Fair Value of Financial Instruments and Concentrations of Credit Risk

12 Months Ended

Dec. 31, 2019

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 2021 Convertible Notes, approximated their fair values at December 31, 2019 and 2018. The estimated fair value of our 2021 Convertible Notes was $101.4 million and $120.9 million at December 31, 2019 and 2018, respectively, 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 and trade accounts receivable. At December 31, 2019, substantially all of our cash deposits were held by our international subsidiaries in accounts at numerous financial institutions across the various regions in which we operate. A majority of the cash was 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.

Receivables

Receivables consisted of the following at December 31:



(In thousands)	2019			2018
Trade receivables:
Gross trade receivables	$	207,554		$	248,176
Allowance for doubtful accounts	(6,007		)	(10,034		)
Net trade receivables	201,547			238,142
Income tax receivables	7,393			9,027
Other receivables	7,774			7,225
Total receivables, net	$	216,714		$	254,394

Other receivables included $6.2 million and $6.3 million for value added, goods and service taxes related to foreign jurisdictions as of December 31, 2019 and 2018, respectively.

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 2019, 2018 and 2017, revenues from our 20 largest customers represented approximately 42%, 44% and 45%, respectively, of our consolidated revenues. For 2019, 2018 and 2017, 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 were as follows:



(In thousands)	2019			2018			2017
Balance at beginning of year	$	10,034		$	9,457		$	8,849
Provision for doubtful accounts	1,792			2,849			1,481
Write-offs, net of recoveries	(5,819		)	(2,272		)	(873		)
Balance at end of year	$	6,007		$	10,034		$	9,457

- 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.

+ References + Details