ANNUAL REPORT 2014

Strong Performance

INTRODUCTION // HIGHLIGHTS

“We achieved record revenues and the second-highest earnings in our 46-year history.”

2008 2014

REVENUESDOLLARS IN MILLIONS

$1,174

2008 2014

NET INCOME

DOLLARS IN MILLIONS

$341

PP. // 01

The past year has been a year of contrasts for Atwood Oceanics. Notably, we achieved

record revenues and the second-highest earnings in our 46-year history. We realized

our best-ever safety results, as measured by incident frequency, even as we continued

to expand our workforce and our rig fleet. We delivered and commissioned our first

two ultradeepwater drillships and demonstrated our ability to operate them reliably and safely. In

addition, our Board of Directors declared our first quarterly dividend, a vehicle to return cash to our

shareholders beginning in calendar 2015.

However, this past year was also marked by a sharp decline in market conditions for the offshore

drilling industry. Demand for offshore drilling services did not materialize as expected, and oil prices

declined to levels not seen in recent years. The delivery of new build rigs from shipyards, including

some without contracts, created excess rig supplies in many regional markets. As a result, utilization

and day rates decreased across all rig classes and one of our active rigs experienced extended idle time.

Despite these challenges, the Atwood Team delivered solid results and achieved significant milestones

in 2014. “Strong performance” has become the hallmark of our company—delivered by our employees

for the benefit of our clients and our investors.

Operational excellence has long been a key differentiator of our drilling services,

and 2014 was no exception. Our five high-specification jackups operated at

approximately 98% revenue efficiency for the year. Our five semisubmersibles

delivered solid results which engendered favorable client feedback and the signing

of longer-term contracts on two of these rigs. In addition, we successfully completed

two extensive maintenance and upgrade projects—one in West Africa and the other in the

Mediterranean—that facilitated follow-on drilling programs with new clients.

LETTER TO OUR SHAREHOLDERS

STRONG PERFORMANCE BEGINS WITH SOLID OPERATIONS

A YEAR OF CONTRASTS

Fellow Shareholders,

The delivery and start-up of our first two ultradeepwater drillships, the Atwood Advantage and the

Atwood Achiever, marked a major milestone in our fleet growth strategy. The Advantage and Achiever

are currently operating in the Gulf of Mexico and Northwest Africa, respectively, under multi-year

agreements with long-time Atwood clients. Each of these drilling vessels offers best-in-class drilling

and water depth capabilities along with a dual BOP system for additional safety and reliability. Most

importantly, our offshore rig teams have performed well in starting up these impressive machines and

running them without major incident during their first months of operations.

Our most critical company value embodied in Our Guiding Principles remains “Safety and

Environmental Stewardship.” In fiscal 2014, we delivered our best (i.e. lowest) recordable incident

rate in our history, reduced our impact on the environment, while our people worked a record

number of man-hours. In addition, our senior management completed Process Safety discussions with

all offshore personnel involved in drilling positions to emphasize the importance of proper well

control. Finally, Atwood was named as the #1 offshore driller for Health, Safety and Environmental

performance in an independent customer survey for the second consecutive year.

Following on our strong operational performance, we posted our highest revenue

ever at $1.17 billion. Our net income of $341 million nearly matched last year’s

record result. Strong revenue recognition from our rigs coupled with cost discipline—

onshore and offshore—contributed to healthy margins and a solid bottom line.

We also improved our financial flexibility by increasing our revolving credit facility by $450 million to

$1.55 billion, while reducing our borrowing costs. Our key credit metric of debt-to-capitalization

peaked in late August at approximately 41% with the delivery of the Atwood Achiever and is projected

to improve going forward. The capital expenditures for our two drillships under construction are fully

funded by cash flow secured by our nearly $3 billion revenue backlog and the available capacity on our

credit facility. In short, our balance sheet is in good shape.

Our Board of Directors declared our first-ever quarterly dividend in September, with the initial

payment to be made in January 2015. We initiated the dividend with a lower yield than many of our

PP. 02 // 03

STRONG FINANCIAL PERFORMANCE

peer companies in order to ensure its sustainability and to preserve our ability to fund future fleet

growth. We believe that our dividend represents an important source of value to our shareholders and

that it will attract new investors to Atwood stock.

Our company’s success would not be possible without the efforts of the nearly 1,900

competent and motivated personnel who comprise the worldwide Atwood Team. We

have increased our workforce substantially over the past five years, and our new

employees have brought us skills and experiences vital to the execution of our growth

strategy. Our reputation for operational excellence and financial stability continues to attract people

considering a career, or a career change, in the offshore drilling industry.

In 2014, we significantly increased our commitment to the training and development of our people.

In August, our Competence Assurance Program for offshore employees received full accreditation

from the International Association of Drilling Contractors (IADC). In addition, we augmented our

offshore leadership training to emphasize the importance of job planning, setting expectations and

proper supervision. To supplement these internal efforts, we also retained industry experts to work

with our rig-based employees to improve their knowledge of our equipment, our procedures and

industry best practices.

We expect that 2015 will be characterized by demanding business conditions for

our industry. Meaningful improvement is not likely to occur until we experience a

recovery in oil prices and our competitors retire a significant number of their older

rigs. The industry downturn may also be elongated as our peers struggle with the

permanent loss of employees, equipment and earnings potential. These concerns underpinned our

decision in early November to delay the deliveries of the Atwood Admiral and Atwood Archer by six

months each.

Fortunately, our backlog is strong and our rig fleet is generally well-contracted as we begin 2015.

