-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, HFmyqMfUG5ec+KhhHhIPXP/2mK6KGAVSwVOj+oq5aXdu5Ub0FE2FQR7/f+7PUFkF Z3vrFcCipSYZTClICRe4hQ== 0000008411-96-000021.txt : 19960808 0000008411-96-000021.hdr.sgml : 19960808 ACCESSION NUMBER: 0000008411-96-000021 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 19960630 FILED AS OF DATE: 19960807 SROS: NASD FILER: COMPANY DATA: COMPANY CONFORMED NAME: ATWOOD OCEANICS INC CENTRAL INDEX KEY: 0000008411 STANDARD INDUSTRIAL CLASSIFICATION: DRILLING OIL & GAS WELLS [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: 96605023 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 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, 1996 COMMISSION FILE NUMBER 0-6352 ATWOOD OCEANICS, INC. (Exact name of registrant as specified in its charter) TEXAS 74-1611874 State or other jurisdiction of (I.R.S. Employer Identification No.) incorporation or organization) 15835 Park Ten Place Drive Houston, Texas 77084 (Address of principal executive offices) (Zip Code) 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 15 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 June 30, 1996 6,688,863 shares of Common Stock $1 par value PAGE 2 PART I. FINANCIAL INFORMATION ATWOOD OCEANICS, INC. AND SUBSIDIARIES 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 to present fairly the financial position as of June 30, 1996 and September 30, 1995, and the results of operations for the three months and nine months ended June 30, 1996 and 1995, respectively, and the statements of cash flows for the nine months then ended. 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, 1995 Annual Report to Shareholders. PAGE 3 PART I. ITEM I - FINANCIAL STATEMENTS ATWOOD OCEANICS, INC. AND SUBSIDIARIES CONSOLIDATED BALANCE SHEETS (Unaudited) June 30, September 30, 1996 1995 (In thousands) ASSETS CURRENT ASSETS: Cash and cash equivalents $ 16,942 $ 11,984 Accounts receivable 16,819 13,425 Inventories of materials and supplies, at lower of 5,274 4,904 average cost or market 4,128 3,953 Prepaid expenses and other Total Current Assets 43,163 34,266 SECURITIES HELD FOR INVESTMENT: Held for maturity, at amortized cost 22,401 22,422 Available-for-sale, at fair value 3,967 3,516 26,368 25,938 PROPERTY AND EQUIPMENT: Drilling vessels, equipment and drill pipe 177,239 174,989 Investment in joint venture 10,497 8,182 Other 4,783 4,569 192,519 187,740 Less-accumulated depreciation 103,237 96,313 Net Property and Equipment 89,282 91,427 DEFERRED COSTS AND OTHER ASSETS 1,305 1,222 $160,118 $152,853 See accompanying notes to financial statements. PAGE 4 PART I. ITEM I - FINANCIAL STATEMENTS ATWOOD OCEANICS, INC. AND SUBSIDIARIES CONSOLIDATED BALANCE SHEETS (Unaudited) June 30, September 30, 1996 1995 (In thousands) LIABILITIES AND SHAREHOLDERS' EQUITY CURRENT LIABILITIES: Current maturities of long-term notes payable $ 3,750 $ 3,750 Short-term notes payable --- 1,500 Accounts payable 5,882 6,260 Accrued liabilities 11,947 8,995 Total Current Liabilities 21,579 20,505 LONG-TERM NOTES PAYABLE, net of current maturities 32,569 35,569 DEFERRED CREDITS: Income taxes 1,798 1,334 Other 3,877 553 5,675 1,887 SHAREHOLDERS' EQUITY: Preferred stock, no par value; 1,000,000 shares authorized, none outstanding --- --- Common stock, $1 par value; 10,000,000 share authorized with 6,689,000 and 6,629,000 shares issued and outstanding in 1996 and 1995, respectively 6,689 6,629 Paid-in capital 55,444 54,771 Net unrealized holding gains on available-for-sale 1,626 1,328 securities Retained earnings 36,536 32,164 Total Shareholders' Equity 100,295 94,892 $ 160,118 $ 152,853 See accompanying notes to financial statements PAGE 5 ATWOOD OCEANICS, INC. AND SUBSIDIARIES Consolidated Statement of Operations (Unaudited) Three Months Ended Nine Months Ended June 30, June 30, 1996 1995 1996 1995 (In thousands, except per share amounts) REVENUES: Contract drilling $ 18,891 $ 18,302 $ 55,712 $ 53,867 Contract management 236 246 639 1,301 19,127 18,548 56,351 55,168 COSTS AND EXPENSES: Contract drilling 11,721 13,120 37,510 37,996 Contract management 158 162 453 439 Depreciation 2,312 2,523 7,380 8,561 General and administrative 1,337 1,199 3,691 3,446 15,528 17,004 49,034 50,442 OPERATING INCOME 3,599 1,544 7,317 4,726 OTHER INCOME (EXPENSE) Interest expense (609) (740) (1,918) (2,207) Interest income 648 738 1,828 2,180 Realized gain on sale of securities --- 2,370 --- 2,370 39 2,368 (90) 2,343 INCOME