Note

- Organization, Nature of Business and Summary of Significant Accounting Policies

Organization and Nature of Business

C&J Energy Services, Inc., a Delaware corporation (the “Successor” and together with its consolidated subsidiaries and for periods subsequent to the Plan Effective Date, “C&J” or the “Company”) is a leading provider of

well construction, well completion, well support and other complementary oilfield services to oil and gas exploration and production companies in North America. The Company offers a comprehensive, vertically-integrated suite of services throughout the life cycle of the well, including hydraulic fracturing, cased-hole wireline and pumpdown, cementing, directional drilling, coiled tubing, service rigs, fluids management and other support services. The Company is headquartered in Houston, Texas and operates in all active onshore basins in the continental United States and Western Canada.

C&J’s business was founded in Texas in

1997

as a partnership and converted to a Delaware corporation (“Old C&J”) in

2010

in connection with an initial public offering that was completed in

July

2011

with a listing on the New York Stock Exchange (“NYSE”) under the symbol “CJES.” In

2015,

Old C&J combined with the completion and production services business (the “C&P Business”) of Nabors Industries Ltd. (“Nabors”) in a transaction (the “Nabors Merger”) that nearly tripled the Company’s size, significantly expanding the Company’s Completion Services business and adding Well Support Services to the Company’s service offering. Upon the closing of the Nabors Merger, Old C&J became a subsidiary of C&J Energy Services Ltd. (the “Predecessor” and together with certain of its subsidiaries and for periods prior to the Plan Effective Date (as defined below), the “Predecessor Companies,” or the “Company”) and shares of common stock of Old C&J were converted into common shares of the Predecessor on a

-for-

basis.

Due to the severe industry downturn, on the Petition Date, certain of the Predecessor Companies filed voluntary petitions for reorganization seeking relief under the provisions of Chapter

of Title

of the United States Bankruptcy Code with the United States Bankruptcy Court in the Southern District of Texas, Houston Division, and also commenced ancillary proceedings in Canada and a provisional liquidation proceeding in Bermuda. Throughout the Chapter

Proceeding, the Debtors continued operations and management of their assets in the ordinary course as debtors-in-possession under the jurisdiction of the Bankruptcy Court in accordance with the applicable provisions of the Bankruptcy Code and orders of the Bankruptcy Court.

On the Plan Effective Date, the Debtors substantially consummated their Restructuring Plan and emerged from the Chapter

Proceeding. As part of the transactions undertaken pursuant to the Restructuring Plan, as of the Plan Effective Date, the Successor was formed, the Predecessor’s equity was canceled, the Predecessor transferred all of its assets and operations to the Successor and the Predecessor was subsequently dissolved. As a result, the Successor became the successor issuer to the Predecessor. See Note

- Chapter

Proceeding and Emergence for additional information, including definitions of capitalized defined terms, about the Chapter

Proceeding and emergence from the Chapter

Proceeding.

Contemporaneously with the commencement of the Chapter

Proceeding, trading in the Predecessor’s common stock was suspended and ultimately delisted from the NYSE. On

April

12,

2017,

the Successor completed an underwritten public offering of common stock and its common stock began trading again on the NYSE under the symbol “CJ.”

Summary of Significant Accounting Policies

Basis of Presentation and Principles of Consolidation

. The accompanying consolidated financial statements have not been audited by the Company’s independent registered public accounting firm, except that the consolidated balance sheet at

December

31,

2016

and the consolidated statement of changes in shareholders' equity as of

December

31,

2016,

are derived from audited consolidated financial statements. In the opinion of management, all material adjustments, consisting of normal recurring adjustments, necessary for fair presentation have been included. These consolidated financial statements include all accounts of the Company. All significant intercompany transactions and accounts have been eliminated upon consolidation.

