ATW - Atwood Oceanics Inc. Message Board

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Gold/Mining/Energy : ATW - Atwood Oceanics Inc.

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From: Dennis Roth	9/13/2005 9:44:48 AM
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Atwood Oceanics (IL/A): Raising estimates + fair value to $94= 16% upside - Goldman Sachs - September 12, 2005 We are raising our 2005/06/07 EPS for ATW to $1.64/$5.26/$8.85 from $1.57/$3.90/$8.20 following recent contract awards that suggest continued acceleration in dayrates. Furthermore - and despite the negative sounding press release headline - we view the early termination of the Southern Cross by BG announced after the close Monday as a slight positive as it "pulls forward" higher dayrate work ($70k vs. $60k previously). The release also announced a contract on the Vicksburg beginning 2H FY06 at rates 5% above our expectation (+$0.03 EPS impact). We believe ATW remains attractive as the only small cap driller w/ deepwater exposure. However, we prefer drillers w/ more exposure to spot rates as ATW has 90%/50% of 2006/2007 rig time already secured, which is at the high end of the peer group. We are raising our fair value to $94 (9x 2006E EBITDA) from $74 = 16% upside. Maintain IL/A. KEY DRIVERS OF ESTIMATE REVISION. Changes to our 2006E EPS are driven primarily by: (1) +10% higher average 2006 dayrate on ATW's semisumbersible fleet (to $117k from $106k = +$1.08 positive impact), primarily driven by the higher dayrate on the Hunter (one of the highest dayrates for a 5,000' semi anywhere at $240k/day vs. our prior $125k); and (2) increased utilization and +12% higher average 2006 dayrate on ATW's shallow water fleet (to $82k from $73k = +$0.26). Changes to our 2007E EPS are driven by: (1) +3% higher average dayrate on deepwater rigs ($163k vs. $158k); and (2) +8% higher average dayrate on shallow water rigs ($90k vs. $83k). Each of the analysts named below hereby certifies that, with respect to each subject company and its securities for which the analyst is responsible in this report, (1) all of the views expressed in this report accurately reflect his or her personal views about the subject companies and securities, and (2) no part of his or her compensation was, is, or will be, directly or indirectly, related to the specific recommendations or views expressed in this report: Jason Gilbert; Terry Darling.

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