BEFORE MINORITY INTEREST AND INCOME TAXES 3,638 3,912 7,227 7,069 MINORITY INTEREST IN NET LOSS OF PARTNERSHIPS --- --- --- 908 INCOME BEFORE INCOME TAXES 3,638 3,912 7,227 7,977 PROVISION FOR INCOME TAXES Foreign 843 651 2,427 1,306 Federal 416 70 428 450 1,259 721 2,855 1,756 NET INCOME $ 2,379 $ 3,191 $ 4,372 $ 6,221 EARNINGS PER COMMON SHARE $ .36 $ .48 $ .66 $ .95 WEIGHTED AVERAGE NUMBER OF COMMON SHARES OUTSTANDING 6,688 6,585 6,656 6,583 See accompanying notes to financial statements. PAGE 6 PART I. ITEM I - FINANCIAL STATEMENTS ATWOOD OCEANICS, INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited) Nine Months Ended June 30 1996 1995 (In thousands) CASH FLOW FROM OPERATING ACTIVITIES: Net Income $ 4,372 $ 6,221 Adjustments to reconcile net income to net cash provided (used) by operating activities: Depreciation 7,380 8,561 Deferred federal income tax provision 310 200 Amortization of deferred costs 474 316 Gain on sale of securities --- (2,370) Minority interest in net loss of partnerships --- (908) Changes in assets and liabilities: Increase in accounts receivable (3,394) (706) Increase in accounts payable and accrued 2,574 2,006 liabilities Other (735) 1,195 Total adjustments 6,609 8,294 Net cash provided by operating activities 10,981 14,515 CASH FLOW FROM INVESTING ACTIVITIES: Proceeds from sale of investments --- 3,343 Payment received on note receivable --- 202 Investment in joint venture (2,315) (4,400) Acquisition of interest in partnerships --- (13,275) Capital expenditures (2,941) (3,018) Net cash used by investing activities (5,256) (17,148) CASH FLOW FROM FINANCING ACTIVITIES: Principal payments on long-term notes payable (3,000) (2,380) Proceeds from exercises of stock options 733 54 Proceeds (payment) on short-term note payable (1,500) 3,000 Prepayment of mobilization revenues 3,000 --- Net payments to limited partner --- (100) Net cash provided (used) by financing activities (767) 574 NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS 4,958 (2,059) CASH AND CASH EQUIVALENTS, at beginning of period 11,984 16,119 CASH AND CASH EQUIVALENTS, at end of period $16,942 $14,060 See accompanying notes to financial statements PAGE 7 PART I. ITEM I - FINANCIAL STATEMENTS ATWOOD OCEANICS, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS 1. In January 1996, the Company commenced receiving a contribution to its financial results from a dayrate payment on RIG-200 during the delay period prior to its start-up of operations in Australia in late 1996 or early 1997. In December 1995, the Company received a $3 million prepayment of mobilization revenue relating to RIG-200 which was reflected in the Consolidated Balance Sheet as "other deferred credits". 2. For the nine months ended June 30, 1996, in accordance with FASB 115, shareholders' equity was increased $298,000 (net of $153,000 increase in deferred income taxes) to reflect the net unrealized increases during the nine months ended June 30, 1996 in holding gains on securities classified as available-for-sale. PAGE 8 PART I. ITEM 2 ATWOOD OCEANICS, INC. AND SUBSIDIARIES MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITIONS AND RESULTS OF OPERATIONS RESULTS OF OPERATIONS The economics in the international offshore drilling market continues to reflect improvement. Worldwide utilization of mobile offshore drilling units is in excess of 90 percent. Since October 1993, the Company has only incurred forty-one idle equipment days on all of its drilling units currently in service, a 99.5 percent equipment utilization rate. Contract revenues increased $1.2 million in the nine months ended June 30, 1996 compared to the same period in 1995. A comparative analysis by quarter of contract revenues is as follows: QUARTERS ENDED June 30, March 31, June 30, 1996 1996 1995 (In thousands) RIG-200 $ 718 $ 729 $ --- SEAHAWK 2,745 2,736 2,689 ATWOOD HUNTER 2,809 2,658 2,534 ATWOOD EAGLE 3,059 3,733 4,036 ATWOOD FALCON 2,542 2,515 2,804 VICKSBURG 1,262 1,235 1,224 RIG-19 2,072 2,057 1,905 RICHMOND 1,600 1,494 1,063 GOODWYN "A" 2,084 1,721 2,068 MANAGEMENT 236 208 225 $19,127 $19,086 $18,548 RIG-200 dayrate payments continue during the delay period while awaiting mobilization to Australia. The rig should commence drilling operations in Australia during the first calendar quarter of 1997. Since commencement of dayrate payments in January 1996, RIG-200 has been a significant contributor to the Company's improving quarterly results. The