These consolidated financial statements have been prepared pursuant to the rules and regulations of the U.S. Securities and Exchange Commission (“SEC”) for interim financial information. Accordingly, they do not include all of the information and notes required by accounting principles generally accepted in the United States of America (“U.S. GAAP”) for complete financial statements. Therefore, these consolidated financial statements should be read in conjunction with the Company’s audited consolidated financial statements and notes thereto for the year ended

December

31,

2016,

which are included in the Company’s Annual Report on Form

-K filed with the SEC. The operating results for interim periods are not necessarily indicative of results that

may

be expected for any other interim period or for the full year.

For the comparable prior year period and on

January

2017

(the "Fresh Start Reporting Date"), the Company applied the Financial Accounting Standards Board (“FASB”) Accounting Standards Codification (“ASC”)

852

Reorganizations

, in preparing the consolidated financial statements. ASC

852

requires that the financial statements distinguish transactions and events that are directly associated with the Chapter

Proceeding from the ongoing operations of the business. Accordingly, certain expenses, gains and losses that are realized or incurred in the Chapter

Proceeding were recorded in a reorganization line item on the consolidated statements of operations of the Predecessor. In addition, pre-petition obligations that management predicted might be impacted by the Chapter

Proceeding were classified on the balance sheet of the Predecessor in liabilities subject to compromise. These liabilities were reported at the amounts expected to be allowed by the Bankruptcy Court, even if they

may

be settled for lesser amounts.

Use of Estimates

. The preparation of financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements, and the reported amounts of revenue and expenses during the reporting period. Estimates are used in, but are not limited to, determining the following: allowance for doubtful accounts, valuation of long-lived assets and intangibles, useful lives used in depreciation and amortization, inventory reserves, income taxes, liabilities subject to compromise and estimated fair values of assets and liabilities under the provisions of ASC

852

fresh start accounting ("Fresh Start"). The accounting estimates used in the preparation of the consolidated financial statements

may

change as new events occur, as more experience is acquired, or as additional information is obtained and as the Company’s operating environment changes.

Cash and Cash Equivalents

For purposes of the consolidated statement of cash flows, cash is defined as cash on-hand, demand deposits, and short-term investments with initial maturities of

three

months or less. The Company maintains its cash and cash equivalents in various financial institutions, which at times

may

exceed federally insured amounts. Management believes that this risk is not significant. Cash balances related to the Company's captive insurance subsidiaries, which totaled

$15.2

million and

$16.1

million at

March

31,

2017

and

December

31,

2016,

respectively, are included in cash and cash equivalents in the consolidated balance sheets, and the Company expects to use these cash balances to fund the operations of the captive insurance subsidiaries.

Accounts Receivable and Allowance for Doubtful Accounts

Accounts receivable are generally stated at the amount billed to customers. The Company provides an allowance for doubtful accounts, which is based upon a review of outstanding receivables, historical collection information and existing economic conditions. Provisions for doubtful accounts are recorded when it is deemed probable that the customer will not make the required payments at either the contractual due dates or in the future.

Inventories

Inventories for the Completion Services segment consist of finished goods, including equipment components, chemicals, proppants, supplies and materials for the segment’s operations. Inventories for the Other Services segment consisted of raw materials, work-in-process and finished goods, including equipment components, supplies and materials.

Consistent with FASB requirements under ASC

852

an entity adopting fresh-start accounting

may

generally set new accounting policies for the successor independent of those followed by the predecessor. The entity emerging from bankruptcy typically is not required to demonstrate preferability for its new accounting policies, as the successor entity represents a new entity for financial reporting purposes.

During

January

2017,

the Company implemented a new computer system that provides financial reporting, inventory management and fixed asset management capabilities (the "new ERP system") to enhance functionality and to support to Company's existing and future operations. The new ERP system utilizes the weighted average cost flow method for determining inventory cost ("Weighted Average"), which replaced the

first

-in,

first

-out basis ("FIFO") method utilized by the Company's legacy system. The Weighted Average and FIFO methods are both allowable under U.S. GAAP. As of the Fresh Start Reporting Date, the Company began utilizing the Weighted Average method for determining inventory cost. Inventory cost for the prior periods presented are still reflective of the FIFO method.

