-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: keymaster@town.hall.org Originator-Key-Asymmetric: MFkwCgYEVQgBAQICAgADSwAwSAJBALeWW4xDV4i7+b6+UyPn5RtObb1cJ7VkACDq pKb9/DClgTKIm08lCfoilvi9Wl4SODbR1+1waHhiGmeZO8OdgLUCAwEAAQ== MIC-Info: RSA-MD5,RSA, ZbByYutSCO52QGmYGBiOUbNeEVhxOh0JPWLh4zGV8cVsSee0HcUs/9EpVgyzj9Wk sUB8Ou2ODXc9p5WQpW2WTg== 0000008411-94-000029.txt : 19940815 0000008411-94-000029.hdr.sgml : 19940815 ACCESSION NUMBER: 0000008411-94-000029 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 1 CONFORMED PERIOD OF REPORT: 19940630 FILED AS OF DATE: 19940812 FILER: COMPANY DATA: COMPANY CONFORMED NAME: ATWOOD OCEANICS INC CENTRAL INDEX KEY: 0000008411 STANDARD INDUSTRIAL CLASSIFICATION: 1381 IRS NUMBER: 741611874 STATE OF INCORPORATION: TX FISCAL YEAR END: 0930 FILING VALUES: FORM TYPE: 10-Q SEC ACT: 1934 Act SEC FILE NUMBER: 000-06352 FILM NUMBER: 94543378 BUSINESS ADDRESS: STREET 1: 15835 PARK TEN PL DR STREET 2: SUITE 200 CITY: HOUSTON STATE: TX ZIP: 77084 BUSINESS PHONE: 7134922929 10-Q 1 10-Q 30 JUNE 1994 THIRD QUARTER SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D. C. 20549 FORM 10-Q QUARTERLY REPORT UNDER SECTION 13 OR 15 (d) OF THE SECURITIES EXCHANGE ACT OF 1934 For Quarterly Period Ended June 30, 1994 Commission File Number 0-6352 ATWOOD OCEANICS, INC. (Exact name of registrant as specified in its charter) State of Texas 74-1611874 (State or other jurisdiction of (I.R.S. Employer incorporation or organization) Identification No.) 15835 Park Ten Place Drive P.O. Box 218350 Houston, Texas 77218 (Address of principal executive offices) Registrant's telephone number, including area code: (713) 492-2929 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 the number of shares outstanding of each of the issuer's classes of common stock, as of August 11, 1994: 6,582,613 shares of Common Stock $1 par value. PAGE 2 ATWOOD OCEANICS, INC. AND SUBSIDIARIES PART I. FINANCIAL INFORMATION The condensed financial statements herein have been prepared by the Company without audit, pursuant to the rules and regulations of the Securities and Exchange Commission. Certain information and footnote disclosures normally included in financial statements prepared in accordance with generally accepted accounting principles have been condensed or omitted, although the Company believes that the disclosures are adequate to make the information not misleading. The financial statements reflect all adjustments which are, in the opinion of management, necessary for a fair statement of the results for the quarters ended June 30, 1994 and 1993. All adjustments were of a normal recurring nature. It is suggested these condensed financial statements be read in conjunction with the financial statements and the notes thereto included in the Company's September 30, 1993 Annual Report to Shareholders. PAGE 3 ATWOOD OCEANICS, INC. AND SUBSIDIARIES PART I. ITEM I - FINANCIAL STATEMENTS CONSOLIDATED BALANCE SHEETS (Unaudited) June 30, September 30, 1994 1993 (In thousands) ASSETS CURRENT ASSETS: Cash and cash equivalents $ 17,037 $ 10,087 Accounts receivable 12,265 10,768 Current maturities of long-term notes receivable 400 400 Inventories of materials and supplies, at lower of average cost or market 3,985 3,850 Prepaid expenses and other 1,354 1,498 Total Current Assets 35,041 26,603 MARKETABLE SECURITIES AND U.S. TREASURY BONDS 24,935 24,957 LONG-TERM NOTES RECEIVABLE, net of current maturities 6,086 6,389 PROPERTY AND EQUIPMENT: Drilling vessels, equipment and drill pipe 185,557 182,851 Other 4,049 3,924 189,606 186,775 Less - accumulated depreciation 105,927 96,625 83,679 90,150 DEFERRED COSTS AND OTHER ASSETS 964 1,754 $ 150,705 $ 149,853 PAGE 4 ATWOOD OCEANICS, INC. AND SUBSIDIARIES