CJ 2017 Annual Report

settlement agreement that was subsequently approved by the Bankruptcy Court whereby, among other things, Nabors was awarded two allowed proofs of claim totaling $13.3 million. As of December 31, 2016, the allowed proofs of claim were included in liabilities subject to compromise on the consolidated balance sheet. As a result of the Company's emergence from the Chapter 11 Proceeding and the cancellation of the Predecessor common shares, Nabors Corporate Services is no longer considered a related party. The Company leased certain properties from Nabors, and Nabors leased certain properties from the Company. For the year ended December 31, 2016, the Company incurred obligations to Nabors of approximately $0.6 million under the leases, and Nabors incurred obligations to C&J of approximately $0.5 million and $0.1 million under the leases for each of the years ended December 31, 2017 and 2016. Amounts payable to Nabors at December 31, 2017 were $0.9 million. As a result of the Company's emergence from the Chapter 11 Proceeding and the cancellation of the Predecessor common shares, Nabors Corporate Services is no longer considered a related party. The Company provided certain services to Shehtah Nabors LP, a Nabors partnership with a third party, pursuant to a Management Agreement and a Cash Flow Sharing Agreement (collectively, “Shehtah Agreements”). Nabors incurred obligations to the Company of approximately $1.8 million under the Shehtah Agreements during 2016. There were no amounts due to the Company under the Shehtah Agreements at December 31, 2016. The Company did not provide services to Shehtah during 2017. As a result of the Company's emergence from the Chapter 11 Proceeding and the cancellation of the Predecessor common shares, Nabors Corporate Services is no longer considered a related party. The Company utilizes the services of certain saltwater disposal wells owned by Pyote Water Solutions, LLC, Pyote Water Systems, LLC, Pyote Water Systems II, LLC and Pyote Water Systems III, LLC (together “Pyote”) used in the disposal of certain fluids associated with oil and gas production. A former member of the Company's Board of Directors, who served from March 24, 2015 until December 16, 2016, holds the position of President and Chief Manager of Pyote and serves as Chairman of the Board of Governors of Pyote. Amounts invoiced from Pyote totaled approximately $0.8 million and $0.6 million for the years ended December 31, 2016 and 2015, respectively. Amounts payable to this vendor at December 31, 2016 were less than $0.1 million. In addition, the Company provides certain workover rig services, fluid hauling services and plug and abandonment services to Pyote. Revenues from Pyote totaled approximately $0.3 million for the year ended December 31, 2015, and no services were provided to Pyote during 2016. There were no amounts due to the Company from Pyote at December 31, 2016. For the year ended December 31, 2017, Pyote was no longer a related party. The Company purchased certain of its equipment from vendors affiliated with a former member of its Board of Directors. For the year ended December 31, 2015, purchases from these vendors totaled $1.9 million. Amounts payable to these vendors at December 31, 2015 were less than $0.1 million. There were no purchases from these vendors for the years ended December 31, 2017 or 2016. For the year ended December 31, 2017, the vendors were no longer considered related parties. The Company obtains office space, equipment rentals, tool repair services and other supplies from vendors affiliated with several employees. For the years ended December 31, 2017, 2016 and 2015, purchases from these vendors totaled $0.5 million in each year. Amounts payable to these vendors at December 31, 2016 were less than $0.1 million. There were no amounts due to these vendors as of December 31, 2017. The Company has an unconsolidated equity method investment with a vendor that provided the Company with raw material for its discontinued specialty chemical business. For the years ended December 31, 2016 and 2015, purchases from this vendor were $1.7 million and $11.8 million, respectively. There were no purchases from this vendor for the year ended December 31, 2017. Amounts payable to this vendor at December 31, 2016 and 2015 were $2.1 million and $1.5 million, respectively. There were no amounts payable to this vendor as of December 31, 2017. The Company obtained drilling fluids from a vendor which was affiliated with one of its former employees. For the year ended December 31, 2015, purchases from this vendor totaled $2.1 million. Amounts due to this vendor at December 31, 2015 were $0.2 million. There were no purchases from this vendor for the year ended December 31, 2016. For the year ended December 31, 2017, this vendor was no longer considered a related party. C&J ENERGY SERVICES, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS 106 Note 9 - Business Concentrations Concentration of Credit Risk Financial instruments that potentially subject the Company to concentrations of credit risk consist primarily of cash and cash equivalents and accounts receivable. Concentrations of credit risk with respect to accounts receivable are limited because the Company performs credit evaluations, sets credit limits, and monitors the payment patterns of its customers. Cash