Inventories consisted of the following (in thousands):

	Successor			Predecessor
	March 31, 2017			December 31, 2016
Raw materials	$	9,948		$	16,367
Work-in-process		599			5,022
Finished goods		45,400			38,091
Total inventory		55,947			59,480
Inventory reserve		(461	)		(5,009	)
Inventory, net	$	55,486		$	54,471

Property, Plant and Equipment

Property, plant and equipment (PP&E) expenditures are reported at cost less accumulated depreciation. Maintenance and repairs, which do not improve or extend the life of the related assets, are charged to expense when incurred. Refurbishments are capitalized when the value of the equipment is enhanced for an extended period. When property and equipment are sold or otherwise disposed of, the asset account and related accumulated depreciation account are relieved, and any gain or loss is included in operating income.

PP&E are evaluated on a quarterly basis to identify events or changes in circumstances (“triggering events”) that indicate the carrying value of certain PP&E

may

not be recoverable. PP&E are reviewed for impairment upon the occurrence of a triggering event. An impairment loss is recorded in the period in which it is determined that the carrying amount of PP&E is not recoverable. The determination of recoverability is made based upon the estimated undiscounted future net cash flows of assets grouped at the lowest level for which there are identifiable cash flows independent of the cash flows of other groups of assets with such cash flows to be realized over the estimated remaining useful life of the primary asset within the asset group, excluding interest expense. The Company determined the lowest level of identifiable cash flows that are independent of other asset groups to be at the service line level, which consists of the well services, hydraulic fracturing, coiled tubing, wireline, pumpdown, directional drilling, cementing, artificial lift applications and data acquisition and control instruments provider service lines as well as the research and technology ("R&T") service line. If the estimated undiscounted future net cash flows for a given asset group is less than the carrying amount of the related assets, an impairment loss is determined by comparing the estimated fair value with the carrying value of the related assets. The impairment loss is then allocated across the asset group's major classifications.

The Company concluded that the sharp fall in commodity prices during the

second

half of

2014

constituted a triggering event that resulted in a significant slowdown in activity across the Company’s customer base, which in turn increased competition and put pressure on pricing for its services throughout

2015

and

2016.

Although uncertainty as to the severity and extent of this downturn still exists, activity and pricing levels

may

decline again in future periods. As a result of the triggering event during the

fourth

quarter of

2014,

PP&E recoverability testing was performed throughout

2015

and

2016

on the asset groups in each of the Company’s service lines. During the

first

quarter of

2016,

the recoverability testing for the directional drilling, cementing, artificial lift applications and international coiled tubing asset groups yielded an estimated undiscounted net cash flow that was less than the carrying amount of the related assets. The estimated fair value for each respective asset group was compared to its carrying value, and impairment expense of

$15.8

million was recognized during the

first

quarter of

2016

and allocated across each respective asset group's major classification. The impairment charge was primarily related to underutilized equipment in the Other Services segment. The fair value of these assets was based on the projected present value of future cash flows that these assets are expected to generate. Should industry conditions worsen, additional impairment charges

may

be required in future periods. No impairment expense was recorded for the

three

months ended

March

31,

2017.

Goodwill, Indefinite-Lived Intangible Assets and Definite-Lived Intangible Assets

Prior to

December

31,

2016,

the Company allocated goodwill to Completion Services, Well Support Services and Other Services, all of which were consistent with the presentation of the Company’s

three

reportable segments as of

December

31,

2016.

At the reporting unit level, the Company tests goodwill for impairment on an annual basis as of

October

of each year, or when events or changes in circumstances, referred to as triggering events, indicate the carrying value of goodwill

may

not be recoverable and that a potential impairment exists.