PART I. ITEM I - FINANCIAL STATEMENTS CONSOLIDATED BALANCE SHEETS (Unaudited) June 30, September 30, 1994 1993 (In thousands) LIABILITIES AND SHAREHOLDERS' EQUITY CURRENT LIABILITIES: Current maturities of notes payable by partnership $ 3,000 $ 3,000 Accounts payable 3,324 3,058 Accrued liabilities 6,002 5,842 Total Current Liabilities 12,326 11,900 LONG-TERM NOTES PAYABLE BY PARTNERSHIP, net of current maturities 50,747 55,409 DEFERRED INCOME TAXES 567 --- MINORITY INTEREST IN PARTNERSHIPS 2,784 2,794 SHAREHOLDERS' EQUITY: Preferred stock, no par value; 1,000,000 shares authorized, none outstanding --- --- Common stock, $1 par value; 10,000,000 shares authorized with 6,582,000 shares issued and outstanding 6,582 6,582 Paid-in capital 54,273 54,273 Retained earnings 23,426 18,895 Total Shareholders' Equity 84,281 79,750 $ 150,705 $ 149,853 PAGE 5 ATWOOD OCEANICS, INC. AND SUBSIDIARIES PART I. ITEM 1 - FINANCIAL STATEMENTS CONSOLIDATED STATEMENTS OF OPERATIONS (Unaudited) Three Months Ended June 30, 1994 1993 (In thousands, except per) share amounts) REVENUES: Drilling revenues $ 16,219 $ 13,047 Management fee income 542 425 Dividends and interest 680 595 Gain on Sale of Indian Joint Venture --- --- 17,441 14,067 COSTS AND EXPENSES: Drilling costs 11,129 9,404 Depreciation 3,421 3,410 General and administrative 1,157 1,069 Interest 708 695 16,415 14,578 INCOME (LOSS) BEFORE MINORITY INTEREST AND INCOME TAXES 1,026 (511) MINORITY INTEREST IN LOSS OF PARTNERSHIPS 635 1,366 INCOME (LOSS) BEFORE INCOME TAXES 1,661 855 PROVISION FOR INCOME TAXES 35 478 NET INCOME (LOSS) $ 1,626 $ 377 INCOME (LOSS) PER COMMON SHARE $ .25 $ .06 WEIGHTED AVERAGE NUMBER OF COMMON SHARES OUTSTANDING 6,582 6,582 PAGE 6 ATWOOD OCEANICS, INC. AND SUBSIDIARIES PART I. PART 1 - FINANCIAL STATEMENTS CONSOLIDATED STATEMENTS OF OPERATIONS (Unaudited) Nine Months Ended June 30, 1994 1993 (In thousands, except per) share amounts) REVENUES: Drilling revenues $ 47,577 $ 34,957 Management fee income 1,561 1,246 Dividends and interest 1,893 2,034 Gain on Sale of Indian Joint Venture 201 --- 51,232 38,237 COSTS AND EXPENSES: Drilling costs 33,102 26,811 Depreciation 10,163 9,625 General and administrative 3,236 3,105 Interest 2,063 2,350 48,564 41,891 INCOME (LOSS) BEFORE MINORITY INTEREST AND INCOME TAXES 2,668 (3,654) MINORITY INTEREST IN LOSS OF PARTNERSHIPS 2,429 3,666 INCOME (LOSS) BEFORE INCOME TAXES 5,097 12 PROVISION FOR INCOME TAXES 566 1,284 NET INCOME (LOSS) $ 4,531 $ (1,272) INCOME (LOSS) PER COMMON SHARE $ .69 $ (.19) WEIGHTED AVERAGE NUMBER OF COMMON SHARES OUTSTANDING 6,582 6,582 PAGE 7 ATWOOD OCEANICS, INC. AND SUBSIDIARIES PART I. ITEM 1 - FINANCIAL STATEMENTS CONSOLIDATED STATEMENTS OF CASH FLOW Nine Months Ended June 30, 1994 1993 (In thousands) CASH FLOW FROM OPERATING ACTIVITIES: Net Income (Loss) $ 4,531 $ (1,272) Adjustments to reconcile net loss to net cash provided (used) by operating activities: Depreciation 10,163 9,625 Amortization of deferred costs 440 80 Deferred federal income tax benefit (200) --- Minority interest in loss of partnerships (2,429) (4,240) Changes in assets and liabilities: Decrease (increase) in accounts receivable (1,497) 5,523 Decrease in accounts payable and accrued liabilities 426 (1,600) Other 32 411 TOTAL ADJUSTMENTS 6,935 9,799 Net Cash Provided by Operating Activities 11,466 8,527 CASH FLOW FROM INVESTING ACTIVITIES: Proceeds from sale of Indian Joint Venture 1,300 --- Payment received on notes receivable 303 817 Capital expenditures (3,869) (4,916) Net Cash Used by Investing Activities (2,266) (4,099) CASH FLOW FROM FINANCING ACTIVITIES: Principal payment on long-term notes payable (2,250) (2,250) Repayment of short-term note payable --- (3,500) Net advances by