ATWOOD OCEANICS INC
<DOCUMENT>
<TYPE>EX-10
<SEQUENCE>5
<FILENAME>ex1042.txt
<TEXT>

                                                               EXHIBIT 10.4.2








                       -----------------------------------

                              ATWOOD OCEANICS, INC.

                                 RETENTION PLAN

                         FOR CERTAIN SALARIED EMPLOYEES

                       -----------------------------------


                         Effective as of January 1, 2006








                     This Plan will terminate automatically
             as of December 31, 2006 if there is no "Effective Date"
            (as defined in Plan Section 1.5) on or before that date.






<PAGE>



                              ATWOOD OCEANICS, INC.
                                 RETENTION PLAN
                         FOR CERTAIN SALARIED EMPLOYEES


     The Company (as  defined  herein)  hereby  adopts this  Retention  Plan for
Certain Salaried Employees (the "Plan"), effective as of the 1st day of January,
2006.


                                  INTRODUCTION

     The  purpose  of this  Plan is to secure  the  interests  of the  Company's
shareholders  in the event of a change of  control  of the  Company.  In such an
event, this Plan would provide an enhanced  severance payment and other benefits
to encourage certain valued employees to remain employed with the Company during
that period of  financial  uncertainty  preceding  and  following  the change of
control.  If such an event does not occur on or before  December 31, 2006,  this
Plan will terminate  automatically,  unless  otherwise  renewed by the Company's
Board of Directors.


                                    ARTICLE I
                                   DEFINITIONS

     Terms  defined above and initially  capitalized  shall have the  respective
meanings so  ascribed.  When used in this Plan and  initially  capitalized,  the
following words and phrases shall have the following  respective meanings unless
the context clearly requires otherwise:

     1.1 "Base Salary" as to any Covered Employee for any period, shall mean the
greater of the sum of such individual's  monthly base salary and Bonus as of the
Termination of Employment or as of the date immediately  preceding the Effective
Date, which is paid to such individual by the Company during employment for such
period,  before  reduction  because  of an  election  between  benefits  or cash
provided  under a plan of the  Company  maintained  pursuant  to Section  125 or
401(k) of the Internal  Revenue Code of 1986, as amended,  and before  reduction
for any other amounts  contributed by the Company on such individual's behalf to
any other employee-benefit plan.

     1.2 "Bonus" as to Covered  Employee for any period,  shall mean the average
of bonus payments,  if any, made over the preceding  three years,  including any
year for which a bonus has been awarded but not paid,  divided by twelve. If the
Covered  Employee  has not been an  employee  of the  Company for at least three
years, then Bonus shall be calculated over the period for which the employee has
been employed with the Company.

     1.3 "Company" shall mean Atwood Oceanics, Inc., a Texas corporation, or any
entity that is a successor to it in ownership  of  substantially  all its assets
and their affiliates ("Atwood") and its direct and indirect subsidiaries.

     1.4 "Covered  Employee"  shall mean an employee  described in Article II of
the Plan.

     1.5 "Effective Date" shall mean the date on or before December 31, 2006, on
which any of the following is effective:

     (a)      The acquisition by any individual, entity or group (within the
              meaning of Section 13(d)(3) or 14(d)(2) of the Securities
              Exchange Act of 1934, as amended (the "Exchange Act"))
              (a "Person") of beneficial ownership (within the meaning of Rule
              13d-3 promulgated under the Exchange Act) of twenty percent (20%)
              or more of either (i) the then outstanding shares of common stock
              of Atwood or (ii) the combined voting power of the then
              outstanding voting securities of Atwood entitled to
              vote generally in the election of directors; provided, however,
              that the following acquisitions shall not constitute a
              Change of Control:  (i) any acquisition directly from Atwood;

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              (ii) any acquisition by Atwood; (iii) any acquisition by any
              employee benefit plan (or related trust) sponsored or maintained
              by the Company; or

     (b)      Atwood shall sell substantially all of its assets to
              another corporation which is not a wholly owned subsidiary; or

     (c)      Individuals who, as of the date hereof, constitute the Board of
              Atwood (the "Incumbent Board") cease for any reason to constitute
              at least a majority of the Board; provided, however, that any
              individual becoming a director subsequent to the date hereof
              whose election, or nomination for election by Atwood's
              shareholders, was approved by a vote of at least a majority of
              the directors then comprising the Incumbent Board shall be
              considered as though such individual were a member
              of the Incumbent Board, but excluding, for this purpose, any
              such individual whose initial assumption of office occurs as a
              result of an actual or threatened election contest with respect
              to the election or removal of directors or other actual or
              threatened solicitation of proxies or consents by or on behalf
              of a Person other than the Board.

