Atwood Oceanics Announces Fiscal 2017 Second Quarter Earnings

Company Release - 5/8/2017 4:52 PM ET

FOR IMMEDIATE RELEASE - EARNINGS

HOUSTON, May 8, 2017 -- Atwood Oceanics, Inc. (NYSE: ATW) ("Company"), announced today that it had recognized a net loss of $28.9 million or $(0.37) per diluted share, on revenues of $167.7 million for the quarter ended March 31, 2017 compared to net income of $9.7 million or $0.15 per diluted share on revenues of $157.6 million for the quarter ended December 31, 2016 and compared to net income of $122.4 million or $1.89 per diluted share, on revenues of $296.4 million for the quarter ended March 31, 2016. For the six months ended March 31, 2017, the Company recognized a net loss of $19.2 million or $(0.27) per diluted share, on revenues of $325.3 million compared to net income of $161.5 million or $2.49 per diluted share, on revenues of $604.2 million for the six months ended March 31, 2016.

During the three months ended March 31, 2017, we concluded that the Atwood Eagle and its materials and supplies were impaired, and we wrote them down to their approximate salvage value. We recorded a non-cash impairment charge of approximately $59.0 million ($57.6 million, net of tax, or $0.74 per diluted share), which is included in Asset Impairment on the Unaudited Condensed Consolidated Statement of Operations for the three months ended March 31, 2017. This impairment charge includes a write-down of property and equipment and deferred costs of $49.6 million, a write-down of our inventory of materials and supplies that was specific to the Atwood Eagle of $8.4 million, and accrued estimated transaction costs of $1.0 million. On May 5, 2017, we executed a sale and recycling agreement with respect to the Atwood Eagle, pursuant to which the vessel, together with associated equipment and machinery will be sold to a third party to be demolished and recycled.

In January 2017, the client for the Atwood Achiever exercised its option provided as part of the "blend and extend" agreement we entered into in October 2015 to revert the contract to the original operating day rate and original end date. Exercise of this option resulted in a one-time payment to us of $48.1 million that includes the difference in day rates, taxes, and administrative fees covering the time periods for which the reduced day rate was applicable for previously provided drilling services, and is reported as a component of Contract drilling revenue in our Unaudited Condensed Consolidated Statements of Operations for the three and six months ended March 31, 2017

During the three months ended March 31, 2017, we issued, in a public offering, 15,525,000 shares of common stock. The net proceeds from the offering, before deducting estimated offering expenses, were approximately $181 million. The net proceeds are currently held as cash and are expected to be used for general corporate purposes, which may include the repayment of borrowings under the Credit Facility, the funding of future purchases or redemption of our Senior Notes, working capital and capital expenditures, and otherwise to enhance our liquidity.

During the three months ended March 31, 2016, we repurchased, through open market transactions, $13.5 million aggregate principal of our Senior Notes at an aggregate cost of $5.1 million, including a minimal amount of accrued interest, representing an average discount of 62.2%. As a result of the repurchases, we recognized a gain on debt retirement, net of the related debt issuance costs, of $8.4 million (or $0.13 per diluted share) in Gains on extinguishment of debt on the Unaudited Condensed Consolidated Statement of Operations for the three and six months ended March 31, 2016.

  For the Three Months Ended
  (Unaudited)
(In thousands, except per share amounts) March 31,
 2017
  December 31,
 2016
  March 31,
 2016
Revenues $ 167,706     $ 157,556     $ 296,351  
Income (Loss) before Income Taxes (27,316 )   12,064     136,426  
Provision for Income Taxes (1,546 )   (2,393 )   (13,989 )
Net Income (Loss) $ (28,862 )   $ 9,671     $ 122,437  
           
Earnings per Common Share -          
Basic $ (0.37 )   $ 0.15     $ 1.89  
Diluted $ (0.37 )   $ 0.15     $ 1.89  

 
 
 
 
     
 
Six Months Ended
      (Unaudited)
(In thousands, except per share amounts)     March 31,
 2017
  March 31,
 2016
Revenues     $ 325,262     $ 604,170  
Income (Loss) before Income Taxes     (15,251 )   186,721  
Provision for Income Taxes     (3,940 )   (25,203 )
Net Income (Loss)     $ (19,191 )   $ 161,518  
           
Earnings per Common Share -          
Basic     $ (0.27 )   $ 2.49  
Diluted     $ (0.27 )   $ 2.49  

