UNITED STATES

SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D. C. 20549

**Form 10-K**

 

ANNUAL REPORT UNDER SECTION 13 OR 15 (d)

OF THE SECURITIES EXCHANGE ACT OF 1934

FOR THE FISCAL YEAR ENDED SEPTEMBER 30, 2007

         

COMMISSION FILE NUMBER 1-13167

 

**ATWOOD OCEANICS, INC.**

(Exact name of registrant as specified in its charter)

         

|   | TEXAS | 74-1611874 |
|--------|-------|------------|

|   | (State or other jurisdiction of

incorporation or                        organization) | (I.R.S. Employer Identification No.) |
|--------|----------------------------------------------------------------------------------------|--------------------------------------|

         

|   | 15835 Park Ten Place Drive

Houston, Texas

(Address of principal                        executive offices) | 77084

(Zip Code) |
|--------|-------------------------------------------------------------------------------------------------------------|-------------------|

 

Registrant's telephone number, including area code:

281-749-7800

         

                                                                                                                                                                     

|   | Securities registered pursuant to

Section 12(b) of the Act:

Common Stock, $1 par value

Preferred Stock Purchase                        Rights

(Title of each Class) |  

New York Stock Exchange

New York Stock Exchange

(Name of each exchange on which registered) |
|--------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------|-------------------------------------------------------------------------------------------------------|

         

Securities registered pursuant to

Section 12(g) of the Act:

NONE

 

Indicate by check mark if the registrant is a well-known seasoned issuer, as        defined in Rule 405 of the Securities Act. YesxNo o

Indicate by check mark if the registrant is not required to file reports        pursuant to Section 13 or Section 15(d) of the Act. Yes o        Nox

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 filings requirements for the past 90        days. YesxNo        o

Indicate by check mark if disclosure of delinquent filers pursuant to Item        405 of Regulation in S-K (229.405 of this chapter) is not contained herein, and will not be        contained, to the best of the registrants knowledge, in definitive proxy or information        statements incorporated by reference in Part III of this Form 10-K or any amendment to this        Form 10-K o.

Indicate by check mark whether the registrant is a large accelerated filer,        an accelerated filer, or a non-accelerated filer. See definition of accelerated filer and        large accelerated filer in Rule 12b-2 of the Exchange Act. (Check One):

| Large accelerated filerx | Accelerated filer o | Non-accelerated filer                        o |
|--------------------------|---------------------|------------------------------------------------|

Indicate by check mark whether the registrant is a shell company (as defined        in Rule 12b-2 of the Act). Yes o Nox

The        aggregate market value of the voting and non-voting common equity held by non-affiliates        computed by reference to the price at which our Common Stock, $1 par value was last sold,        or the average bid and asked price of such Common Stock, as of March 31, 2007 was        $1,833,000,000.

The        number of shares outstanding of our Common Stock, $1 par value, as of November 27,        2007:31,675,927.

DOCUMENTS INCORPORATED BY REFERENCE

(1)        Annual Report to Shareholders for the fiscal year ended September 30, 2007 - Referenced in        Parts I, II and IV of this report.        (2) Proxy Statement for Annual Meeting of Shareholders to be held February 14, 2008 -        Referenced in Part III of this report.

----

| **ITEM 1.** | **BUSINESS** |
|-------------|--------------|

Atwood Oceanics, Inc. (which together with its subsidiaries is identified as        the Company, we or our, unless the context requires otherwise) is engaged in the        international offshore drilling and completion of exploratory and developmental oil and gas        wells and related support, management and consulting services. We are headquartered in        Houston, Texas, USA. Atwood Oceanics, Inc. was organized in 1968 as a Texas corporation and        commenced operations in 1970.

During our thirty-nine year history, the majority of our drilling units have        operated outside of United States waters, and we have conducted drilling operations in most        of the major offshore exploration areas of the world. Our current worldwide operations        include eight premium offshore mobile drilling units located in six regions of the world        offshore Southeast Asia, offshore Africa, offshore India, offshore Australia, the Black Sea        and the U.S. Gulf of Mexico. Approximately 93%, 93%, and 93% of our contract revenues were        derived from foreign operations in fiscal years 2007, 2006 and 2005, respectively. The        submersible RICHMOND is our only drilling unit currently working in United States waters.        We support our operations from our Houston headquarters and offices currently located in        Australia, Malaysia, Malta, Egypt, Indonesia, Singapore and the United Kingdom. For        information relating to the contract revenues, operating income and identifiable assets        attributable to specific geographic areas of operations, see Note 13 of the Notes to        Consolidated Financial Statements contained in our Annual Report to Shareholders for fiscal        year 2007, incorporated by reference herein.

The following table presents our wholly-owned and operating rig fleet as of        November 27, 2007:

         

|  

**Rig Name**     |  

**Rig Type**         |  

**Upgraded** | **Water Depth**

**Rating (feet)** |
|--------------------------|------------------------------|----------------------|------------------------------------|
|      |                              |                      |                                    |
| ATWOOD EAGLE             | Semisubmersible              | 2000/2002            | 5,000                              |
| ATWOOD HUNTER            | Semisubmersible              | 1997/2001            | 5,000                              |
| ATWOOD FALCON            | Semisubmersible              | 1998/2006            | 5,000                              |
| ATWOOD SOUTHERN CROSS    | Semisubmersible              | 1997/2006            | 2,000                              |
| SEAHAWK                  | Semisubmersible TenderAssist | 1992/1999/2006       | 600                                |
| ATWOOD BEACON            | Jack-up                      | 2003(1)              | 400                                |
| VICKSBURG                | Jack-up                      | 1998                 | 300                                |
| RICHMOND                 | Submersible                  | 2000/2002/2007       | 70                                 |

         

|   | (1) | The ATWOOD BEACON was constructed in 2003. |
|--------|-----|--------------------------------------------|

         

When necessary, we update and upgrade our fleet in order to maintain        premium, modern equipment. In fiscal year 1997, we commenced an internal upgrade program of        all of our active drilling units. Collectively, since fiscal year 1997, we have invested        approximately $400 million in upgrading seven offshore mobile drilling units in connection        with our upgrade program. In August 2003, our eighth drilling unit, the ATWOOD BEACON, an        ultra-premium, jack-up rig, commenced its initial drilling contract following completion of        its construction and commissioning in early August 2003. This drilling unit was constructed        on time and on budget at a cost of approximately $120 million. We have a ninth drilling        unit, the ATWOOD AURORA, another ultra-premium, jack-up rig, under construction in        Brownsville, Texas, with scheduled delivery in October/November 2008. The total        construction cost of this drilling unit (including capitalized interest) is expected to be        approximately $160 million.

All of our currently active drilling units have contractual dayrate        commitments that are the highest in their respective histories. Currently, we have        approximately 87% and 33% of our available rig days contracted for fiscal years 2008 and        2009, respectively. For many years, one of our strategic focuses has been maintaining high        equipment utilization. We had a 100% equipment utilization rate in each of fiscal years        2007 and 2006 and have averaged over 90% utilization over the last ten years. Today,        virtually all worldwide offshore drilling areas have strong market fundamentals, with high        utilization of both floating as well as bottom supported drilling units. Despite the        increase in operating costs for fiscal year 2007, our operating results significantly        increased for fiscal year 2007 compared to fiscal year 2006. Although we anticipate a        continuing trend for increases in operating costs during the next fiscal year, with our        backlog of contracted days providing increasing revenue expectations, we anticipate that        revenues, operating cash flows and earnings for fiscal year 2008 will reflect a significant        improvement over fiscal year 2007 operating results, and we expect our 2008 operating        results to be the highest in our history.

 

3

         

**OFFSHORE DRILLING EQUIPMENT**

Each type of drilling rig is uniquely designed for different 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 we own illustrate the diversified range        of applications of our rig fleet.

**Semisubmersible Rigs.**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 other types of drilling units. Semisubmersible units are generally more        expensive to operate than jack-up drilling rigs and are often limited in the amount of        supplies that can be stored on board.

**Semisubmersible Tender Assist Rigs.**Semisubmersible tender assist rigs operate like a semisubmersible except        that their drilling equipment is temporarily installed on permanently constructed offshore        support platforms. Semisubmersible rigs provide crew accommodations, storage facilities and        other support for drilling operations.

**Jack-up Drilling Rigs.**A jack-up drilling rig        contains all of the drilling equipment on a single hull designed to be towed to a well        site. Once on location, legs are lowered to the sea floor and the unit is raised out of the        water by jacking the hull up the legs. On completion of the well, the unit is jacked down,        and towed to the next location. A jack-up drilling rig 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 water as deep as that in which a semisubmersible unit can operate. A jack-up drilling        rig is a bottom supported rig.

**Submersible Drilling Rigs.**The submersible        drilling rig we own 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 its 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 a jack-up drilling rig, they cannot operate in water as        deep as that in which a semisubmersible rig can operate. A submersible drilling rig is a        bottom supported unit.

**DRILLING CONTRACTS**

We obtain the contracts under which we operate our units either through        individual negotiation with the customer or by submitting proposals in competition with        other contractors. Our contracts vary in their terms and conditions. The initial term of        contracts for our owned and/or managed units has ranged from the length of time necessary        to drill one well to several years and is generally subject to early termination in the        event of a total loss of the drilling unit, a force majeure event, excessive equipment        breakdown or failure to meet minimum performance criteria. It is not unusual for contracts        to contain renewal provisions, which in time of weak market conditions are usually at the        option of the customer; while in time of strong market demand, like today, are usually        mutually agreeable.