     1.6 "Employment Year" shall mean a period which commences on the first date
of employment or any anniversary of such date and ends one year from such date.

     1.7 "Good  Cause" shall mean a material  violation  of a Company  policy or
procedure  applicable  to  employees  in the same or similar job  position,  the
willful  disregard  or  failure  to  follow  the  reasonable  instructions  of a
superior,  the taking of any action,  or the  failure to take any action,  which
results  in a damage  or  detriment  to the  Company,  or the  conviction  of an
employee of a felony involving moral turpitude.

     1.8  "Health  and  Life  Benefits"  shall  mean  as to  any  employee,  the
group-health  and  life-insurance  benefits  sponsored  by the  Company  for its
full-time employees and provided to or elected by such individual as of the date
immediately preceding the Effective Date.

     1.9 "Other  Severance"  shall have the  meaning set forth in Section 2.2 of
the Plan.

     1.10 "Severance Pay" shall mean the sum payable to a Covered  Employee upon
Termination of Employment as set forth in Section 3.1 of the Plan.

     1.11 "Term"  shall mean the period  commencing  on the  Effective  Date and
ending one year after that date.

     1.12  "Termination  of  Employment"  shall mean a termination of employment
with  the  Company  at the  option  of the  Company  for any  reason,  except  a
termination  of  employment  for Good  Cause  shall  not mean a  Termination  of
Employment.

     1.13 "Years of Continuous Service" shall mean, as to any employee, all full
or partial  years  during  which he was  employed  on a  full-time  basis by the
Company.

                                   ARTICLE II.
                                COVERED EMPLOYEES

     2.1 Who is a Covered  Employee.  Any  employee  of the Company who upon the
occurrence of an Effective Date,  shall be listed in Schedule 3.1 hereto,  which
Schedule 3.1 shall be amended  from time to time by the  Company,  and who has a
Termination  of  Employment  during  the Term  shall be a Covered  Employee  and
eligible to receive the benefits described in this Plan.

     2.2 Exclusions.  Any employee who otherwise is a Covered  Employee but who,
pursuant  to a  separate  agreement  signed on behalf of the  Company,  receives
severance or other salary continuation benefits upon a Termination of Employment
(other than payments or benefits  under the Company's  Executive  Life Insurance
Plan)  shall not be a Covered  Employee  under this Plan.  This Plan shall be in
lieu of any plan,  program,  policy or practice of or contract or agreement with
the Company relating to severance of employment ("Other  Severance") and any and

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all benefits of payments  arising out of or relating to Other Severance shall be
fully offset against any benefits or payments due and owing hereunder.

                                   ARTICLE III
                        SEVERANCE PAY AND OTHER BENEFITS

     3.1 Amount of  Severance  Pay.  The Company  shall pay  Severance  Pay to a
Covered  Employee  upon a  Termination  of  Employment in an amount equal to the
greater of (a) or (b):

     (a)      such individual's weekly Base Salary multiplied by
              such individual's Years of Continuous Service; or

     (b)      a payment, depending upon the category of employee as
              identified in Schedule 3.1 hereto, as follows:

Category of Employee                                  Payment
--------------------                          --------------------------
Houston Management A:                       (i)   Less than 4 Years of
                                            Continuous  Service  - 6
                                            months' Base Salary; or

                                            (ii) 4 Years but less than 8 Years
                                            of Continuous Service - 12 months'
                                            Base Salary; or

                                            (iii) 8 or greater Years of
                                            Continuous Service - 18 months' Base
                                            Salary

Houston Management B,
Houston Technical,
Rig Management and
Other Administration:                       (i)  Less  than 4 Years of
                                            Continuous  Service  - 1
                                            month Base Salary; or

                                            (ii) 4 Years but less than 8 Years
                                            of Continuous Service - 4 months'
                                            Base Salary; or

                                            (iii) 8 Years but less than 12 Years
                                            of Continuous Service - 8 months'
                                            Base Salary; or

                                            (iv) 12 or greater Years of
                                            Continuous Service - 12 months' Base
                                            Salary

Houston Accounting A, Houston
Accounting B and
Houston Staff:                              (i)  Less  than 4 Years of
                                            Continuous  Service  - 1
                                            month Base Salary; or

                                            (ii) 4 Years but less than 8 Years
                                            of Continuous Service - 3 months'
                                            Base Salary; or