Judgment is used in assessing whether goodwill should be tested for impairment more frequently than annually. Factors such as unexpected adverse economic conditions, competition, market changes and other external events

may

require more frequent assessments. During the

first

quarter of

2016,

commodity price levels remained depressed which materially and negatively impacted the Company's results of operations, and the significant declines in the Company's share price led to an interim period test for goodwill impairment. See Note

- Goodwill and Other Intangible Assets for further discussion on impairment testing results

Before employing detailed impairment testing methodologies, the Company

may

first

evaluate the likelihood of impairment by considering qualitative factors relevant to each reporting unit, such as macroeconomic, industry, market or any other factors that have a significant bearing on fair value. If the Company

first

utilizes a qualitative approach and determines that it is more likely than not that goodwill is impaired, detailed testing methodologies are then applied. Otherwise, the Company concludes that no impairment has occurred. Detailed impairment testing, or Step

testing, involves comparing the fair value of each reporting unit to its carrying value, including goodwill. Fair value reflects the price a market participant would be willing to pay in a potential sale of the reporting unit. If the fair value exceeds carrying value, then it is concluded that no goodwill impairment has occurred. If the carrying value of the reporting unit exceeds its fair value, a

second

step is required to measure possible goodwill impairment loss. The

second

step, or Step

testing, includes hypothetically valuing the tangible and intangible assets and liabilities of the reporting unit as if the reporting unit had been acquired in a business combination. Then, the implied fair value of the reporting unit’s goodwill is compared to the carrying value of that goodwill. If the carrying value of the reporting unit’s goodwill exceeds the implied fair value of the goodwill, an impairment loss is recognized in an amount equal to the excess, not to exceed the carrying value.

The Company’s Step

impairment analysis involves the use of a blended income and market approach. Significant management judgment is necessary to evaluate the impact of operating and macroeconomic changes on each reporting unit. Critical assumptions include projected revenue growth, fleet count, utilization, gross profit rates, sales, general and administrative (“SG&A”) rates, working capital fluctuations, capital expenditures, discount rates, terminal growth rates, and price-to-earnings multiples. The Company’s market capitalization is also used to corroborate reporting unit valuations.

Similar to goodwill, indefinite-lived intangible assets are subject to annual impairment tests or more frequently if events or circumstances indicate the carrying amount

may

not be recoverable.

Definite-lived intangible assets are amortized over their estimated useful lives. Along with PP&E, these intangibles are reviewed for impairment when a triggering event indicates that the asset

may

have a net book value in excess of recoverable value. In these cases, the Company performs a recoverability test on its PP&E and definite-lived intangible assets by comparing the estimated future net undiscounted cash flows expected to be generated from the use of these assets to the carrying amount of the assets for recoverability. If the estimated undiscounted cash flows exceed the carrying amount of the assets, an impairment does not exist and a loss will not be recognized. If the undiscounted cash flows are less than the carrying amount of the assets, the assets are not recoverable and the amount of impairment must be determined by fair valuing the assets.

For further discussion of the application of this accounting policy regarding impairments, please see Note

- Goodwill and Other Intangible Assets.

Deferred Financing Costs.

Costs incurred to obtain term debt financing are presented on the balance sheet as a direct deduction from the carrying amount of the term debt, consistent with debt discounts, and accreted over the term of the loan using the effective interest method. Costs incurred to obtain revolver based financing are capitalized and amortized over the term of the loan using the effective interest method.

Revenue Recognition

. All revenue is recognized when persuasive evidence of an arrangement exists, the service is complete or the equipment has been delivered to the customer, the amount is fixed or determinable and collectability is reasonably assured, as follows:

Completion Services Segment

Hydraulic Fracturing Revenue.

Through its hydraulic fracturing service line, the Company provides hydraulic fracturing services on a spot market basis or pursuant to contractual arrangements, such as term contracts and pricing agreements. Under either scenario, revenue is recognized and customers are invoiced upon the completion of each job, which can consist of

one

or more fracturing stages. Once a job has been completed to the customer’s satisfaction, a field ticket is written that includes charges for the service performed and the consumables (such as fluids and proppants) used during the course of service. The field ticket

may

also include charges for the mobilization and set-up of equipment, the personnel on the job, any additional equipment used on the job, and other miscellaneous consumables.