The rate of compensation specified in each contract depends on the nature of        the operation to be performed, the duration of the work, the amount and type of equipment        and services provided, the geographic areas involved, market conditions and other        variables. Generally, contracts for drilling, management and support services specify a        basic rate of compensation computed on a dayrate basis. Such agreements generally provide        for a reduced dayrate payable when operations are interrupted by equipment failure and        subsequent repairs, field moves, adverse weather conditions or other factors beyond our        control. 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 dayrate because of the above conditions or because the vessel is idle and        not on contract will have an adverse effect on operating profits. An over-supply of        drilling rigs in any market area can adversely affect our ability to employ our drilling        units. Our active rig utilization, which excludes contractual downtime for rigs upgraded,        for fiscal years 2007, 2006 and 2005 was 100%, 100% and 98%, respectively.

Of our current drilling contracts, five of our drilling units have contract        terms that extend to the end of fiscal year 2008 or beyond. The ATWOOD EAGLE's contract in        Australia extends into fiscal year 2010. The ATWOOD FALCON,

 

4

ATWOOD        BEACON and VICKSBURG contracts extend into fiscal year 2009. The current SEAHAWK contract        extends to the end of fiscal year 2008. The current ATWOOD SOUTHERN CROSS and ATWOOD HUNTER        contracts are expected to terminate in February 2008 and July 2008, respectively, with both        rigs expected to be recontracted at increased dayrates. Even though the RICHMOND currently        has a one well contract commitment, we expect that this rig will remain highly utilized;        however, we expect its dayrate to be down from its current one well commitment of $80,000        to the mid to high $60,000.

|   | We currently expect the following zero rate downtime in                        fiscal year 2008: |
|--------|--------------------------------------------------------------------------------------------------|

| RIG                   |   | ESTIMATED QUARTER IN WHICH DOWNTIME COULD OCCUR                                                |   |  

ESTIMATED DAYS AT ZERO RATE |
|-----------------------|--------|------------------------------------------------------------------------------------------------|--------|-------------------------------------|
|                  |   |                                                                                           |   |                                |
| ATWOOD HUNTER         |   | End of first quarter to beginning of second                        quarter                     |   | 15 to 20 Days                       |
| ATWOOD EAGLE          |   | First Quarter                                                                                  |   | 15 Days                             |
| ATWOOD FALCON         |   | Fourth quarter of fiscal year 2008 or first quarter of                        fiscal year 2009 |   | 5 to 10 Days                        |
| ATWOOD SOUTHERN CROSS |   | Second Quarter                                                                                 |   | 4 to 10 Days                        |
| ATWOOD BEACON         |   | Second Quarter                                                                                 |   | 3 Days                              |
| RICHMOND              |   | First Quarter                                                                                  |   | 70 Days                             |

                       In addition to the above planned downtime, we are always at risk for unplanned downtime.        Thus far in the first quarter of fiscal year 2008, the SEAHAWK and the ATWOOD HUNTER have        incurred sixteen (16) days and three (3) days, respectively of unplanned        downtime. Maintaining high equipment utilization in up, as well as down, cycles is a big        factor in generating cash to satisfy current and future obligations.

For long moves of drilling equipment, we attempt to obtain from our        customers either a lump sum or a dayrate as mobilization compensation for expenses incurred        during the period in transit. In todays strong market environment, we are able to receive a        dayrate as mobilization compensation; however, a surplus of certain types of units, either        worldwide or in particular operating areas, can result in our acceptance of a contract        which provides only partial or no recovery of relocation costs. Additionally, under such a        contract, we may not make any profit during the relocation of a rig. We can give no        assurance that we will receive full or partial recovery of any future relocation costs        beyond that for which we have already contracted.

Operation of our 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.

The majority of our contracts are denominated in United States dollars, but        occasionally a portion of a contract is payable in local currency. To the extent there is a        local currency component in a contract, we attempt to match revenue in the local currency        to operating costs paid in the local currency such as local labor, shore base expenses, and        local taxes, if any.

**INSURANCE AND RISK MANAGEMENT**

Our operations are subject to the usual hazards associated        with the drilling of oil and gas wells, such as blowouts, explosions and fires. In        addition, our equipment is subject to various risks particular to our industry which we        seek to mitigate by maintaining insurance. These risks include leg damage to jack-ups        during positioning, capsizing, grounding, collision and damage from severe weather        conditions.

 

5

Any of        these risks could result in damage or destruction of drilling rigs and oil and gas wells,        personal injury and property damage, suspension of operations or environmental damage        through oil spillage or extensive, uncontrolled fires. Therefore, in addition to general        business insurance policies, we maintain the following insurance relating to our rigs and        rig operations: hull and machinery, loss of hire, builders risk, cargo, war risks,        protection and indemnity, and excess liability, among others.

Our operations are also subject to disruption due to terrorism. As a result        of significant losses incurred by the insurance industry due to terrorism, offshore        drilling rig accidents, damages from hurricanes and other events, we have experienced        increases in premiums for certain insurance coverages. Although we believe that we are        adequately insured against normal and foreseeable risks in our operations in accordance        with industry standards, such insurance may not be adequate to protect us against liability        from all consequences of well disasters, marine perils, extensive fire damage, damage to        the environment or disruption due to terrorism. To date, we have not experienced difficulty        in obtaining insurance coverage, although we can provide no assurance as to the future        availability of such insurance or the cost thereof. The occurrence of a significant event        against which we are not adequately insured could have a material adverse effect on our        financial position. See also Risk Factors in Item 1A.

**CUSTOMERS**

During fiscal year 2007, we performed operations for 15 customers. Because        of the relatively limited number of customers for which we can operate at any given time,        revenues from 3 different customers amounted to 10% or more of our revenues in fiscal year        2007 as indicated below:

         

| Customer                   |   | Percentage of Revenues |
|----------------------------|--------|------------------------|
| Woodside Energy Ltd.       |   | 17%                    |
| BHP Billiton Petroleum Pty |   | 13%                    |
| Sarawak Shell Bhd.         |   | 13%                    |

 

Our business operations are subject to the risks associated with a business        having a limited number of customers for our products or services, and a decrease in the        drilling programs of these customers in the areas where we are employed may adversely        affect our revenues and, therefore, our results of operations and cash flows.

**COMPETITION**

We compete with several international offshore drilling contractors, most of        which are substantially larger than we are and which possess appreciably greater financial        and other resources. The offshore drilling industry is very competitive, with no single        offshore drilling contractor being dominant. Thus, there is competition in securing        available offshore drilling contracts.

Price competition is generally the most important factor in the offshore        drilling industry; however, when there is high worldwide utilization of equipment, as        currently exists, rig availability and suitability become more important factors in        securing contracts than price. 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, safety performance, reputation and customer relations. We believe that we        compete favorably with respect to these factors.

**INDUSTRY TRENDS**

The performance of the offshore drilling industry is largely determined by        basic supply and demand for available equipment. Periods of high demand and high dayrates        are often followed by periods of low demand and low dayrates. Offshore drilling contractors        can mobilize rigs from one region of the world to another, can cold stack rigs (taking them        out of service) or reactivate cold stacked rigs in order to adjust supply of existing        equipment in various markets to meet demand. The market is highly cyclical and is typically        driven by general economic activity and changes in actual or anticipated oil and

 

6

gas        prices. Generally, sustained high energy prices translate into increased exploration and        production spending by oil and gas companies, which in turn results in increased drilling        activity and demand for equipment like ours.

The offshore markets where we currently operate, offshore Southeast Asia,        offshore Africa, offshore India, offshore Australia, the Black Sea, and shallow waters in        the U.S. Gulf of Mexico, offer the potential for continuing high utilization. We expect        demand for all of our drilling units to continue to be strong due to demand for oil and gas        in their respective regions, and expect significant growth in demand for oil and gas driven        by Chinas and Indias rapidly expanding economies.

**INTERNATIONAL OPERATIONS**

The large majority of our operations are in foreign jurisdictions, which we        have historically found to be more stable in market terms. We believe international        operations provide a better opportunity than domestic operations for attractive contracts        and returns over the longer term. Since 1970, we have operated offshore Southeast Asia,        offshore Australia, in the Far East, in the Mediterranean Sea, in the Arabian Gulf, in the        Red Sea, in the Black Sea, offshore India, offshore Papua New Guinea, offshore Vietnam,        offshore East and West Africa, offshore Central and South America, offshore Chinaand in the        U.S. Gulf of Mexico. Currently, we have only one rig working in the U.S. Gulf of Mexico. We        have foreign offices currently located in Australia, Malaysia, Malta, Egypt, Indonesia,        Singapore and the United Kingdom.

Virtually all of our tax        provision for fiscal years 2005, 2006 and 2007 relates to taxes in foreign jurisdictions.        As a result of working in foreign jurisdictions, we earned a high level of operating income        in certain nontaxable and deemed profit tax jurisdictions which significantly reduced our        effective tax rate for the current fiscal year when compared to the United States statutory        rate. Our effective tax rate for fiscal year 2007 was 15%. Excluding any discrete items        that may occur, we expect our effective tax rate to be approximately 15% for fiscal year        2008.  We do not record federal income taxes on the undistributed earnings of our        foreign subsidiaries that we consider to be permanently reinvested in foreign operations.        The cumulative amount of such undistributed earnings was approximately $128 million at        September 30, 2007.  It is not practicable to estimate the amount of any deferred tax        liability associated with the undistributed earnings. If these earnings were to be remitted        to us, any United States income taxes payable would be substantially reduced by foreign tax        credits generated by the repatriation of the earnings. Such foreign tax credits totaled        approximately $57 million at September 30, 2007.