                                            (iii) 8 or greater Years of
                                            Continuous Service - 6 months' Base
                                            Salary

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<PAGE>


     3.2 Health and Life Benefits.  Upon a Termination of Employment,  a Covered
Individual's Health and Life  Benefits shall be treated
as follows:

          (a)      Upon a Termination of Employment and if applicable,
                   the Company will notify each Covered Employee of the
                   right to elect to continue any Company-provided
                   health or disability benefits, all in accordance with
                   and subject to the provisions of the Consolidated
                   Omnibus Budget Reconciliation Act ("COBRA"). The
                   Company shall charge the maximum allowable premium in
                   connection with any COBRA benefits so provided. Other
                   than the benefits provided under COBRA, the Company
                   shall have no further obligation to provide health or
                   disability insurance benefits to any Covered
                   Individual following a Termination of Employment.

          (b)      Upon written request by a Covered Individual within
                   five (5) days of a Termination of Employment, the
                   Company shall assign any life, salary continuation or
                   travel insurance plans or policies to such Covered
                   Individual which by their terms are so assignable,
                   and such Covered Individual will thenceforth become
                   responsible for the payment of any premiums required
                   to maintain said plans or policies from and after the
                   date of Termination of Employment; otherwise, the
                   Company will cease to continue such life insurance
                   plans or policies on behalf of any Covered Employee
                   effective as of the date of Termination of
                   Employment.

     3.3 Payment for Unused  Vacation.  Upon a Termination  of  Employment,  the
Company will pay a Covered Employee an amount equal to such individual's  weekly
Base Salary  multiplied  by each full and partial  week of  vacation,  which was
accrued  but  unused  during  the   Employment   Year  in  which  occurred  such
individual's  Termination  of Employment.  For purposes of  determining  payment
under this  Section  3.3, a full week of vacation  consists of five (5) vacation
days.


                                   ARTICLE IV
                          DISTRIBUTION OF CASH PAYMENTS

     The Company  shall pay a Covered  Employee the amount to which he or she is
entitled under (as applicable)  Plan Section 3.1 (relating to Severance Pay) and
Plan  Section  3.3  (relating  to Payment for Unused  Vacation)  in one lump sum
within a reasonable  time,  but in no event greater than ten (10) business days,
after such Covered Employee's Termination of Employment.


                                    ARTICLE V
                             ADMINISTRATION OF PLAN

     5.1 In General.  The Plan shall be administered  by Atwood,  which shall be
the  named   fiduciary   under  the  Plan.   Atwood  may  delegate  any  of  its
administrative  duties,  including without limitation duties with respect to the
processing,  review, investigation,  approval, and payment of benefits under the
Plan, to a named administrator or administrators.

     5.2 Regulations.  Atwood shall promulgate any rules and regulations that it
deems necessary to carry out the purposes of the Plan, or to interpret the terms
and conditions of the Plan; provided that no rule, regulation, or interpretation
shall be contrary to the  provisions of the Plan.  The rules,  regulations,  and
interpretations  made by the Atwood shall,  subject only to the claims procedure
outlined in Section 5.3 hereof,  be final and binding on any  employee or former
employee of the Company, or any successor in interest of either.

     5.3  Claims  Procedure.  The  Company  shall  determine  the  rights of any
employee  or former  employee  of the  Company to any  benefits  hereunder.  Any
employee or former  employee of the Company who believes  that he is entitled to
receive any benefits other than as initially determined by the Company, may file
a claim in writing with  Atwood's  President.  Atwood shall no later than ninety
(90)  days  after  the  receipt  of a claim  either  allow or deny the  claim in
writing.

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     A denial of a claim,  wholly or  partially,  shall be  written  in a manner
calculated to be understood by the claimant and shall include:

                  (a) the specific reason or reasons for the denial;
                  (b) specific reference to pertinent Plan provisions on which
                      the denial is based;
                  (c) a description of any additional material or
                      information necessary for the claimant to perfect
                      the claim and an explanation of why such material or
                      information is necessary; and
                  (d) an explanation of the claim-review procedure.

      A claimant whose claim is denied (or his duly authorized representative),
may within 30 days after receipt of denial of his claim:

                  (a) request a review upon written application to the Company's
                      personnel administrator; (b) review pertinent documents;
                      and
                  (c) submit issues and comments in writing.

     Atwood shall  notify the  claimant of its  decision on review  within sixty
(60) days after  receipt of a request  for  review.  Notice of the  decision  on
review shall be in writing.

