Atwood Oceanics (ATW) 10-Q 3 Feb 16 2016 Q1 Quarterly report Financial data

Document and Entity Information

Document and Entity Information - shares	3 Months Ended
	Dec. 31, 2015	Jan. 29, 2016
Document And Entity Information [Abstract]
Entity Registrant Name	ATWOOD OCEANICS INC
Entity Central Index Key	8,411
Current Fiscal Year End Date	--09-30
Entity Filer Category	Large Accelerated Filer
Document Type	10-Q
Document Period End Date	Dec. 31, 2015
Document Fiscal Year Focus	2,016
Document Fiscal Period Focus	Q1
Amendment Flag	false
Entity Common Stock, Shares Outstanding		64,769,129
Trading Symbol	atw

Condensed Consolidated Statemen

Condensed Consolidated Statements of Operations (Unaudited) - USD ($) shares in Thousands, $ in Thousands	3 Months Ended
	Dec. 31, 2015	Dec. 31, 2014
REVENUES:
Contract drilling	$ 294,615	$ 336,761
Revenues related to reimbursable expenses	13,204	14,965
Total revenues	307,819	351,726
COSTS AND EXPENSES:
Contract drilling	130,652	136,465
Reimbursable expenses	8,286	11,907
Depreciation	42,827	44,575
General and administrative	15,177	17,409
Asset impairment	64,724	60,777
Loss on sale of assets	77	9,806
Total costs and expenses	261,743	280,939
OPERATING INCOME	46,076	70,787
OTHER INCOME (EXPENSE):
Interest expense, net of capitalized interest	(13,761)	(15,504)
Interest income	4	57
Other income	17,976	0
Other income (expense) total	4,219	(15,447)
INCOME BEFORE INCOME TAXES	50,295	55,340
PROVISION FOR INCOME TAXES	11,214	9,122
NET INCOME	$ 39,081	$ 46,218
EARNINGS PER COMMON SHARE:
Basic (in dollars per share)	$ 0.60	$ 0.72
Diluted (in dollars per share)	$ 0.60	$ 0.71
WEIGHTED AVERAGE COMMON SHARES OUTSTANDING:
Basic (in shares)	64,765	64,405
Diluted (in shares)	64,921	65,015

Condensed Consolidated Stateme3

Condensed Consolidated Statement of Comprehensive Income (Unaudited) - USD ($) $ in Thousands	3 Months Ended
	Dec. 31, 2015	Dec. 31, 2014
Statement of Comprehensive Income [Abstract]
Net income	$ 39,081	$ 46,218
Derivative financial instruments:
Unrealized holding gains/(losses)	(168)	1,065
Gains/(losses) reclassified to net income	694	(40)
Total other comprehensive income	526	1,025
Comprehensive income	$ 39,607	$ 47,243

Condensed Consolidated Balance

Condensed Consolidated Balance Sheets - USD ($) $ in Thousands	Dec. 31, 2015	Sep. 30, 2015
ASSETS
Cash	$ 115,669	$ 113,983
Accounts receivable, net	249,874	311,514
Income tax receivable	9,534	8,705
Inventories of materials and supplies, net	117,703	137,998
Prepaid expenses, deferred costs and other current assets	24,461	33,735
Total current assets	517,241	605,935
Property and equipment, net	4,208,091	4,172,132
Other receivables	11,831	11,831
Deferred income taxes	150	150
Deferred costs and other assets	11,133	11,285
Total assets	4,748,446	4,801,333
LIABILITIES AND SHAREHOLDERS' EQUITY
Accounts payable	55,313	70,161
Accrued liabilities	20,528	23,572
Dividends payable	4,858	16,164
Interest payable	19,042	7,704
Income tax payable	13,264	13,906
Deferred credits and other liabilities	3,284	3,941
Total current liabilities	116,289	135,448
Long-term debt	1,608,399	1,678,268
Deferred income taxes	988	1,658
Deferred credits	309	800
Other	38,922	37,989
Total long-term liabilities	$ 1,648,618	$ 1,718,715
Commitments and contingencies
Preferred stock, no par value, 1,000 shares authorized, none outstanding	$ 0	$ 0
Common stock, $1.00 par value, 180,000 shares authorized with 64,768 issued and outstanding at December 31, 2015 and 180,000 shares authorized and 64,654 shares issued and outstanding at September 30, 2015	64,768	64,654
Paid-in capital	214,754	213,096
Retained earnings	2,704,219	2,670,148
Accumulated other comprehensive income	(202)	(728)
Total shareholders' equity	2,983,539	2,947,170
Total liabilities and shareholders' equity	$ 4,748,446	$ 4,801,333

Condensed Consolidated Balance5

Condensed Consolidated Balance Sheets (Parenthetical) - $ / shares	Dec. 31, 2015	Sep. 30, 2015
Statement of Financial Position [Abstract]
Preferred stock, authorized (in shares)	1,000,000	1,000,000
Preferred stock, outstanding (in shares)	0	0
Common stock, par value (in dollars per share)	$ 1	$ 1
Common stock, authorized (in shares)	180,000,000	180,000,000
Common stock, issued (in shares)	64,768,000	64,654,000
Common stock, outstanding (in shares)	64,768,000	64,654,000

Condensed Consolidated Stateme6

Condensed Consolidated Statement of Changes In Shareholders' Equity (Unaudited) - 3 months ended Dec. 31, 2015 - USD ($) shares in Thousands, $ in Thousands	Total	Common Stock	Paid-in Capital	Retained Earnings	Accumulated Other Comprehensive Income (Loss)
Beginning Balance (in shares) at Sep. 30, 2015		64,654
Beginning Balance at Sep. 30, 2015	$ 2,947,170	$ 64,654	$ 213,096	$ 2,670,148	$ (728)
Increase (Decrease) in Stockholders' Equity
Net income	39,081			39,081
Other comprehensive income	526				526
Dividends	(5,010)			(5,010)
Vesting of restricted stock and performance unit awards (in shares)		114
Vesting of restricted stock and performance unit awards	(599)	$ 114	(713)
Stock compensation expense	2,371		2,371
Ending Balance (in shares) at Dec. 31, 2015		64,768
Ending Balance at Dec. 31, 2015	$ 2,983,539	$ 64,768	$ 214,754	$ 2,704,219	$ (202)