SEAHAWK has maintained a consistent level of contribution to the Company's operating results since it commenced operations in February 1993. The improvement in revenues generated by the ATWOOD HUNTER ("HUNTER") is the result of some increases in dayrate levels. The HUNTER has experienced 100 percent utilization since April 1993. During March/April 1996, the ATWOOD EAGLE ("EAGLE") was relocated from Australia to West Africa. As a result of this mobilization period, both revenues and drilling costs declined during the third quarter of 1996. However, with operating margin increasing from $10,000 per day in Australia to around $25,000 per day in West Africa the EAGLE was a contributor to the earnings improvement reflected in the third quarter's operating results. The PAGE 9 ATWOOD FALCON ("FALCON") continues to work on a consistent basis in the "Joint Development Area" between Thailand and Malaysia. Stable contracts for the VICKSBURG and RIG-19 continue to provide consistency to these operations. Increasing dayrates in the Gulf of Mexico account for the improvement in revenues generated by the RICHMOND. In June 1996 the Company received certain operating bonus awards related to GOODWYN 'A' which account for its revenues in the third quarter exceeding revenues for the quarter ended March 31, 1996. PAGE 10 Current status of the Company's drilling contracts is as follows: NAME OF RIG LOCATION CONTRACT STATUS RIG-200 United States Currently preparing for transport of rig to Australia. Estimate drilling to commence early 1997. Firm two year term with anticipated drilling program of five years. SEAHAWK Malaysia Term contract (estimated completion March 1997). ATWOOD HUNTER Malaysia Rig has five remaining option wells on its current contract, which, if drilled, could result in the dayrate revenue remaining approximately at current level. If all option wells are drilled, contract could extend to the end of 1996. Following completion of its contract work in Southeast Asia, the rig will be upgraded and relocated to the United States Gulf of Mexico to commence in mid-1997 a two year drilling program for British-Borneo Petroleum Inc. ATWOOD EAGLE Equatorial Guinea In May 1996 commenced drilling under a one year firm plus two six-month options contract. ATWOOD FALCON Thailand/Malaysia Current program has been extended at a "Joint higher dayrate level with estimated Development Area" completion of May 1997. VICKSBURG Australia Under contract until January 1997 (with a one year option). RIG-19 Australia Should complete work on current platform in September 1996. Planning in progress to move the rig to a new platform with drilling work of 12 to 18 months. RICHMOND United States Firm commitment through well-in progress at the end of September 1996 in the Gulf of Mexico (anticipate continuous work with current client through remainder of 1996.) GOODWYN 'A' Australia Term contract (estimated completion late 1996/early 1997). PAGE 11 An analysis of contract drilling costs by rig by quarter is as follows: QUARTERS ENDED June 30, March 31, June 30, 1996 1996 1995 (In thousands) RIG-200 $ 92 $ 97 $ --- SEAHAWK 1,613 1,654 1,597 ATWOOD HUNTER 1,718 1,821 1,773 ATWOOD EAGLE 1,408 2,519 3,362 ATWOOD FALCON 1,632 1,663 1,597 VICKSBURG 731 705 736 RIG-19 1,647 1,613 1,469 RICHMOND 1,240 1,235 971 GOODWYN "A" 1,572 1,379 1,396 OTHER 68 215 219 $11,721 $12,901 $13,120 The decline in drilling costs for the EAGLE is due to its relocation from Australia to West Africa. Costs incurred by the EAGLE during the mobilization period were offset by the $3.8 million of mobilization revenues; thereby, significantly reducing the level of costs reflected for the rig during the third quarter of 1996. RIG-19 operating cost in 1996 have increased over 1995 levels due to higher labor costs. The increases in RICHMOND's operating costs are due to higher maintenance expenditures. For the nine months ended June 30, 1996 compared to the same period in fiscal year 1995, depreciation decreased $1.2 million. This decrease is primarily attributable to an increase in the depreciable lives of the HUNTER, EAGLE and FALCON of five additional years upon the Company's acquisition of the limited partner's interest in these rigs effective December 31, 1994. An analysis of depreciation expense by rig is as follows: NINE MONTHS ENDED June 30, June 30, 1996 1995 (In thousands) ATWOOD HUNTER $ 1,226 $ 1,395 ATWOOD EAGLE 1,450 1,697 ATWOOD FALCON 1,976 2,437 