CJ 2017 Annual Report

Our Reportable Business Segments As of December 31, 2017, our reportable business segments were: • Completion Services, which consists of the following businesses and service lines: (1) fracturing; (2) cased- hole wireline and pumping services; (3) well construction & intervention services, which includes cementing, coiled tubing and directional drilling services; and (4) completion support services, which includes our R&T department and data control instruments business. • Well Support Services, which consists of the following businesses and service lines: (1) rig services; (2) fluids management services; and (3) special services, which includes plug and abandonment, artificial lift applications and other specialty well site services. Our Other Services segment consisted of smaller, non-core business lines that have since been divested, including our specialty chemical business, equipment manufacturing and repair business and our 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, we are now disclosing two reportable segments, and financial information for the Other Services reportable segment is only presented for the corresponding prior year period. Our reportable business segments are described in more detail below; for financial information about our reportable business segments, including revenue from external customers and total assets by reportable business segment, please see “Note 13 - Segment Information” in Part II, Item 8 “Financial Statements and Supplementary Data” of this Annual Report. Completion Services The core services provided through our Completion Services segment are fracturing and cased-hole wireline and pumping services. We utilize our in-house manufacturing capabilities, including our R&T department and data control instruments business, to offer a technologically advanced and efficiency focused range of completion techniques. Our well construction & intervention services business, which includes cementing, coiled tubing and directional drilling services, and our completion support services business, which includes the manufacturing capabilities of our R&T department and data control instruments business, are each also managed through our Completion Services segment. The majority of revenue for this segment is generated by our fracturing business. During the fourth quarter of 2017, our fracturing business deployed, on average, approximately 590,000 hydraulic horsepower (“HHP”) out of our fleet of approximately 860,000 HHP as of December 31, 2017. We ended the year with 615,000 HHP deployed over 14 horizontal and two vertical fleets. With the delivery and deployment of an additional 40,000 new HHP in February 2018, our current total capacity is 900,000 HHP. In our cased-hole wireline and pumping business, we deployed, on average, approximately 75 of our average fleet of 124 wireline trucks, as well as all 68 of our pumpdown units. In our well construction & intervention services business, we deployed, on average, approximately 16 coiled tubing units out of our average fleet of approximately 44 units. Prior to the completion of the O-Tex Transaction, in our legacy cementing services business, we deployed, on average, approximately 31 cementing units out of our average fleet of 36 units. After the completion of the O-Tex Transaction, we deployed, on average, approximately 56 cementing units out of our average fleet of 81 units during the month of December. However, our deployed assets may not be utilized fully, or at all, at any given time, due to, among other things, routine scheduled maintenance and downtime. Management evaluates the operational performance of our Completions Services segment and allocates resources primarily based on Adjusted EBITDA because management believes that Adjusted EBITDA provides important information about the activity and profitability of our lines of business within this segment. Adjusted EBITDA is a non-GAAP financial measure computed as total earnings (loss) before net interest expense, income taxes, depreciation and amortization, other income (expense), net, net gain or loss on disposal of assets, acquisition-related costs, and non-routine items. For the year ended December 31, 2017, revenue from our Completion Services segment was $1.3 billion, representing approximately 76.7% of our total revenue, compared with revenue of $599.8 million for the year ended December 31, 2016, which represents a 109.5% year-over-year increase. Adjusted EBITDA from this segment for the year ended December 31, 2017 was $221.9 million, compared with $(41.6) million of Adjusted EBITDA for the year ended 39