Rates for services performed on a spot market basis are based on an agreed-upon hourly spot market rate for a specified number of hours of service.

Pursuant to pricing agreements and other contractual arrangements which the Company

may

enter into from time to time, such as those associated with an award from a bid process, customers typically commit to targeted utilization levels based on a specified number of hours of service at agreed-upon pricing, but without termination penalties or obligations to pay for services not used by the customer. In addition, the agreed-upon pricing is typically subject to periodic review, as specifically defined in the agreement, and

may

be adjusted upon the agreement of both parties.

Casedhole Solutions Revenue.

Through its Casedhole Solutions service line, the Company provides cased-hole wireline, pumpdown services, wireline logging, perforating, pressure pumping, well site make-up and pressure testing and other complementary services, on a spot market basis. Jobs for these services are typically short-term in nature, lasting anywhere from a few hours to multiple days. The Company typically charges the customer for these services on a per job basis at agreed-upon spot market rates. Revenue is recognized based on a field ticket issued upon the completion of the job.

Revenue from Materials Consumed While Performing Certain Completion Services.

The Company generates revenue from consumables used during the course of providing services.

With respect to hydraulic fracturing services, the Company generates revenue from the fluids, proppants and other materials that are consumed while performing a job. For services performed on a spot market basis, the required consumables are typically provided by the Company and the customer is billed for those consumables at cost plus an agreed-upon markup. For services performed on a contractual basis, when the consumables are provided by the Company, the customer typically is billed for those consumables at a negotiated contractual rate. When consumables are supplied by the customer, the Company typically charges handling fees based on the amount of consumables used.

Other Completion Services.

The Company generates revenue from certain smaller well construction service lines, specifically cementing and directional drilling services, and R&T which is primarily engaged in the engineering and production of certain parts and components, such as perforating guns and addressable switches, which are used in the completion process.

With respect to its directional drilling services, the Company provides these services on a spot market basis. Jobs for these services are typically short-term in nature, lasting anywhere from a few days to multiple weeks. The Company typically charges the customer for these services on a per day basis at agreed-upon spot market rates depending on the level of services required and the complexity of the job. Revenue is recognized and customers are invoiced upon the completion of each job. Once a job has been completed to the customer’s satisfaction, a field ticket is written that includes charges for the service performed.

With respect to its cementing services, the Company provides these services on a spot market or project basis. Jobs for these services are typically short-term in nature and are generally completed in a few hours. The Company typically charges the customer for these services on a per job basis at agreed-upon spot market rates or agreed-upon job pricing for a particular project. Revenue is recognized and customers are invoiced upon the completion of each job. Once a job has been completed to the customer’s satisfaction, a field ticket is written that includes charges for the service performed and the consumables (such as blended bulk cement and chemical additives) used during the course of service.

Well Support Services Segment

Rig Services Revenue.

Through its rig service line, the Company provides workover and well servicing rigs that are primarily used for routine repair and maintenance of oil and gas wells, re-drilling operations and plugging and abandonment operations. These services are provided on an hourly basis at prices that approximate spot market rates. Revenue is recognized and a field ticket is generated upon the earliest of the completion of a job or at the end of each day. A rig services job can last anywhere from a few hours to multiple days depending on the type of work being performed. The field ticket includes the base hourly rate charge and, if applicable, charges for additional personnel or equipment not contemplated in the base hourly rate.

Fluids Management Services Revenue.

Through its fluids management service line, the Company primarily provides storage, transportation and disposal services for fluids used in the drilling, completion and workover of oil and gas wells. Rates for these services vary and can be on a per job, per hour or per load basis, or on the basis of quantities sold or disposed of. Revenue is recognized upon the completion of each job or load, or delivered product, based on a completed field ticket.

Coiled Tubing Services Revenue.