SEAHAWK 1,671 1,725 RIG-19 544 892 OTHER 513 415 $ 7,380 $ 8,561 As a result of the Company's buyout of its limited partner's interest effective as of December 31, 1994, the limited partner had no interest in the operating results of the HUNTER, EAGLE and FALCON for the nine months ended June 30, 1996; therefore, no minority interest is reflected in the 1996 financial statements. The increase in provision for income taxes for the PAGE 12 three months and nine months ended June 30, 1996 is due primarily to increases in foreign taxes in Malaysia and Australia. As a result of profitable operations in recent times in both of these countries, most tax carryforward attributes have been utilized, thereby, increasing exposure to foreign taxes. Due to lower tax attribute carryforwards, the Company anticipates that tax expense in 1996 will be higher than 1995. Operating results in 1995 compared to 1996 were enhanced by the positive impact of minority interest, a lower tax provision and a $2.4 million gain on sale of securities. However, with continuation of 100 percent utilization of its active equipment and increasing dayrates on several rigs, the Company anticipates that the operating results for the fourth quarter of 1996 will continue to reflect improvement. LIQUIDITY AND CAPITAL RESOURCES In June 1996, the Company entered into a contract with British-Borneo Petroleum, Inc. for the HUNTER to conduct drilling operations in 1997 under a firm two years plus option program in the Gulf of Mexico. The Company will incur expenditures of approximately $40 million to upgrade the rig for operations in water depths of up to 3,500 feet, and to relocate the rig from Southeast Asia to the Gulf of Mexico. In addition to the HUNTER, the Company has also committed to purchase $5 million of long delivery equipment for the ATWOOD SOUTHERN CROSS ("CROSS"). The CROSS (a second-generation semisubmersible) remains idle in Australia as the Company continues to market the rig. Besides the $5 million of current commitments, an additional $15 to $18 million of equipment will have to be purchased to enable the rig to be placed in service with the capacity to drill in water depths up to 2,000 feet. The VICKSBURG, a jackup, is also a candidate for upgrade investment. This rig is currently committed under a drilling contract until 1997. The construction of RIG-200 was completed on time and within cost estimates. The rig is currently stacked in the United States awaiting delivery to Australia. Due to certain delays unrelated to the Company's activities, the rig is now not scheduled to commence drilling operations until early 1997. On January 1, 1996, the Company commenced receiving a "holding period" dayrate on RIG-200. In December 1995, the Company received a $3 million prepayment of mobilization revenues related to RIG-200, which will not be recognized into income until the rig is delivered to Australia. The Company continues to experience no difficulties in collecting its accounts receivable, with no requirement for an allowance for doubtful accounts. Currently the Company has no outstanding borrowings under a $10 million short-term line of credit it has with a bank. In accordance with Financial Accounting Standard Board Statement No. 115, available for sale securities are reflected in the Consolidated Balance Sheet at fair value, with the aggregate unrealized gain, net of related deferred tax liability, included in shareholders' equity. At June 30, 1996, the Company had approximately $43 million in cash and securities. A significant portion of the current capital commitment should be funded from excess cash; however, some short-term borrowings may be required to fund a portion of the upgrade expenditures. Based upon continued high equipment utilization and increasing operation margins from its third- generation semisubmersibles, especially the EAGLE, the Company's fourth quarter results should continue to reflect improvements in operating cash flow. Quarterly cash flows generated by the EAGLE and HUNTER above certain defined levels could result in additional principal payments to the Bank Group. In addition to the HUNTER, the FALCON and EAGLE could also be upgraded PAGE 13 to higher water depth drilling capabilities. Although no current commitments exist for upgrading these two rigs, the Company will continue to explore future upgrade opportunities, as well as, continue actively marketing the CROSS. Thus, the Company