         

**EMPLOYEES**

We currently employ approximately 900 persons in our domestic and foreign        operations. In connection with our foreign drilling operations, we are often required by        the host country to hire substantial portions of our work force in that country and, in        some cases, these employees are represented by foreign unions. To date, we have experienced        little difficulty in complying with such requirements, and our drilling operations have not        been significantly interrupted by strikes or work stoppages. Our success depends to a        significant extent upon the efforts and abilities of our executive officers and other key        management personnel. There is no assurance that these individuals will continue in such        capacity for any particular period of time.

**ENVIRONMENTAL REGULATION**

The transition zone and shallow water areas of the U.S. Gulf of Mexico are        ecologically sensitive. Environmental issues have led to higher drilling costs, a more        difficult and lengthy well permitting process and, in general, have adversely affected        decisions of oil and gas companies to drill in these areas. In the United States,        regulations applicable to our operations include regulations controlling the discharge of        materials into the environment, requiring removal and cleanup of materials that may harm        the environment, or otherwise relating to the protection of the environment. For example,        as an operator of a mobile offshore drilling unit in navigable United States waters and        some offshore areas, we may be liable for damages and costs incurred in connection with oil        spills or other unauthorized discharges of chemicals or wastes resulting from or related to        those operations. Laws and regulations protecting the environment have become more        stringent, and may in some cases impose strict liability, rendering a person liable for        environmental damage without regard to negligence or fault on the part of such person. Some        of these laws and regulations may expose us to liability for the conduct of or conditions        caused by others or for acts which were in compliance with all applicable laws at the time        they were performed. The application of these requirements or the adoption of new        requirements could have a material adverse effect on our financial position, results of        operations or cash flows.

The U.S. Federal Water Pollution Control Act of 1972, commonly referred to        as the Clean Water Act, prohibits the discharge of specified substances into the navigable        waters of the United States without a permit. The regulations implementing the Clean Water        Act require permits to be obtained by an operator before specified exploration activities        occur. Offshore facilities must also prepare plans addressing spill prevention control and        countermeasures. Violations of monitoring, reporting and permitting requirements can result        in the imposition of civil and criminal penalties.

 

7

The U.S. Oil Pollution Act of 1990, or OPA, and related regulations impose a        variety of requirement on responsible parties related to the prevention of oil spills and        liability for damages resulting from such spills. Few defenses exist to the liability        imposed by OPA, and the liability could be substantial. Failure to comply with ongoing        requirements or inadequate cooperation in the event of a spill could subject a responsible        party to civil or criminal enforcement action. We have taken all steps necessary to comply        with this law, and have received a Certificate of Financial Responsibility (Water        Pollution) from the U.S. Coast Guard. Our operations in United States waters are also        subject to various other environmental regulations regarding pollution, and we have taken        steps to ensure compliance with those regulations.

The U.S. Outer Continental Shelf Lands Act authorizes regulations relating        to safety and environmental protection applicable to lessees and permittees operating on        the outer continental shelf. Included among these are regulations that require the        preparation of spill contingency plans and establish air quality standards for certain        pollutants, including particulate matter, volatile organic compounds, sulfur dioxide,        carbon monoxide and nitrogen oxides. Specific design and operational standards may apply to        outer continental shelf vessels, rigs, platforms, vehicles and structures. Violations of        lease conditions or regulations related to the environment issued pursuant to the U.S.        Outer Continental Shelf Lands Act can result in substantial civil and criminal penalties,        as well as potential court injunctions curtailing operations and canceling leases. Such        enforcement liabilities can result from either governmental or citizen        prosecution.

The U.S. Comprehensive Environmental Response, Compensation, and Liability        Act, or CERCLA, also known as the Superfund law, imposes liability without regard to fault        or the legality of the original conduct on some classes of persons that are considered to        have contributed to the release of a hazardous substance into the environment. Such persons        include the owner or operator of a facility where a release occurred and companies that        disposed or arranged for the disposal of the hazardous substances found at a particular        site. Persons who are or were responsible for releases of hazardous substances under CERCLA        may be subject to joint and several liability for the cost of cleaning up the hazardous        substances that have been released into the environment and for damages to natural        resources. It is also not uncommon for third parties to file claims for personal injury and        property damage allegedly caused by the hazardous substances released into the        environment.

**OTHER        GOVERNMENTAL REGULATION**

Our non-United States contract drilling operations are subject to various        laws and regulations in the countries in which we operate, including laws and regulations        relating to the importation of and operation of drilling units, currency conversions and        repatriation, oil and gas exploration and development, taxation of offshore earnings and        earnings of expatriate personnel, the use of local employees and suppliers by foreign        contractors and duties on the importation and exportation of drilling units and other        equipment. Governments in some foreign countries have become increasingly active in        regulating and controlling the ownership of concessions and companies holding concessions,        the exploration for oil and gas and other aspects of the oil and gas industries in their        countries. In some areas of the world, this governmental activity has adversely affected        the amount of exploration and development work done by major oil and gas companies and may        continue to do so. Operations in less developed countries can be subject to legal systems        that are not as mature or predictable as those in more developed countries, which can lead        to greater uncertainty in legal matters and proceedings.

Our worldwide operations are also subject to a variety of laws and        regulations designed to improve safety in the businesses in which we operate. International        conventions, including Safety of Life at Sea, also referred to as SOLAS, and the Code for        Construction of Mobile Offshore Drilling Units, also referred to as the MODU CODE,        generally are applicable to our offshore operations. Historically, we have made significant        capital expenditures and incurred additional expenses to ensure that our equipment complies        with applicable local and international health and safety regulations. Our future efforts        to comply with these regulations and standards may increase our costs and may affect the        demand for our services by influencing energy prices or limiting the areas in which we may        drill.

Although significant capital expenditures may be required to comply with        these governmental laws and regulations, such compliance has not, to date, materially        adversely affected our earnings, cash flows or competitive position.

**SECURITIES LITIGATION SAFE HARBOR STATEMENT**

Statements included in this report and the documents incorporated herein by        reference which are not historical facts (including any statements concerning plans and        objectives of management for future operations or economic performance, or assumptions        related thereto) are forward-looking statements within the meaning of the Private        Securities Litigation Reform Act of 1995. In addition, we and our representatives may from        to time to time make other oral or written statements which are also forward-looking        statements.

These forward-looking statements are made based upon managements current        plans, expectations, estimates, assumptions and beliefs concerning future events impacting        us and therefore involve a number of risks and uncertainties. We caution that        forward-looking statements are not guarantees and that actual results could differ        materially from those expressed or implied in the forward-looking statements.

 

8

Important factors that could cause our actual results of operations,        financial condition or cash flows to differ include, but are not necessarily limited        to:

|   | • | our dependence on the oil and gas industry; |
|--------|--------|---------------------------------------------|

|   | • | the operational risks involved in drilling for oil and                        gas; |
|--------|--------|------------------------------------------------------------------------------------|

|   | • | changes in rig utilization and dayrates in response to the                        level of activity in the oil and gas industry, which is significantly                        affected by indications and expectations regarding the level and volatility                        of oil and gas prices, which in turn are affected by such things as                        political, economic and weather conditions affecting or potentially                        affecting regional or worldwide demand for oil and gas, actions or                        anticipated actions by OPEC, inventory levels, deliverability constraints,                        and future market activity; |
|--------|--------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | • | the extent to which customers and potential customers                        continue to pursue deepwater drilling; |
|--------|--------|---------------------------------------------------------------------------------------------------------------------|

|   | • | exploration success or lack of exploration success by our                        customers and potential customers; |
|--------|--------|---------------------------------------------------------------------------------------------------------------------|

|   | • | the highly competitive and cyclical nature of our business,                        with periods of low demand and excess rig availability; |
|--------|--------|--------------------------------------------------------------------------------------------------------------------------------------------|

|   | • | the impact of the war with Iraq or other military                        operations, terrorist acts or embargoes elsewhere; |
|--------|--------|-----------------------------------------------------------------------------------------------------------------------------|

|   | • | our ability to enter into and the terms of future drilling                        contracts; |
|--------|--------|----------------------------------------------------------------------------------------------|

|   | • | the availability of qualified personnel; |
|--------|--------|------------------------------------------|

|   | • | our failure to retain the business of one or more                        significant customers; |
|--------|--------|-------------------------------------------------------------------------------------------------|

|   | • | the termination or renegotiation of contracts by                        customers; |
|--------|--------|------------------------------------------------------------------------------------|

|   | • | the availability of adequate insurance at a reasonable                        cost; |
|--------|--------|-------------------------------------------------------------------------------------|

|   | • | the occurrence of an uninsured loss; |
|--------|--------|--------------------------------------|

|   | • | the risks of international operations, including possible                        economic, political, social or monetary instability, and compliance with                        foreign laws; |
|--------|--------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | • | the effect public health concerns could have on our                        international operations and financial results; |
|--------|--------|----------------------------------------------------------------------------------------------------------------------------|

|   | • | compliance with or breach of environmental laws; |
|--------|--------|--------------------------------------------------|

|   | • | the incurrence of secured debt or additional unsecured                        indebtedness or other obligations by us or our subsidiaries; |
|--------|--------|--------------------------------------------------------------------------------------------------------------------------------------------|

|   | • | the adequacy of sources of liquidity; |
|--------|--------|---------------------------------------|

|   | • | currently unknown rig repair needs and/or additional                        opportunities to accelerate planned maintenance expenditures due to                        presently unanticipated rig downtime; |
|--------|--------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | • | higher than anticipated accruals for performance-based                        compensation due to better than anticipated performance by us, higher than                        anticipated severance expenses due to unanticipated employee terminations,                        higher than anticipated legal and accounting fees due to unanticipated                        financing or other corporate transactions, and other factors that could                        increase general and administrative expenses; |
|--------|--------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

         

