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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D. C. 20549
FORM 10-K
ANNUAL REPORT PURSUANT TO SECTION 13 OR 15 (d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the Fiscal Year Ended September 30, 1995
Commission File Number 0-6352
ATWOOD OCEANICS, INC.
(Exact name of registrant as specified in its charter)
State of Texas
(State or other jurisdiction of incorporation or organization)
74-1611874
(I.R.S. Employer 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
Securities registered pursuant to Section 12(b) of the Act:
NONE
Securities registered pursuant to Section 12(g) of the Act:
Common Stock, $1 par value
(Title of Class)
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 (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to
such filing requirements for the past 90 days.
Yes x . No .
Indicate by check mark if disclosure of delinquent filers pursuant to Item 405
of Regulation in S-K is not contained herein, and will not be contained, to
the best of the registrant's knowledge, in definite proxy or information
statements incorporated by reference in Part III of this Form 10-K or any
amendment to this Form 10-K [ ]
The aggregate market value of the voting stock held by non-affiliates of the
registrants as of November 30, 1995 is $94,294,000.
The number of shares outstanding of the issuer's class of Common Stock, as of
November 30 , 1995: 6,629,013 shares of Common Stock, $1 par value.
DOCUMENTS INCORPORATED BY REFERENCE
(1) Annual Report to Shareholders for the fiscal year ended September 30,
1995 - Referenced in Parts I, II and IV of this report.
(2) Proxy Statement for Annual Meeting of Shareholders to be held February 8,
1996 - Referenced in Part III of this report.
PART I
ITEM 1. BUSINESS
Atwood Oceanics, Inc. (which together with its subsidiaries is
identified as the "Company" or "Registrant", unless the context requires
otherwise), a corporation organized in 1968 under the laws of the State of
Texas, is engaged in contract drilling of exploratory and development oil and
gas wells in offshore areas and related support, management and consulting
services. The Company currently owns (i) one jack-up, one "second-generation"
semisubmersible tender-assist vessel, one submersible, three "third-
generation" semisubmersibles, one "second-generation" semisubmersible and one
modular, self-contained platform rig, and (ii) a fifty percent interest in an
Australian company which has been awarded a term contract for the design,
constuction and operation of a new generation platform rig. The Company also
provides labor, supervisory and consulting services to two operator owned
platform rigs in Australia.
Although, activity in the contract drilling industry and related oil
service businesses has improved in recent times, there still exists an
oversupply of drilling equipment and intense competition. During fiscal years
1995 and 1994, the Company had 99 percent utilization of its drilling
equipment which resulted in two consecutive years of profitability. However,
due to the fact that several rigs are currently working under short-term
contracts, there is no assurance in 1996 that the Company can maintain its
equipment utilization rate at its 1995 and 1994 levels.
Most of the Company's drilling operations have been conducted outside
United States waters. The Company is currently involved in active drilling
operations in Australia, Malaysia, Malaysia/Thailand Joint Development Area
and the United States. At the present time, the submersible "RICHMOND" is the
Company's only drilling vessel located in United States waters. Since March
1993 the RICHMOND has had continuous profitable work in the United States Gulf
of Mexico.
For information relating to the revenues, profitability and identifiable
assets attributable to specific geographic area of operations, see Note 13 of
Notes to Consolidated Financial Statements contained in the Company's Annual
Report to shareholders for fiscal year 1995, incorporated by reference herein.
The following table sets forth, for each of the last three fiscal years, the
approximate percentage of contract revenues derived from domestic and foreign
operations:
Fiscal Year Ended
September 30,
1995 1994 1993
Domestic 7% 8% 7%
Foreign 93% 92% 93%
OFFSHORE DRILLING EQUIPMENT
As stated above, the Company's diversified fleet of owned or operated
drilling rigs currently consists of four semisubmersibles, one semisubmersible
tender assist vessel, one jack-up, one submersible, and four modular, self-
contained platform rig. Each type of drilling rig is designed for different
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purposes and applications, for operations in different water depths, bottom
conditions, environments and geographical areas, and for different drilling
and operating requirements. The following descriptions of the various types
of drilling rigs owned or operated by the Company illustrate the diversified
range of application of the rig fleet.
Each semisubmersible drilling unit has two hulls, the lower of which is
capable of being flooded. Drilling equipment is mounted on the main hull.
