how can I justly avoid paying taxes on this?

This makes no sense. Just put it in the bank and don't report it. A few thousand is nothing

Don't sweat that. Get the friend to sign an acknowledgment that the check was repayment of a loan if you're really concerned.

Can't you draft a quick loan agreement that shows paid in full, have him sign it, and viola... audit documentation.

I'm not Poodlebrain, but the first question I'd ask is how frequently you get audited. Some small businesses do but if you're the average Joe it'll never happen and this isn't worth worrying about.

I'd be more worried about your friend. He is paying you via company check and therefore is probably writing off the loan as a business expense. And that's assuming he is a sole proprietor, if he isn't then he's cheating the other owners on top of that.

The simplest way to avoid paying tax on all of the money you were paid is to have the payer issue you a 1099-Int for the portion of the money that was interest. You report that amount as interest income, and the balance of the payment is not reported as income as it is the repayment of the loan principal.

If there was no interest paid on the loan, then you need to follow the rules for below market rate loans. You'll have to look them up, or consult with someone familiar with them, to see what the requirements are since they depend on the facts and circumstances of the original transaction and any subsequent payments.

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Whoa now. There's something accounting-related that Poodle doesn't know?

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Actually, I am familiar with accounting for below market rate loans, usually loans made between related parties. It's just not possible to guess all of the facts and circumstances surrounding the OP's situation to give an answer that is more than a guess.

International taxation is an area I have little to no experience with. Oil and gas industry accounting is also foreign to me.