9

|   | • | the actions of our competitors in the offshore drilling                        industry, which could significantly influence rig dayrates and                        utilization; |
|--------|--------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | • | changes in the geographic areas in which our customers plan                        to operate, which in turn could change our expected effective tax                        rate; |
|--------|--------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | • | changes in oil and gas drilling technology or in our                        competitors drilling rig fleets that could make our drilling rigs less                        competitive or require major capital investments to keep them                        competitive; |
|--------|--------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | • | rig availability; |
|--------|--------|-------------------|

|   | • | the effects and uncertainties of legal and administrative                        proceedings and other contingencies; |
|--------|--------|-----------------------------------------------------------------------------------------------------------------------|

|   | • | the impact of governmental laws and regulations and the                        uncertainties involved in their administration, particularly in some                        foreign jurisdictions; |
|--------|--------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | • | changes in accepted interpretations of accounting guidelines                        and other accounting pronouncements and tax laws; |
|--------|--------|---------------------------------------------------------------------------------------------------------------------------------------|

|   | • | the risks involved in the construction, upgrade, and repair                        of our drilling units; and |
|--------|--------|---------------------------------------------------------------------------------------------------------------|

|   | • | such other factors as may be discussed in this report and                        our other reports filed with the Securities and Exchange Commission, or                        SEC. |
|--------|--------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

These factors are not necessarily all of the important factors that could        cause actual results to differ materially from those expressed in any of our        forward-looking statements. See also Risk Factors in Item 1A. Other unknown or        unpredictable factors could also have material adverse effects on future results. The words        believe, impact, intend, estimate, anticipate, plan and similar expressions identify        forward-looking statements. These forward-looking statements are found at various places        throughout the Managements Discussion and Analysis in our Annual Report to Shareholders for        fiscal year 2007 incorporated by reference in Part I, Part II, Part IV and elsewhere in        this report. When considering any forward-looking statement, you should also keep in mind        the risk factors described in other reports or filings we make with the SEC from time to        time. Undue reliance should not be placed on these forward-looking statements, which are        applicable only on the date hereof. Neither we nor our representatives have a general        obligation to revise or update these forward-looking statements to reflect events or        circumstances that arise after the date hereof or to reflect the occurrence of        unanticipated events.

**COMPANY        INFORMATION**

We file annual, quarterly and current reports, proxy statements and other        information with the SEC. Our SEC filings are available to the public over the internet at        the SECs web site at http://www.sec.gov. Our website address is www.atwd.com. We make        available free of charge on or through our website our annual report on Form 10-K,        quarterly reports on Form 10-Q, and current reports on Form 8-K, and amendments to those        reports filed or furnished pursuant to Section 13(a) or 15(d) of the Exchange Act as soon        as reasonably practicable after we electronically file such material with, or furnish it        to, the SEC. We have adopted a code of ethics applicable to our chief executive officer and        our senior financial officers which is also available on our website. We intend to satisfy        the disclosure requirement regarding any changes in or waivers from our code of ethics by        posting such information on our website or by filing a Form 8-K for such event. Unless        stated otherwise, information on our website is not incorporated by reference into this        report or made a part hereof for any purpose. You may also read and copy any document we        file at the SECs Public Reference Room at 100F Street NE, Washington, DC 20549. Please call        the SEC at 1-800-SEC-0330 for further information on the public reference rooms and copy        charges.

         

| **ITEM 1A.** | **RISK FACTORS** |
|--------------|------------------|

An investment in our securities involves significant risks. You should        carefully consider the risk factors described below before deciding whether to invest in        our securities. The risks and uncertainties described below are not the only ones we face.        You should also carefully read and consider all of the information we have included, or        incorporated by reference, in

 

10

this        report on Form 10-K before you decide to invest in our securities. Additional risks and        uncertainties not presently known to us or that we currently deem immaterial may also        impair our business.

WE RELY        ON THE OIL AND NATURAL GAS INDUSTRY AND VOLATILE OIL AND NATURAL GAS PRICES IMPACT DEMAND        FOR OUR SERVICES.

Demand for our services depends on activity in offshore oil and natural gas        exploration, development and production. The level of exploration, development and        production activity is affected by factors such as:

|   | • | prevailing oil and natural gas prices; |
|--------|--------|----------------------------------------|

|   | • | expectations about future prices; |
|--------|--------|-----------------------------------|

|   | • | the cost of exploring for, producing and delivering oil and                        natural gas; |
|--------|--------|-------------------------------------------------------------------------------------------------|

|   | • | the sale and expiration dates of available offshore                        leases; |
|--------|--------|------------------------------------------------------------------------------------|

|   | • | worldwide demand for petroleum products; |
|--------|--------|------------------------------------------|

|   | • | current availability of oil and natural gas                        resources; |
|--------|--------|-------------------------------------------------------------------------------|

|   | • | the rate of discovery of new oil and natural gas reserves in                        offshore areas; |
|--------|--------|-----------------------------------------------------------------------------------------------------|

|   | • | local and international political and economic                        conditions; |
|--------|--------|-----------------------------------------------------------------------------------|

|   | • | technological advances; |
|--------|--------|-------------------------|

|   | • | ability of oil and natural gas companies to generate or                        otherwise obtain funds for capital; |
|--------|--------|--------------------------------------------------------------------------------------------------------------------|

|   | • | the ability of the Organization of Petroleum Exporting                        Countries, or OPEC, to set and maintain production levels and                        pricing; |
|--------|--------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | • | political or other disruptions that limit exploration,                        development and production in oil-producing countries; |
|--------|--------|--------------------------------------------------------------------------------------------------------------------------------------|

|   | • | the level of production by non-OPEC countries;                        and |
|--------|--------|---------------------------------------------------------------------------|

|   | • | laws and governmental regulations that restrict exploration                        and development of oil and natural gas in various jurisdictions. |
|--------|--------|-----------------------------------------------------------------------------------------------------------------------------------------------------|

During recent years, the level of offshore exploration, development and        production activity has been volatile. Such volatility is likely to continue in the future.        A decline in the worldwide demand for oil and natural gas or prolonged low oil or natural        gas prices in the future would likely result in reduced exploration and development of        offshore areas and a decline in the demand for our services. Even during periods of high        prices for oil and natural gas, companies exploring for oil and gas may cancel or curtail        programs, or reduce their levels of capital expenditures for exploration and production for        a variety of reasons. Any such decrease in activity is likely to reduce our day rates and        our utilization rates and, therefore, could have a material adverse effect on our financial        condition, results of operations and cash flows.

RIG        CONVERSIONS, UPGRADES OR NEWBUILDS MAY BE SUBJECT TO DELAYS AND COST OVERRUNS.

From time to time we may undertake to increase our fleet capacity through        conversions or upgrades to rigs or through new construction. These projects are subject to        risks of delay or cost overruns inherent in any large construction project resulting from        numerous factors, including the following:

|   | • | shortages of equipment, materials or skilled                        labor; |
|--------|--------|----------------------------------------------------------------------------|

|   | • | unscheduled delays in the delivery of ordered materials and                        equipment; |
|--------|--------|-----------------------------------------------------------------------------------------------|

|   | • | unanticipated cost increases; |
|--------|--------|-------------------------------|

 

11

 

|   | • | weather interferences; |
|--------|--------|------------------------|

|   | • | difficulties in obtaining necessary permits or in meeting                        permit conditions; |
|--------|--------|-----------------------------------------------------------------------------------------------------|

|   | • | design and engineering problems; and |
|--------|--------|--------------------------------------|

|   | • | shipyard failures. |
|--------|--------|--------------------|

OPERATING HAZARDS INCREASE OUR RISK OF LIABILITY; WE MAY NOT BE ABLE TO        FULLY INSURE AGAINST THESE RISKS.

Our operations are subject to various operating hazards and risks,        including:

|   | • | catastrophic marine disaster; |
|--------|--------|-------------------------------|

|   | • | adverse sea and weather conditions; |
|--------|--------|-------------------------------------|

|   | • | mechanical failure; |
|--------|--------|---------------------|

|   | • | navigation errors; |
|--------|--------|--------------------|

|   | • | collision; |
|--------|--------|------------|

|   | • | oil and hazardous substance spills, containment and clean                        up; |
|--------|--------|--------------------------------------------------------------------------------------|

|   | • | labor shortages and strikes; |
|--------|--------|------------------------------|

|   | • | damage to and loss of drilling rigs and production                        facilities; and |
|--------|--------|-------------------------------------------------------------------------------------------|

|   | • | war, sabotage and terrorism. |
|--------|--------|------------------------------|

These risks present a threat to the safety of personnel and to our rigs,        cargo, equipment under tow and other property, as well as the environment. We could be        required to suspend our operations or request that others suspend their operations as a        result of these hazards. Third parties may have significant claims against us for damages        due to personal injury, death, property damage, pollution and loss of business if such        event were to occur in our operations.

We maintain insurance coverage against the casualty and liability risks        listed above. We believe our insurance is adequate, and we have never experienced a loss in        excess of policy limits. However, we may not be able to renew or maintain our existing        insurance coverage at commercially reasonable rates or at all. Additionally, there is no        assurance that our insurance coverage will be adequate to cover future claims that may        arise.

THE        INTENSE PRICE COMPETITION AND CYCLICALITY OF OUR INDUSTRY, WHICH IS MARKED BY PERIODS OF        LOW DEMAND, EXCESS RIG AVAILABILITY AND LOW DAYRATES, COULD HAVE AN ADVERSE EFFECT ON OUR        REVENUES, PROFITABILITY AND CASH FLOWS.

The contract drilling business is highly competitive with numerous industry        participants. The industry has experienced consolidation in recent years and may experience        additional consolidation. Recent mergers among oil and natural gas exploration and        production companies have reduced the number of available customers.