limited partner --- 812 Net Cash Used by Financing Activities (2,250) (4,938) NET INCREASE IN CASH AND CASH EQUIVALENTS 6,950 (510) CASH AND CASH EQUIVALENTS, at beginning of period 10,087 8,859 CASH AND CASH EQUIVALENTS, at end of period $ 17,037 $ 8,349 PAGE 8 ATWOOD OCEANICS, INC. AND SUBSIDIARIES PART I. ITEM 2 MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITIONS AND RESULTS OF OPERATIONS RESULTS OF OPERATIONS Total revenues increased $3.4 million (24 percent) in the third quarter of fiscal year 1994 compared to the third quarter of fiscal year 1993. This increase is primarily due to an increase in drilling revenues. A comparative analysis of drilling revenues by rig is as follows: QUARTERS ENDED June 30, March 31, June 30, 1994 1994 1993 (In Thousands) HUNTER $ 2,618 $ 2,533 $ 2,315 EAGLE 3,214 3,218 2,362 FALCON 2,680 2,311 438 VICKSBURG 1,136 1,044 1,106 RIG-19 1,814 1,744 1,755 SEAHAWK 2,716 2,684 2,674 RICHMOND 1,241 1,487 1,720 OTHER 800 964 677 $16,219 $15,985 $13,047 Thus far in fiscal year 1994, the HUNTER has incurred no idle days. In fiscal year 1993, the HUNTER was idle the entire second quarter and the first thirteen days of the third quarter. During December 1993, the EAGLE was mobilized from Malaysia to the "Zone of Cooperation" (an area between Indonesia and Australia) to drill under a multiple well contract. Due to higher labor costs, dayrate revenue levels are higher in Australia than in Malaysia. This difference in dayrate levels is reflected in the comparison of EAGLE revenues. The FALCON was idle virtually the entire third quarter of fiscal year 1993, which accounts for the significantly reduced revenues in 1993 compared to 1994. Since its relocation from the Gulf of Mexico to Australia in 1987, the VICKSBURG has worked continuously for the same customer. RIG-19 has also had continuous employment since its acquisition in 1989. Since its commencement of operations in February 1993, the SEAHAWK has been a significant contributor to the Company's improved operating results. The RICHMOND has worked continuously since its return to employment in March 1993. The reduction in revenues from the RICHMOND is due to a decline in dayrates. The Company has reduced dayrate levels on the RICHMOND in order to maintain utilization. The increase in "OTHER" relates primarily to the commencement in November 1993 of a short-term labor contract in Australia. The Company's current contract status for drilling rigs wholly or partially owned is as follows: PAGE 9 NAME OF RIG LOCATION CONTRACT STATUS HUNTER Malaysia Rig is currently drilling the third of six possible option wells. If all option wells are drilled, contract could terminate in September/October 1994. Discussions are currently ongoing for additional wells. EAGLE Indonesia- Rig is currently drilling its last firm well; Australia however, the Company anticipates that two to "Zone of three option wells will be drilled. If the Cooperation" option wells are drilled, the contract should continue until December 1994. FALCON Preparing The rig is currently preparing to mobilize to Mobilize to Korea to commencing drilling under a to Korea contract estimated to last six to nine months. The rig should be on location by the first week of September 1994. VICKSBURG Australia Employed under a contract estimated to extend to January 1995, with additional options. RIG-19 Australia Drilling under a term contract estimated to extend into 1997. SEAHAWK Malaysia Commenced drilling in February, 1993 under a contract with primary term of 600 days plus multiple options. RICHMOND U.S. Gulf Drilling under a contract estimated to terminate in September 1994. Additional ongoing work is now being pursued. SOUTHERN CROSS Australia Remains idle