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What: Shares of Atwood Oceanics (NYSE:ATW) took off on Thursday, soaring 22% by 11:15 a.m. EST. While some of that rally was fueled by today's oil price rally, the big driver was the company's fiscal fourth-quarter results, despite the fact that those results were released Tuesday evening.

So what: Investors are breathing a bit of a sigh of relief after taking the time to digest the company report and the progress it's making. Investors are overlooking the fact that earnings were lower than prior periods because of idled rigs, because the company managed its costs to soundly beat expectations.

In addition to reporting earnings, the company also announced that it is taking additional actions to improve its liquidity and balance sheet strength to see it through to the recovery. These actions included addition headcount reductions, which will save the company $10 million to $15 million per year. Further, after pushing back nearly $200 million in milestone payments on its two newbuild ultra-deepwater drillships, the company believes it has adequate liquidity through at least mid-2018. However, it is working with its banks on a covenant amendment to ensure it has the flexibility it needs on its bank credit facility should the downturn last well into 2017.

Further, the company noted on its conference call that it's making some progress on finding follow-on work for a number of its rigs that have contracts expiring later this year. It has identified at least one opportunity for follow-on work for the Atwood Osprey that it expects to close in the next few weeks. In addition to that, it's exploring "blend-and-extend" contract extensions with some of its clients, which would enable other rigs to continue to generate income for a longer period, albeit at a lower rate.

Now what: Investors can see that the company is making some progress on improving its liquidity and contract situation. That said, progress and actionable contracts are quite different. Suffice it to say, the company needs to find profitable work for as many of its rigs as possible while it waits for the offshore drilling market to recover, which won't happen until the price of oil is a lot higher.

Matt DiLallo has no position in any stocks mentioned. The Motley Fool owns shares of and recommends Atwood Oceanics. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.