Atwood Oceanics, Inc. (ATW)
Q2 2010 Earnings Call
August 5, 2010 11:00 am ET
Robert Saltiel – President, Chief Executive Officer
James Holland – Chief Financial Officer
Collin Gerry – Raymond James
Dave Wilson – Howard Weil
Brian Uhlmer – Pritchard Capital
Scott Burk – Oppenheimer
Mike Brigade – Hodges Capital.
I’d now like to turn it over to Mr. Jim Holland. Please go ahead sir.
Previous Statements by ATW
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Speakers today will be Rob Saltiel, our President and CEO, and myself, James Holland, currently Senior Vice President and CFO.
However, as stated in our 8K filed on July 19th, after a 33-year career here with Atwood, I will step down from my position effective the close of business on August 10th.
As the Investor Relations Officer for these many years, it’s been one of the highlights of my career to have had the opportunity to visit with analysts and shareholders. I want to thank everyone who’s helped make the investor relations functions of my career so enjoyable.
Before I turn the conference call over to Rob, let me, as usually, remind everyone that during the course of this conference call, we may make forward-looking statement based upon management’s 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.
The words belief, estimate, impact, intend, anticipate or predict convey uncertainty of future events or outcomes. Undo rely should not be placed on these forward-looking statement, which are applicable only on the date hereof.
I will now turn the conference call over to Rob.
Thank you, Jim. Good morning, and welcome to all of you joining on today’s call. I’ll say a few words on our actions here at Atwood, our financial results and our market outlook before turning it back to Jim.
As Jim mentioned, with his pending retirement, this will be his last earnings call with Atwood Oceanics. Jim’s been on the Atwood team for 33 years and has provided financial leadership as CFO for the past 29 years. Clearly, the longest serving CFO in our industry.
Jim has always performed his duties with the highest standards of ethics and integrity and one of his legacies to Atwood is its strong balance sheet on which to build our future growth. We thank Jim for his many contributions and he will be greatly missed.
Over the next few weeks, Jim will work with his successor during his on-boarding process.
After an extensive search, we will welcome next week our new CFO, Mark Mey. I know that many of you on the call already know Mark, but for those of you who don’t, Mark brings 17 years of financial leadership in offshore drilling, plus strong personal attributes that will be of great benefit to Atwood.
Once he gets settled in, Mark will soon be out on the road joining me visiting with investors and analysts.
Turning now to our business, this is clearly been a challenging quarter with the Macondo Well blowout in the daily news, and the uncertainties that it has presented for our industry in the Gulf of Mexico and worldwide.
Even though we at Atwood have limited rig exposure to the Gulf, and no deep-water presence currently, we are just as keen as everyone in this industry to see this moratorium end and for sensible regulations to be implemented.
To this end, we participated in industry taskforce meetings for both the equipment and procedural systems where development and review of industry recommendations are made.
We play an active role in all IADC and API work groups to help in the development of rules, regulations and requirements. And we have representatives from our technical staff who are involved in writing and review of new equipment guidelines and requirements.
Closer to home, we continue to conduct our internal operation’s integrity assessment to ensure that our people, processes, and equipment are fully effective. We continue to allocate significant recourses to maintain a strong safety culture on our active rigs and to establish that same culture on our new builds so that all Atwood employees are strong safety leaders.
2010 is shaping up to be one of our best years for safety in the company’s history. Yet we know that each day represents a new challenge and that compliancy is our greatest enemy.
Turning to our financials, our third quarter established an Atwood record for quarterly revenue with $167 million. So Jim is going out on a high note.
The strong revenue story was aided by the Atwood Hunter, the Atwood Eagle and the Atwood Falcon all working at their highest day rates in their history, coupled with solid operations performance across the fleet during the quarter.
Shifting to the markets, we’ve seen the moratorium overshadow the fact that the fundamentals of our business are improving. After bouncing around quite a bit, oil prices seem to be steadying in the high 70s and low 80’s as confidence grows in a recovery world economy.
We are starting to see some evidence that NOCs and other oil companies will increase their budgets in 2011 over 2010 levels.
However, with that said the supply overhang that I talked about on our last call is still with us. And the uncertain future of rigs in the Gulf of Mexico has added it to this issue. We are still seeing light contracting activity across the floater segment, and with growing competition in some cases from displaced Gulf of Mexico rigs. This has led to declines in recent floater day-rate fixtures.