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Atwood Oceanics Inc.

Wed, 10 Dec 2008|



Good thank you -- and good morning every run. I'm gonna get kicked off -- Jim will. Join me up here to talk more about the big picture and some of the company's strategy. -- doing throughout forward looking disclaimer. And starting with a strategy slide. The strategy is is something we've developed now. Really over ten to fifteen years it's strategy we believe has served us well and certainly a strategy that will continue to guide us. Into the future and direct all of our our efforts as we we continued to move along. There's very much a focus on executing on this strategy and then producing the stroke the results that we believe. There will flow in -- -- returns from from the strategy but it starts with. With a premium -- of course we're an offshore drilling and completions contract. -- focused on the premium and -- all of the fleet. Operating certain types of assets and today with very much leverage to deep water. And and building new. Particularly when Jim gets up here. Also leverage to international markets. One rig in the Gulf of Mexico but we see the the world is our reader in terms of the type of units we -- And seeking high utilization and and longer contracts and and hopefully -- returns over the longer to. Longstanding client relationships which is celebrating actually -- fortieth year as a company since founding. Long history of working with the majors in super majors. Also the active and large independence particularly those working in deeper water and today of course in overseas -- fact. Two rigs have recently been working we've with astronauts. But in keeping with that and the type of clients we do -- -- and working your premium fleet. We focus on safe quality performance. And in building those relationships over the longer term and we do believe we have. They've certainly have track record we're very proud -- there and we've worked. Two to enhance and and protect. We work on optimizing the mix of long term and short term contracts. Today you'll see we have being going longer term. On the the 2011. And longer we still have some short term contracts more than. Those non B port aside that we try to balance set over the longer term to take -- -- longer term returns and once again. But opportunistically expanding the fleet. Really over the -- fifteen years we have worked. In -- initially in acquiring assets and then upgrading those assets to greater capability reviewing them life enhancing them. Basically. Taking advantage of more lucrative market positions and being able to work -- with clients. In understanding -- needs and and meeting those demands. But as we have operated athlete -- initially the seven units you'll see. We have been adding new units and now reviewing our -- But during the course of that and we have creative lot of value -- certainly that's our goal to continue doing that in the future and we. Believe we are well positioned to do that. The summit in increasing. You know features of that would that perhaps makes little bit different so I said leverage to the -- and leverage to international very. Important parts of the market today. Premium a premium fleet as I said that focused on the deep water aside we do have some. Bottom supported units premium -- it's of course. We think that if balance of both it is is a positive over the longer -- So you'll see the the important financial leverage its flowing from the we believe the company is well positioned for the longer term based on longer term. Energy demand that we see out there and the right type of assets. For the future in paper being able to be that -- our clients. Knees and we we think very much in terms of these -- it's for the longer term. And -- growth potential. -- there. Potential to go on earning -- returns and in fact all of our growth this is focused on. Not growth for growth sake but the earnings focus that the two or. Value enhancing component and returns it can flow from the -- -- we've been we've been operating. Athlete he and its operating today consists of eight units 12. Join shortly -- -- -- operating units four of those units semi submersible. A fifth units a semi submersible -- -- unit the top three units you see there -- 5000 foot. Units the bottom three -- bottom supported unit's two of them Jack ups and wanna unique rig operating in the Gulf of Mexico the Richmond that fills a very special place in the -- -- being very highly utilized -- Extremely well during hurricanes in meeting clients' needs in shallow water doing deep drilling you can see all of these rigs have been operated. During the lost ten years and and they operate around the world. And in terms what we have done through the fleet over this cost ten year period the same seven rigs. Shown on the top of the slide. You can see that we operated enduring a period when the cost of doing those major upgrades. Was at much lower cost than it is today. And we did many -- them in two phases to. Insure that we could do. These projects on time on budget that the rigs would operate well and that we believe has been. Achieved and also we did you projects -- -- time so we could use our -- as well. For the future we were able to get these upgrades done before the markets picked up so it has put us in a strong position today to take advantage of what we have seen in terms of increasing data rates. In addition we then added the eight unit -- would be can go up that at a great price -- Unit. Jack up its being performed very well and on the body you'll see we -- now heading. -- constructing three -- units one. The that would -- Rorer which you would -- -- service. Around mid February next year for two year contract. Also got a positive price on that another great unit in terms of design and into deep water. Semi submersible boat being built at your own -- -- out in Singapore. I certainly one of the preeminent yards we believe rebuilding. Design that's already being delivered and about a dozen of these being built with the millennium the XT design. Now talk about a little bit about the three rigs that