     5.4 Revocability of Company Action. Any action taken by Atwood with respect
to the  rights  under  the Plan of any  employee  or  former  employee  shall be
revocable by Atwood as to payments or distributions not yet made to such person,
and  acceptance  of any benefits  under the Plan  constitutes  acceptance of and
agreement to any appropriate  adjustments made by the Company in future payments
or distributions to such person to offset any excess of underpayment  previously
made to him with respect to any benefits.

                                   ARTICLE VI
                        AMENDMENT OR TERMINATION OF PLAN

     6.1  Right to Amend or  Terminate.  Atwood  reserves  the right at any time
prior to the Effective Date, and without prior or other approval of any employee
or former employee,  to change,  modify,  amend, or terminate the Plan. All such
changes,  modifications,  or amendments may be retroactive to any date up to and
including the original  effective  date of the Plan, and shall be retroactive to
that date unless other  provision is  specifically  made;  provided that no such
change, modification,  or amendment shall adversely affect any benefit under the
Plan previously paid or provided to a Covered  Employee (or his or her successor
in interest).

     6.2 Automatic  Termination.  This Plan shall terminate  automatically as of
December  31,  2006,  or such other  extended  termination  date duly adopted in
accordance  with the  provisions of Section 6.1 above,  if there is no Effective
Date on or before that date. Termination pursuant to this Plan Section 6.2 shall
occur  without  any  action on the part of the  Company  and shall be  effective
without  prior notice to or approval of any  employee or former  employee of the
Company.


                                   ARTICLE VII
                                METHOD OF FUNDING

     The Company shall pay benefits under the Plan from current operating funds.
No property of the Company is or shall be, by reason of this Plan, held in trust
for any  employee of the  Company,  nor shall any person have any interest in or
any lien or prior  claim upon any  property of the Company by reason of the Plan
or the Company's obligations to make payments hereunder.


                                  ARTICLE VIII
                      LEGAL FEES AND EXPENSES; ENFORCEMENT

     It is the intent of the  Company  that no Covered  Employee  be required to
incur the expenses associated with the enforcement of his rights under this Plan
by litigation or other legal action  because the cost and expense  thereof would
substantially  detract  from the  benefits  intended to be extended to a Covered
Employee hereunder.  Accordingly, if it should appear to a Covered Employee that

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<PAGE>


the Company has failed to comply with any of its obligations  under this Plan or
in the event that the Company or any other person takes any action  inconsistent
with the terms of this Plan to  declare  this  Plan  void or  unenforceable,  or
institutes  any  litigation  designed to deny, or to recover  from,  the Covered
Employee  the  benefits  intended  to  be  provided  to  such  Covered  Employee
hereunder, the Company irrevocably authorizes such Covered Employee from time to
time  to  retain  counsel  of his  choice,  at the  expense  of the  Company  as
thereafter  provided,  to represent such Covered Employee in connection with the
initiation or defense of any  litigation  or other legal  action,  whether by or
against the  Company or any  director,  officer,  stockholder,  or other  person
affiliated with the Company in any  jurisdiction.  Notwithstanding  any existing
prior  attorney-client  relationship  between the Company and such counsel,  the
Company  irrevocably  consents  to  such  Covered  employee's  entering  into an
attorney-client  relationship  with such  counsel,  and in that  connection  the
Company and such Covered Employee agree that a confidential  relationship  shall
exist between such Covered Employee and such counsel.  The Company shall pay and
be solely  responsible  for any and all attorneys' and related fees and expenses
incurred  by such  Covered  Employee  as a result of the  Company's  failure  to
perform under this Plan or any provision thereof;  or as a result of the Company
or any person  contesting  the  validity or  enforceability  of this Plan or any
provision thereof.


                                   ARTICLE IX
                                  MISCELLANEOUS


     9.1  Limitation  on  Rights.  Participation  in the Plan shall not give any
employee the right to be retained in the service of the Company or any rights to
any benefits  whatsoever,  except to the extent  specifically  set forth herein.
Unless otherwise agreed in writing, employment with the Company is "at will."

     9.2 Headings.  Headings of Articles and Sections in this instrument are for
convenience only, and do not constitute any part of the Plan.

     9.3 Gender and Number. Unless the context clearly indicates otherwise,  the
masculine  gender  when used in the Plan shall  include  the  feminine,  and the
singular number shall include the plural and the plural number the singular.




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EXECUTED effective as of the date first set forth above.

                                    ATWOOD OCEANICS, INC.


                                    By: /S/ JOHN  R. IRWIN
                                        ------------------
                                    Name: John R. Irwin
                                    Title: President & Chief Executive Officer


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