ATW - Atwood Oceanics Inc. Message Board

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

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To: Dennis Roth who wrote (10)	5/13/2008 7:02:37 AM
From: Dennis Roth	of 11

Atwood Oceanics, Inc. (ATW): Strong quarter- focus remains on organic deepwater growth - Goldman Sachs - May 12, 2008 United States What's changed ATW reported FY2Q08 EPS of $1.30, above our estimate of $1.10 and consensus of $1.15. We raised our 2008/2010E EPS to $6.73/$11.99 from $6.56/$11.87 and lowered our 2009E EPS to $10.51 from $10.60 to reflect recent fleet status reports and a slightly lower tax rate assumption. We raised our 12-month price target to $108 from $104 (8.5X CY2009E DACF). Implications (1) ATW reported a third consecutive quarter of strong execution with operating costs inline with guidance. Part of the beat was due to less than expected downtime for the Southern Cross (+$0.05) and a foreign currency exchange gain ($0.03). Also, management raised its FY2008 cost guidance to $213-215 million from $205-210 million (GS= $216 million vs. $211 million previously). (2) We expect ATW to remain focused on growing its deepwater fleet organically. The company has an option for a newbuild with Jurong shipyard that expires on June 30, 2008. We fully expect ATW to exercise the option but recognize that the option date could be extended if ATW is unable to secure a contract before the deadline. However, given the robust deepwater market, we do not expect ATW to have a difficult time securing a contract that exceeds its hurdle rate. Valuation ATW trades at 8.3X/7.5X CY2009E EV-DACF/EV-EBITDA (-9%/+11% relative to DO) and 7.6X/6.9X CY2010E EV-DACF/EV-EBITDA (-7%/+13% relative to DO). Key risks Key risks include higher than expected cost inflation and a severe correction in commodity prices.

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