	309
Level 2 [Member] | Deferred costs and other assets [Member] | Interest rate swaps [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Derivative Asset	(255)
Level 2 [Member] | Other long-term liabilities [Member] | Foreign exchange forward currency contracts [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Derivative Liability	455
Level 3 [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Total derivative contracts, liability (asset), net	0
Level 3 [Member] | Interest rate swaps [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Total derivative contracts, liability (asset), net		0
Level 3 [Member] | Accrued liabilities [Member] | Interest rate swaps [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Derivative Liability	0	0
Level 3 [Member] | Deferred costs and other assets [Member] | Interest rate swaps [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Derivative Asset	0
Estimated Fair Value [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Total derivative contracts, liability (asset), net	1,870
Estimated Fair Value [Member] | Interest rate swaps [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Total derivative contracts, liability (asset), net		1,586
Estimated Fair Value [Member] | Accrued liabilities [Member] | Interest rate swaps [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Derivative Liability	1,361	1,586
Estimated Fair Value [Member] | Accrued liabilities [Member] | Foreign exchange forward currency contracts [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Derivative Liability	309
Estimated Fair Value [Member] | Deferred costs and other assets [Member] | Interest rate swaps [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Derivative Asset	(255)
Estimated Fair Value [Member] | Other long-term liabilities [Member] | Foreign exchange forward currency contracts [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Derivative Liability	455
Carrying Amount [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Total derivative contracts, liability (asset), net	1,870
Carrying Amount [Member] | Interest rate swaps [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Total derivative contracts, liability (asset), net		1,586
Carrying Amount [Member] | Accrued liabilities [Member] | Interest rate swaps [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Derivative Liability	1,361	1,586
Carrying Amount [Member] | Accrued liabilities [Member] | Foreign exchange forward currency contracts [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Derivative Liability	309
Carrying Amount [Member] | Deferred costs and other assets [Member] | Interest rate swaps [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Derivative Asset	(255)
Carrying Amount [Member] | Other long-term liabilities [Member] | Foreign exchange forward currency contracts [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Derivative Liability	$ 455

XML

Share-Based Compensation (Tables)

3 Months Ended

Dec. 31, 2013

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, 2013 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, 2013	989	$	33.21	5.9	$	21,592
Granted	—	$	—
Exercised	(24)	$	34.63		$	476
Forfeited	(17)	$	40.26
Outstanding at December 31, 2013	948	$	33.04	5.6	$	19,178
Exercisable at December 31, 2013	761	$	31.29	5.1	$	15,355

Schedule of Restricted Stock Activity

A summary of restricted stock activity for the three months endedDecember 31, 2013 is as follows:

	Number of Shares (000s)	Wtd. Avg. Fair Value
Unvested at October 1, 2013	849	$	42.42
Granted	297	$	54.62
Vested	(132)	$	37.29
Forfeited	(34)	$	41.17
Unvested at December 31, 2013	980	$	46.85