NOTE O – MARKET RISKS AND DERIVATIVE AND HEDGE CONTRACTS

We are exposed to financial and market risks that affect our businesses. We have concentrations of credit risk as a result of trade receivables owed to us by companies in the energy industry. We have currency exchange rate risk exposure related to transactions denominated in a foreign currency as well as to investments in certain of our international operations. As a result of our variable rate bank credit facilities, including the variable rate credit facility of CCLP, we face market risk exposure related to changes in applicable interest rates. Our financial risk management activities may at times involve, among other measures, the use of derivative financial instruments, such as swap and collar agreements, to hedge the impact of market price risk exposures.

Derivative Contracts

Stock Warrants. In December 2016, we issued the Warrants in connection with an offering of our common stock. The warrants are exercisable into shares of our common stock at an exercise price of $5.75 per share. The fair value of the Warrants are calculated using the Black-Scholes valuation model, and totaled $18.5 million as of December 31, 2016, and is classified as Warrant Liability, a long-term liability, on the consolidated balance sheet. Changes in the fair value of the Warrants from the issuance date to December 31, 2016 was $2.1 million and are charged to Warrants fair value adjustment in the accompanying consolidated statement of operations.

Foreign Currency Derivative Contracts. We and CCLP enter into 30-day foreign currency forward derivative contracts as part of a program designed to mitigate the currency exchange rate risk exposure on selected transactions of certain foreign subsidiaries. As of December 31, 2016, we and CCLP had the following foreign currency derivative contracts outstanding relating to a portion of our foreign operations:



Derivative Contracts	US Dollar Notional Amount		Traded Exchange Rate	Settlement Date
	(In Thousands)
Forward purchase euro	$	509	1.07	1/18/2017
Forward purchase pounds sterling	$	6,258	1.28	1/18/2017
Forward purchase Mexican peso	$	6,740	20.18	1/18/2017
Forward sale Norwegian krone	$	2,322	8.53	1/18/2017
Forward sale Mexican peso	$	2,483	20.18	1/18/2017

As of December 31, 2015, we and CCLP had the following foreign currency derivative contracts outstanding relating to a portion of our foreign operations:



Derivative Contracts	US Dollar Notional Amount		Traded Exchange Rate	Settlement Date
	(In Thousands)
Forward purchase euro	$	3,768	1.11	1/19/2016
Forward purchase pounds sterling	$	12,614	1.52	1/19/2016
Forward purchase Mexican peso	$	7,850	17.45	1/19/2016
Forward purchase Saudi Arabia riyal	$	5,040	3.74	1/5/2016
Forward sale Mexican peso	$	4,641	17.45	1/19/2016

Under this program, we and CCLP may enter into similar derivative contracts from time to time. Although contracts pursuant to this program will serve as an economic hedge of the cash flow of our currency exchange risk exposure, they are not formally designated as hedge contracts or qualify for hedge accounting treatment. Accordingly, any change in the fair value of these derivative instruments during a period will be included in the determination of earnings for that period.

The fair value of foreign currency derivative instruments are based on quoted market values as reported to us by our counterparty (a Level-2 measurement). The fair values of our foreign currency derivative instruments as of December 31, 2016 and 2015, are as follows:



Foreign currency derivative instruments	Balance Sheet Location	Fair Value at December 31, 2016			Fair Value at December 31, 2015
		(In Thousands)
Forward purchase contracts	Current assets	$	—		$	—
Forward sale contracts	Current assets	81			23
Forward sale contracts	Current liabilities	—			(31		)
Forward purchase contracts	Current liabilities	(371		)	(354		)
Total		$	(290	)	$	(362	)

None of the foreign currency derivative contracts contain credit risk related contingent features that would require us to post assets or collateral for contracts that are classified as liabilities. During the year ended December 31, 2016, 2015, and 2014, we recognized approximately $2.0 million, $0.6 million and $1.9 million of net losses reflected in other expense associated with our foreign currency derivative program.