we are writing for us the -- -- A super 116. -- -- unit. 350 foot unit. Deep drilling capability. High pressure fifteen K very -- can't believe lodge capacities great break for our international markets over the longer term. This unit has a two year contract. That is -- to commence currently target for. Rounded. February going to Egypt. -- the client has the opportunity to extend that to a three year contract. The right for the two years including -- nations around -- 170000. Today. And based on the total. Capitalized. Estimated cost of around -- -- and eighty million and that includes the first. Mobilization cost. Which is capitalized and of -- for -- goes to goes into service. The in total rate of return using a ten year -- in excess of 15% closer to 1617. -- -- returns and earnings per share impact of -- forty cents or up to little bit more. Then out to news semi submersible the first of these so first both of them being built that your own shipped. To the EXT millennium design the first problem is a conventionally -- unit for 6000 feet of Warner. To go to work in a straighter and all talk about that contract in a moment. But it is a rigged with a very large capacity. Tremendous drilling capability but also advanced completion capability that's. Very important for the work that this -- will be doing. Accommodations for up to 200. And speeches. Offline features that increase the efficiency. Such as offline -- handling capability. And also a simultaneous. Puck handling system that increases efficiency at the rig floor level. This unit cost around 600 million including capitalized interest project management. Targeted delivery -- early 2011. It has a three year contract at 470000. Dollars today. That day right we'll be escalating. And and that right will be higher of course then when when the -- starts. The caught -- Clark has the opportunity to. Increase that three year contract the six years at a slightly lower -- -- the in terms of returns we targeting a 60% cash -- -- tax. In the three year from period and should the contract be extended to six years. We would see something closer to around a 100% cash -- back up to attacks in the five year period and based on where the rigs going. Tax -- -- -- earnings per share impact around -- dollar 25 perhaps a little bit more. Per year. Then we took advantage earlier in the year of an option for another EXT millennium designed. Semi submersible. At the same -- god in this case they. Missed 101000 foot or -- deep unit. So us taking advantage of building. Where we have been building over the years starting at 15100 feet 3500 feet 5000 feet 6000 now. The natural step -- to 101000 feet where over the longer term we -- see. Tremendous opportunity for drilling in and increasing development into -- water based on future future demand and and even today. With the financial issues that naturally. All of us who wear off. This has put something of a damper on the commitment for new rigs and and even some of those have already being committed on. The the amount of supply capacity so longer term we believe that this will be very beneficial forests it. But this unit once again great for our international markets -- completion capability. Tremendous. Drilling capability and and capacities. Andy rig that can carry its fold rise a string and move around the world. The project. Estimated cost including capitalized interest and management around 752. 775. Million. And -- action for delivery and -- mid 2012. We show what they rate range here and at this rig has not being committed at this point. But they decorate ranges really to try to demonstrate. Some about the earnings impact but also our expectations or thinking in terms of having committed on this unit. But -- the time we did commit we had seen rates for 5000 foot units go into the 500 thousand's. In fact there are under. That would Roderick has rights is a 5000 foot unit in the 500 thousand's. For a four year contract which we did in June. And we've seen rates rising for these. Teams in terms of internal right after tax and a ten year model with rights in the 500 thousands. And with the same economics and we have -- -- rates -- lives so we. Felt that this was say -- had time to move and take advantage of late but the timely slot and pricing so we feel. Still feel good about this does -- decision if we get those sort of rates -- earnings impacted all of forty to a dollar eighty per share. Our international leverage you can see where rigs in yellow placed. Some attractive markets the major markets around the world. The organization -- company over long period has been working in -- nationally. And work from the Far East right through southeast -- to straighter India the middle east West Africa the Mediterranean -- Central and south America's so that's what we do that's what our organization is geared towards doing in terms of both operationally marketing and working -- our clients that the skills that we have. A little bit before are -- to Jim on estimated. Backlog and cut it. In three different ways first an estimated contract degree days by year. For the current fiscal year 75%. Looking forward 45%. 34%. And 20%. If we then look at the day rights that apply and cut that in terms of estimated contractor revenues. You can see those -- three years are up. -- over 500 million and then distribute twelve. In the mid 300 millions. And then if we take that. And look in terms of contract backlog total. In an estimated. -- -- tax operating cash flow. We've got about one point three billion for a floating units and they you can see that before leverage -- a bottom supported units -- little local you know. Point one billion for total of about one point four billion. And it when did Jim gets up here he'll talk some more about the construction program commitments in the financial side and you'll see how this this backlog of one point four million billion. Matches our current commitments. For new construction and how important to it is we're very much focused on execution keeping the company's strong and -- the company and really looking. To the longer term -- out of the