Through its coiled tubing service line, the Company provides a range of coiled tubing services primarily used for frac plug drill-out during completion operations and for well workover and maintenance, primarily on a spot market basis. Jobs for these services are typically short-term in nature, lasting anywhere from a few hours to multiple days. Revenue is recognized upon completion of each day’s work based upon a completed field ticket. The field ticket includes charges for the services performed and the consumables (such as stimulation fluids, nitrogen and coiled tubing materials) used during the course of service. The field ticket

may

also include charges for the mobilization and set-up of equipment, the personnel on the job, any additional equipment used on the job, and other miscellaneous consumables. The Company typically charges the customer for the services performed and resources provided on an hourly basis at agreed-upon spot market rates.

In addition, ancillary to coiled tubing services revenue, the Company generates revenue from stimulation fluids, nitrogen, coiled tubing materials and other consumables used during those processes.

Other Special Well Site Services Revenue.

Through its other special well site service line, the Company primarily provides fishing, contract labor, and tool rental services for completion and workover of oil and gas wells. Rates for these services vary and can be on a per job, per hour or on the basis of rental days per month. Revenue is recognized based on a field ticket issued upon the completion of each job or on a monthly billing for rental services provided.

With respect to its artificial lift applications, the Company generates revenue primarily from the sale of manufactured equipment and products. Revenue is recognized upon the completion, delivery and customer acceptance of each order.

Other Services Segment

Revenue within the Other Services Segment was generated from certain of the Company’s smaller, non-core service lines that have since been divested, such as, equipment manufacturing and repair operations and the Company’s international coiled tubing operations in the Middle East. In line with the discontinuance of these small, ancillary service lines and divisions, subsequent to the year ended

December

31,

2016,

the Company is disclosing only

two

reportable segments, and financial information for the Other Services reportable segment is only presented for the corresponding prior year period.

Share-Based Compensation

The Company’s share-based compensation plans provide the ability to grant equity awards to the Company’s employees, consultants and non-employee directors. As of

March

31,

2017,

only nonqualified stock options and restricted stock had been granted under such plans. The Company values option grants based on the grant date fair value by using the Black-Scholes option-pricing model and values restricted stock grants based on the closing price of C&J’s common stock on the grant date. The Company recognizes share-based compensation expense on a straight-line basis over the requisite service period for the entire award. Further information regarding the Company’s share-based compensation arrangements and the related accounting treatment can be found in Note

– Share-Based Compensation.

Fair Value of Financial Instruments

The Company’s financial instruments consist of cash and cash equivalents, accounts receivable and accounts payable. The recorded values of cash and cash equivalents, accounts receivable and accounts payable approximate their fair values given the short-term nature of these instruments.

Equity Method Investments

. The Company has investments in joint ventures which are accounted for under the equity method of accounting as the Company has the ability to exercise significant influence over operating and financial policies of the joint venture. Judgment regarding the level of influence over each equity method investment includes considering key factors such as ownership interest, representation on the board of directors, participation in policy-making decisions and material intercompany transactions. Under the equity method, original investments are recorded at cost and adjusted by the Company’s share of undistributed earnings and losses of these investments. The Company eliminates all significant intercompany transactions, including the intercompany portion of transactions with equity method investees, from the consolidated financial results.

Income Taxes

The Company is subject to income and other similar taxes in all areas in which they operate. When recording income tax expense, certain estimates are required because: (a) income tax returns are generally filed months after the close of our annual accounting period; (b) tax returns are subject to audit by taxing authorities and audits can often take years to complete and settle; and (c) future events often impact the timing of when we recognize income tax expenses and benefits.

The Company accounts for income taxes utilizing the asset and liability method. Under this method, deferred tax assets and liabilities are recognized for the future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. The effect on deferred tax assets and liabilities of a change in tax rates is recognized as income or expense in the period that includes the enactment date.

The ultimate realization of deferred tax assets is dependent upon the generation of future taxable income during the periods in which those temporary differences become deductible. In assessing the likelihood and extent that deferred tax assets will be realized, consideration is given to projected future taxable income and tax planning strategies. A valuation allowance is recorded when, in the opinion of management, it is more likely than not that some portion or all of the deferred tax assets will not be realized.

