Atwood Oceanics Announces Fiscal 2017 Third Quarter Earnings
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
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
