17. INVESTMENT IN AMAK

In first quarter 2018, we completed an exchange of shares with some Saudi Arabian shareholders whereby they traded 65,000 shares of TREC stock in exchange for 24,489 shares of our AMAK stock. The 65,000 shares were accounted for as treasury stock. This transaction reduced our ownership percentage from 33.44% to 33.41%.

As of March 31, 2018, and December 31, 2017, the Company had a non-controlling equity interest of 33.4% in AMAK of approximately $45.2 million and $45.1 million, respectively. This investment is accounted for under the equity method. There were no events or changes in circumstances that may have an adverse effect on the fair value of our investment in AMAK at March 31, 2018.

AMAK's financial statements were prepared in the functional currency of AMAK which is the Saudi Riyal (SR). In June 1986 the SR was officially pegged to the U. S. Dollar (USD) at a fixed exchange rate of 1 USD to 3.75 SR.

The summarized results of operation and financial position for AMAK are as follows:

Results of Operations

	Three Months Ended March 31,
	2018			2017
	(thousands of dollars)
Sales	$	14,087		$	2,256
Gross profit (loss)		1,581			(1,307	)
General, administrative and other expenses		1,900			2,589
Net Loss	$	(319	)	$	(3,896	)

Depreciation and amortization was $7.7 million and $0.5 million for the three months ended March 31, 2018, and 2017, respectively. Therefore, net income before depreciation and amortization was as follows:

	Three Months Ended March 31,
	2018		2017
	(thousands of dollars)
Net income (loss) before depreciation and amortization	$	7,382	$	(3,369	)

Financial Position

	March 31,		December 31,
	2018		2017
	(thousands of dollars)
Current assets	$	33,273	$	23,333
Noncurrent assets		228,733		237,875
Total assets	$	262,006	$	261,208

Current liabilities	$	22,873	$	24,439
Long term liabilities		71,520		68,837
Shareholders' equity		167,613		167,932
	$	262,006	$	261,208

The equity in the income or loss of AMAK reflected on the consolidated statements of income for the three months ended March 31, 2018, and 2017, is comprised of the following:

	Three months ended March 31,
	2018			2017
	(thousands of dollars)
AMAK Net Loss	$	(319	)	$	(3,896	)

Company's share of loss reported by AMAK	$	(107	)	$	(1,303	)
Amortization of difference between Company's investment in AMAK and Company's share of net assets of AMAK		337			337
Equity in earnings (loss) of AMAK	$	230		$	(966	)

See our Annual Report on Form 10-K for the year ended December 31, 2017, for additional information.

At March 31, 2018, and December 31, 2017, we had a receivable from AMAK of approximately $165,000 and $121,000, respectively, relating to unreimbursed travel and Board expenses which are included in prepaid and other assets. We did not advance any cash to AMAK during 2018.