M
                                                                 EXHIBIT 10.3.7


                         FORM OF STOCK OPTION AGREEMENT

                            2001 STOCK INCENTIVE PLAN



     This is an Agreement dated the ______ day of ______________  200__, between
ATWOOD  OCEANICS,  INC., (the "Company") and  ________________________  ("Option
Holder").

Recitals:

     The  Company  has  adopted  its 2001  Stock  Incentive  Plan  (as  amended,
restated,  or otherwise modified from time to time, the "Plan") for the granting
to  Participants  (as defined in the Plan) of options to purchase  shares of the
Common Stock of the Company.  Pursuant to said Plan, the Compensation  Committee
of the  Company's  Board of Directors has approved and ratified the execution of
this Stock Option Agreement between the Company and the Option Holder.

Agreement:

     1. The  Company  grants  to the  Option  Holder  the  right  and  option to
purchase, on the terms and conditions  hereinafter set forth, all or any part of
an aggregate of __________  shares of the Common Stock,  $1.00 par value, of the
Company at the option price of $_______ per share (the  "Options"),  exercisable
from time to time, subject to the provisions of this Agreement,  during a period
commencing  at the end of the first year  following  the date of this  Agreement
(the  "Anniversary  Date") and  expiring at the close of business ten (10) years
from the date of this Agreement (the "Expiration Date").

     2. To the  extent  such  rights  shall not have been  exercised  and to the
extent the Options were  exercisable at the time of any  termination on or after
the  Option  Holder's  "Retirement  Date" as such term is  defined in the Atwood

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Oceanics,  Inc.  Employees'  Retirement Plan (or its successor)  ("Retirement"),
death of the  Option  Holder or the  Option  Holder's  Disability(as  defined as
defined in Section 22(e) of the Internal Revenue Code of 1986, as amended),  the
Option Holder (or his or her personal representative in the case of death) shall
be entitled to exercise  all or any part of any vested but  unexercised  Options
during the remaining term of such Options. If an Option Holder's employment with
the Company, its subsidiaries or affiliates (collectively,  the "Company Group")
terminates for any other reason  besides  Retirement,  death or Disability,  the
Option  Holder  shall be entitled to exercise  all or any part of any vested but
unexercised  Options  for a  period  of up to three  months  from  such  date of
termination.  It is understood  and agreed that neither the grant of this Option
nor the execution of this Agreement  shall create any right of the Option Holder
to remain in the employ of the Company Group, and that the Company Group retains
the right to terminate such employment at will, for due cause or otherwise.

     3. These Options are non-exercisable during the first (1) year during which
the Agreement is in effect.  Thereafter,  these Options are  exercisable  at the
times and for the  percentage  of shares  herein  granted as follows:

(i) On or After the First Anniversary Date:
                _________________  - 25%

(ii) On or After the Second  Anniversary  Date:
                 _________________  - 25%

(iii) On or After the Third Anniversary  Date:
                 _________________  -  25%

(iv)  On  or  After  the  Fourth Anniversary Date:
                 _________________ - 25%

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     Provided,  however, that the Options are cumulative, so that any shares not
purchased  pursuant to exercise of vested  Options within any one of the periods
above specified may be purchased  thereafter in a subsequent period, in whole or
in part, until the expiration or termination of the Options.

     4. The Option  Holder shall give  written  notice of the exercise of one or
more Options to the  Secretary  of the Company at its office in Houston,  Texas,
specifying  the number of shares to be purchased and  accompanied  by payment in
cash or by certified or cashier's  check  payable to the order of the Company of
the full purchase price of the shares to be purchased.  Payment may also be made
by  delivery  to the Company of an executed  irrevocable  Option  exercise  form
together with  irrevocable  instructions to a broker dealer to sell a sufficient
portion  of  the  shares  and  deliver  the  sale  proceeds  to the  Company  in
satisfaction of the exercise price. Payments may also be made in Common Stock of
the  Company  or a  combination  of cash and  Common  Stock of the  Company,  as
specified in the Plan.

     5. In no event may the Options  granted  hereby be  exercised to any extent
after the  Expiration  Date. The employment of the Option Holder shall be deemed
to  continue  during  any leave of  absence,  which has been  authorized  by the
Company  Group,  provided  that no exercise of Options may take place during any
such authorized leave of absence except during the first three months thereof.

     6. No shares of Common  Stock  issuable  upon the  exercise  of the Options
shall be issued and delivered  unless and until all applicable  requirements  of
law and the  Securities and Exchange  Commission  pertaining to the issuance and
sale of such shares,  and all applicable  listing  requirements  of any national
securities  exchange on which  shares of the same class are then  listed,  shall
have been complied with.

