Atwood Oceanics Announces Fiscal 2017 Third Quarter Earnings

Company Release - 8/3/2017 8:48 AM ET

FOR IMMEDIATE RELEASE - EARNINGS

HOUSTON, August 3, 2017 -- Atwood Oceanics, Inc. (NYSE: ATW) ("Company"), announced today that it had recognized a net loss of 4.3 million or $(0.05) per diluted share, on revenues of $117.2 million for the quarter ended June 30, 2017 compared to 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 and compared to net income of $99.5 million or $1.53 per diluted share, on revenues of $227.8 million for the quarter ended June 30, 2016. For the nine months ended June 30, 2017, the Company recognized a net loss of 23.5 million or $(0.32) per diluted share, on revenues of $442.5 million compared to net income of $261.0 million or $4.02 per diluted share, on revenues of $832.0 million for the nine months ended June 30, 2016.

Rob Saltiel, President and Chief Executive Officer, commented on the Company's third quarter financial results. "Our third quarter revenues were impacted negatively by lower fleet revenue efficiency due to isolated downtime incidents. In contrast, the rig fleet operated at a revenue efficiency of approximately 99% for the month of July. Third quarter contract drilling costs were significantly lower than those of the second quarter due to excellent cost control and efficient progression of the Atwood Condor project as this rig prepares for work in Australia commencing January 2018."

During the nine months ended June 30, 2016, we repurchased, through open market transactions, $159.3 million aggregate principal amount of our Senior Notes for $102.5 million, including accrued interest. As a result of the repurchases, we recognized a total gain on debt retirement, net of the related debt issuance costs and premium, of $58.9 million ($44.1 million, net of tax, or $0.68 per diluted share) in Gains on extinguishment of debt on our Condensed Consolidated Statements of Operations for the nine ended June 30, 2016.

These repurchases, in the nine month periods ended June 30, 2016, allowed us to reduce our outstanding indebtedness and related interest expense at a significant discount to the face value of our Senior Notes. The gain associated with the repurchases was subject to tax and increased our effective tax rate. However, due to the availability of operating loss carry-forwards the actual cash tax impact was minimal. The repurchases were made using available cash balances.

Pending Merger with Ensco plc ("Ensco")
On May 29, 2017, the Company entered into an Agreement and Plan of Merger (the "Merger Agreement") with Ensco and Echo Merger Sub LLC, a wholly owned subsidiary of Ensco ("Merger Sub"), pursuant to which Ensco will acquire the Company in an all-stock transaction. Subject to the terms and conditions of the Merger Agreement, at the effective time of the Merger, each share of common stock, par value $1.00 per share (other than shares of Company common stock held by Ensco, Merger Sub or the Company), will be converted into the right to receive 1.60 validly issued, fully paid and nonassessable Class A ordinary shares of Ensco, nominal value $0.10.

The Merger Agreement contains customary representations, warranties and covenants by the Company, Merger Sub and Ensco. The Merger Agreement also contains customary pre-closing covenants, including the obligation of the Company and Ensco to conduct their respective businesses in the ordinary course of business and to refrain from taking specified actions without the consent of the other party.

The consummation of the Merger is subject to satisfaction of customary closing conditions, including among other things, the approval of the allotment and issuance of Ensco shares by Ensco's shareholders, approval of the Merger by both the Company's and Ensco's shareholders, the expiration or termination of any waiting period applicable to the Merger under the Hart-Scott-Rodino Antitrust Improvements Acts of 1976 (the "HSR Act") and similar regulatory clearances in certain other jurisdictions. On June 29, 2017, the transaction received early termination of the waiting period under the HSR Act. The Merger is expected to close in the third quarter of calendar 2017.

Conference Call

Given the proposed Merger with Ensco, the Company will not hold a conference call to discuss its quarterly results.