After the drilling unit is towed to location, the lower hull is flooded,
lowering the entire drilling unit to its operating draft, and the drilling
unit is anchored in place. On completion of operations, the lower hull is
deballasted, raising the entire drilling unit to its towing draft. This type
of drilling unit is designed to operate in greater water depths than a jack-up
and in more severe sea conditions than a drillship. Semisubmersible units are
generally more expensive to operate than jack-up rigs and, compared to a
drillship, are often limited in the amount of supplies that can be stored on
board.
The semisubmersible tender assist vessel operates like a semisubmersible
except that its drilling equipment is temporarily installed on permanently
constructed offshore support platforms. The semisubmersible vessel provides
crew accommodations, storage facilities and other support for the drilling
operations.
A jack-up drilling barge contains all of the drilling equipment on a
single hull designed to be towed to the well site. Once on location, legs are
lowered to the sea floor and the barge is raised out of the water by jacking
up on these legs. On completion of the well, the barge is jacked down, and
towed to the next location. A jack-up drilling unit can operate in more
severe sea and weather conditions than a drillship and is less expensive to
operate than a semisubmersible. However, because it must rest on the sea
floor, a jack-up cannot operate in as deep water as other units.
The submersible drilling unit owned by the Company has two hulls, the
lower being a mat which is capable of being flooded. Drilling equipment and
crew accommodations are located on the main hull. After the drilling unit is
towed to location, the lower hull is flooded, lowering the entire unit to its
operating draft at which it rests on the sea floor. On completion of
operations, the lower hull is deballasted, raising the entire unit to its
towing draft. This type of drilling unit is designed to operate in shallow
water depths ranging from 9 to 70 feet and can operate in moderately severe
sea conditions. Although drilling units of this type are less expensive to
operate, like the jack-up rig, they cannot operate in as deep water as other
units.
A modular platform rig is similar to a land rig in its basic components.
Modular platform rigs are temporarily installed on permanently constructed
offshore support platforms in order to perform the drilling operations. After
the drilling phase is completed, the modular rig is broken down into
convenient packages and moved by work boats. A platform rig usually stays at
a location for several months, if not years, since several wells are typically
drilled from a support platform.
DRILLING CONTRACTS
The contracts under which the Company operates its vessels are obtained
either through individual negotiations with the customer or by submitting
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proposals in competition with other contractors and vary in their terms and
conditions. The initial term of contracts for the Company's owned and/or
operated vessels has ranged from the length of time necessary to drill one
well to several months and is generally subject to early termination in the
event of a total loss of the drilling vessel, excessive equipment breakdown or
failure to meet minimum performance criteria. In the current offshore
drilling market, most contracts for mobile exploration vessels, such as the
Company's semisubmersibles, are for terms of less than one year. However, it
is not unusual for contracts to contain renewal provisions at the option of
the customer.
The rate of compensation specified in each contract depends on the
nature of the operation to be performed, the duration of the work, equipment
and services provided, the areas involved, market conditions and other
variables. Generally, contracts for drilling, management and support services
specify a basic rate of compensation computed on a day rate basis. Such
agreements generally provide for a reduced day rate payable when operations
are interrupted by equipment failure and subsequent repairs, field moves,
adverse weather conditions or other factors beyond the control of the Company.
Some contracts also provide for revision of the specified dayrates in the
event of material changes in certain items of cost. Any period during which a
vessel is not earning a full operating day rate because of the above
conditions or because the vessel is idle and not on contract will have an
adverse effect on operating profit. An over supply of drilling rigs in any
market area can adversely affect the Company's ability to employ its drilling
vessels.
For long moves, the Company attempts to obtain either a lump sum or a
day rate as mobilization compensation for expenses incurred during the period
in transit. A surplus of certain types of units, either worldwide or in
particular operating areas, can result in the Company's acceptance of a
contract which provides only partial or no recovery of relocation costs.
Operation of the Company's drilling equipment is subject to the offshore
drilling requirements of petroleum exploration companies and agencies of
foreign governments. These requirements are, in turn, subject to fluctuations
in government policies, world demand and prices for petroleum products, proved
reserves in relation to such demand and the extent to which such demand can be
met from onshore sources. Some contracts continue to be offered on a per well
basis rather than a fixed time period.
The Company also contracts to provide various types of services to third
party owners of drilling rigs. These contracts are normally for a stated term
or until termination of operations or stages of operation at a particular
facility or location. The services may include, as in the case of contracts
entered into by the Company in connection with operations offshore Australia,
the supply of personnel and rig design, fabrication, installation and
operation. The contracts normally provide for reimbursement to the Company
for all out-of-pocket expenses, plus a service or management fee for all of
the services performed. In most instances, the amount charged for the
services may be adjusted if there are changes in conditions, scope or costs of
operations. The Company generally obtains insurance or a contractual
indemnity from the owner for liabilities which could be incurred in
operations.
