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Table of Contents

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

Form 10-Q

(MARK ONE)

☒			QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended September 30, 2023

☐			TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from              to               .

Commission File No. 001-35779

USA Compression Partners, LP

(Exact name of registrant as specified in its charter)

Delaware (State or other jurisdiction of incorporation or organization)			75-2771546 (I.R.S. Employer Identification No.)

111 Congress Avenue, Suite 2400 Austin, Texas (Address of principal executive offices)			78701 (Zip Code)

(512) 473-2662

(Registrant’s telephone number, including area code)

Securities registered pursuant to Section 12(b) of the Act:

Title of each class

Trading Symbol(s)

Name of each exchange on which registered

Common units representing limited partner interests

USAC

New York Stock Exchange

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.  Yes ☒  No ☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).  Yes ☒  No ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

Large accelerated filer ☒			Accelerated filer ☐
Non-accelerated filer ☐			Smaller reporting company ☐
			Emerging growth company ☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).  Yes ☐  No ☒

As of October 26, 2023, there were 98,299,245 common units outstanding.

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Table of Contents

TABLE OF CONTENTS

			Page
PART I. FINANCIAL INFORMATION			1
ITEM 1.         Financial Statements			1
Unaudited Condensed Consolidated Balance Sheets			1
Unaudited Condensed Consolidated Statements of Operations			2
Unaudited Condensed Consolidated Statements of Changes in Partners’ Capital (Deficit)			3
Unaudited Condensed Consolidated Statements of Cash Flows			4
Notes to Unaudited Condensed Consolidated Financial Statements			5
Note 1 – Organization and Description of Business			5
Note 2 – Basis of Presentation and Summary of Significant Accounting Policies			5
Note 3 – Trade Accounts Receivable			8
Note 4 – Inventories			8
Note 5 – Property and Equipment and Identifiable Intangible Assets			8
Note 6 – Other Current Liabilities			9
Note 7 – Derivative Instrument			10
Note 8 – Long-Term Debt			10
Note 9 – Preferred Units			12
Note 10 – Partners’ Deficit			13
Note 11 – Revenue Recognition			14
Note 12 – Transactions with Related Parties			15
Note 13 – Commitments and Contingencies			15
Note 14 – Subsequent Events			16
ITEM 2.         Management’s Discussion and Analysis of Financial Condition and Results of Operations			17
Operating Highlights			18
Financial Results of Operations			19
Liquidity and Capital Resources			25
Non-GAAP Financial Measures			27
ITEM 3.         Quantitative and Qualitative Disclosures About Market Risk			32
ITEM 4.         Controls and Procedures			33
PART II. OTHER INFORMATION			34
ITEM 1.         Legal Proceedings			34
ITEM 1A.      Risk Factors			34
ITEM 6.         Exhibits			34
SIGNATURES			35

i

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Table of Contents

GLOSSARY

The abbreviations, acronyms and industry terminology used in this Quarterly Report on Form 10-Q are defined as follows:

Credit Agreement						Seventh Amended and Restated Credit Agreement, dated as of December 8, 2021, by and among USA Compression Partners, LP, as borrower, the guarantors party thereto from time to time, the lenders party thereto from time to time, as may be amended from time to time, and any predecessor thereto if the context so dictates
CPI						Consumer Price Index for all Urban Consumers
DERs						distribution equivalent rights
DRIP						distribution reinvestment plan
Energy Transfer						Energy Transfer LP
Exchange Act						Securities Exchange Act of 1934, as amended
GAAP						generally accepted accounting principles of the United States of America
Preferred Units						Series A Preferred Units representing limited partner interests in USA Compression Partners, LP
SEC						United States Securities and Exchange Commission
Senior Notes 2026						$725.0 million aggregate principal amount of senior notes due on April 1, 2026
Senior Notes 2027						$750.0 million aggregate principal amount of senior notes due on September 1, 2027
SOFR						Secured Overnight Financing Rate
U.S.						United States of America

ii

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Table of Contents

PART I.  FINANCIAL INFORMATION

ITEM 1.    Financial Statements

USA COMPRESSION PARTNERS, LP

Unaudited Condensed Consolidated Balance Sheets

(in thousands, except unit amounts)