Drilling contracts are, for the most part, awarded on a competitive bid        basis. Price competition is often the primary factor in determining which qualified        contractor is awarded a job, although rig availability and the quality and technical        capability of service and equipment are also factors. We compete with approximately ten        other drilling contractors, most of which are substantially larger and have appreciably        greater resources than us.

The industry in which we operate historically has been cyclical, marked by        periods of low demand, excess rig supply and low dayrates, followed by periods of high        demand, short rig supply and increasing dayrates. Periods of excess rig supply intensify        the competition in the industry and often result in rigs being idled. Several markets in        which we operate are currently oversupplied. Lower utilization and dayrates in one or more        of the regions in which we operate would adversely affect our revenues and profitability.        Prolonged periods of low utilization and dayrates could also result in the recognition        of

12

impairment        charges on certain of our drilling rigs if future cash flow estimates, based upon        information available to management at the time, indicate that the carrying value of these        rigs may not be recoverable. We may be required to idle rigs or to enter into lower-rate        contracts in response to market conditions in the future.

WE RELY        HEAVILY ON A SMALL NUMBER OF CUSTOMERS AND THE LOSS OF A SIGNIFICANT CUSTOMER COULD HAVE AN        ADVERSE IMPACT ON OUR FINANCIAL RESULTS.

Our contract drilling business is subject to the usual risks associated with        having a limited number of customers for our services. Woodside Energy Ltd., BHP Billiton        Petroleum Pty and Sarawak Shell Bhd. provided approximately 17%, 13%, and 13%, respectively        of our consolidated revenues in fiscal year 2007. Our results of operations could be        materially adversely affected if any of our major customers terminate its contracts with        us, fails to renew our existing contracts or refuses to award new contracts to        us.

WE MAY        SUFFER LOSSES IF OUR CUSTOMERS TERMINATE OR SEEK TO RENEGOTIATE THEIR CONTRACTS.

Certain of our contracts with customers may be cancelable upon specified        notice at the option of the customer. Other contracts require the customer to pay a        specified early termination payment upon cancellation, which payments may not fully        compensate us for the loss of the contract. Contracts customarily provide for either        automatic termination or termination at the option of the customer in the event of total        loss of the drilling rig or if drilling operations are suspended for extended periods of        time by reason of acts of God or excessive rig downtime for repairs, or other specified        conditions. Early termination of a contract may result in a rig being idle for an extended        period of time. Our revenues may be adversely affected by customers' early termination of        contracts, especially if we are unable to recontract the affected rig within a short period        of time. During depressed market conditions, a customer may no longer need a rig that is        currently under contract or may be able to obtain a comparable rig at a lower daily rate.        As a result, customers may seek to renegotiate the terms of their existing drilling        contracts or avoid their obligations under those contracts. The renegotiation of a number        of our drilling contracts could adversely affect our financial position, results of        operations and cash flows.

WE ARE        SUBJECT TO OPERATING RISKS SUCH AS BLOWOUTS AND WELL FIRES THAT COULD RESULT IN        ENVIRONMENTAL DAMAGE, PROPERTY LOSS, AND PERSONAL INJURY OR DEATH.

Our drilling operations are subject to many hazards that could increase the        likelihood of accidents. Accidents can result in:

|   | • | costly delays or cancellations of drilling                        operations; |
|--------|--------|-------------------------------------------------------------------------------|

|   | • | serious damage to, or destruction of, equipment; |
|--------|--------|--------------------------------------------------|

|   | • | personal injury or death; |
|--------|--------|---------------------------|

|   | • | significant impairment of producing wells or underground                        geological formations; and |
|--------|--------|------------------------------------------------------------------------------------------------------------|

|   | • | major environmental damage. |
|--------|--------|-----------------------------|

Our offshore drilling operations are also subject to marine hazards, either        at offshore sites or while drilling equipment is under tow, such as vessel capsizings,        collisions or groundings. In addition, raising and lowering jack-up drilling rigs and        offshore drilling platforms whose three legs independently penetrate the ocean floor,        flooding semisubmersible ballast tanks to help fix the floating drilling unit over the well        site and drilling into high-pressure formations are complex, hazardous activities and we        can encounter problems.

We have had accidents in the past due to some of the hazards described        above, including the fiscal year 2004 ATWOOD BEACON incident. Because of the ongoing        hazards associated with our operations:

|   | • | we may experience a higher number of accidents in the future                        than expected; |
|--------|--------|----------------------------------------------------------------------------------------------------|

|   | • | our insurance coverage may prove inadequate to cover losses                        that are greater than anticipated; |
|--------|--------|-----------------------------------------------------------------------------------------------------------------------|

|   | • | our insurance deductibles may increase; or |
|--------|--------|--------------------------------------------|

 

13

|   | • | our insurance premiums may increase to the point where                        maintaining our current level of coverage is prohibitively                        expensive. |
|--------|--------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

Any similar events could yield future operating losses and have a        significant adverse impact on our business.

OUR        RESULTS OF OPERATIONS WILL BE ADVERSELY AFFECTED IF WE ARE UNABLE TO SECURE CONTRACTS FOR        OUR DRILLING RIGS ON ECONOMICALLY FAVORABLE TERMS.

The drilling markets in which we compete frequently experience significant        fluctuations in the demand for drilling services, as measured by the level of exploration        and development expenditures, and the supply of capable drilling equipment. In response to        fluctuating market conditions, we can, as we have done in the past, relocate drilling rigs        from one geographic area to another, but only when such moves are economically justified.        If demand for our rigs declines, rig utilization and dayrates are generally adversely        affected.

FAILURE        TO OBTAIN AND RETAIN KEY PERSONNEL COULD IMPEDE OUR OPERATIONS.

We depend to a significant extent upon the efforts and abilities of our        executive officers and other key management personnel. There is no assurance that these        individuals will continue in such capacity for any particular period of time. The loss of        the services of one or more of our executive officers or key management personnel could        adversely affect our operations.

GOVERNMENT REGULATION AND ENVIRONMENTAL RISKS REDUCE OUR BUSINESS        OPPORTUNITIES AND INCREASE OUR COSTS.

We must comply with extensive government regulation in the form of        international conventions, federal, state and local laws and regulations in jurisdictions        where our vessels operate and are registered. These conventions, laws and regulations        govern oil spills and matters of environmental protection, worker health and safety, and        the manning, construction and operation of vessels, and vessel and port security. We        believe that we are in material compliance with all applicable environmental, health and        safety, and vessel and port security laws and regulations. We are not a party to any        pending governmental litigation or similar proceeding, and we are not aware of any        threatened governmental litigation or proceeding which, if adversely determined, would have        a material adverse effect on our financial condition or results of operations. However, the        risks of incurring substantial compliance costs, liabilities and penalties for        non-compliance are inherent in our industry. Compliance with environmental, health and        safety, and vessel and port security laws increases our costs of doing business.        Additionally, environmental, health and safety, and vessel and port security laws change        frequently. Therefore, we are unable to predict the future costs or other future impact of        environmental, health and safety, and vessel and port security laws on our operations.        There is no assurance that we can avoid significant costs, liabilities and penalties        imposed as a result of governmental regulation in the future.

OUR        RELIANCE ON FOREIGN OPERATIONS EXPOSES US TO ADDITIONAL RISKS NOT GENERALLY ASSOCIATED WITH        DOMESTIC OPERATIONS, WHICH COULD HAVE AN ADVERSE EFFECT ON OUR OPERATIONS OR FINANCIAL        RESULTS.

During the past five years, we derived substantially all of our revenues        from foreign sources. We, therefore, face risks inherent in conducting business        internationally, such as:

|   | • | legal and governmental regulatory requirements; |
|--------|--------|-------------------------------------------------|

|   | • | difficulties and costs of staffing and managing                        international operations; |
|--------|--------|--------------------------------------------------------------------------------------------------|

|   | • | language and cultural differences; |
|--------|--------|------------------------------------|

|   | • | potential vessel seizure or nationalization of                        assets; |
|--------|--------|-------------------------------------------------------------------------------|

|   | • | import-export quotas or other trade barriers; |
|--------|--------|-----------------------------------------------|

|   | • | renegotiation or nullification of existing                        contracts; |
|--------|--------|------------------------------------------------------------------------------|

|   | • | difficulties in collecting accounts receivable and longer                        collection periods; |
|--------|--------|------------------------------------------------------------------------------------------------------|

 

14

|   | • | foreign and domestic monetary policies; |
|--------|--------|-----------------------------------------|

|   | • | political and economic instability; |
|--------|--------|-------------------------------------|

|   | • | terrorist acts, war and civil disturbances; |
|--------|--------|---------------------------------------------|

|   | • | assault on property or personnel; |
|--------|--------|-----------------------------------|

|   | • | travel limitations or operational problems caused by severe                        acute respiratory syndrome (SARS) or other public health                        threats; |
|--------|--------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | • | imposition of currency exchange controls; and |
|--------|--------|-----------------------------------------------|

|   | • | potentially adverse tax consequences, including those due to                        changes in laws or interpretation of existing laws. |
|--------|--------|-----------------------------------------------------------------------------------------------------------------------------------------|

In the past, these conditions or events have not materially affected our        operations. However, we cannot predict whether any such conditions or events might develop        in the future. Also, we organized our subsidiary structure and our operations, in part,        based on certain assumptions about various foreign and domestic tax laws, currency exchange        requirements, and capital repatriation laws. While we believe our assumptions are correct,        there can be no assurance that taxing or other authorities will reach the same conclusion.        If our assumptions are incorrect, or if the relevant countries change or modify such laws        or the current interpretation of such laws, we may suffer adverse tax and financial        consequences, including the reduction of cash flow available to meet required debt service        and other obligations. Any of these factors could materially adversely affect our        international operations and, consequently, our business, operating results and financial        condition.