The Company has federal, state and international net operating losses (NOLs) carried forward from prior years that will expire in the years

2021

through

2036.

After considering the scheduled reversal of deferred tax liabilities, projected future taxable income, the potential limitation on use of NOLs under Section

382

of the Internal Revenue Code of

1986,

as amended (the "Code") and tax planning strategies, the Company established a valuation allowance due to the uncertainty regarding the ultimate realization of the deferred tax assets associated with its NOL carryforwards.

As a result of the Chapter

Proceeding, on the Plan Effective Date, the Company believes it experienced an ownership change for purposes of Section

382

of the Code as a result of its Restructuring Plan and that consequently its pre-change NOLs are subject to an annual limitation (See Note

- Chapter

Proceeding and Emergence for additional information, including definitions of capitalized defined terms, about the Chapter

Proceeding and emergence from the Chapter

Proceeding). The ownership change and resulting annual limitation on use of NOLs are not expected to result in the expiration of the Company's NOL carryforwards if it is able to generate sufficient future taxable income within the carryforward periods. However, the limitation on the amount of NOLs available to offset taxable income in a specific year

may

result in the payment of income taxes before all NOLs have been utilized. Additionally, a subsequent ownership change

may

result in further limitation on the ability to utilize existing NOLs and other tax attributes, which could cause our pre-change NOL carryforwards to expire unused.

The Company recognizes the financial statement effects of a tax position when it is more-likely-than-not, based on the technical merits, that the position will be sustained upon examination. A tax position that meets the more-likely-than-not recognition threshold is measured as the largest amount of tax benefit that is greater than

50.0%

likely of being realized upon ultimate settlement with a taxing authority. Previously recognized tax positions are reversed in the

first

period in which it is no longer more-likely-than-not that the tax position would be sustained upon examination. Income tax related interest and penalties, if applicable, are recorded as a component of the provision for income tax expense. For the

three

months ended

March

31,

2017,

the Company recorded an income tax benefit of

$3.2

million primarily related to a decrease in the estimate of unrecognized tax benefits relating to uncertain tax positions. The decrease resulted primarily from the effect of changes in the application of relevant withholding tax provisions under applicable local country treaties related to certain of the Company's foreign subsidiaries. As of

March

31,

2017,

the remaining amount of unrecognized tax benefits relating to uncertain tax positions was

$3.3

million.

Earnings (Loss) Per Share

Basic earnings (loss) per share is based on the weighted average number of shares of common stock outstanding during the applicable period and excludes shares subject to outstanding stock options and restricted stock. Diluted earnings per share is computed based on the weighted average number of shares of common stock outstanding during the period plus, when their effect is dilutive, incremental shares consisting of shares subject to outstanding stock options and restricted stock.

The following is a reconciliation of the components of the basic and diluted loss per share calculations for the applicable periods:

	Successor			Predecessor
	Three Months Ended March 31, 2017			On January 1, 2017		Three Months Ended March 31, 2016
	(In thousands, except per share amounts)			(In thousands, except per share amounts)
Numerator:
Net income (loss) attributed to common stockholders	$	(32,301	)	$	298,582	$	(428,412	)
Denominator:
Weighted average common shares outstanding		55,557			118,633		117,533
Effect of potentially dilutive common shares:
Stock options		—			—		—
Restricted shares		—			—		—
Weighted average common shares outstanding and assumed conversions		55,557			118,633		117,533
Income (loss) per common share:
Basic	$	(0.58	)	$	2.52	$	(3.65	)
Diluted	$	(0.58	)	$	2.52	$	(3.65	)

A summary of securities excluded from the computation of basic and diluted loss per share is presented below for the applicable periods:

	Successor		Predecessor
	Three Months Ended March 31, 2017		On January 1, 2017		Three Months Ended March 31, 2016
	(In thousands)		(In thousands)
Basic loss per share:
Restricted shares		299		898		2,726
Diluted loss per share:
Anti-dilutive stock options		155		4,416		4,523
Anti-dilutive restricted shares		299		898		2,695
Potentially dilutive securities excluded as anti-dilutive		454		5,314		7,218

Recent Accounting Pronouncements

. In

May

2014,

the Financial Accounting Standards Board ("FASB") issued

a comprehensive new revenue recognition standard, Accounting Standards Update ("ASU") No.

