Note 9 Investments in Unconsolidated Affiliates

On March 24, 2015, we completed the Merger of our Completion & Production Services business with C&J Energy. We received total consideration comprised of approximately $693.5 million in cash ($650.0 million after settlement of working capital requirements) and approximately 62.5 million common shares in the combined company, CJES, representing approximately 53% of the outstanding and issued common shares of CJES as of the closing date. Because we have significant influence over CJES, but not a controlling financial interest, we account for our investment in CJES under the equity method of accounting.

Our consolidated statement of income (loss) for the year ended December 31, 2015 consolidates the operating results of our Completion & Production Services business through the closing date of the Merger. As a result of the Merger, CJES became an unconsolidated affiliate and we no longer consolidate the operating results of our Completion & Production Services business. Therefore, subsequent to the closing date of the Merger, our share of the net income (loss), as adjusted for our basis differences, of our equity method investment in CJES is recorded as earnings (losses) from unconsolidated affiliates in our consolidated statements of income (loss). Our policy is to record our share of the net income (loss) of CJES on a one-quarter lag as we are not able to obtain the financial information of CJES on a timely basis. Accordingly, the equity in earnings from CJES, which is reflected in earnings (losses) from unconsolidated affiliates in our consolidated statement of income (loss) for the year ended December 31, 2015 is related to the period from the closing date of the Merger until September 30, 2015.

We record our investment in the equity of CJES in the Investment in unconsolidated affiliates line in our consolidated balance sheet. We review our equity method investments for impairment whenever impairment indicators exist including the absence of an ability to recover the carrying amount of the investment or inability of the investee to sustain an earnings capacity which would justify the carrying amount of the investment. A loss in value of an investment that is other than a temporary decline should be recognized. During the year, we determined the carrying value of our investment was other than temporarily impaired which resulted in an impairment charge of $180.6 million. This other-than-temporary impairment is reflected in impairments and other charges in our consolidated statement of income (loss) for the year ended December 31, 2015. Further sustained declines in oil prices and activity levels in the pressure pumping business could impact CJES’s operations and the fair value of its assets, resulting in future operating losses. Additionally, as of the date of this annual report, the market price of CJES is trading below our carrying value. Should it remain at these levels for an extended period of time, it could result in a future other-than-temporary impairment. See Note 3—Impairments and Other Charges.

During the first quarter of 2015, we recognized an estimated gross gain of $102.2 million in connection with the Merger based on the difference between the consideration received and the carrying value of the assets and liabilities of our Completion & Production Services business. This gain was partially offset by $49.6 million in transaction costs related to the Merger. During 2015, we recorded a post-closing adjustment of $5.5 million attributable to the settlement of certain working capital requirements at the completion of the transition period.

During the second quarter of 2015, we acquired the remaining 49% equity interest in Nabors Arabia, our joint venture in Saudi Arabia, making it a wholly owned subsidiary. Previously, we held a 51% equity interest and we had accounted for the joint venture as an equity method investment. See Note 5 — Acquisitions.

The tables below present summarized financial information for our investments in unconsolidated affiliates. The financial information as of and for the year ended December 31, 2015 represents the historical financial information of our investee, CJES, as of and for the nine months ended September 30, 2015. The financial information as of December 31, 2014 and the years ended December 31, 2014 and 2013 represents our previous equity method investment in Nabors Arabia.

	September 30,		December 31,
	2015		2014
	(In thousands)

Current assets	$	496,826	$	470,501
Long-term assets	$	2,200,779	$	324,234
Current liabilities	$	325,434	$	467,000
Long-term liabilities	$	1,421,569	$	207,681

	Nine Months Ended September 30,			Year Ended December 31,
	2015			2014			2013
	(In thousands)

Gross revenues	$	1,339,878		$	605,179		$	562,101
Gross margin	188,356			$	35,370		$	46,446
Net income (loss)	(550,800		)	$	(642	)	$	1,088
Nabors’ share of equity method earnings (losses)	(81,260		)	$	(6,301	)	$	39