Condensed Consolidated Stateme7

Condensed Consolidated Statements of Cash Flows (Unaudited) - USD ($) $ in Thousands	3 Months Ended
	Dec. 31, 2015	Dec. 31, 2014
Cash flows from operating activities:
Net income	$ 39,081	$ 46,218
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation	42,827	44,575
Amortization	1,250	2,504
Provision for doubtful accounts	757	0
Deferred income tax benefit	(714)	(3,380)
Share-based compensation expense	2,371	4,024
Asset impairment	64,724	60,777
Loss on sale of assets	77	9,806
Changes in assets and liabilities:
Accounts receivable	60,883	27,965
Income tax receivable	(829)	(717)
Inventories of materials and supplies	11,023	(6,771)
Prepaid expenses, deferred costs and other current assets	7,462	5,095
Deferred costs and other assets	(1,050)	62
Accounts payable	(17,615)	(14,248)
Accrued liabilities	8,570	14,866
Income tax payable	(642)	(1,333)
Deferred credits and other liabilities	1,973	5,263
Net cash provided by operating activities	220,148	194,706
Cash flows from investing activities:
Capital expenditures	(131,547)	(149,042)
Proceeds from sale of assets	0	1,348
Net cash used in investing activities	(131,547)	(147,694)
Cash flows from financing activities:
Proceeds from borrowing of long-term debt	45,000	0
Principal repayments on long-term debt	(115,000)	0
Repayments on short-term debt, net	0	(5,931)
Dividends paid	(16,316)	0
Proceeds (payments) related to exercise of stock options	(599)	784
Debt issuance costs paid	0	(142)
Net cash used by financing activities	(86,915)	(5,289)
Net increase in cash and cash equivalents	1,686	41,723
Cash and cash equivalents, at beginning of period	113,983	80,080
Cash and cash equivalents, at end of period	115,669	121,803
Non-cash activities:
Increase (decrease) in accounts payable and accrued liabilities related to capital expenditures	10,530	(4,525)
Dividends payable	$ 4,858	$ 0

Unaudited Interim Information

Unaudited Interim Information	3 Months Ended
	Dec. 31, 2015
Accounting Policies [Abstract]
Unaudited Interim Information	UNAUDITED INTERIM INFORMATION The accompanying unaudited condensed consolidated financial statements of Atwood Oceanics, Inc. and its subsidiaries as of December 31, 2015 and for the three months ended December 31, 2015 and 2014 , have been prepared in accordance with accounting principles generally accepted in the United States for interim financial information. Unless otherwise indicated, references to “we”, “us”, “our” and the “Company” refer collectively to Atwood Oceanics, Inc. and subsidiaries. The year-end condensed consolidated balance sheet data was derived from the audited financial statements as of September 30, 2015 . Although these financial statements and related information have been prepared without audit and certain information and note disclosures normally included in financial statements prepared in accordance with generally accepted accounting principles have been condensed or omitted, we believe that the note disclosures are adequate to make the information not misleading. The interim financial results may not be indicative of results that could be expected for a full fiscal year. These unaudited condensed consolidated financial statements should be read in conjunction with the audited consolidated financial statements and the related notes included in our Annual Report on Form 10-K for the year ended September 30, 2015 . In our opinion, the unaudited interim financial statements reflect all adjustments considered necessary for a fair statement of our financial position, results of operations and cash flows for the periods presented. Certain prior period amounts have been reclassified to conform to current year presentation. Recently issued accounting pronouncements In May 2014, the Financial Accounting Standards Board ("FASB") issued new guidance intended to change the criteria for recognition of revenue. The core principle of the guidance is that an entity should recognize revenue to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. The guidance is effective for annual reporting periods beginning after December 15, 2017, including interim periods within that reporting period. We are currently evaluating what impact the adoption of this guidance will have on our financial statements or disclosures in our financial statements. In April 2015, the FASB issued new guidance intended to simplify the presentation of debt issuance costs. This new guidance requires that debt issuance costs related to outstanding debt be netted against that liability in the balance sheet, consistent with the treatment of debt discounts. In August 2015, the FASB issued additional guidance to clarify that this presentation change does not address debt issuance costs related to line of credit arrangements. The new presentation guidance is effective for fiscal years and interim periods beginning after December 15, 2015 and early adoption is permitted. We adopted this guidance in the first quarter of fiscal 2016. We reclassified $1.6 million from Prepaid, Expenses, Deferred Costs and Other Current Assets and $6.8 million from Deferred Credits and Other Assets to Long-Term Debt in the September 30, 2015 Condensed Consolidated Balance Sheet presented in this Form 10-Q to conform to the current year presentation of debt issuance costs. We elected not to change our treatment of debt issuance cost related to line of credit arrangements. In November 2015, amended guidance from the FASB was issued for the balance sheet classification of deferred income taxes. The amended guidance requires the classification of all deferred tax assets and liabilities as noncurrent on the balance sheet instead of separating deferred taxes into current and noncurrent amounts. Deferred tax assets and liabilities will continue to be offset and presented as a single amount under the amended guidance. The effective date for public business entities is for financial statements issued for annual periods beginning after December 15, 2016, and interim periods within those annual periods. The Company has not yet adopted nor selected a transition method and is currently evaluating the impact it may have on its financial condition and results of operations.

Earnings Per Common Share

Earnings Per Common Share	3 Months Ended
	Dec. 31, 2015
Earnings Per Share [Abstract]
Earnings Per Common Share	EARNINGS PER COMMON SHARE The computation of basic and diluted earnings per share for the three months ended December 31, 2015 and 2014 is as follows: Three Months Ended (In thousands, except per share amounts) Net Income Shares Per Share Amount December 31, 2015 Basic earnings per share $ 39,081 64,765 $ 0.60 Effect of dilutive securities: Stock options — — — Restricted stock and performance units — 156 — Diluted earnings per share $ 39,081 64,921 $ 0.60 December 31, 2014 Basic earnings per share $ 46,218 64,405 0.72 Effect of dilutive securities: Stock options — 99 — Restricted stock and performance units — 511 (0.01 ) Diluted earnings per share $ 46,218 65,015 $ 0.71 For the purpose of calculating diluted earnings per share for the three months ended December 31, 2015 , there were approximately 1,584,000 anti-dilutive securities and for the three months ended December 31, 2014 , there were approximately 600,000 anti-dilutive securities.