OPERATIONAL RISKS AND INSURANCE
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The Company's operations are subject to the usual hazards associated
with the drilling of oil and gas wells, such as blowouts, explosions and
fires. In addition, the Company's vessels are subject to those perils
peculiar to marine operations, such as capsizing, grounding, collision and
damage from severe weather conditions. Any of these risks could result in
damage or destruction of drilling rigs and oil and gas wells, personal injury
and property damage, and suspension of operations or environmental damage
through oil spillage or extensive, uncontrolled fires. Although the Company
believes that it is adequately insured against normal and foreseeable risks in
its operations in accordance with industry standards, such insurance may not
be adequate to protect the Company against liability from all consequences of
well disasters, marine perils, extensive fire damage or damage to the
environment. To date, the Company has not experienced difficulty in obtaining
insurance coverage, although no assurance can be given as to the future
availability of such insurance or cost thereof. The occurrence of a
significant event against which the Company is not fully insured could have a
material adverse effect on the Company's financial position.
ENVIRONMENTAL PROTECTION
Under the Federal Water Pollution Control Act, as amended, operators of
vessels in navigable United States waters and certain offshore areas are
liable to the United States government for the costs of removing oil and
certain other pollutants for which they may be held responsible, subject to
certain limitations, and must establish financial responsibility to cover such
liability. The Company has taken all steps necessary to comply with this law,
and has received a Certificate of Financial Responsibility (Water Pollution)
from the U.S. Coast Guard. The Company's operations in United States waters
are also subject to various other environmental regulations regarding
pollution and control thereof, and the Company has taken steps to ensure
compliance therewith.
CUSTOMERS
During fiscal year 1995, the Company performed operations for 13
customers. Because of the relatively limited number of customers for which
the Company can operate at any give time, sales to each of 3 different
customers amounted to 10% or more of the Company's fiscal 1995 revenues. Esso
Australia Limited/Esso Production Malaysia, Inc., BHP Petroleum Pty. Ltd. and
Woodside Offshore Petroleum Pty. Ltd. accounted for 35%, 22% and 11%,
respectively, of fiscal year 1995 revenues. The Company's business operations
are subject to the risks associated with a business having a limited number of
customers for its products or services, and a decrease in the drilling
programs of these customers in the areas where they employ the Company may
adversely affect the Company's revenues.
COMPETITION
The Company competes with numerous other drilling contractors, some of
which are substantially larger than the Company and possess appreciably
greater financial and other resources. Even though in recent years several
drilling companies have undertaken business combinations with other companies,
which has resulted in a decrease in the total number of competitors, the
drilling industry remains competitive, with no one drilling contractor being
dominant. Thus, there continues to be competition in securing available
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drilling contracts.
Price competition is generally the most important factor in the drilling
industry, but the technical capability of specialized drilling equipment and
personnel at the time and place required by customers are also important.
Other competitive factors include work force experience, rig suitability,
efficiency, condition of equipment, reputation and customer relations. The
Company believes that it competes favorably with respect to these factors. If
demand for drilling rigs increases in the future, rig availability may also
become a competitive factor. Competition usually occurs on a regional basis
and, although drilling rigs are mobile and can be moved from one region to
another in response to increased demand, an oversupply of rigs in any region
may result. Demand for drilling equipment is also dependent on the
exploration and development programs of oil and gas companies, which are in
turn influenced by the financial condition of such companies, by general
economic conditions and by prices of oil and gas, and from time to time by
political considerations and policies.
FOREIGN OPERATIONS
The operations of the Company are conducted primarily in foreign waters
and are subject to certain political, economic and other uncertainties not
encountered by purely domestic drilling contractors, including risks of
expropriation, nationalization, foreign exchange restrictions, foreign
taxation, changing conditions and foreign and domestic monetary policies.
Generally, the Company purchases insurance to protect against some or all loss
due to events of political risk such as nationalization, expropriation, war,
confiscation and deprivation. Occasionally, customers will indemnify the
Company against such losses. Moreover, offshore drilling activity is affected
by government regulations and policies limiting the withdrawal of offshore oil
and gas, by regulations affecting production, by regulations restricting the
importation of foreign petroleum, by environmental regulations and by
regulations which may limit operations in offshore areas by foreign companies
and/or personnel. See Note 13 to Consolidated Financial Statements contained
in the Company's Annual Report to shareholders for fiscal year 1995,
incorporated herein by reference, for a summary of contract revenues,
operating income (loss) and identifiable assets by geographic region.