ATWOOD OCEANICS, INC. AND SUBSIDIARIES
UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

  Three Months Ended March 31,   Six Months Ended March 31,
(In thousands, except per share amounts) 2017   2016   2017   2016
REVENUES:              
Contract drilling $ 162,240     $ 282,546     $ 312,103     $ 577,161  
Revenues related to reimbursable expenses 5,466     13,805     13,159     27,009  
Total revenues 167,706     296,351     325,262     604,170  
               
COSTS AND EXPENSES:              
Contract drilling 64,277     89,918     129,947     220,570  
Reimbursable expenses 4,674     9,123     11,276     17,409  
Depreciation 41,443     41,053     83,251     83,880  
General and administrative 12,445     11,488     27,636     26,665  
Asset impairment 58,962     708     58,962     65,432  
(Gain) loss on sale of assets (51 )   77     (118 )   77  
Other, net -     (1,137 )   -     (1,060 )
  181,750     151,230     310,954     412,973  
               
OPERATING (LOSS) INCOME (14,044 )   145,121     14,308     191,197  
               
OTHER (EXPENSE) INCOME:              
Interest expense, net of capitalized interest (13,537 )   (17,098 )   (29,828 )   (30,859 )
Interest income 265     6     269     10  
Gains on extinguishment of debt -     8,397     -     8,397  
Other income -     -     -     17,976  
  (13,272 )   (8,695 )   (29,559 )   (4,476 )
               
(LOSS) INCOME BEFORE INCOME TAXES (27,316 )   136,426     (15,251 )   186,721  
PROVISION FOR INCOME TAXES 1,546     13,989     3,940     25,203  
NET (LOSS) INCOME $ (28,862 )   $ 122,437     $ (19,191 )   $ 161,518  
               
(LOSS) EARNINGS PER COMMON SHARE (NOTE 3):              
Basic $ (0.37 )   $ 1.89     $ (0.27 )   $ 2.49  
Diluted $ (0.37 )   $ 1.89     $ (0.27 )   $ 2.49  
WEIGHTED AVERAGE COMMON SHARES OUTSTANDING (NOTE 3):              
Basic 78,270     64,781     71,504     64,739  
Diluted 78,270     64,825     71,504     64,870  
Dividend declared per share $ -     $ -     $ -     $ 0.075  

ATWOOD OCEANICS, INC. AND SUBSIDIARIES
UNAUDITED ANALYSIS OF REVENUES AND DRILLING COSTS

  REVENUES
  Three Months Ended   Six Months Ended
(In millions) March 31,
 2017
  December 31,
 2016
  March 31,
 2016
  March 31,
 2017
  March 31,
 2016
Ultra-Deepwater $ 162     $ 148     $ 189     $ 310     $ 371  
Deepwater -     -     59     -     131  
Jackups -     2     34     2     75  
Reimbursable 6     8     14     13     27  
  $ 168     $ 158     $ 296     $ 325     $ 604  

  DRILLING COSTS
  Three Months Ended   Six Months Ended
(In millions) March 31,
 2017
  December 31,
 2016
  March 31,
 2016
  March 31,
 2017
  March 31,
 2016
Ultra-Deepwater $ 53     $ 50     $ 54     $ 103     $ 115  
Deepwater -     -     19     -     62  
Jackups 11     14     19     25     45  
Reimbursable 5     7     9     11     17  
Other -     1     (2 )   2     (1 )
  $ 69     $ 72     $ 99     $ 141     $ 238  

ATWOOD OCEANICS, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS

(In thousands, except par value) March 31,
 2017
  September 30,
 2016
  (Unaudited)    
 ASSETS      
Cash $ 435,208     $ 145,427  
Accounts receivable, net 81,630     113,091  
Income tax receivable 2,889     6,095  
Inventories of materials and supplies, net 101,721     109,925  
Prepaid expenses, deferred costs and other current assets 12,498     18,504  
Total current assets 633,946     393,042  
       
Property and equipment, net 4,143,390     4,127,696  
       
Other receivables 11,831     11,831  
Deferred income taxes 165     165  
Deferred costs and other assets 7,313     7,058  
Total assets $ 4,796,645     $ 4,539,792  
       
LIABILITIES AND SHAREHOLDERS' EQUITY      
Accounts payable $ 23,693     $ 25,299  
Accrued liabilities 9,747     7,868  
Interest payable 8,395     7,096  
Income tax payable 8,582     8,294  
Deferred credits and other liabilities 1,636     799  
 Total current liabilities 52,053     49,356  
       