Property And Equipment

Property And Equipment	3 Months Ended
	Dec. 31, 2015
Property, Plant and Equipment [Abstract]
Property and Equipment	PROPERTY AND EQUIPMENT A summary of property and equipment by classification is as follows: (In thousands) December 31, September 30, Drilling vessels and equipment $ 3,933,767 $ 4,003,483 Construction work in progress 791,232 720,852 Drill pipe 54,861 55,248 Office equipment and other 39,033 36,379 Total cost 4,818,893 4,815,962 Less: Accumulated depreciation (610,802 ) (643,830 ) Property and equipment, net $ 4,208,091 $ 4,172,132 Impairments The Atwood Falcon is expected to complete work on its contract in early February 2016. As a result of the current lack of contract opportunities, the rig's age and continued deterioration of commodity prices, we determined that it was not likely that additional work would be obtained in the foreseeable future. Based on our analysis, we concluded that the Atwood Falcon and its materials and supplies were impaired, and we have written them down to their approximate salvage value. We recorded a non-cash impairment charge of approximately $64.7 million ( $64.7 million , net of tax, or $1.00 per diluted share), which is included in Asset Impairment on the Condensed Consolidated Statement of Operations for the three months ended December 31, 2015. This impairment charge includes write-downs of property and equipment of $53.0 million and write-downs of the portion of our inventory of materials and supplies that was specific to the Atwood Falcon of $11.7 million . The Atwood Hunter completed the contract it was working under in December 2014. Based on the lack of contracting opportunities and the further deterioration of commodity prices, in January 2015, we determined that it was not likely that additional work would be obtained in the foreseeable future. Based on our analysis, in the three months ended December 31, 2014, we determined that the Atwood Hunter and its materials and supplies were impaired, and we wrote them down to their salvage value. We recorded a non-cash impairment charge of approximately $60.8 million ( $56.1 million , net of tax, or $0.86 per diluted share), which is included in Asset Impairment on the Condensed Consolidated Statement of Operations for the three months ended December 31, 2014. This impairment charge includes write-downs of property and equipment of $48.0 million and write-downs of our inventory of materials and supplies that was specific to the Atwood Hunter of $8.4 million . Other Income— During the three months ended December 31, 2015, we recognized approximately $18.0 million ( $18.0 million , net of tax, or $0.28 per diluted share) of expected insurance recoveries related to cyclone damage to the Atwood Osprey . This amount is included in Other Income on the Condensed Consolidated Statement of Operations for the three months ended December 31, 2015. Loss on sale of assets— Our loss on sale of assets for the three months ended December 31, 2014 was primarily due to a loss of approximately $8.0 million ( $7.1 million , net of tax, or $0.11 per diluted share) due to the sale of the Atwood Southern Cross. Construction Projects On December 17, 2015, we entered into supplemental agreements (collectively, "Supplemental Agreement No. 4") which delay our requirement to take delivery of the Atwood Admiral to September 30, 2017 and the Atwood Archer to June 30, 2018. Supplemental Agreement No. 4 superseded all previous agreements. In consideration of the agreement, the Company made a payment of $50 million for each drillship on December 31, 2015. DSME has extended all remaining milestone payments, $93.9 million for the Atwood Admiral and $306.1 million for the Atwood Archer, until their respective delivery dates. The Company retains the option to take earlier delivery of each vessel, subject to a forty-five day notice period to DSME.

Debt

Debt	3 Months Ended
	Dec. 31, 2015
Debt Disclosure [Abstract]
Debt	DEBT A summary of long-term debt is as follows: (In thousands) December 31, September 30, 6.5% Senior Notes due 2020 ("Senior Notes") $ 648,399 $ 648,268 Revolving Credit Facility 960,000 1,030,000 Total long-term debt $ 1,608,399 $ 1,678,268 Senior Notes As of December 31, 2015 , our Senior Notes had an aggregate principal amount of $650 million and is presented in the table above net of unamortized debt issuance costs and the unamortized premium from their issuance. Ou r Senior Notes are unsecured obligations and are not guaranteed by any of our subsidiaries. Revolving Credit Facility As of December 31, 2015 , our senior secured revolving credit facility (the "Credit Facility") had $1.547 billion of total commitments and there were $960 million of outstanding borrowings. The outstanding borrowings are presented net of unamortized debt issuance costs in the table above. As of December 31, 2015 , we had approximately $587 million available for borrowings under the Credit Facility. Borrowings under the Credit Facility bear interest at the Eurodollar rate plus a margin ranging from 1.75% to 2.00% and the commitment fee on the unused portion of the underlying commitment ranges from 0.30% to 0.40% per annum, in each case based on our corporate credit ratings. Approximately $305 million of the commitments mature in May 2018 and approximately $1.242 billion of the commitments under the Credit Facility mature in May 2019. Obligations under the Credit Facility are secured primarily by first preferred mortgages on eight of our drilling units ( Atwood Aurora , Atwood Beacon , Atwood Condor , Atwood Eagle, Atwood Falcon, Atwood Mako, Atwood Manta and Atwood Osprey ), as well as liens on the equity interests of our subsidiaries that own, directly or indirectly, such drilling units. Our Credit Facility contains various financial covenants. We were in compliance with all financial covenants under the Credit Facility at December 31, 2015 and we anticipate that we will continue to be in compliance for the remainder of fiscal year 2016. The weighted-average effective interest rate on our long-term debt was approximately 4.10% per annum at December 31, 2015 . The effective rate was determined after giving consideration to the effect of our interest rate swaps accounted for as hedges and the amortization of premiums or discount. Interest capitalized for the three months ended December 31, 2015 was approximately $5 million and interest capitalized for the three months ended December 31, 2014 was approximately $4 million .