  For the Three Months Ended
  (Unaudited)
(In thousands, except per share amounts) June 30,
 2017
  March 31,
 2017
  June 30,
 2016
Revenues $ 117,234     $ 167,706     $ 227,797  
Income (Loss) before Income Taxes (1,768 )   (27,316 )   120,116  
Provision for Income Taxes (2,581 )   (1,546 )   (20,611 )
Net Income (Loss) $ (4,349 )   $ (28,862 )   $ 99,505  
           
Earnings per Common Share -          
Basic $ (0.05 )   $ (0.37 )   $ 1.54  
Diluted $ (0.05 )   $ (0.37 )   $ 1.53  

      Nine Months Ended
      (Unaudited)
(In thousands, except per share amounts)     June 30,
 2017
  June 30,
 2016
Revenues     $ 442,496     $ 831,967  
Income (Loss) before Income Taxes     (17,021 )   306,837  
Provision for Income Taxes     (6,520 )   (45,814 )
Net Income (Loss)     $ (23,541 )   $ 261,023  
           
Earnings per Common Share -          
Basic     $ (0.32 )   $ 4.03  
Diluted     $ (0.32 )   $ 4.02  

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

  Three Months Ended June 30,   Nine Months Ended June 30,
(In thousands, except per share amounts) 2017   2016   2017   2016
REVENUES:              
Contract drilling $ 111,803     $ 217,818     $ 423,906     $ 794,979  
Revenues related to reimbursable expenses 5,431     9,979     18,590     36,988  
Total revenues 117,234     227,797     442,496     831,967  
               
COSTS AND EXPENSES:              
Contract drilling 48,182     80,524     178,129     301,094  
Reimbursable expenses 3,245     5,489     14,521     22,898  
Depreciation 38,500     41,084     121,751     124,964  
General and administrative 15,557     12,028     43,193     38,693  
Asset impairment 211     (659 )   59,173     64,773  
Loss on sale of assets 379     -     261     77  
Other, net -     16     -     (1,044 )
  106,074     138,482     417,028     551,455  
               
OPERATING INCOME 11,160     89,315     25,468     280,512  
               
OTHER (EXPENSE) INCOME:              
Interest expense, net of capitalized interest (13,636 )   (19,674 )   (43,464 )   (50,533 )
Interest income 708     9     975     19  
Gains on extinguishment of debt -     50,466     -     58,863  
Other income -     -     -     17,976  
  (12,928 )   30,801     (42,489 )   26,325  
               
(LOSS) INCOME BEFORE INCOME TAXES (1,768 )   120,116     (17,021 )   306,837  
PROVISION FOR INCOME TAXES 2,581     20,611     6,520     45,814  
NET (LOSS) INCOME $ (4,349 )   $ 99,505     $ (23,541 )   $ 261,023  
               
(LOSS) EARNINGS PER COMMON SHARE (NOTE 3):              
Basic $ (0.05 )   $ 1.54     $ (0.32 )   $ 4.03  
Diluted $ (0.05 )   $ 1.53     $ (0.32 )   $ 4.02  
WEIGHTED AVERAGE COMMON SHARES OUTSTANDING (NOTE 3):              
Basic 80,542     64,795     74,515     64,750  
Diluted 80,542     64,847     74,515     64,852  

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

  REVENUES
  Three Months Ended   Nine Months Ended
(In millions) June 30,
 2017
  March 31,
 2017
  June 30,
 2016
  June 30,
 2017
  June 30,
 2016
Ultra-Deepwater $ 109     $ 162     $ 182     $ 419     $ 553  
Deepwater -     -     -     -     131  
Jackups 3     -     36     5     111  
Reimbursable 5     6     10     18     37  
  $ 117     $ 168     $ 228     $ 442     $ 832  

  DRILLING COSTS
  Three Months Ended   Nine Months Ended
(In millions) June 30,
 2017
  March 31,
 2017
  June 30,
 2016
  June 30,
 2017
  June 30,
 2016
Ultra-Deepwater $ 43     $ 53     $ 54     $ 146     $ 168  
Deepwater -     -     10     1     71  
Jackups 7     11     16     32     62  
Reimbursable 3     5     5     15     23  
Other (2 )   -     1     (1 )   -  
  $ 51     $ 69     $ 86     $ 193     $ 324  