WE MAY        SUFFER LOSSES AS A RESULT OF FOREIGN EXCHANGE RESTRICTIONS AND FOREIGN CURRENCY        FLUCTUATIONS.

A significant portion of the contract revenues of our foreign operations are        paid in United States dollars; however, some payments are made in foreign currencies. As a        result, we are exposed to currency fluctuations and exchange rate risks as a result of our        foreign operations. To minimize the financial impact of these risks when we are paid in        foreign currency, we attempt to match the currency of operating costs with the currency of        contract revenue. However, any increase in the value of the United States dollar in        relation to the value of applicable foreign currencies could adversely affect our operating        revenues when translated into United States dollars. To date, currency fluctuations have        not had a material impact on our financial condition or results of operations.

WE ARE        SUBJECT TO WAR, SABOTAGE AND TERRORISM, WHICH COULD HAVE AN ADVERSE EFFECT ON OUR        BUSINESS.

The terrorist attacks of September 11, 2001 have had a continuing impact,        including those related to the current United States military campaigns in Afghanistan and        Iraq, on the energy industry. It is unclear what impact the current United States military        campaigns or possible future campaigns will have on the energy industry in general, or us        in particular, in the future. Uncertainty surrounding retaliatory military strikes or a        sustained military campaign may affect our operations in unpredictable ways, including        changes in the insurance markets, disruptions of fuel supplies and markets, particularly        oil, and the possibility that infrastructure facilities, including pipelines, production        facilities, refineries, electric generation, transmission and distribution facilities,        could be direct targets of, or indirect casualties of, an act of terror. War or risk of war        may also have an adverse effect on the economy.

The terrorist attacks have resulted in a hardening of the insurance market.        We maintain insurance coverage against casualty and liability risks and have renewed our        primary insurance program for the insurance year 2006-2007. We will evaluate the need to        maintain this coverage as it applies to our drilling fleet in the future. We believe our        insurance is adequate, and we have never experienced a loss in excess of policy limits.        There is no assurance that our insurance coverage will be available or affordable and, if        available, whether it will be adequate to cover future claims that may arise.

Instability in the financial markets as a result of war, sabotage or        terrorism could also affect our ability to raise capital and could also adversely affect        the oil, gas and power industries and restrict their future growth.

 

15

THE        SUBSTANTIAL EQUITY INTEREST OWNED BY CERTAIN SHAREHOLDERS MAY LIMIT THE ABILITY OF OTHER        SHAREHOLDERS TO INFLUENCE THE OUTCOME OF DIRECTOR ELECTIONS AND OTHER MATTERS REQUIRING        SHAREHOLDER APPROVAL.

As of November 28, 2007, Helmerich & Payne International Drilling Co.,        owns of record and beneficially 4,000,000 shares, or approximately 13% of the issued and        outstanding shares of our common stock. One of our directors, Hans Helmerich is an        executive officer of Helmerich & Payne, Inc. (H&P) the parent company of Helmerich        & Payne International Drilling Co. Another director, George Dotson, was also an        executive officer of H&P up until his retirement in 2006. The beneficial ownership of        our common stock and membership of an officer of H&P on our board enables H&P to        exercise some influence over the election of directors and other corporate matters        requiring shareholder or board of directors' approval.

FUTURE        SALES OF OUR COMMON STOCK BY HELMERICH & PAYNE INTERNATIONAL DRILLING CO. OR ANY OTHER        LARGE SHAREHOLDER COULD ADVERSELY AFFECT OUR MARKET PRICE.

Helmerich & Payne International Drilling Co. has advised us that,        consistent with its pursuit of a strategy of focusing on its core drilling business, it        intends to evaluate its entire investment portfolio, which includes shares of our common        stock, and its cash requirements on a continuous basis and that it may seek to dispose of        all or a portion of the shares of our common stock owned by it when and as necessary, from        time to time, to fund its corporate needs. Until the sale of all of the shares of common        stock owned by Helmerich & Payne International Drilling Co. or any other large        shareholder are sold, we will or may have a large number of shares of common stock        outstanding and available for resale beginning at various points in the future. Sales of a        substantial number of shares of our common stock in the public market, or the possibility        that these sales may occur, could also make it more difficult for us to sell our common        stock or other equity securities in the future at a time and at a price that we deem        appropriate.

ANTI-TAKEOVER PROVISIONS IN OUR AMENDED AND RESTATED CERTIFICATE OF        FORMATION, SECOND AMENDED AND RESTATED BYLAWS, AND RIGHTS PLAN COULD MAKE IT DIFFICULT FOR        HOLDERS OF OUR COMMON STOCK TO RECEIVE A PREMIUM FOR THEIR SHARES UPON A CHANGE OF        CONTROL.

Holders of the common stock of acquisition targets often receive a premium        for their shares upon a change of control. Texas law and the following provisions, among        others, of our certificate of formation, bylaws and rights plan could have the effect of        delaying or preventing a change of control and could prevent holders of our common stock        from receiving such a premium:

|   | • | We are subject to a provision of Texas corporate law that                        prohibits us from engaging in a business combination with any shareholder                        for three years from the date that person became an affiliated shareholder                        by beneficially owning 20% or more of our outstanding common stock, unless                        specified conditions are met. |
|--------|--------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | • | Special meetings of shareholders may not be called by anyone                        other than our chairman of the board of directors, president, or the                        holders of at least one-tenth of all shares issued, outstanding, and                        entitled to vote. |
|--------|--------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | • | Our board of directors has the authority to issue up to                        1,000,000 shares of "blank-check" preferred stock and to determine the                        voting rights and other privileges of these shares without any vote or                        action by our shareholders. |
|--------|--------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | • | We have issued "poison pill" rights to purchase Series A                        Junior Participating Preferred Stock under our rights plan, whereby the                        ownership of our shares by a potential acquirer can be significantly                        diluted by the sale at a significant discount of additional shares of our                        common stock to all other shareholders, which could discourage unsolicited                        acquisition proposals. |
|--------|--------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| **ITEM 1B.** | **UNRESOLVED STAFF COMMENTS** |
|--------------|-------------------------------|

None.

 

16

| **ITEM 2.** | **PROPERTIES** |
|-------------|----------------|

Information regarding the current location and general character of our        principal assets may be found in the table with the caption heading "Offshore Drilling        Operations" in the Company's Annual Report to Shareholders for fiscal year 2007, which is        incorporated by reference herein.

Collectively since fiscal year 1997, we have expended approximately $400        million (including the current upgrade in progress on the RICHMOND) in upgrading seven        offshore mobile drilling units. The timing and costs of the various upgrades are as        follows:

         

| **DRILLING UNITS**               |   | **YEAR UPGRADE**

**COMPLETED** |   | **COST OF UPGRADE**                                                                                                                                                        |
|----------------------------------|--------|---------------------------------|--------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|                             |   |                            |   | **(In Millions)**                                                                                                                                                          |
|                             |   |                            |   |                                                                                                                                                                       |
| ATWOOD HUNTER (PHASE I)          |   | 1997                            |   |      $  40                                                                                                                                        |
| ATWOOD SOUTHERN CROSS (PHASE I)  |   | 1997                            |   |      35                                                                                                                                                |
| ATWOOD FALCON (PHASE I)          |   | 1998                            |   |      45                                                                                                                                                |
| VICKSBURG                        |   | 1998                            |   |      35                                                                                                                                                |
| SEAHAWK (PHASE I)                |   | 1999                            |   |      22                                                                                                                                                |
| ATWOOD EAGLE (PHASE I)           |   | 2000                            |   |      8                                                                                                                                                 |
| RICHMOND                         |   | 2000                            |   |      7                                                                                                                                                 |
| ATWOOD HUNTER (PHASE II)         |   | 2001                            |   |      58                                                                                                                                                |
| ATWOOD EAGLE (PHASE II)          |   | 2002                            |   |      90                                                                                                                                                |
| ATWOOD SOUTHERN CROSS (PHASE II) |   | 2006                            |   |      7                                                                                                                                                 |
| SEAHAWK (PHASE II)               |   | 2006                            |   |       16                                                                                                                                          |
| ATWOOD FALCON (PHASE II)         |   | 2006                            |   |       23                                                                                                                                          |
| RICHMOND (IN PROGRESS)           |   | 2007                            |   |                                                15(estimated) |
|                             |   |                            |   |    $ 401                                                                                                                                                         |
|                             |   |                            |   |                                                                                                                                                                       |

 

 

The ATWOOD AURORA, another ultra-premium jack-up, will become our ninth        drilling unit upon expected completion of its construction on or before October/November        2008. This drilling unit is expected to have a total construction cost of approximately        $160 million.

| **ITEM 3.** | **LEGAL PROCEEDINGS** |
|-------------|-----------------------|

We are party to a number of lawsuits which are ordinary, routine litigation        incidental to our business, the outcome of which, individually, or in the aggregate, is not        expected to have a material adverse effect on our financial condition, results of        operations or cash flows.

| **ITEM 4.** | **SUBMISSION OF MATTERS TO A VOTE OF                        SHAREHOLDERS** |
|-------------|----------------------------------------------------------------------------|

During the fourth quarter of fiscal year 2007, no matters were submitted to        a vote of shareholders through the solicitation of proxies or otherwise.

| **ITEM 5.** | **MARKET FOR THE REGISTRANT'S COMMON STOCK AND RELATED                        SHAREHOLDER MATTERS** |
|-------------|-----------------------------------------------------------------------------------------------------|

As of November 27, 2007 there were approximately 10,700 beneficial owners of        our common stock based upon information provided to us by a third party service provider.        Our common stock is traded on the New York Stock Exchange under the symbol ATW.