Fair Value of Financial Instrum

Fair Value of Financial Instruments	3 Months Ended
	Dec. 31, 2015
Fair Value Disclosures [Abstract]
Fair Value of Financial Instruments	FAIR VALUE OF FINANCIAL INSTRUMENTS We have certain assets and liabilities that are required to be measured and disclosed at fair value. Fair value is defined as the exchange price that would be received for an asset or paid to transfer a liability (an exit price) in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants on the measurement date. The fair value hierarchy prioritizes inputs to valuation techniques used to measure fair value into three levels. Priority is given to unadjusted quoted prices in active markets for identical assets or liabilities (Level 1) and the lowest priority to unobservable inputs (Level 3). Assets and liabilities measured at fair value are classified based on the lowest level of input that is significant to the fair value measurement. Our assessment of the significance of a particular input to the fair value measurement requires judgment, which may affect the valuation of the fair value of assets and liabilities and their placement within the fair value hierarchy levels. The determination of the fair values, stated below, takes into account the market for our financial assets and liabilities, the associated credit risk and other considerations. We have classified and disclosed fair value measurements using the following levels of the fair value hierarchy: Level 1 : Unadjusted quoted prices in active markets that are accessible at the measurement date for identical, unrestricted assets or liabilities. Level 2 : Quoted prices in markets that are not active, or inputs which are observable, either directly or indirectly, for substantially the full term of the asset or liability. Level 3 : Measurement based on prices or valuation models that require inputs that are both significant to the fair value measurement and less observable for objective sources (i.e., supported by little or no market activity). Fair value of Certain Assets and Liabilities The fair value of cash, accounts receivable and accounts payable approximate fair value because of their short term maturities. Fair Value of Financial Instruments Independent third party services are used to determine the fair value of our financial instruments using quoted market prices and observable inputs. When independent third party services are used, we obtain an understanding of how the fair values are derived and selectively corroborate fair values by reviewing other readily available market based sources of information. Senior Notes – The carrying value of our Senior Notes, net of unamortized premium and debt issuance costs, is $648 million ( $650 million principal amount) while the fair value of our Senior Notes was $359 million at December 31, 2015 . The fair value is determined by a market approach using quoted period-end bond prices. We have classified this as a Level 2 fair value measurement as valuation inputs for fair value measurements are quoted market prices at December 31, 2015 that can only be obtained from independent third party sources. The fair value amount has been calculated using these quoted prices. However, no assurance can be given that the fair value would be the amount realized in an active market exchange. Credit Facility - Our Credit Facility is variable-rate and the carrying value of our variable-rate debt approximates fair value because such debt bears short-term, market-based interest rates. We have classified the fair value measurement of this instrument as Level 2 as valuation inputs for purposes of determining our fair value disclosure are readily available published Eurodollar rates. Derivative financial instruments - Our derivative financial instruments consist of our interest rate swap contracts and our foreign currency forward exchange contracts. We record our derivative contracts at fair value on our consolidated balance sheets. The fair values of our interest rate swaps and our foreign currency forward exchange contracts are based upon valuations calculated by an independent third party. The derivatives were valued according to the "market approach" where possible, and the "income approach" otherwise. A third party independently valued each instrument using forward price data obtained from reputable data providers (e.g., Bloomberg and Reuters) and reviewed market activity and similarity of pricing terms to determine appropriate reliability level assertions for each instrument. The contribution of the credit valuation adjustment to total fair value is less than 1% for all derivatives and is therefore not significant. Based on valuation inputs for fair value measurement and independent review performed by third party consultants, we have classified our derivative contracts as Level 2 as they were valued based upon observable inputs from dealer markets. The following table sets forth the estimated fair value of our derivative financial instruments at December 31, 2015 and September 30, 2015 , which are measured and recorded at fair value on a recurring basis: December 31, September 30, (In thousands) Balance Sheet Classification 2015 2015 Derivative assets designated as hedges: Short-term foreign currency forwards Prepaid expenses, deferred costs and other current assets $ 2,362 $ 3,822 Long-term interest rate swaps Deferred costs and other assets 295 — Derivative liabilities designated as hedges: Short-term interest rate swaps Accrued liabilities (1,045 ) (1,326 ) Long-term interest rate swaps Other long-term liabilities — (974 ) Total derivative contracts, net $ 1,612 $ 1,522

Share-Based Compensation

Share-Based Compensation	3 Months Ended
	Dec. 31, 2015
Disclosure of Compensation Related Costs, Share-based Payments [Abstract]
Share-Based Compensation	SHARE-BASED COMPENSATION A summary of our share-based compensation expense during the three months ended December 31, 2015 and 2014 is as follows: Three Months Ended December 31, (In thousands, except average service periods) 2015 2014 Share-based compensation recognized $ 2,371 $ 4,024 Unrecognized compensation cost, net of estimated forfeitures 25,940 29,089 Remaining weighted-average service period (years) 2.3 2.3 Restricted Stock Units During the three months ended December 31, 2015 , we granted to certain employees and our non-employee directors, restricted stock and restricted stock units that are subject to vesting conditions. The grant date fair value of these awards was based on the fair value of our common stock on the date of grant. A summary of our restricted stock activity for the three months ended December 31, 2015 is as follows: Number of Shares (000s) Weighted Average Fair Value Unvested at October 1, 2015 711 $ 43.14 Granted 569 15.28 Vested (162 ) 46.99 Forfeited (18 ) 44.58 Unvested at December 31, 2015 1,100 28.14 Performance Units During the three months ended December 31, 2015 , we granted to certain employees share-based awards that are subject to market-based performance conditions ("performance units"). The grant date fair value of these performance units was determined through use of the Monte Carlo simulation method. A summary of performance unit stock activity for the three months ended December 31, 2015 is as follows: Number of Shares (000s) Weighted Average Fair Value Unvested at October 1, 2015 240 $ 43.73 Granted 254 15.63 Vested — — Forfeited — — Unvested at December 31, 2015 494 29.26 Stock Options A summary of stock option activity for the three months ended December 31, 2015 is as follows: Number of Weighted Weighted Aggregate Outstanding at October 1, 2015 685 $ 34.90 Granted — — Exercised — — — Forfeited — — Expired (10 ) 18.58 Outstanding at December 31, 2015 675 35.15 4.1 (16,822 ) Exercisable at December 31, 2015 675 35.15 4.1 (16,822 )