ATWOOD OCEANICS, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS

(In thousands, except par value) June 30,
 2017
  September 30,
 2016
  (Unaudited)    
 ASSETS      
Cash $ 474,313     $ 145,427  
Accounts receivable, net 78,140     113,091  
Income tax receivable 2,769     6,095  
Inventories of materials and supplies, net 102,444     109,925  
Prepaid expenses, deferred costs and other current assets 13,617     18,504  
Total current assets 671,283     393,042  
       
Property and equipment, net 4,137,741     4,127,696  
       
Other receivables 11,831     11,831  
Deferred income taxes 165     165  
Deferred costs and other assets 7,174     7,058  
Total assets $ 4,828,194     $ 4,539,792  
       
LIABILITIES AND SHAREHOLDERS' EQUITY      
Accounts payable $ 35,822     $ 25,299  
Accrued liabilities 11,034     7,868  
Interest payable 13,571     7,096  
Income tax payable 7,239     8,294  
Deferred credits and other liabilities 8,663     799  
 Total current liabilities 76,329     49,356  
       
Long-term debt 1,298,136     1,227,919  
Deferred income taxes 1,815     1,202  
Deferred credits 12,429     -  
Other 39,663     30,929  
 Total long-term liabilities 1,352,043     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 80,544 issued (Note 10) and outstanding as of June 30, 2017 and 180,000 shares authorized and 64,799 shares issued and outstanding as of September 30, 2016 80,544     64,799  
 Paid-in capital 413,831     237,542  
 Retained earnings 2,905,334     2,929,839  
 Accumulated other comprehensive loss 113     (1,794 )
Total shareholders' equity 3,399,822     3,230,386  
Total liabilities and shareholders' equity $ 4,828,194     $ 4,539,792  

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

  Nine Months Ended June 30,
(In thousands) 2017   2016
Cash flows from operating activities:      
Net (loss) income $ (23,541 )   $ 261,023  
Adjustments to reconcile net (loss) income to net cash provided by operating activities:      
Depreciation 121,751     124,964  
Amortization 4,357     2,407  
Provision for doubtful accounts 2,472     4,619  
Deferred income tax benefit 86     (378 )
Share-based compensation expense 10,657     8,224  
Asset impairment 59,173     64,753  
Loss (gain) on sale of assets 261     (71 )
Gain on extinguishment of debt -     (58,863 )
Other, net -     (1,137 )
Changes in assets and liabilities:      
Accounts receivable 32,479     121,964  
Income tax receivable 3,326     511  
Inventories of materials and supplies (891 )   12,988  
Prepaid expenses, deferred costs and other current assets 6,324     19,377  
Deferred costs and other assets (6,440 )   (1,019 )
Accounts payable 911     (33,674 )
Accrued liabilities 10,400     (3,274 )
Income tax payable (1,055 )   (376 )
Deferred credits and other liabilities 28,558     (6,623 )
Net cash provided by operating activities 248,828     515,415  
       
Cash flows from investing activities:      
Capital expenditures (173,246 )   (198,248 )
Proceeds from sale of assets 2,338     20,813  
Net cash used in investing activities (170,908 )   (177,435 )
       
Cash flows from financing activities:      
Proceeds from issuance of long-term debt 125,000     45,000  
Principal payments on long-term debt (55,000 )   (290,110 )
Dividends paid -     (21,746 )
Payments related to exercise of stock options -     (930 )
Proceeds from issuance of common stock

180,966     -  
Windfall tax benefits from share-based payment arrangements -     14,797  
Net cash provided by (used in) financing activities

250,966     (252,989 )
Net increase in cash and cash equivalents 328,886     84,991  
Cash and cash equivalents, at beginning of period 145,427     113,983  
Cash and cash equivalents, at end of period $ 474,313     $ 198,974  
       
Non-cash activities:      
Increase in accounts payable related to capital expenditures $ 9,612     $ 7,902  

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.

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




This announcement is distributed by Nasdaq Corporate Solutions on behalf of Nasdaq Corporate Solutions clients.
The issuer of this announcement warrants that they are solely responsible for the content, accuracy and originality of the information contained therein.
Source: Atwood Oceanics, Inc. via Globenewswire