     7. The Options  granted  hereby may be transferred by the Option Holder to,
(i) the  ex-spouse  of the  Option  Holder  pursuant  to the  terms of  domestic
relations  order,  (ii) the  spouse,  children  or  grandchildren  of the Option
Holder,  (iii) a trust  or  trusts  for the  exclusive  benefit  of the  spouse,

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children or grandchildren  of the Option Holder,  or (iv) a partnership in which
spouse,  children or  grandchildren  of the Option Holder are the only partners;
provided in each case that there may be no  consideration  for any such transfer
and subsequent transfers or transferred Options shall be prohibited except those
made in  accordance  with this  section or by will or by the laws of descent and
distribution.  Following transfer, any such Options shall continue to be subject
to the  same  terms  and  conditions  as were  applicable  immediately  prior to
transfer.  The provisions with respect to termination of employment set forth in
Section 2 of this Agreement shall continue to apply with respect to the original
Option Holder, in which event the Options shall be exercisable by the transferee
only to the extent and for the periods  specified  herein.  The original  Option
Holder  will  remain  subject to  withholding  taxes upon  exercise  of any such
Options by the  transferee.  The Company shall have no obligation  whatsoever to
provide notice to any transferee of any matter,  including  without  limitation,
early  termination of an Option on account of termination of employment with the
Company Group of the original Option Holder.

     Except as set forth above,  no Option shall be  transferable  by the Option
Holder  otherwise than by the will or by laws of descent and  distribution,  and
all Options shall be exercisable,  during the Option  Holder's  lifetime only by
the Option Holder.  At the request of the Option Holder,  Common Stock purchased
upon  exercise  of an Option may be issued or  transferred  into the name of the
Option Holder and another person jointly with rights of survivorship.

     8. If the  outstanding  shares  of the  Common  Stock  of the  Company  are
increased,  decreased, changed into, or exchanged for a different number or kind
of shares or securities of the Company through reorganization, recapitalization,
reclassification,  stock  dividend,  stock  split or  reverse  stock  split,  an
appropriate and proportionate  adjustment to the type,  number, and the exercise
price of the  securities  to be  issued  upon  exercise  of the  Options  (to be
conclusively  determined by the Board of Directors of the Company) shall be made
to the Options governed by this Agreement.

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     9.  Subject  to the  provisions  of the  Plan,  in the event of a Change of
Control  (as  defined  in the Plan)  all  Options  granted  hereby  will  become
automatically fully vested and immediately exercisable.

     10. Nothing herein contained shall affect the right of the Option Holder to
participate  in and  receive  benefits  under  and in  accordance  with the then
current  provisions of any pension,  insurance,  profit  sharing or other Option
Holder welfare plan or program of the Company Group.

     11.  Neither the Option  Holder nor any other  person  legally  entitled to
exercise these Options shall be entitled to any of the rights or privileges of a
shareholder  of the Company in respect of any shares  issuable upon any exercise
of these Options  unless and until a certificate  or  certificates  representing
such shares shall have been actually issued and delivered to him or her.

     12. The Options  hereby  granted are subject to, and the Company and Option
Holder agree to be bound by, all of the terms and conditions of the Plan, except
that no amendment to the Plan shall adversely  affect the Option Holder's rights
under this  Agreement.  A copy of the Plan in its present form is available  for
inspection  during business hours by the Option Holder or other persons entitled
to exercise these Options at the Company's principal office.

     13. Upon an exercise of the Options hereby  granted,  the Company Group may
be required to withhold  federal or local tax with respect to the realization of

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compensation.  The  Company  Group is  hereby  authorized  to  satisfy  any such
withholding requirement out of (i) any cash distributable upon exercise and (ii)
any other cash compensation then or thereafter  payable to the Option Holder. To
the extent that the Company Group in its sole  discretion  determines  that such
sources  are  or  may  be  insufficient   to  fully  satisfy  such   withholding
requirement, Option Holder, as a condition to the exercise of the Options, shall
deliver  to the  Company,  on behalf  of the  Company  Group,  cash in an amount
determined by the Company Group to be sufficient to satisfy any such withholding
requirement.  13. These Options has been granted, executed and delivered the day
and  year  first  above  written  at  Houston,  Texas,  and the  interpretation,
performance  and  enforcement of this Agreement shall be governed by the laws of
the State of Texas, without regard to conflicts of laws.

                                  ATWOOD OCEANICS, INC.

                                  By___________________________________



                                  -------------------------------------
                                  Option Holder