History
Atwood Oceanics borrowed heavily to build a modern rig fleet, was squeezed by the post-2014 downturn, and ended as an Ensco subsidiary in October 2017.
2006-2008: The newbuild program begins
The record opens with Atwood already an established offshore drilling contractor. In March 2006 it ordered its first newbuild rig, a $160 million jackup (a drilling rig with legs that rest on the seabed) from Keppel AmFELS, which would become its ninth mobile drilling unit. Funding came next: in late 2007 it signed a $300 million, five-year revolving loan led by Nordea Bank, secured on the EAGLE, HUNTER and BEACON.
In January 2008 Atwood ordered a semisubmersible (a floating rig) from Jurong in Singapore, already contracted to Chevron Australia. In July it ordered a second Jurong semisubmersible, rated for 10,000 feet of water, at an estimated $750-775 million, placed without a customer contract. In August 2008 the credit facility was amended to allow up to $300 million more debt, and weeks after Lehman Brothers collapsed it was amended again, with a separate new credit agreement added. Contracts stayed strong: the FALCON won a record $425,000 a day and the HUNTER a four-year deal in the Eastern Mediterranean at dayrates in the $500,000s.
2009-2010: The stacking scare
In March 2009 two rigs, the BEACON and VICKSBURG, came up without follow-on work. The SOUTHERN CROSS was ready-stacked (idle but kept ready) with costs cut toward $50,000 a day, and by October the RICHMOND had joined it, its rate down to the low $30,000s if it could find short-term work. The VICKSBURG won a Thailand contract in July and the BEACON a Hess contract in September. In January 2010 the SOUTHERN CROSS found work in Tunisia at $154,500 a day.
By November 2010, with every deepwater semisubmersible contracted through fiscal 2011, backlog stood at about $1.2 billion and the scare was behind it. In October 2010 Atwood resumed expansion, ordering two jackups from PPL Shipyard at $190 million each.
2011-2012: Drillships and the bond market
In January 2011 Atwood exercised an option for a third PPL jackup and ordered its first drillship, the $600 million Atwood Advantage, from DSME in South Korea. In May it replaced its credit lines with a $750 million five-year facility secured on six rigs including the newly delivered OSPREY. In October it ordered a second drillship, the $600 million Atwood Achiever.
In January 2012 it issued its first public bonds, $450 million of 6.50% senior notes due 2020. In September 2012 the unfinished Atwood Advantage won a three-year Noble Energy contract at $584,000 a day, lifting backlog to about $2.9 billion, and Atwood ordered a third drillship, the $635 million Atwood Admiral. In November the 2002 shareholder rights plan (a takeover defense) expired and was not renewed.
2013-2014: Peak borrowing capacity
In May 2013 Atwood agreed to buy back 2 million shares from Helmerich & Payne for $107.1 million, while H&P sold another 2 million to a financial institution, leaving it with about 6.3%. Shares on issue fell from 65.6 million to 64.2 million that year. In June it added $200 million to the 2020 notes, making $650 million, and ordered a fourth drillship, the $635 million Atwood Archer. In July the credit facility's maximum size was lifted to $1.3 billion. In October it agreed to sell the older VICKSBURG jackup for $55.4 million.
In April 2014 lenders extended the facility to May 2018 and raised commitments to a peak $1.55 billion. In September, just as oil prices began falling, Atwood declared its first quarterly dividend, $0.25 a share.
2015-2016: The downturn bites
In March 2015 lenders loosened the leverage covenant (a limit on debt relative to earnings) to 4.50x from 4.00x. In March 2016 they scrapped leverage covenants entirely, added a $150 million minimum-liquidity requirement, cut commitments by $152 million and barred dividends, ending a payout that was eighteen months old. In December 2016 Atwood's Alpha Admiral unit and DSME signed Supplemental Agreement No. 5, delaying the Atwood Admiral to September 2019, with a $10 million interim payment due by September 2017 and about $84 million pushed to 2022.
2017: Absorbed by Ensco
On 30 May 2017 Atwood announced an all-stock takeover by Ensco plc, each Atwood share converting into 1.60 Ensco Class A shares. In July it issued its last quarterly fleet status report. The August proxy statement set shareholder meetings for 5 October and said former Atwood holders would own about 31% of the combined company. The year-end share count of 80.5 million is not explained by the beats. The merger closed on 6 October 2017, Atwood became a wholly owned Ensco subsidiary, and its credit facility was repaid in full and terminated. Its registration of securities was terminated on 17 October.
Written from the 45 story beats below (2006 to 17 Oct 2017), which come from the company's own announcements and filings.