2014

09,

Revenue from Contracts with Customers

("ASU

2014

09")

that will supersede existing revenue recognition guidance under U.S. GAAP. In

August

2015,

the FASB issued an accounting standards update for a

one

-year deferral of the revenue recognition standard's effective date for all entities, which changed the effectiveness to annual reporting periods beginning after

December

15,

2017,

including interim periods within that reporting period. The core principle of the new guidance is that a company should recognize revenue to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which the company expects to be entitled in exchange for those goods or services. The standard creates a

five

step model that requires companies to exercise judgment when considering the terms of a contract and all relevant facts and circumstances. The standard allows for the following transition methods: (a) a full retrospective adoption in which the standard is applied to all of the periods presented, or (b) a modified retrospective adoption in which the standard is applied only to the most current period presented in the financial statements, including additional disclosures of the standard’s application impact to individual financial statement line items. The Company is currently evaluating the impact, if any, of adopting this new accounting standard on its results of operations and financial position.

July

2015,

the FASB issued ASU No.

2015

11,

implifying the Measurement of Inventory

("ASU

2015

11"),

which changes the measurement principle for inventory from the lower of cost or market to lower of cost and net realizable value. ASU

2015

is part of the FASB’s simplification initiative and applies to entities that measure inventory using a method other than last-in,

first

-out ("LIFO") or the retail inventory method. The guidance will require prospective application at the beginning of the Company's

first

uarter of fiscal

2018,

but permits adoption in an earlier period. The Company does not expect this ASU to have a material impact on its consolidated financial statements.

February

2016,

the FASB issued ASU No.

2016

02,

Leases (Topic

842)

("ASU

2016

02").

ASU No.

2016

seeks to increase transparency and comparability among organizations by recognizing lease assets and lease liabilities on the balance sheet and by disclosing key information about leasing arrangements. Unlike current U.S. GAAP, which requires only capital leases to be recognized on the balance sheet, ASU No.

2016

will require both operating and finance leases to be recognized on the balance sheet. Additionally, the new guidance will require disclosures to help investors and other financial statement users better understand the amount, timing, and uncertainty of cash flows arising from leases, including qualitative and quantitative requirements. The amendments in ASU No.

2016

are effective for fiscal years beginning after

December

15,

2018,

including interim periods within those fiscal years, and early application is permitted. The Company is currently evaluating the impact of adopting this new accounting standard on its results of operations and financial position.

June

2016,

the FASB issued ASU No.

2016

13,

Financial Instruments-Credit Losses (Topic

326):

Measurement of Credit Losses on Financial Instruments

(“ASU

2016

13”),

which amends U.S. GAAP by introducing a new impairment model for financial instruments that is based on expected credit losses rather than incurred credit losses. The new impairment model applies to most financial assets, including trade accounts receivable. The amendments in ASU

2016

are effective for interim and annual reporting periods beginning after

December

15,

2019,

although it

may

be adopted

one

year earlier, and requires a modified retrospective transition approach. The Company is currently evaluating the impact this standard will have on its results of operations and financial position.

October

2016,

the FASB issued ASU No.

2016

16,

Income Taxes (Topic

740):

Intra-Entity Transfers of Assets Other Than Inventory

("ASU

2016

16"),

which requires an entity to recognize the income tax consequences of an intra-entity asset transfer, other than an intra-entity asset transfer of inventory, when the transfer occurs. The ASU is effective for the interim and annual reporting periods beginning after

December

15,

2017,