Income Taxes

Income Taxes	3 Months Ended
	Dec. 31, 2015
Income Tax Disclosure [Abstract]
Income Taxes	INCOME TAXES Our consolidated effective income tax rate for the three months ended December 31, 2015 was approximately 22% , as compared to 17% for the three months ended December 31, 2014 . The effective tax rate for the three months ended December 31, 2015 was higher than the rate for the three months ended December 31, 2014 , primarily due to the impairment charge to the Atwood Falcon , which did not result in a corresponding tax benefit . Our effective tax rate was lower than the U.S. statutory rate of 35% as a result of working in certain lower tax jurisdictions outside the United States. We record estimated accrued interest and penalties related to uncertain tax positions as income tax expense. At December 31, 2015 , we had approximately $15.1 million of reserves for uncertain tax positions, including estimated accrued interest and penalties of $3.7 million , which are included in Other long-term liabilities in the Consolidated Balance Sheet. None of our reserves for uncertain tax positions relate to timing differences. All of the net uncertain tax liabilities would affect the effective tax rate if realized.

Commitments And Contingencies

Commitments And Contingencies	3 Months Ended
	Dec. 31, 2015
Commitments and Contingencies Disclosure [Abstract]
Commitments And Contingencies	COMMITMENTS AND CONTINGENCIES Litigation We are party to a number of lawsuits which are ordinary, routine litigation incidental to our business, the outcome of which is not expected to have, either individually or in the aggregate, a material adverse effect on our financial position, results of operations or cash flows. Other Matters The Atwood Beacon operated in India from early December 2006 to the end of July 2009. A service tax was enacted in India in 2004 on revenues derived from seismic and exploration activities. This service tax law was subsequently amended in June 2007 and again in May 2008 to state that revenues derived from mining services and drilling services were specifically subject to this service tax. The contract terms with our customer in India provided that any liability incurred by us related to any tax obligation pursuant to laws not in effect at the time the contract was executed in 2005 was to be reimbursed by our customer. We believe any service taxes assessed by the Indian tax authorities under the 2007 or 2008 amendments are an obligation of our customer. Our customer is disputing this obligation on the basis of its contention that revenues derived from drilling services were taxable under the initial 2004 law, and are, therefore, our obligation. After reviewing the status of the drilling services we provided to our customer, the Indian tax authorities assessed service tax obligations on revenues derived from the Atwood Beacon commencing on June 1, 2007. The relevant Indian tax authority issued an extensive written ruling setting forth the application of the June 1, 2007 service tax regulation and confirming the position that drilling services, including the services performed under our contract with our customer prior to June 1, 2007, were not covered by the 2004 service tax law. In August 2012, the Indian Custom Excise and Service Tax Appellate Tribunal issued an Order in our favor confirming our position that service tax did not apply to drilling services performed prior to June 1, 2007. The Indian Service Tax Authority has appealed this ruling to the Indian Supreme Court. As of December 31, 2015 , we had paid to the Indian government $10.5 million in service taxes and have accrued $1.3 million of additional service tax obligations in accrued liabilities on our consolidated balance sheets, for a total of $11.8 million relating to service taxes. We recorded a corresponding $11.8 million long-term other receivable due from our customer relating to service taxes due under the contract. We continue to pursue collection of such amounts from our customer and expect to collect the amount recorded as a receivable.

Unaudited Interim Information (

Unaudited Interim Information (Policies)	3 Months Ended
	Dec. 31, 2015
Accounting Policies [Abstract]
Recently Issued Accounting Pronouncements	Recently issued accounting pronouncements In May 2014, the Financial Accounting Standards Board ("FASB") issued new guidance intended to change the criteria for recognition of revenue. The core principle of the guidance is that an entity should recognize revenue to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. The guidance is effective for annual reporting periods beginning after December 15, 2017, including interim periods within that reporting period. We are currently evaluating what impact the adoption of this guidance will have on our financial statements or disclosures in our financial statements. In April 2015, the FASB issued new guidance intended to simplify the presentation of debt issuance costs. This new guidance requires that debt issuance costs related to outstanding debt be netted against that liability in the balance sheet, consistent with the treatment of debt discounts. In August 2015, the FASB issued additional guidance to clarify that this presentation change does not address debt issuance costs related to line of credit arrangements. The new presentation guidance is effective for fiscal years and interim periods beginning after December 15, 2015 and early adoption is permitted. We adopted this guidance in the first quarter of fiscal 2016. We reclassified $1.6 million from Prepaid, Expenses, Deferred Costs and Other Current Assets and $6.8 million from Deferred Credits and Other Assets to Long-Term Debt in the September 30, 2015 Condensed Consolidated Balance Sheet presented in this Form 10-Q to conform to the current year presentation of debt issuance costs. We elected not to change our treatment of debt issuance cost related to line of credit arrangements. In November 2015, amended guidance from the FASB was issued for the balance sheet classification of deferred income taxes. The amended guidance requires the classification of all deferred tax assets and liabilities as noncurrent on the balance sheet instead of separating deferred taxes into current and noncurrent amounts. Deferred tax assets and liabilities will continue to be offset and presented as a single amount under the amended guidance. The effective date for public business entities is for financial statements issued for annual periods beginning after December 15, 2016, and interim periods within those annual periods. The Company has not yet adopted nor selected a transition method and is currently evaluating the impact it may have on its financial condition and results of operations.
Fair Value Measurement	We have certain assets and liabilities that are required to be measured and disclosed at fair value. Fair value is defined as the exchange price that would be received for an asset or paid to transfer a liability (an exit price) in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants on the measurement date. The fair value hierarchy prioritizes inputs to valuation techniques used to measure fair value into three levels. Priority is given to unadjusted quoted prices in active markets for identical assets or liabilities (Level 1) and the lowest priority to unobservable inputs (Level 3). Assets and liabilities measured at fair value are classified based on the lowest level of input that is significant to the fair value measurement. Our assessment of the significance of a particular input to the fair value measurement requires judgment, which may affect the valuation of the fair value of assets and liabilities and their placement within the fair value hierarchy levels. The determination of the fair values, stated below, takes into account the market for our financial assets and liabilities, the associated credit risk and other considerations. We have classified and disclosed fair value measurements using the following levels of the fair value hierarchy: Level 1 : Unadjusted quoted prices in active markets that are accessible at the measurement date for identical, unrestricted assets or liabilities. Level 2 : Quoted prices in markets that are not active, or inputs which are observable, either directly or indirectly, for substantially the full term of the asset or liability. Level 3 : Measurement based on prices or valuation models that require inputs that are both significant to the fair value measurement and less observable for objective sources (i.e., supported by little or no market activity).
Income Taxes	We record estimated accrued interest and penalties related to uncertain tax positions as income tax expense.