gym and appreciate you listening. Ultimately our program -- -- and I wrote retrieve. -- so there are two different contracts. Coming -- a -- on our reflect performance and -- comments about -- First we talk about three soon. -- -- -- or Wii units were pretty found the form the foundation for a one point four billion. But -- -- on mentioned. Or talk about that would eagle. This is worked last year Gulf Coast of Australia -- working under -- -- to your program which -- -- Direct afford 5000 following the completion this program. Estimated BNG to two in civilian how way at least a six month program which Chevron -- increasing direct. It could go longer. So that that unit is well positioned here for foreigners for years. So to -- to the eagle that would -- just immensely. For your commitment. With with noble and with cosmos is currently working. -- the coast of Israel for noble about -- well -- they're about six months. A director in this four year period be from power at 111000 -- 45000 so again it's also well positioned. It's also has cost as much protection as well. The last Dumars. Premiums. They're not commercial that would -- currently working their program August 2009. -- -- -- -- -- -- believe. Completion of program -- site. To your program. Diarrhea forward and twenty. The next three contracts review all will will look -- -- 2000 and the -- one. The -- southern crosses current drilling one well off the coast Mauritania. Which you'll be completed sometime in in December. The -- Barbour -- and today I would receive no impact on our -- term commitments. We -- stoops are great fundamentals in in the deep water activities. -- we -- a little bigger impact. Is is -- -- across a little bit because. With crosses. Did an excellent job. In the last years working in in the Black -- the man in network and -- Africa but -- -- his customers are more smaller. All companies and they focus -- -- -- well well well programs. And we're we're seeing is is -- haven't biblical unifying and -- ongoing work for this unit at this time. There's some possibility it could incur some some I'll I'll period here. Because what we're seeing is on the smaller -- writers. Are not -- programs or deferring programs -- later on in. In 2009 so there's some possibility that in your -- service Rick could -- some down time. Our next two contracts that expire in in 2009 or two jackass. Firstly I would be can. -- -- -- -- we believe we'll -- probably in the June July. Of 2009. We do believe that. We can excuse some upside and pricing on this unit current -- 803500. We believe. You know we still believe in this environment we -- today. -- and went that you would sixties. Is a good good objective here. The other. Jack up the the Vicksburg currently working for -- -- Gulf Coast. A -- and also expires in -- -- And we. Believe we keep his -- close word you because falling could decline maybe in the in the 140 -- -- summer -- four when fifty we believe -- Good -- write this from going forward so. We we still rotten even -- bombers for both Jeff both these. Jacket DC. We have that discussion going on we'll see what happens there was -- -- pretty -- we could do if -- -- -- contract. -- what's -- most on the next to John Torrey Mitchell known. I'll just 6000 foot to a new unit being built up for Australia for your commitment. But this can also be -- to a six year commitment. And the -- roar coming on December. Going to Egypt to your commitment but it also can be -- straight three years in which we believe could could possibly happen. Now -- -- just comment pre pre owned. -- natural forces -- come with our balance -- In recent years we've had -- and increasing -- you know our you know our results. To the gulf of 2007. Time with the highest their -- revenues. Cash flow ordering history. The results for 2008. Which we will disclosed here -- next week. Will be for nearly higher than what we incurred in in 2007. We expect our our margins offering marches to continue to improve -- for 2008. There were somewhere around. But if I just that are -- -- separately the -- in the secure right you're going to and -- just now from a cash flow perspective use of cash. We. Expect a and in 2007. We generated -- for two million dollars in cash flow. 2008 we that increased doctored the committee and we expect -- 2000. And none -- backlog. Contracts to be somewhere around 300 million. We expect to incur or popular programs. Somewhere around. Hundreds of -- -- in the capital expenditures. So we you're working out -- Put in place and additional credit facility. To help fund these these these are kept were -- for commitments today. We have three remain our facility. In place -- -- to remain on the facility. And we hope here before the end of this month I don't know -- 280 million dollar facility in place so roughly 580 million dollars of -- capacity. We wouldn't despite having outstanding debt somewhere between. Ford Five Hundred million by the end of physical none. And then without any additional growth that that that that what. Will be -- declining. And fact about 2012 we we could be out of debt based on our our backlog so -- we have about one point five. Billion dollars of -- capital commitments today. And as John said about one point four billion dollars -- backlog after tax cash flow. So even -- our our -- we'll wrap up a little bit the next year or two and we you know way to be over burgers and debt to account ratio so we still believe we will. Be it would maintain. -- strong balance sheet get get are these two semis built. And if you focus on different wrote the right time -- -- they'll happen here -- To a conclusion. We believe our assets are located here is -- world will allow them the maximum very -- bill is over next next few years. With a one point four billion dollars about all cash flow we believe we can continue to -- was keeping a very strong balance sheet. I -- growth and continued focus army object which is to do. You do we -- Indian ancestor of so likely to our presentation for you for your interest and -- -- to visit with you in America.

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