CJ 2017 Annual Report

Our principal executive offices are located at 3990 Rogerdale Road, Houston, Texas 77042 and our main telephone number at that address is (713) 325-6000. Our website is available at www.cjenergy.com . We make available free of charge through our website all reports filed with or furnished to the SEC pursuant to Section 13(a) or 15(d) of the Exchange Act, including our Annual Report on Form 10-K, Quarterly Reports on Form 10-Q, Current Reports on Form 8-K, Proxy Statement on Schedule 14A and all amendments to those reports, as soon as reasonably practicable after such material is electronically filed with or furnished to the SEC. Information contained on or available through our website is not a part of or incorporated into this Annual Report or any other report that we may file with or furnish to the SEC. Business Overview Demand for our services, and therefore our operating and financial performance, is heavily influenced by drilling, completion and production activity by our customers, which is significantly impacted by commodity prices. Beginning in 2011 through mid-2015, we significantly invested in a number of strategic initiatives to strengthen, expand and diversify our business, including through service line diversification, vertical integration and technological advancement (“R&T”). During that time, we rapidly grew our business both organically and through multiple acquisitions, including the Nabors Merger. During 2016 and into the first quarter of 2017, we divested several of our small, non-core businesses, including our specialty chemical business, equipment manufacturing and repair business, and our international coiled tubing operations in the Middle East. These divestitures, as well as the sale of our Canadian Well Support Services business in November 2017 discussed below, reflect a refocusing of our growth strategy in line with our goal of being the leading U.S. provider in all of our core services. Additionally, in furtherance of our strategy, we have continued to rightsize our U.S. Well Support Services segment, while we accelerated the growth of our cementing services with the O-Tex Transaction, described below. We emerged from the Chapter 11 Proceeding as the market was beginning to recover. During 2017, we focused on the continuous improvement of our organization, including several ongoing initiatives purposed to optimize our business processes and gain greater efficiency over time. We also took a deliberate approach to increasing our core capabilities, adding capacity, and growing our core service lines. The O-Tex Transaction On October 25, 2017, we entered into an Agreement and Plan of Merger (the “Merger Agreement”) by and among Caymus Merger Sub, Inc., a Delaware corporation and wholly owned direct subsidiary of the Company (“Merger Sub”), O-Tex Holdings, Inc., a Texas corporation (“O-Tex”), the stockholders of O-Tex (the “Stockholders”), and O- Tex Sellers Representative LLC, a Delaware limited liability company, in its capacity as representative of the Stockholders (the “Stockholders’ Representative”), providing for the merger of Merger Sub with and into O-Tex (the “Merger”), with O- Tex surviving the Merger, and immediately thereafter, the merger of O-Tex with and into another wholly owned direct subsidiary of the Company (together with the Merger and the other transactions contemplated by the Merger Agreement, the “O-Tex Transaction”). On November 30, 2017 (the “Closing Date”), each holder of (i) outstanding common stock, par value $0.01 per share, of O-Tex (the “O-Tex Common Stock”), (ii) Series A Preferred Stock, par value $0.01 per share, of O-Tex (the “Series A Preferred Stock”) and (iii) Series B Preferred Stock, par value $0.01 per share, of O-Tex (together with the Series A Preferred Stock and the O-Tex Common Stock, the “O-Tex Shares”) had its O-Tex Shares (excluding any O-Tex Shares held in the treasury of O-Tex or held by the Company or Merger Sub immediately prior to the effective time of the Merger) converted into the right to receive such Stockholders’ pro rata portion of 4,420,000 shares of common stock, par value $0.01 per share, of the Company (the “Specified C&J Common Stock”). In addition, we paid to the Stockholders’ Representative, and each Stockholder became entitled to receive a pro rata portion of, $90.8 million in cash. The cash portion of the merger consideration was determined based on $132.5 million of base cash merger consideration, which was subject to closing adjustments as provided in the Merger Agreement (including reductions for the repayment of O-Tex’s indebtedness and transaction expenses) and may be further adjusted post-closing as provided in the Merger Agreement (including reductions for the payment of certain amounts into escrow for post-closing working capital adjustments and the satisfaction of post-closing indemnification obligations). The foregoing description of the Merger Agreement does not purport to be complete and is qualified in its entirety by reference to the Merger Agreement, which was filed as Exhibit 2.1 to our Current Report on Form 8-K filed with the SEC on October 26, 2017, and is incorporated herein by reference. Canadian Well Support Service Divestiture 4