			September 30, 2023						December 31, 2022
Assets
Current assets:
Cash and cash equivalents			$	6					$	35
Accounts receivable, net of allowances for credit losses of $784 and $1,164, respectively			96,888						83,822
Related-party receivables			449						52
Inventories			106,457						93,754
Derivative instrument			10,730						—
Prepaid expenses and other assets			9,157						8,784
Total current assets			223,687						186,447
Property and equipment, net			2,198,137						2,172,924
Lease right-of-use assets			17,538						18,195
Derivative instrument, long term			3,513						—
Identifiable intangible assets, net			252,997						275,032
Other assets			10,542						13,126
Total assets			$	2,706,414					$	2,665,724
Liabilities, Preferred Units, and Partners’ Deficit
Current liabilities:
Accounts payable			$	37,030					$	35,303
Accrued liabilities			77,593						76,016
Deferred revenue			63,053						62,345
Total current liabilities			177,676						173,664
Long-term debt, net			2,276,449						2,106,649
Operating lease liabilities			15,119						16,146
Other liabilities			10,482						8,255
Total liabilities			2,479,726						2,304,714
Commitments and contingencies
Preferred Units			477,309						477,309
Partners’ deficit:
Common units, 98,299,245 and 98,227,656 units issued and outstanding, respectively			(259,433)						(125,111)
Warrants			8,812						8,812
Total partners’ deficit			(250,621)						(116,299)
Total liabilities, Preferred Units, and partners’ deficit			$	2,706,414					$	2,665,724

See accompanying notes to unaudited condensed consolidated financial statements.

1

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Table of Contents

USA COMPRESSION PARTNERS, LP

Unaudited Condensed Consolidated Statements of Operations

(in thousands, except per unit amounts)

			Three Months Ended September 30,												Nine Months Ended September 30,
			2023						2022						2023						2022
Revenues:
Contract operations			$	204,716					$	171,019					$	590,237					$	492,656
Parts and service			7,153						4,901						15,133						10,432
Related party			5,216						3,693						15,759						11,398
Total revenues			217,085						179,613						621,129						514,486
Costs and expenses:
Cost of operations, exclusive of depreciation and amortization			74,928						59,453						211,515						168,343
Depreciation and amortization			64,101						58,772						183,626						176,795
Selling, general, and administrative			20,085						14,663						54,136						43,842
Loss (gain) on disposition of assets			(3,865)						1,118						(3,932)						1,970
Impairment of compression equipment			882						504						12,346						936
Total costs and expenses			156,131						134,510						457,691						391,886
Operating income			60,954						45,103						163,438						122,600
Other income (expense):
Interest expense, net			(43,257)						(35,142)						(125,092)						(100,059)
Gain on derivative instrument			3,437						—						17,987						—
Other			23						27						104						68
Total other expense			(39,797)						(35,115)						(107,001)						(99,991)
Net income before income tax expense			21,157						9,988						56,437						22,609
Income tax expense			255						376						1,010						657
Net income			20,902						9,612						55,427						21,952
Less: distributions on Preferred Units			(12,188)						(12,188)						(36,563)						(36,563)
Net income (loss) attributable to common unitholders’ interests			$	8,714					$	(2,576)					$	18,864					$	(14,611)
Weighted-average common units outstanding – basic			98,292						97,968						98,270						97,689
Weighted-average common units outstanding – diluted			100,263						97,968						99,915						97,689
Basic net income (loss) per common unit			$	0.09					$	(0.03)					$	0.19					$	(0.15)
Diluted net income (loss) per common unit			$	0.09					$	(0.03)					$	0.19					$	(0.15)
Distributions declared per common unit for respective periods			$	0.525					$	0.525					$	1.575					$	1.575

See accompanying notes to unaudited condensed consolidated financial statements.

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USA COMPRESSION PARTNERS, LP

Unaudited Condensed Consolidated Statements of Changes in Partners’ Capital (Deficit)

(in thousands, except per unit amounts)