could incur additional equipment upgrade commitments which could require some form of externally generated funding. PAGE 14 ATWOOD OCEANICS, INC. AND SUBSIDIARIES PART II - ITEM 1 TO OUR SHAREHOLDERS AND EMPLOYEES: The Company's net income for the quarter ended June 30, 1996 reflects an approximate $1 million increase over the results for the second quarter of fiscal 1996 and an approximate $1.6 million increase over the results for the third quarter of fiscal year 1995 after adjustment for a $2.4 million gain realized in 1995 on sale of securities. This improvement in the third-quarter financial performance results primarily from increased operating margins realized from the Company's third-generation semisubmersibles, particularly the ATWOOD EAGLE ("EAGLE"). Earnings excluding investment income, but before depreciation, interest and taxes, were $5.9 million for the third quarter of fiscal 1996 compared to $4.1 million for the third quarter of fiscal 1995. The Company is optimistic this improving trend in financial performance will continue in its fourth fiscal quarter with increasing dayrates and continuing high fleet utilization. Excluding the ATWOOD SOUTHERN CROSS ("SOUTHERN CROSS"), which has not been placed in service, only forty-one idle equipment days have been incurred by the Company from October 1993 through June 30, 1996, a 99.5 percent equipment utilization rate. The EAGLE commenced operation in Equatorial Guinea in early May, 1996 under a one-year firm contract at significantly improved dayrates and daily margins. The ATWOOD FALCON ("FALCON") also received a firm extension of its current contract at significantly increased dayrates and daily margins. The FALCON contract extension is for five additional firm wells commencing in July, 1996 following the fifth well of the current contract. A term contract has been executed with British-Borneo Petroleum, Inc. for upgrade of the ATWOOD HUNTER to conduct drilling operations in the Gulf of Mexico under a firm two-year plus options contract, estimated to commence in mid-1997. The SOUTHERN CROSS is actively being offered for term opportunities in up to 2,000 ft. of water. RIG 19 is now expected to complete its current platform in September, 1996. We are still optimistic that RIG 19 will then move to another platform of 12 to 18 months duration. Formal notice has been received for mobilization of RIG 200 to Australia with arrival expected by November, 1996. RIG 200 drilling operations should commence in early calendar year 1997. The RICHMOND received a further dayrate increase in July and a firm contract extension which should keep it employed into October, 1996. The SEAHAWK and VICKSBURG should remain employed under their existing contracts into fiscal year 1997. The Company's positive trend in safety performance was again evident during our third fiscal quarter. The final phase in development and implementation of the Company's improved fleet-wide safety and management systems has now begun. In May, 1996, the Company completed a full year, fleet-wide, without a lost-time accident. The Company's employees throughout our operations are to be commended for this achievement and for their commitment to safe operations. We would also like to recognize our employees for their efforts and contributions to the Company's progress during our third quarter. /s/ John R. Irwin JOHN R. IRWIN President PAGE 15 ATWOOD OCEANICS, INC. AND SUBSIDIARIES PART II. OTHER INFORMATION Item 6. Reports on Form 8-K. On July 9, 1996, the Company filed a Form 8-K related to the June 24, 1996 announcement that it executed a term contract with British-Borneo Petroleum, Inc. for the ATWOOD HUNTER to conduct drilling operations under a firm two years plus option program. This contract will require the Company to incur expenditures of approximately $40 million to upgrade the rig for operating in water depths up to 3,500 feet, and to relocate the rig from Southeast Asia to the Gulf of Mexico. PAGE 16 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: 8/7/96 /s/ James M. Holland James M. Holland Senior Vice President and Chief Accounting Officer EX-27 2
5 0000008411 ATWOOD OCEANICS, INC. 1,000 3-MOS SEP-30-1996 OCT-01-1995 JUN-30-1996 16,942 26,368 16,819 0 5,274 43,163 192,519 101,237 160,118 21,579 32,569 0 0 6,689 57,070 160,118 56,351 58,179 37,963 41,654 7,380 0 1,918 7,227 2,855 4,372 0 0 0 4,372 .66 .66
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