Fair Value of Financial Instruments and Concentrations of Credit Risk

12 Months Ended

Dec. 31, 2017

Fair Value of Financial Instruments and Concentrations of Credit Risk

Fair Value of Financial Instruments

Our financial instruments include cash and cash equivalents, receivables, payables and debt. We believe the carrying values of these instruments, with the exception of our 2017 Convertible Notes and our 2021 Convertible Notes, approximated their fair values at December 31, 2017 and December 31, 2016. The estimated fair value of our 2021 Convertible Notes was $127.3 million at December 31, 2017 and $110.5 million at December 31, 2016, and the estimated fair value of our 2017 Convertible Notes was $84.4 million at December 31, 2016, based on quoted market prices at these respective dates.

Concentrations of Credit Risk

Financial instruments that potentially subject us to significant concentrations of credit risk consist principally of cash, trade accounts and notes receivable. At December 31, 2017, substantially all of our cash deposits are held in accounts at numerous financial institutions across the various regions that we operate in. A majority of the cash is held in accounts that maintain deposit ratings of P-1 by Moody’s, A-1 by Standard and Poor’s, and F1 by Fitch. As part of our investment strategy, we perform periodic evaluations of the relative credit standing of these financial institutions.

Accounts Receivable

Accounts receivable consisted of the following at December 31:



(In thousands)	2017			2016
Gross trade receivables	$	256,851		$	162,569
Allowance for doubtful accounts	(9,457		)	(8,849		)
Net trade receivables	247,394			153,720
Income tax receivables	6,905			39,944
Other receivables	11,567			20,643
Total receivables, net	$	265,866		$	214,307

Gross trade receivables increased $94.3 million, or 58%, in 2017 primarily due to the increase in revenues.

At December 31, 2016, income tax receivables included approximately $38.0 million related to the carryback refund claims primarily for our U.S. federal tax losses incurred in 2016, substantially all of which was received in 2017.

Other receivables includes $10.8 million and $11.5 million for value added, goods and service taxes related to foreign jurisdictions as of December 31, 2017 and 2016, respectively. In addition, other receivables included $8.0 million held in escrow at December 31, 2016 in connection with the March 2014 sale of the Environmental Services business. In connection with the settlement of a dispute with the buyers, as described further in Note 15 below, the escrow funds have been reclassified at December 31, 2017, reducing the settlement obligation reflected in accrued liabilities in the accompanying balance sheet.

Customer Revenue Concentration

We derive a significant portion of our revenues from companies in the E&P industry, and our customer base is highly concentrated in mid-sized and international oil companies as well as government-owned or government-controlled oil companies operating in the markets that we serve. For 2017, 2016 and 2015, revenues from our 20 largest customers represented approximately 45%, 53% and 49%, respectively, of our consolidated revenues. For 2016, revenue from Sonatrach, our primary customer in Algeria, represented approximately 14% of consolidated revenues. For 2017 and 2015, no single customer accounted for more than 10% of our consolidated revenues.

We maintain an allowance for doubtful accounts based upon the expected collectability of accounts receivable. Changes in this allowance for 2017, 2016 and 2015 was as follows:



(In thousands)	2017			2016			2015
Balance at beginning of year	$	8,849		$	7,189		$	5,458
Provision for uncollectible accounts	1,481			2,416			1,886
Write-offs, net of recoveries	(873		)	(756		)	(155		)
Balance at end of year	$	9,457		$	8,849		$	7,189

- Definition

The entire disclosure for the fair value of financial instruments (as defined), including financial assets and financial liabilities (collectively, as defined), and the measurements of those instruments as well as disclosures related to the fair value of non-financial assets and liabilities. Such disclosures about the financial instruments, assets, and liabilities would include: (1) the fair value of the required items together with their carrying amounts (as appropriate); (2) for items for which it is not practicable to estimate fair value, disclosure would include: (a) information pertinent to estimating fair value (including, carrying amount, effective interest rate, and maturity, and (b) the reasons why it is not practicable to estimate fair value; (3) significant concentrations of credit risk including: (a) information about the activity, region, or economic characteristics identifying a concentration, (b) the maximum amount of loss the entity is exposed to based on the gross fair value of the related item, (c) policy for requiring collateral or other security and information as to accessing such collateral or security, and (d) the nature and brief description of such collateral or security; (4) quantitative information about market risks and how such risks are managed; (5) for items measured on both a recurring and nonrecurring basis information regarding the inputs used to develop the fair value measurement; and (6) for items presented in the financial statement for which fair value measurement is elected: (a) information necessary to understand the reasons for the election, (b) discussion of the effect of fair value changes on earnings, (c) a description of [similar groups] items for which the election is made and the relation thereof to the balance sheet, the aggregate carrying value of items included in the balance sheet that are not eligible for the election; (7) all other required (as defined) and desired information.

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