EMPLOYEES
The Company currently employs approximately 650 persons in its domestic
and worldwide operations. In connection with its foreign drilling operations,
the Company has often been required by the host country to hire substantial
portions of its work force in that country, and in some cases, these employees
may be represented by foreign unions. To date, the Company has experienced
little difficulty in complying with such requirements and the Company's
drilling operations have not been significantly interrupted by strikes or work
stoppages.
ITEM 2. PROPERTIES
Information regarding the location and general character of the
Company's principal assets may be found in the schedule with the caption
heading "Offshore Drilling Operations" in the Company's Annual Report to
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Shareholders for fiscal year 1995, which is incorporated by reference herein.
Effective December 31, 1994, the Company acquired the remaining 50
percent interest in the FALCON, HUNTER and EAGLE (third-generation
semisubmersibles). In fiscal year 1994, the Company increased its rig fleet
with the addition of the SOUTHERN CROSS, a semisubmersible built in 1976.
During fiscal year 1995, construction of RIG-200 (a new generation platform
rig of which the Company has 50 percent ownership) was substantially
completed. For more information concerning these events, see Notes 2, 4 and 5
to Consolidated Financial Statements contained in the Company's Annual Report
to Shareholders for fiscal year 1995, incorporated by reference herein.
ITEM 3. LEGAL PROCEEDINGS
The Company is not currently involved in any material legal proceedings.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SHAREHOLDERS
During the fourth quarter of fiscal 1995, no matters were submitted to a
vote of shareholders through the solicitation of proxies or otherwise.
PART II
ITEM 5. MARKET FOR THE REGISTRANT'S COMMON STOCK AND RELATED SHAREHOLDER
MATTERS
As of September 30, 1995, there were over 400 beneficial owners of the
Company's common stock.
The Company did not pay cash dividends in fiscal years 1994 or 1995 and
the Company does not anticipate paying cash dividends in the foreseeable
future because of the capital intensive nature of its business. Cash reserves
will be utilized to offset any operating cash deficiencies which could occur,
as well as to acquire additional equipment, at the appropriate time, to enable
the company to maintain its high competitive profile in the industry.
Market information concerning the Company's common stock may be found
under the caption heading "Stock Price Information" in the Company's Annual
Report to Shareholders for fiscal 1995, which is incorporated by reference
herein.
ITEM 6. SELECTED FINANCIAL DATA
Information required by this item may be found under the caption "Five
Year Financial Review" in the Company's Annual Report to Shareholders for
fiscal 1995, which is incorporated by reference herein.
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
Information required by this item may be found in the Company's Annual
Report to Shareholders for fiscal 1995, which is incorporated by reference
Page 9
herein.
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
Information required by this item may be found in the Company's Annual
Report to Shareholders for fiscal 1995, which is incorporated by reference
herein.
ITEM 9. DISAGREEMENTS ON ACCOUNTING AND FINANCIAL DISCLOSURE
There have been no disagreements with the Company's accountants on
accounting and financial disclosure.
PART III
ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE COMPANY
This information is incorporated by reference from the Company's
definitive Proxy Statement for the Annual Meeting of Shareholders to be held
February 8, 1996, to be filed with the Securities and Exchange Commission (the
Commission) not later than 120 days after the end of the fiscal year covered
by this Form 10-K.
ITEM 11. EXECUTIVE COMPENSATION
This information is incorporated by reference from the Company's
definitive Proxy Statement for the Annual Meeting of Shareholders to be held
February 8, 1996, to be filed with the Commission not later than 120 days
after the end of the fiscal year covered by this Form 10-K.
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
This information is incorporated by reference from the Company's
definitive Proxy Statement for the Annual Meeting of Shareholders to be held
February 8, 1996, to be filed with the Commission not later than 120 days
after the end of the fiscal year covered by this Form 10-K.
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
This information is incorporated by reference from the Company's
definitive Proxy Statement for the Annual Meeting of Shareholders to be held
February 8, 1996, to be filed with the Commission not later than 120 days
after the end of the fiscal year covered by this Form 10-K.