Earnings Per Common Share (Tabl

Earnings Per Common Share (Tables)	3 Months Ended
	Dec. 31, 2015
Earnings Per Share [Abstract]
Computation of Basic and Diluted Earnings Per Share	The computation of basic and diluted earnings per share for the three months ended December 31, 2015 and 2014 is as follows: Three Months Ended (In thousands, except per share amounts) Net Income Shares Per Share Amount December 31, 2015 Basic earnings per share $ 39,081 64,765 $ 0.60 Effect of dilutive securities: Stock options — — — Restricted stock and performance units — 156 — Diluted earnings per share $ 39,081 64,921 $ 0.60 December 31, 2014 Basic earnings per share $ 46,218 64,405 0.72 Effect of dilutive securities: Stock options — 99 — Restricted stock and performance units — 511 (0.01 ) Diluted earnings per share $ 46,218 65,015 $ 0.71

Property and Equipment (Tables)

Property and Equipment (Tables)	3 Months Ended
	Dec. 31, 2015
Property, Plant and Equipment [Abstract]
Summary of Property and Equipment by Classification	A summary of property and equipment by classification is as follows: (In thousands) December 31, September 30, Drilling vessels and equipment $ 3,933,767 $ 4,003,483 Construction work in progress 791,232 720,852 Drill pipe 54,861 55,248 Office equipment and other 39,033 36,379 Total cost 4,818,893 4,815,962 Less: Accumulated depreciation (610,802 ) (643,830 ) Property and equipment, net $ 4,208,091 $ 4,172,132

Debt (Tables)

Debt (Tables)	3 Months Ended
	Dec. 31, 2015
Debt Disclosure [Abstract]
Summary of Long-Term Debt	A summary of long-term debt is as follows: (In thousands) December 31, September 30, 6.5% Senior Notes due 2020 ("Senior Notes") $ 648,399 $ 648,268 Revolving Credit Facility 960,000 1,030,000 Total long-term debt $ 1,608,399 $ 1,678,268

Fair Value of Financial Instr20

Fair Value of Financial Instruments (Tables)	3 Months Ended
	Dec. 31, 2015
Fair Value Disclosures [Abstract]
Estimated Fair Value Of Financial Instruments	The following table sets forth the estimated fair value of our derivative financial instruments at December 31, 2015 and September 30, 2015 , which are measured and recorded at fair value on a recurring basis: December 31, September 30, (In thousands) Balance Sheet Classification 2015 2015 Derivative assets designated as hedges: Short-term foreign currency forwards Prepaid expenses, deferred costs and other current assets $ 2,362 $ 3,822 Long-term interest rate swaps Deferred costs and other assets 295 — Derivative liabilities designated as hedges: Short-term interest rate swaps Accrued liabilities (1,045 ) (1,326 ) Long-term interest rate swaps Other long-term liabilities — (974 ) Total derivative contracts, net $ 1,612 $ 1,522

Share-Based Compensation (Table

Share-Based Compensation (Tables)	3 Months Ended
	Dec. 31, 2015
Disclosure of Compensation Related Costs, Share-based Payments [Abstract]
Summary of Share-based Compensation Arrangements	A summary of our share-based compensation expense during the three months ended December 31, 2015 and 2014 is as follows: Three Months Ended December 31, (In thousands, except average service periods) 2015 2014 Share-based compensation recognized $ 2,371 $ 4,024 Unrecognized compensation cost, net of estimated forfeitures 25,940 29,089 Remaining weighted-average service period (years) 2.3 2.3
Schedule of Restricted Stock Activity	A summary of our restricted stock activity for the three months ended December 31, 2015 is as follows: Number of Shares (000s) Weighted Average Fair Value Unvested at October 1, 2015 711 $ 43.14 Granted 569 15.28 Vested (162 ) 46.99 Forfeited (18 ) 44.58 Unvested at December 31, 2015 1,100 28.14
Schedule of Performance-based Units Activity	A summary of performance unit stock activity for the three months ended December 31, 2015 is as follows: Number of Shares (000s) Weighted Average Fair Value Unvested at October 1, 2015 240 $ 43.73 Granted 254 15.63 Vested — — Forfeited — — Unvested at December 31, 2015 494 29.26
Summary of Stock Option Activity	A summary of stock option activity for the three months ended December 31, 2015 is as follows: Number of Weighted Weighted Aggregate Outstanding at October 1, 2015 685 $ 34.90 Granted — — Exercised — — — Forfeited — — Expired (10 ) 18.58 Outstanding at December 31, 2015 675 35.15 4.1 (16,822 ) Exercisable at December 31, 2015 675 35.15 4.1 (16,822 )

Unaudited Interim Information22

Unaudited Interim Information (Details) - New Accounting Pronouncement, Early Adoption, Effect $ in Millions	Sep. 30, 2015USD ($)
Prepaid expenses, deferred costs and other current assets
New Accounting Pronouncement, Early Adoption [Line Items]
Deferred finance costs, current	$ (1.6)
Deferred credits and other assets
New Accounting Pronouncement, Early Adoption [Line Items]
Deferred finance costs, noncurrent	(6.8)
Long-term Debt
New Accounting Pronouncement, Early Adoption [Line Items]
Deferred finance costs, current	1.6
Deferred finance costs, noncurrent	$ 6.8

