CJ 2017 Annual Report

With respect to our directional drilling services, we provide these services on a spot market basis. Jobs for these services are typically short-term in nature, lasting anywhere from a few days to multiple weeks. We typically charge the customer for these services on a per day basis at agreed-upon spot market rates depending on the level of services required and the complexity of the job. Revenue is recognized and customers are invoiced upon the completion of each job. Once a job has been completed, a field ticket is written that includes charges for the service performed. Revenue from Materials Consumed While Performing Certain Completion Services. We generate revenue from consumables used during the course of providing services. With respect to our fracturing services, we generate revenue from the fluids, proppants and other materials that are consumed while performing a job. For services performed on a spot market basis, the required consumables are typically provided by us and the customer is billed for those consumables at cost plus an agreed-upon markup. For services performed on a contractual basis, when the consumables are provided by us, the customer typically is billed for those consumables at a negotiated contractual rate. When consumables are supplied by the customer, we typically charge handling fees based on the amount of consumables used. Other Completion Services Revenue. We generate revenue from our R&T department, which is primarily engaged in the engineering and production of certain parts and components, such as perforating guns and addressable switches, which are used in the completion process. Revenue is recognized upon the completion, delivery and customer acceptance of each order of parts and components. Well Support Services Segment Rig Services Revenue. Through our rig service line, we provide workover and well servicing rigs that are primarily used for routine repair and maintenance of oil and gas wells, re-drilling operations and plugging and abandonment operations. These services are provided on an hourly basis at agreed upon spot market rates. Revenue is recognized and a field ticket is generated upon the earliest of the completion of a job or at the end of each day. A rig services job can last anywhere from a few hours to multiple days depending on the type of work being performed. The field ticket includes the base hourly rate charge and, if applicable, charges for additional personnel or equipment not contemplated in the base hourly rate. The field ticket may also include charges for the mobilization and set-up of equipment, Fluids Management Services Revenue. Through our fluids management service line, we primarily provide storage, transportation and disposal services for fluids used in the drilling, completion and workover of oil and gas wells. Rates for these services vary and can be on a per job, per hour or per load basis, or on the basis of quantities sold or disposed. Revenue is recognized upon the completion of each job or load, or delivered product, based on a completed field ticket. Other Special Well Site Services Revenue. Through our other special well site service line, we primarily provide fishing, contract labor, and tool rental services for completion and workover of oil and gas wells. Rates for these services vary and can be on a per job, per hour or on the basis of rental days per month. Revenue is recognized based on a field ticket issued upon the completion of each job or on a monthly billing for rental services provided. With respect to our artificial lift applications, we generate revenue primarily from the sale of manufactured equipment and products. Revenue is recognized upon the completion, delivery and customer acceptance of each order. Other Services Segment Revenue within our Other Services Segment was generated from certain of our smaller, non-core service lines that were divested in 2016 and 2017, such as our specialty chemical business, equipment manufacturing and repair business and 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. Accounts Receivable and Allowance for Doubtful Accounts . Accounts receivable are generally stated at the amount billed to customers. We provide an allowance for doubtful accounts, which is based upon a review of outstanding receivables, historical collection information and existing economic conditions. Provisions for doubtful accounts are recorded when it is deemed probable that the customer will not make the required payments at either the contractual due dates or in the future. At December 31, 2017 and 2016, the allowance for doubtful accounts totaled $4.3 million and $3.0 million, respectively. Bad debt expense of $4.4 million, $1.7 million and $8.1 million was included in direct costs on the consolidated statements of operations for the years ended December 31, 2017, 2016 and 2015, respectively. 60