PART IV
ITEM 14. EXHIBITS, FINANCIAL STATEMENTS, AND REPORTS ON FORM 8-K
(a) Financial Statements and Exhibits
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1. Financial Statements
The following financial statements, together with the report of Arthur
Andersen LLP dated November 21, 1995 appearing in the Company's Annual Report
to Shareholders, are incorporated by reference herein:
Consolidated Balance Sheets
Consolidated Statements of Operations
Consolidated Statements of Cash Flows
Consolidated Statements of Changes in Shareholders' Equity
Report of Independent Public Accountants
Notes to Consolidated Financial Statements
2. Exhibits
Listed below are all of the Exhibits filed as part of this report.
3.1.1 Restated Articles of Incorporation dated January 1972
(Incorporated herein by reference to Exhibit 3.1.1 of the
Company's Form 10-K for the year ended September 30, 1993).
3.1.2 Articles of Amendment dated March 1975 (Incorporated herein
by reference to Exhibit 3.1.2 of the Company's Form 10-K for
the year ended September 30, 1993).
3.1.3 Articles of Amendment dated March 1992 (Incorporated herein
by reference to Exhibit 3.1.3 ofthe Company's Form 10-K for
the year ended September 30, 1993).
3.2 Bylaws, as amended (Incorporated herein by reference to
Exhibit 3.2 of the Company's Form 10-K for the year ended
September 30, 1993).
10.1 Atwood Oceanics, Inc. 1981 Incentive Stock Option Plan
(Incorporated herein by reference to Exhibit 10.1 of the
Company's Form 10-K for the year ended September 30, 1993).
10.2 Atwood Oceanics, Inc. 1990 Stock Option Plan (Incorporated
herein by reference to Exhibit 10.2 of the Company's Form
10-K for the year ended September 30, 1993).
10.3 Joint Venture Letter Agreement dated November 4, 1994
between the Company and Helmerich & Payne, Inc.
(Incorporated herein by reference to Exhibit 10.3 of the
Company's Form 10-K for the year ended September 30, 1994).
10.4.1 Amended and Restated Master Loan Restructuring
Agreement as of March 31, 1995 between Atwood Deep
Seas, Ltd.; Texas Commercen Bank, National
Association; CoMac Partners and Chemical Bank.
10.4.2 Amendment to Second Amended and Restated Master Loan
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Restructuring Agreement dated as of November 28, 1995
between Atwood Deep Seas, Ltd.; Texas Commerce Bank,
National Association; CoMac Partners and Chemical
Bank.
10.5 Asset Purchase Agreement dated February 14, 1995, effective
as of December 31, 1995 between Atwood Falcon I, Ltd. and
Atwood Oceanics Pacific Limited.
10.6 Purchase and Sale Agreement dated February 14, 1995,
effective as of December 31, 1995 among Philadelphia
Investment Corporation of Delaware, Philadelphia Falcon
Drilling Company, Philadelphia Drilling Company, Atwood
Oceanics Drilling Company, Falcon I, Ltd. and Atwood Deep
Seas, Ltd.
13.1 Annual Report to Shareholders
21.1 List of Subsidiaries
23.1 Accountants Consent
27.1 Financial Data Schedule
4. Executive Compensation Plans and Arrangements
Atwood Oceanics, Inc. 1981 Incentive Stock Option Plan - See
Exhibit 10.1 hereof.
Atwood Oceanics, Inc. 1990 Stock Option Plan - See Exhibit 10.2
hereof.
(b) Reports on Form 8-K
During the last quarter of fiscal 1995, the Company did not file
with the Securities and Exchange Commission any reports on Form 8-K.
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange
Act of 1934, the Company has duly caused this report to be signed on its
behalf by the undersigned, thereunto duly authorized.
ATWOOD OCEANICS, INC.
/s/ JOHN R. IRWIN /s/ JAMES M. HOLLAND
JOHN R. IRWIN, President JAMES M. HOLLAND, Senior Vice
(Principal Executive Officer) President
Principal Financial and Accounting
Officer)
Date: December 7, 1995 Date: December 7, 1995
Pursuant to the requirements of the Securities Exchange Act of 1934, this
report has been signed below by the following persons on behalf of the
registrant and in the capacities on the dates indicated.
/s/ ROBERT W. BURGESS /s/ GEORGE S. DOTSON
ROBERT W. BURGESS, Director GEORGE S. DOTSON, Director
Date: 7 December 1995 Date: 7 December 1995
/s/ HANS HELMERICH /s/ WILLIAM J. MORRISSEY
HANS HELMERICH, Director WILLIAM J. MORRISSEY, Director
Date: 7 December 1995 Date: 7 December 1995