Only one of our active floaters, the Atwood Hunter, is expected to remain idle in the near term. Our

other four semisubmersibles and two drillships are each contracted until at least the first quarter

OUR PEOPLE DELIVER THE PERFORMANCE

PREPARED FOR A CHALLENGING 2015

LETTER TO OUR SHAREHOLDERS

of calendar 2016. Four of our five high-specification jackups are under contract through at least

December of this year. The Atwood Admiral, now scheduled for delivery in late September, is our

only ultradeepwater rig with availability in calendar 2015.

Despite this challenging outlook, I have no doubt that the Atwood Team will once again deliver

strong performance. Our operations team will be focused on reducing the well costs for our clients

by improving the efficiency of our drilling services. In addition, we will identify ways to eliminate

unnecessary activities and reduce expenses across our organization. Of course, these goals will be

pursued without ever compromising our safety and environmental responsibilities.

As our company begins its 47th year, I want to extend my sincere thanks to the men

and women who comprise the worldwide Atwood Team for their continued dedication

to our success. I also want to recognize our many loyal clients and investors—their

continual support is a source of inspiration for our strong performance.

OUR 47TH YEAR

PRESIDENT AND CHIEF EXECUTIVE OFFICER

Rob Saltiel

PP. 04 // 05

SAFETY & OPERATIONS // FINANCIAL HIGHLIGHTS

SAFETY PERFORMANCE

“We delivered our lowest recordable incident rate in our history while our people worked a record number of man-hours.”

1.5

0.9

0.6

0.3

0 0

1

2

3

4

5

1.2

2009 2010 2011 2012 2013 2014

4.94.5

3.23.0

3.3

2.8

.92

.80.68

.58

1.14

.67

RECORDABLE INCIDENTS PER 200,000 MAN-HOURS MILLION MAN-HOURS WORKED

PP. 06 // 07

“The capital expenditures for our two drill-ships under construction are fully funded. Our balance sheet is in good shape.”

FINANCIAL HIGHLIGHTS (IN THOUSANDS, EXCEPT PER SHARE DATA) 2014 2013 2012

OPE R ATING RE SU LTS :

Total revenues $ 1,173,953 $ 1,063,663 $ 787,421

EBITDA 594,776 552,205 389,297

Operating income 438,784 429,471 319,410

Net income 340,822 350,224 272,171

Earnings per common share (diluted) 5.24 5.32 4.14

FINANCIAL POS ITION :

Cash $ 80,080 $ 88,770 $ 77,871

Net working capital 330,430 296,888 232,887

Net property and equipment 3,967,028 3,164,724 2,537,340

Total debt 1,754,007 1,271,303 835,148

Shareholder’s equity 2,555,524 2,207,371 1,939,422

CAS H FLOW DATA :

Net cash provided by operating activities $ 442,620 $ 432,110 $ 255,603

Capital expenditures 975,731 745,223 785,083

“The delivery and start-up of our first two ultradeepwater drillships marked a major milestone in our fleet growth strategy.”

FLEET GROWTH & TRANSFORMATION

FLEET GROWTH PLAN (CALENDAR YEARS 2011–2016)

2014 2015 20162011 2012 2013

ATWOOD CONDOR

ATWOOD ADVANTAGE

ATWOOD ACHIEVER

ATWOOD OSPREY

ATWOOD MANTA

ATWOOD MAKO

ATWOOD ORCA

ATWOOD ADMIRAL

ATWOOD ARCHERDRILLSHIP

DRILLSHIP

DRILLSHIP

DRILLSHIP

JACKUP

JACKUP

JACKUP

SEMISUBMERSIBLE

SEMISUBMERSIBLE

DELIVERED SCHEDULED

FINANCIAL INFORMATION

Financials Form 10-K

CORPORATE DIRECTORY

ROBERT J. SALTIEL

PRESIDENT AND CHIEF EXECUTIVE OFFICER

MARK L. MEY

SENIOR VICE PRESIDENT AND CHIEF FINANCIAL OFFICER

ARTHUR M. POLHAMUS

VICE PRESIDENT, OPERATIONS

BARRY M. SMITH

VICE PRESIDENT, TECHNICAL SERVICES

WALTER A. BAKER

VICE PRESIDENT, GENERAL COUNSEL AND CORPORATE SECRETARY

GEOFFREY C. WAGNER

VICE PRESIDENT, MARKETING AND BUSINESS DEVELOPMENT

MARK W. SMITH

VICE PRESIDENT, CHIEF ACCOUNTING OFFICER AND CONTROLLER

STUART D. ALLEN

VICE PRESIDENT, HUMAN RESOURCES AND ADMINISTRATIVE SERVICES

JOHN K. GIDLEY

VICE PRESIDENT, HEALTH, SAFETY & ENVIRONMENT

Officers

GEORGE S. DOTSON

CHAIRMAN

DEBORAH A. BECK

JACK E. GOLDEN

HANS HELMERICH

JEFFREY A. MILLER

JAMES R. MONTAGUE

ROBERT J. SALTIEL

PHIL D. WEDEMEYER

Directors

CORPORATE HEADQUARTERS

15011 KATY FREEWAY, SUITE 800

HOUSTON, TEXAS 77094

OFFICE: 281-749-7800

WWW.ATWD.COM

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NEW YORK STOCK EXCHANGE

SYMBOL: ATW

ANNUAL MEETING

ATWOOD SHAREHOLDERS ARE INVITED TO ATTEND OUR ANNUAL MEETING WHICH WILL BE HELD ON WEDNESDAY, FEBRUARY 18, 2015 AT 12:00 PM CST AT OUR PRINCIPAL OFFICE.

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HOUSTON, TEXAS

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