while the Company pursues future contract opportunities. For the three months ended June 30, 1994 compared to the three months ended June 30, 1993, drilling costs increased $1.7 million (18 percent). An analysis of drilling costs by rig is as follows: QUARTERS ENDED June 30, March 31, June 30, 1994 1994 1993 (In Thousands) HUNTER $ 1,697 $ 1,823 $ 1,714 EAGLE 2,525 2,430 1,539 FALCON 1,494 1,422 726 VICKSBURG 735 610 680 RIG-19 1,428 1,242 1,242 SEAHAWK 1,504 1,451 1,567 RICHMOND 852 885 1,086 OTHER 894 1,261 850 $11,129 $11,124 $ 9,404 PAGE 10 The increase in the EAGLE's drilling costs is due to its relocation from Malaysia to Australia - Indonesia "Zone of Cooperation". Operating costs are less in Malaysia due to lower labor expenses. The increase in FALCON drilling costs is due to the rig having 100 percent utilization during 1994 compared to being idle virtually the entire third quarter of fiscal year 1993. Thus, relocation of the EAGLE to an area with higher operating costs and the increased utilization of the FALCON accounts for the increase in drilling costs between the third quarter of 1994 and 1993. The decline in interest expense during 1994 is due primarily to a reduction in effective interest rates during the first half of 1994 coupled with some reduction in outstanding principal. The increase in depreciation expense for the nine months ended June 30, 1994 is due to the depreciation on the SEAHAWK which commenced operations in February 1993. As required, the Company adopted the Financial Accounting Standards Board Statement No. 109, "Account for Income Taxes", in the first quarter of fiscal year 1994. This initial adoption had no impact on the Company's statement of operations and minimally increased assets and liabilities by approximately $800,000 on the Company's balance sheet. As a result of the reductions in the difference between book and tax basis on certain partnerships' assets during fiscal year 1994, a $200,000 tax benefit with a corresponding $200,000 reduction in deferred income taxes were recorded during the third quarter of 1994. This tax benefit coupled with less foreign taxes accounts for the reduction in the provision for income taxes. The primary reason for the Company's profitable results in 1994 continues to be its ability to maintain high equipment utilization. For the first nine months of fiscal year 1994, excluding the SOUTHERN CROSS, the Company has only incurred eleven idle equipment days (99 percent utilization) compared to 337 idle equipment days (81 percent utilization) for the same period in fiscal year 1993. The key to the Company continuing its profitable operations in subsequent quarters will be maintaining high utilization of its equipment. LIQUIDITY AND CAPITAL RESOURCES In October 1993, the Company sold its forty percent interest in an Indian joint venture company for $1.3 million resulting in a gain of $201,000. The Company used the proceeds from this sale to help fund the $1.5 million purchase of the SOUTHERN CROSS, a semisubmersible built in 1976. This vessel remains idle in Australia as the Company pursues future contract opportunities. In August 1994, an Australian entity in which the Company owns a 50 percent interest entered into an agreement with a multi- national oil company to provide a mechanized modular offshore platform rig to commence drilling offshore Australia by the first calendar quarter of 1996. The remaining fifty percent interest is owned by a wholly owned subsidiary of Helmerich & Payne, Inc., the owner of approximately 24 percent of the Company's common stock. The modular rig will cost approximately $27 million to construct and will be funded equally by the Company and Helmerich & Payne out of internally generated