We did not pay cash dividends in fiscal years 2006 or 2007 and we do not        anticipate paying cash dividends in the foreseeable future because of the capital-intensive        nature of our business. To enable us to maintain our high competitive

 

17

profile in        the industry, we expect to utilize cash reserves at the appropriate time to upgrade        existing equipment or to acquire additional equipment. Both our credit facility in place at        September 30, 2007 and our new credit facility entered into in October 2007, prohibit        payments of cash dividends on common stock without lender approval. In March 2006, we        declared a two-for-one stock split of our common stock effected in the form of a 100%        common stock dividend.

Market information concerning our common stock may be found under the        caption heading Stock Price Information" in our Annual Report to Shareholders for fiscal        year 2007, which is incorporated by reference herein.

Equity compensation plan information required by this item may be found in        Note 3 to Consolidated Financial Statements contained in our Annual Report to Shareholders        for fiscal year 2007, which is incorporated by reference herein.

Stock Performance Graph required by this item may be found under the caption        heading Stock Price Information in our Annual Report to Shareholders for fiscal year 2007,        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 our Annual Report to Shareholders for fiscal year 2007, 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 under the caption Managements        Discussion and Analysis of Financial Condition and Results of Operations in our Annual        Report to Shareholders for fiscal year 2007, which is incorporated by reference        herein.

| **ITEM 7A.** | **QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET                        RISK** |
|--------------|---------------------------------------------------------------------------------------|

 

Information required by this item may be found under the caption Disclosures        About Market Risk in the Managements Discussion and Analysis of Financial Condition and        Results of Operations section of the Companys Annual Report to Shareholders for fiscal year        2007, which is incorporated by reference herein.

| **ITEM 8.** | **FINANCIAL STATEMENTS AND SUPPLEMENTARY                        DATA** |
|-------------|------------------------------------------------------------------------|

Information required by this item may be found in our Annual Report to        Shareholders for fiscal year 2007, which is incorporated by reference herein.

| **ITEM 9.** | **CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON                        ACCOUNTING AND FINANCIAL DISCLOSURE** |
|-------------|-----------------------------------------------------------------------------------------------------------------|

None.

**ITEM        9A.              CONTROLS        AND PROCEDURES**

 

|   | (a) | Evaluation of Disclosure Controls and Procedures |
|--------|-----|--------------------------------------------------|

Our management, with the participation of our Chief Executive Officer and        Chief Financial Officer, evaluated the effectiveness of our disclosure controls and        procedures as of the end of the period covered by this report. Based on that evaluation,        the Chief Executive Officer and Chief Financial Officer concluded that our disclosure        controls and procedures as of the end of the period covered by this report have been        designed and are effective at the reasonable assurance level so that the information        required to be disclosed by us in our periodic SEC filings is recorded, processed,        summarized and reported within the time periods specific in the SECs rules and forms. We        believe that a controls system, no matter how well designed and operated, cannot provide        absolute assurance that the objectives of the controls system are met, and no evaluation of        controls can provide absolute assurance that all control issues and instances of fraud, if        any, within a company have been detected.

|   | (b) | Managements Annual Report on Internal Control over Financial                        Reporting |
|--------|-----|-----------------------------------------------------------------------------------------------|

 

18

A copy of our Managements Report of Internal Control over Financial        Reporting is included in our Annual Report to Shareholders for fiscal year 2007, which is        incorporated by reference herein.

|   | (c) | Attestation Report of the Independent Registered Public                        Accounting Firm. |
|--------|-----|-------------------------------------------------------------------------------------------------|

A copy of the attestation report of PricewaterhouseCoopers, LLP, our        independent registered public accounting firm is included in our Annual Report to        Shareholders for fiscal year 2007, which is incorporated by reference herein.

|   | (d) | Change in Internal Control over Financial                        Reporting |
|--------|-----|----------------------------------------------------------------------------|

No change in our internal control over financial reporting occurred during        the fiscal quarter covered by this report that has materially affected, or is reasonably        likely to materially affect, our internal control over financial reporting.

**ITEM        9B.              OTHER        INFORMATION**

 

None.

**PART III**

| **ITEM 10.** | **DIRECTORS AND EXECUTIVE OFFICERS OF THE                        COMPANY** |
|--------------|----------------------------------------------------------------------------|

This information is incorporated by reference from our definitive Proxy        Statement for the Annual Meeting of Shareholders to be held February 14, 2008, to be filed        with the SEC 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 our definitive Proxy        Statement for the Annual Meeting of Shareholders to be held February 14, 2008, to be filed        with the SEC 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 our definitive Proxy        Statement for the Annual Meeting of Shareholders to be held February 14, 2008, to be filed        with the SEC 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 our definitive Proxy        Statement for the Annual Meeting of Shareholders to be held February 14, 2008, to be filed        with the SEC not later than 120 days after the end of the fiscal year covered by this Form        10-K.

| **ITEM 14.** | **PRINCIPAL ACCOUNTING FEES AND SERVICES** |
|--------------|--------------------------------------------|

This information is incorporated by reference from our definitive Proxy        Statement for the Annual Meeting of Shareholders to be held February 14, 2008, to be filed        with the SEC not later than 120 days after the end of the fiscal year covered by this Form        10-K.

**PART IV**

| **ITEM 15** | **EXHIBITS AND FINANCIAL STATEMENTS** |
|-------------|---------------------------------------|

|   | (a) | **FINANCIAL STATEMENTS AND EXHIBITS** |
|--------|-----|---------------------------------------|

 

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|   | **1. and 2.** | **FINANCIAL STATEMENTS AND SCHEDULES** |
|--------|---------------|----------------------------------------|

The following financial statements, together with the report of        PricewaterhouseCoopers LLP dated November 28, 2007 appearing in our Annual Report to        Shareholders for fiscal year 2007, are incorporated by reference herein:

Report of Independent Registered Public Accounting Firm

Consolidated Balance Sheets as of September 30, 2007 and 2006

Consolidated Statements of Operations for each of the three years in the        period ended September 30, 2007

Consolidated Statements of Cash Flows for each of the three years in the        period ended September 30, 2007

Consolidated Statements of Changes in Shareholders' Equity for each of the        three years in the period ended September 30, 2007

Notes to Consolidated Financial Statements

|   | **3.** | **MANAGEMENT CONTRACTS AND COMPENSATORY PLANS OR                        ARRANGEMENTS** |
|--------|--------|----------------------------------------------------------------------------------------|

The management contracts and compensatory plans or arrangements required to        be filed as exhibits to this report are as follows:

Atwood Oceanics, Inc. 1996 Incentive Equity Plan - See Exhibit 10.1.1        hereof.

Form of Atwood Oceanics, Inc. Stock Option Agreement (1996 Incentive Equity        Plan) - See Exhibit 10.1.2 hereof.

Amendment No. 1 to Atwood Oceanics, Inc. 1996 Incentive Equity Plan - See        Exhibit 10.1.3 hereof.

Form of Amendment No. 1 to the Atwood Oceanics, Inc. Stock Option Agreement        (1996 Incentive Equity Plan) - See Exhibit 10.1.4 hereof.

Amendment No. 2 to Atwood Oceanics, Inc. 1996 Incentive Equity Plan - See        Exhibit 10.1.5 hereof.

Amended and Restated Atwood Oceanics, Inc. 2001 Stock Incentive Plan See        Exhibit 10.1.6 hereof.

Form of Atwood Oceanics, Inc. Stock Option Agreement (2001 Stock Incentive        Plan) See Exhibit 10.1.7 hereof.

Form of Atwood Oceanics, Inc. Restricted Stock Award Agreement (2001 Stock        Incentive Plan) See Exhibit 10.1.8 hereof.

Form of Non-Employee Director Restricted Stock Award Agreement Amended and        Restated 2001 Stock Incentive Plan See Exhibit 10.1.9 hereof.

Atwood Oceanics, Inc. 2007 Long-Term Incentive Plan See Exhibit 10.1.11        hereof.

Form of Stock Option Agreement (2007 Long-Term Incentive Plan) See Exhibit        10.1.12 hereof.

Form of Restricted Stock Award Agreement (2007 Long-Term Incentive Plan) See        Exhibit 10.1.13 hereof.

Form of Non-Employee Director Restricted Stock Award Agreement (2007        Long-Term Incentive Plan) See Exhibit 10.1.14 hereof.

Non-Employee Directors Elective Deferred Compensation Plan See Exhibit        10.1.10 hereof.

 

20

Atwood Oceanics, Inc. Retention Plan for Certain Salaried Employees dated        effective as of January 1, 2007 See Exhibit 10.2.1 hereof.

Atwood Oceanics, Inc. Retention Plan for Certain Salaried Employees dated        effective as of January 1, 2008 See Exhibit 10.2.2 hereof.

Executive Agreement dated as of September 18, 2002 between the Company and        John R. Irwin See Exhibit 10.3.1 hereof.

Executive Agreement dated as of September 18, 2002 between the Company and        James M. Holland See Exhibit 10.3.2 hereof.

Executive Agreement dated as of September 18, 2002 between the Company and        Glen P. Kelley See Exhibit 10.3.3 hereof.