Earnings Per Common Share - Nar

Earnings Per Common Share - Narrative (Details) - USD ($) $ / shares in Units, shares in Thousands, $ in Thousands	3 Months Ended
	Dec. 31, 2015	Dec. 31, 2014
Net Income
Net income	$ 39,081	$ 46,218
Stock options	0	0
Restricted stock and performance units	0	0
Diluted earnings per share	$ 39,081	$ 46,218
Shares
Basic earnings per share (in shares)	64,765	64,405
Stock options (in shares)	0	99
Restricted stock (in shares)	156	511
Diluted earnings per share (in shares)	64,921	65,015
Per Share Amount
Basic earnings per share (in dollars per share)	$ 0.60	$ 0.72
Stock options (in dollars per share)	0	0
Restricted stock (in dollars per share)	0	(0.01)
Diluted earnings per share (in dollars per share)	$ 0.60	$ 0.71
Stock Options
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items]
Outstanding stock options, excluded in the calculation of earnings per share	1,584	600

Property and Equipment - Summar

Property and Equipment - Summary of Property and Equipment by Classification (Details) - USD ($) $ in Thousands	Dec. 31, 2015	Sep. 30, 2015
Property, Plant and Equipment
Total cost	$ 4,818,893	$ 4,815,962
Less: Accumulated depreciation	(610,802)	(643,830)
Property and equipment, net	4,208,091	4,172,132
Drilling vessels and equipment
Property, Plant and Equipment
Total cost	3,933,767	4,003,483
Construction work in progress
Property, Plant and Equipment
Total cost	791,232	720,852
Drill pipe
Property, Plant and Equipment
Total cost	54,861	55,248
Office equipment and other
Property, Plant and Equipment
Total cost	$ 39,033	$ 36,379

Property and Equipment - Narrat

Property and Equipment - Narrative (Details) - USD ($) $ / shares in Units, $ in Thousands	Dec. 31, 2015	Dec. 17, 2015	Dec. 31, 2015	Dec. 31, 2014
Property, Plant and Equipment
Asset impairment			$ 64,724	$ 60,777
(Gain) loss on sale of equipment			(77)	(9,806)
Atwood Falcon
Property, Plant and Equipment
Asset impairment			64,700
Impairment, net of tax			$ 64,700
Impairment effect on earnings per share, after tax (in dollars per share)			$ 1
Atwood Falcon | Equipment
Property, Plant and Equipment
Asset impairment			$ 53,000
Atwood Falcon | Inventory
Property, Plant and Equipment
Asset impairment			11,700
Atwood Hunter
Property, Plant and Equipment
Asset impairment				60,800
Impairment, net of tax				$ 56,100
Impairment effect on earnings per share, after tax (in dollars per share)				$ 0.86
Atwood Hunter | Equipment
Property, Plant and Equipment
Asset impairment				$ 48,000
Atwood Hunter | Inventory
Property, Plant and Equipment
Asset impairment				8,400
Atwood Osprey
Property, Plant and Equipment
Insurance recoveries			18,000
Insurance recoveries, net of tax			$ 18,000
Insurance recoveries effect on earnings per share, after tax (in dollars per share)			$ 0.28
Atwood Southern Cross
Property, Plant and Equipment
Impairment, net of tax				$ 7,100
Impairment effect on earnings per share, after tax (in dollars per share)				$ 0.11
(Gain) loss on sale of equipment				$ (8,000)
Atwood Admiral
Property, Plant and Equipment
Accelerated delivery notice period			45 days
Atwood Admiral | Capital Addition Purchase Commitments
Property, Plant and Equipment
Payments for construction projects	$ 50,000
Atwood Admiral | Final Payment | Capital Addition Purchase Commitments
Property, Plant and Equipment
Commitments on drilling units under construction		$ 93,900
Atwood Archer
Property, Plant and Equipment
Accelerated delivery notice period			45 days
Atwood Archer | Capital Addition Purchase Commitments
Property, Plant and Equipment
Payments for construction projects	$ 50,000
Atwood Archer | Final Payment | Capital Addition Purchase Commitments
Property, Plant and Equipment
Commitments on drilling units under construction		$ 306,100

Debt - Summary of Long-Term Deb

Debt - Summary of Long-Term Debt (Details) - USD ($) $ in Thousands	Dec. 31, 2015	Sep. 30, 2015
Debt Instrument [Line Items]
Long-term Debt	$ 1,608,399	$ 1,678,268
Senior Notes | 6.5% Senior Notes
Debt Instrument [Line Items]
Stated interest rate	6.50%	6.50%
Long-term Debt	$ 648,399	$ 648,268
Revolving Credit Facility
Debt Instrument [Line Items]
Long-term Debt	$ 960,000	$ 1,030,000

Debt - Senior Notes (Details)

Debt - Senior Notes (Details)	Dec. 31, 2015USD ($)
Senior Notes | 6.5% Senior Notes
Debt Instrument [Line Items]
Principal amount	$ 650,000,000

Debt - Credit Facility (Details

Debt - Credit Facility (Details) $ in Millions	3 Months Ended
	Dec. 31, 2015USD ($)drilling_unit	Dec. 31, 2014USD ($)
Line of Credit Facility [Line Items]
Weighted average interest rate	4.10%
Revolving Credit Facility
Line of Credit Facility [Line Items]
Long-term line of credit, maximum borrowing capacity	$ 1,547
Long-term line of credit	960
Long-term line of credit, remaining borrowing capacity	587
Interest costs capitalized	$ 5	$ 4
Revolving Credit Facility | Minimum | Eurodollar
Line of Credit Facility [Line Items]
Basis spread on variable rate	1.75%
Unused capacity commitment fee	0.30%
Revolving Credit Facility | Maximum | Eurodollar
Line of Credit Facility [Line Items]
Basis spread on variable rate	2.00%
Unused capacity commitment fee	0.40%
Commercial Real Estate | Revolving Credit Facility
Line of Credit Facility [Line Items]
Number of drilling units | drilling_unit	8
Revolving Credit Facility, Maturing May 2018 | Revolving Credit Facility
Line of Credit Facility [Line Items]
Long-term line of credit, maximum borrowing capacity	$ 305
Revolving Credit Facility, Maturing May 2019 | Revolving Credit Facility
Line of Credit Facility [Line Items]
Long-term line of credit, maximum borrowing capacity	$ 1,242