Long-term debt 1,298,067     1,227,919  
Deferred income taxes 1,599     1,202  
Deferred credits 7,910     -  
Other 35,994     30,929  
 Total long-term liabilities 1,343,570     1,260,050  
       
Commitments and contingencies (Note 9)      
       
Preferred stock, no par value, 1,000 shares authorized, none outstanding -     -  
Common stock, $1.00 par value, 180,000 shares authorized with 80,516 issued (Note 10) and outstanding as of March 31, 2017 and 180,000 shares authorized and 64,799 shares issued and outstanding as of September 30, 2016 80,516     64,799  
 Paid-in capital 410,855     237,542  
 Retained earnings 2,909,684     2,929,839  
 Accumulated other comprehensive loss (33 )   (1,794 )
Total shareholders' equity 3,401,022     3,230,386  
Total liabilities and shareholders' equity $ 4,796,645     $ 4,539,792  

ATWOOD OCEANICS, INC. AND SUBSIDIARIES
UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

  Six Months Ended March 31,
(In thousands) 2017   2016
Cash flows from operating activities:      
Net (loss) income $ (19,191 )   $ 161,518  
Adjustments to reconcile net (loss) income to net cash provided by operating activities:      
Depreciation 83,251     83,880  
Amortization 3,367     1,607  
Provision for doubtful accounts 2,369     1,141  
Deferred income tax benefit (525 )   (650 )
Share-based compensation expense 7,566     5,009  
Asset impairment 58,962     65,432  
(Gain) loss on sale of assets (118 )   77  
(Gain) on extinguishment of debt -     (8,397 )
Other, net -     (1,137 )
Changes in assets and liabilities:      
Accounts receivable 38,217     62,963  
Income tax receivable 3,206     507  
Inventories of materials and supplies (168 )   16,187  
Prepaid expenses, deferred costs and other current assets 6,072     14,709  
Deferred costs and other assets (4,201 )   (1,381 )
Accounts payable 3,425     (25,306 )
Accrued liabilities 4,023     (3,760 )
Income tax payable 288     6,534  
Deferred credits and other liabilities 6,720     1,220  
Net cash provided by operating activities 193,263     380,153  
       
Cash flows from investing activities:      
Capital expenditures (154,448 )   (176,175 )
Proceeds from sale of assets -     6,681  
Net cash used in investing activities (154,448 )   (169,494 )
       
Cash flows from financing activities:      
Proceeds from issuance of long-term debt 125,000     45,000  
Principal payments on long-term debt (55,000 )   (120,156 )
Dividends paid -     (21,746 )
Payments related to exercise of stock options -     (928 )
Proceeds from issuance of common stock

180,966     -  
Net cash provided by (used in) financing activities

250,966     (97,830 )
Net increase in cash and cash equivalents 289,781     112,829  
Cash and cash equivalents, at beginning of period 145,427     113,983  
Cash and cash equivalents, at end of period $ 435,208     $ 226,812  
       
Non-cash activities:      
(Decrease) increase in accounts payable related to capital expenditures $ (5,031 )   $ 950  
Increase in deferred credits not yet collected $ 9,125     $ -  

Atwood Oceanics, Inc. is a leading offshore drilling company engaged in the drilling and completion of exploration and development wells for the global oil and gas industry. The Company currently owns 10 mobile offshore drilling units and is constructing two ultra-deepwater drillships. The Company was founded in 1968 and is headquartered in Houston, Texas. Atwood Oceanics, Inc. common stock is traded on the New York Stock Exchange under the symbol "ATW." For more information about the Company, please visit www.atwd.com.

Conference Call

The Company has scheduled a conference call and webcast related to its second quarter 2017 results on Tuesday, May 9, 2017, at 9:00 A.M. CDT (10:00 A.M. EDT). Interested parties are invited to listen to the call by dialing 1-800-894-5910, or internationally 1-785-424-1052, Conference ID - Atwood, Password 46829. Interested parties may also listen over the Internet through a link posted in the Investor Relations section of the Company's Web site.

A replay of the conference call will be available on the Company's Web site following the end of the live call.

Contact: Mark W. Smith
Senior Vice President and Chief Financial Officer
(281) 749-7840




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Source: Atwood Oceanics, Inc. via Globenewswire