cash. PAGE 11 At June 30, 1994 compared to September 30, 1993, the Company's working capital increased approximately $8 million. The Company continues to experience no difficulties in collecting its accounts receivable. Subject to investing in new opportunities (including the construction of the above modular rig), the Company's cash reserves should continue to increase as a result of anticipated continuing improvement in cash flows. PAGE 12 ATWOOD OCEANICS, INC. AND SUBSIDIARIES PART I. ITEM 2 August 12, 1994 To Our Shareholders and Employees: The Company earned a profit of $4,531,000 for the nine months ended June 30, 1994, the Company's best financial performance since 1983. Equipment utilization for the first nine months of fiscal year 1994, excluding the SOUTHERN CROSS which has not been placed in service, has been 99 percent (eleven idle days) compared to 81 percent utilization (337 idle days) for the same period in fiscal year 1993. Earnings, including investment income, before depreciation, interest and taxes, but after adjustment for minority interest, were $11.5 million for the nine months ended June 30, 1994, compared to $6.0 million for the same period in 1993. Operating cash flow for the nine months ended June 30, 1994 compared to the same period in 1993 increased $8.3 million. For the nine months ended June 30, 1994 drilling revenues increased $12.6 million or 36 percent. The Company's improvement in operating results is primarily attributable to management's emphasis on maintaining high equipment utilization, not to any significant improvements in market conditions. Recent increases in oil prices, if sustained, may eventually yield market improvement; however, for the balance of calendar 1994, our goal is to strive for continuing high equipment utilization without expecting an improvement in market conditions. The FALCON has a contract with the Korean Petroleum Development Corp. in Korea which should keep it employed into the second quarter of fiscal 1995 and the EAGLE's current contract should keep it employed until first quarter of fiscal 1995. Ongoing opportunities are being aggressively sought for the RICHMOND and HUNTER which are expected to complete their current contract commitments in the fourth quarter of fiscal 1994 and the first quarter of fiscal 1995, respectively. A commitment has been made to install a new top-drive system on the RICHMOND; we believe that this enhancement will improve the RICHMOND's competitiveness and availability of employment opportunities. We are pleased to report that a newly formed venture owned 50% by Atwood Oceanics and 50% by an affiliated company, Helmerich & Payne, Inc., (an owner of 24% of the Company's common stock) has been awarded a term contract by Esso Australia Ltd. for the design, construction and operation of a new platform rig incorporating the latest technology in instrumentation and mechanization. Operation of the new rig will be managed by the Company and is expected to commence on Esso's West Tuna platform in the Bass Strait offshore the State of Victoria in early 1996. Our efforts in pursuing profitable new opportunities are continuing. Striving to achieve safe operations remains at the forefront of our endeavors. The support of our shareholders and employees is appreciated as we work toward future development of the Company. /s/ John R. Irwin JOHN R. IRWIN PRESIDENT PAGE 13 ATWOOD OCEANICS, INC. AND SUBSIDIARIES PART II. OTHER INFORMATION During the quarter ended June 30, 1994, the Company has not filed any Form 8-K's. 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: 8/12/94 s/JAMES M. HOLLAND James M. Holland Senior Vice President and Chief Accounting Officer -----END PRIVACY-ENHANCED MESSAGE-----