 

|   | **(b)** | **See the "EXHIBIT INDEX" for a listing of all of the                        Exhibits filed as part of this report.** |
|--------|---------|-----------------------------------------------------------------------------------------------------------------------|

|   | **(c)** | **NONE** |
|--------|---------|----------|

 

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**SIGNATURES**

Pursuant to the requirements of Section 13 or 15(d) of the Securities        Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf        by the undersigned, thereunto duly authorized.

|   | **ATWOOD OCEANICS, INC.** |
|--------|---------------------------|

 

|   | /s/John R. Irwin |
|--------|------------------|

|   | JOHN R. IRWIN, President and Chief Executive                        Officer |
|--------|-----------------------------------------------------------------------------|

|   | DATE: November 29, 2007 |
|--------|-------------------------|

 

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 and on the dates indicated.

|   | /S/ JAMES M. HOLLAND | /S/ JOHN R. IRWIN |
|--------|----------------------|-------------------|

|   | JAMES M. HOLLAND | JOHN R. IRWIN |
|--------|------------------|---------------|

Senior Vice President and Chief Financial        Officer                                                 President, Chief Executive Officer and

(Principal Financial and Accounting        Officer)                                                 Director

|   | Date: November 29, 2007 | (Principal Executive Officer) |
|--------|-------------------------|-------------------------------|

|   | Date: November 29, 2007 |
|--------|-------------------------|

 

|   | /S/ ROBERT W. BURGESS | /S/ GEORGE S. DOTSON |
|--------|-----------------------|----------------------|

|   | ROBERT W. BURGESS | GEORGE S. DOTSON |
|--------|-------------------|------------------|

|   | Director | Director |
|--------|----------|----------|

|   | Date: November 29, 2007 | Date: November 29, 2007 |
|--------|-------------------------|-------------------------|

         

|   | /S/ HANS HELMERICH | /S/ WILLIAM J. MORRISSEY |
|--------|--------------------|--------------------------|

|   | HANS HELMERICH | WILLIAM J. MORRISSEY |
|--------|----------------|----------------------|

|   | Director | Director |
|--------|----------|----------|

|   | Date: November 29, 2007 | Date: November 29, 2007 |
|--------|-------------------------|-------------------------|

         

|   | /S/ DEBORAH A. BECK | /S/JAMES R. MONTAGUE   |
|--------|---------------------|-----------------------------|

|   | DEBORAH A. BECK | JAMES R. MONTAGUE |
|--------|-----------------|-------------------|

|   | Director | Director |
|--------|----------|----------|

|   | DATE: November 29, 2007 | DATE: November 29, 2007 |
|--------|-------------------------|-------------------------|

         

 

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**EXHIBIT INDEX**

| 3.1 | Amended and Restated Certificate of Formation dated February                        9, 2006 (Incorporated herein by reference to Exhibit 3.1 of our Form 8-K                        filed February 14, 2006). |
|-----|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| 3.2 | Second Amended and Restated By-Laws dated May 5, 2006                        (Incorporated herein by reference to Exhibit 3.2 of our Form 10-Q filed May                        10, 2006). |
|-----|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| 3.3 | Amendment No. 1 to Second Amended and Restated By-Laws dated                        June 7, 2007 (Incorporated herein by reference to Exhibit 3.1 of our Form                        8-K filed June 12, 2007). |
|-----|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| 4.1 | Rights Agreement dated effective October 18, 2002 between                        the Company and Continental Stock Transfer & Trust Company                        (Incorporated herein by reference to Exhibit 4.1 of our Form 8-A filed                        October 21, 2002). |
|-----|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| 4.2 | Certificate of Adjustment of Atwood Oceanics, Inc. dated                        March 17, 2006 (Incorporated herein by reference to Exhibit 4.1 of our Form                        8-K filed March 23, 2006). |
|-----|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| 10.1.1 | Atwood Oceanics, Inc. 1996 Incentive Equity Plan                        (Incorporated herein by reference to Exhibit 10.1 of our Form 10-Q for the                        quarter ended June 30, 1997). |
|--------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| 10.1.2 | Form of Atwood Oceanics, Inc. Stock Option Agreement - 1996                        Incentive Equity Plan (Incorporated herein by reference to our Form 10-K                        for the year ended September 30, 1999). |
|--------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| 10.1.3 | Amendment No. 1 to the Atwood Oceanics, Inc. 1996 Incentive                        Equity Plan (Incorporated herein by reference to our Form 10-K for the year                        ended September 30, 1999). |
|--------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| 10.1.4 | Form of Amendment No. 1 to the Atwood Oceanics, Inc. Stock                        Option Agreement - 1996 Incentive Equity Plan (Incorporated herein by                        reference to Exhibit 10.3.4 of our Form 10-K for the year ended September                        30, 1999). |
|--------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| 10.1.5 | Amendment No. 2 to the Atwood Oceanics, Inc. 1996 Incentive                        Equity Plan (Incorporated herein by reference to Appendix A to our Form DEF                        14A filed January 12, 2001). |
|--------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| 10.1.6 | Atwood Oceanics, Inc. Amended and Restated 2001 Stock                        Incentive Plan (Incorporated herein by reference to Appendix D to our                        definitive proxy statement on Form DEF 14A filed January 13,                        2006). |
|--------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| 10.1.7 | Form of Atwood Oceanics, Inc. Stock Option Agreement 2001                        Stock Incentive Plan (Incorporated herein by reference to Exhibit 10.3.7 of                        our Form 10-K for the year ended September 30, 2005). |
|--------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| 10.1.8 | Form of Atwood Oceanics, Inc. Restricted Stock Award                        Agreement 2001 Stock Incentive Plan (Incorporated herein by reference to                        Exhibit 10.3.8 of our Form 10-K for the year ended September 30,                        2005). |
|--------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| 10.1.9 | Form of Non-Employee Director Restricted Stock Award                        Agreement Amended and Restated 2001 Stock Incentive Plan (Incorporated                        herein by reference to Exhibit 10.1 of our Form 8-K filed June 1,                        2006). |
|--------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

10.1.10 Non-Employee Directors Elective Deferred Compensation Plan effective        December 1, 2007 (Incorporation herein by reference to Exhibit 10.1 on our Form 8-K filed        November 14, 2007.

| 10.1.11 | Atwood Oceanics, Inc. 2007 Long-Term Incentive Plan                        (Incorporated herein by reference to Appendix B to our definitive proxy                        statement on Form DEF 14A filed January 9, 2007). |
|---------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| 10.1.12 | Form of Stock Option Agreement 2007 Long-Term Incentive Plan                        (Incorporated herein by reference to Exhibit 10.1.1 of our Form 10-Q for                        the quarter ended March 31, 2007). |
|---------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| 10.1.13 | Form of Restricted Stock Award Agreement 2007 Long-Term                        Incentive Plan (Incorporated herein by reference to Exhibit 10.1.2 of our                        Form 10-Q for the quarter ended March 31, 2007). |
|---------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| 10.1.14 | Form of Non-Employee Director Restricted Stock Award                        Agreement 2007 Long-Term Incentive Plan (Incorporated herein by reference                        to Exhibit 10.1.3 of our Form 10-Q for the quarter ended March 31,                        2007). |
|---------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

 

23

| 10.2.1 | Atwood Oceanics, Inc. Retention Plan for Certain Salaried                        Employees effective as of January 1, 2007 (Incorporated herein by reference                        to Exhibit 10.2.2 of our Form 10-K for the year ended September 30,                        2006). |
|--------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| *10.2.2 | Atwood Oceanics, Inc. Retention Plan for Certain Salaried                        Employees dated as of January 1, 2008. |
|---------|-------------------------------------------------------------------------------------------------------------------------|

| 10.3.1 | Executive Agreement dated as of September 18, 2002 between                        the Company and John R. Irwin (Incorporated herein by reference to Exhibit                        10.5.1 of our Form 10-K for the year ended September 30, 2002). |
|--------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| 10.3.2 | Executive Agreement dated as of September 18, 2002 between                        the Company and James M. Holland (Incorporated herein by reference to                        Exhibit 10.5.2 of our Form 10-K for the year ended September 30,                        2002). |
|--------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| 10.3.3 | Executive Agreement dated as of September 18, 2002 between                        the Company and Glen P. Kelley (Incorporated herein by reference to Exhibit                        10.5.3 of our Form 10-K for the year ended September 30, 2002). |
|--------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| 10.4 | Credit Agreement for $300 million dated October 26, 2007                        among the Company, Atwood Oceanics Pacific Limited and Nordea Bank Finland                        Plc and other Financial Institutions (Incorporated herein by reference to                        Exhibit 10.1 of our Form 8-K filed November 1, 2007). |
|------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| 10.5 | Platform Construction Agreement by and between Atwood                        Oceanics Pacific Limited and Keppel AmFELS, Inc. dated March 1, 2006                        (Incorporated herein by reference to Exhibit 10.1 of our Form 8-K filed                        March 2, 2006). |
|------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| *13.1 | Annual Report to Shareholders. |
|-------|--------------------------------|

| *21.1 | List of Subsidiaries. |
|-------|-----------------------|

| *23.1 | Consent of Independent Registered Public Accounting                        Firm. |
|-------|----------------------------------------------------------------------------------|

| *31.1 | Certification of Chief Executive Officer pursuant to Section                        302 of the Sarbanes-Oxley Act of 2002. |
|-------|----------------------------------------------------------------------------------------------------------------------------|

| *31.2 | Certification of Chief Financial Officer pursuant to Section                        302 of the Sarbanes-Oxley Act of 2002. |
|-------|----------------------------------------------------------------------------------------------------------------------------|

| *32.1 | Certification of Chief Executive Officer pursuant to Section                        906 of the Sarbanes-Oxley Act of 2002. |
|-------|----------------------------------------------------------------------------------------------------------------------------|

| *32.2 | Certification of Chief Financial Officer pursuant to Section                        906 of the Sarbanes-Oxley Act of 2002. |
|-------|----------------------------------------------------------------------------------------------------------------------------|

*Filed herewith

 

 

24