Fair Value of Financial Instr29

Fair Value of Financial Instruments - Narrative (Details) - USD ($)	Dec. 31, 2015	Sep. 30, 2015
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis
Long-term debt, carrying value	$ 1,608,399,000	$ 1,678,268,000
Credit valuation adjustment to total fair value percentage (less than)	1.00%
Senior Notes | 6.5% Senior Notes
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis
Long-term debt, carrying value	$ 648,399,000	$ 648,268,000
Principal amount	650,000,000
Long-term debt, fair value	$ 359,000,000

Fair Value of Financial Instr30

Fair Value of Financial Instruments - Estimated Fair Value of Financial Instruments (Details) - Fair Value, Measurements, Recurring - USD ($) $ in Thousands	Dec. 31, 2015	Sep. 30, 2015
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis
Total derivative contracts, net	$ 1,612	$ 1,522
Prepaid expenses, deferred costs and other current assets | Foreign currency forwards | Designated as Hedging Instrument
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis
Derivative assets designated as hedges	2,362	3,822
Deferred costs and other assets | Interest rate swap | Designated as Hedging Instrument
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis
Derivative assets designated as hedges	295	0
Accrued liabilities | Interest rate swap | Designated as Hedging Instrument
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis
Derivative liabilities designated as hedges	(1,045)	(1,326)
Other long-term liabilities | Interest rate swap | Designated as Hedging Instrument
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis
Derivative liabilities designated as hedges	$ 0	$ (974)

Share-Based Compensation - Sche

Share-Based Compensation - Schedule of Share Based Compensation Expense (Details) - USD ($) $ in Thousands	3 Months Ended
	Dec. 31, 2015	Dec. 31, 2014
Disclosure of Compensation Related Costs, Share-based Payments [Abstract]
Share-based compensation recognized	$ 2,371	$ 4,024
Unrecognized compensation cost, net of estimated forfeitures	$ 25,940	$ 29,089
Remaining weighted average service period (Years)	2 years 3 months 18 days	2 years 3 months 18 days

Share-Based Compensation - Summ

Share-Based Compensation - Summary of Restricted Stock Activity (Details) - Restricted Stock shares in Thousands	3 Months Ended
	Dec. 31, 2015$ / sharesshares
Number of Shares:
Unvested at beginning of period (in shares) | shares	711
Granted (in shares) | shares	569
Vested (in shares) | shares	(162)
Forfeited (in shares) | shares	(18)
Unvested at end of period (in shares) | shares	1,100
Weighted Average Fair Value:
Unvested at beginning of period (in dollars per share) | $ / shares	$ 43.14
Granted (in dollars per share) | $ / shares	15.28
Vested (in dollars per share) | $ / shares	46.99
Forfeited (in dollars per share) | $ / shares	44.58
Unvested at end of period (in dollars per share) | $ / shares	$ 28.14

Share-Based Compensation - Su33

Share-Based Compensation - Summary of Performance Stock Activity (Details) - Performance Shares shares in Thousands	3 Months Ended
	Dec. 31, 2015$ / sharesshares
Number of Shares:
Unvested at beginning of period (in shares) | shares	240
Granted (in shares) | shares	254
Vested (in shares) | shares	0
Forfeited (in shares) | shares	0
Unvested at end of period (in shares) | shares	494
Weighted Average Fair Value:
Unvested at beginning of period (in dollars per share) | $ / shares	$ 43.73
Granted (in dollars per share) | $ / shares	15.63
Vested (in dollars per share) | $ / shares	0
Forfeited (in dollars per share) | $ / shares	0
Unvested at end of period (in dollars per share) | $ / shares	$ 29.26

Share-Based Compensation - Su34

Share-Based Compensation - Summary of Stock Option Activity (Details) - Stock Options $ / shares in Units, shares in Thousands, $ in Thousands	3 Months Ended
	Dec. 31, 2015USD ($)$ / sharesshares
Number of Options:
Outstanding at beginning of period (shares) | shares	685
Granted (shares) | shares	0
Exercised (shares) | shares	0
Forfeited (shares) | shares	0
Expired (Shares) | shares	(10)
Outstanding at end of period (shares) | shares	675
Exercisable at end of period (shares) | shares	675
Weighted Average Exercise Price (in dollars per share):
Outstanding at beginning of period (dollars per share) | $ / shares	$ 34.90
Granted (dollars per share) | $ / shares	0
Exercised (dollars per share) | $ / shares	0
Forfeited (dollars per share) | $ / shares	0
Expired (dollars per share) | $ / shares	18.58
Outstanding at end of period (dollars per share) | $ / shares	35.15
Exercisable at end of period (dollars per share) | $ / shares	$ 35.15
Share-based Compensation Arrangement by Share-based Payment Award, Options, Additional Disclosures [Abstract]
Weighted average remaining contractual life, outstanding	4 years 1 month 6 days
Weighted average remaining contractual life, outstanding, exercisable	4 years 1 month 6 days
Aggregate intrinsic value, exercised in period | $	$ 0
Aggregate intrinsic value, outstanding | $	(16,822)
Aggregate intrinsic value, exercisable | $	$ (16,822)

Income Taxes - Narrative (Detai

Income Taxes - Narrative (Details) - USD ($) $ in Millions	3 Months Ended
	Dec. 31, 2015	Dec. 31, 2014
Income Tax Contingency [Line Items]
Effective income tax rate	22.00%	17.00%
Statutory income tax rate	35.00%
Unrecognized tax benefits	$ 15.1
Other long-term liabilities
Income Tax Contingency [Line Items]
Estimated accrued interest and penalties	$ 3.7

Commitments And Contingencies -

Commitments And Contingencies - Narrative (Details) - USD ($) $ in Thousands	3 Months Ended
	Dec. 31, 2015	Sep. 30, 2015
Loss Contingencies
Other receivables	$ 11,831	$ 11,831
Indian Tax Authority
Loss Contingencies
Service taxes paid	10,500
Accrued additional service tax	1,300
Total service taxes	11,800
Other receivables	$ 11,800