			For the Nine Months Ended September 30, 2023
			Common units						Warrants						Total
Partners’ capital (deficit) ending balance, December 31, 2022			$	(125,111)					$	8,812					$	(116,299)
Distributions and DERs, $0.525 per unit			(51,602)						—						(51,602)
Issuance of common units under the DRIP			617						—						617
Unit-based compensation for equity-classified awards			69						—						69
Net loss attributable to common unitholders’ interests			(1,246)						—						(1,246)
Partners’ capital (deficit) ending balance, March 31, 2023			(177,273)						8,812						(168,461)
Distributions and DERs, $0.525 per unit			(51,617)						—						(51,617)
Issuance of common units under the DRIP			423						—						423
Unit-based compensation for equity-classified awards			69						—						69
Net income attributable to common unitholders’ interests			11,396						—						11,396
Partners’ capital (deficit) ending balance, June 30, 2023			(217,002)						8,812						(208,190)
Distributions and DERs, $0.525 per unit			(51,628)						—						(51,628)
Issuance of common units under the DRIP			414						—						414
Unit-based compensation for equity classified awards			69						—						69
Net income attributable to common unitholders’ interests			8,714						—						8,714
Partners’ capital (deficit) ending balance, September 30, 2023			$	(259,433)					$	8,812					$	(250,621)

			For the Nine Months Ended September 30, 2022
			Common units						Warrants						Total
Partners’ capital ending balance, December 31, 2021			$	87,129					$	13,979					$	101,108
Distributions and DERs, $0.525 per unit			(51,137)						—						(51,137)
Issuance of common units under the DRIP			516						—						516
Unit-based compensation for equity-classified awards			64						—						64
Net loss attributable to common unitholders’ interests			(8,933)						—						(8,933)
Partners’ capital ending balance, March 31, 2022			27,639						13,979						41,618
Distributions and DERs, $0.525 per unit			(51,154)						—						(51,154)
Issuance of common units under the DRIP			508						—						508
Unit-based compensation for equity-classified awards			65						—						65
Exercise and conversion of warrants into common units			5,167						(5,167)						—
Net loss attributable to common unitholders’ interests			(3,102)						—						(3,102)
Partners’ capital (deficit) ending balance, June 30, 2022			(20,877)						8,812						(12,065)
Vesting of phantom units			408						—						408
Distributions and DERs, $0.525 per unit			(51,450)						—						(51,450)
Issuance of common units under the DRIP			553						—						553
Unit-based compensation for equity classified awards			64						—						64
Net loss attributable to common unitholders’ interests			(2,576)						—						(2,576)
Partners’ capital (deficit) ending balance, September 30, 2022			$	(73,878)					$	8,812					$	(65,066)

See accompanying notes to unaudited condensed consolidated financial statements.

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USA COMPRESSION PARTNERS, LP

Unaudited Condensed Consolidated Statements of Cash Flows

(in thousands)

			Nine Months Ended September 30,
			2023						2022
Cash flows from operating activities:
Net income			$	55,427					$	21,952
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization			183,626						176,795
Provision for expected credit losses			—						(700)
Amortization of debt issuance costs			5,460						5,451
Unit-based compensation expense			17,652						9,716
Deferred income tax benefit			(46)						(216)
Loss (gain) on disposition of assets			(3,932)						1,970
Change in fair value of derivative instrument			(14,243)						—
Impairment of compression equipment			12,346						936
Changes in assets and liabilities:
Accounts receivable and related-party receivables, net			(13,462)						34,271
Inventories			(51,875)						(20,708)
Prepaid expenses and other current assets			(374)						(2,746)
Other assets			3,165						2,515
Accounts payable			(368)						5,383
Accrued liabilities and deferred revenue			(13,095)						(56,128)
Net cash provided by operating activities			180,281						178,491
Cash flows from investing activities:
Capital expenditures, net			(159,048)						(88,061)
Proceeds from disposition of property and equipment			5,122						1,049
Proceeds from insurance recovery			535						597
Net cash used in investing activities			(153,391)						(86,415)
Cash flows from financing activities:
Proceeds from revolving credit facility			798,424						623,443
Payments on revolving credit facility			(631,305)						(521,396)
Cash paid related to net settlement of unit-based awards			—						(1,055)
Cash distributions on common units			(156,740)						(155,554)
Cash distributions on Preferred Units			(36,563)						(36,563)
Deferred financing costs			(379)						(549)
Other			(356)						(396)
Net cash used in financing activities			(26,919)						(92,070)
Increase (decrease) in cash and cash equivalents			(29)						6
Cash and cash equivalents, beginning of period			35						—
Cash and cash equivalents, end of period			$	6					$	6
Supplemental cash flow information:
Cash paid for interest, net of capitalized amounts			$	145,697					$	118,557
Cash paid for income taxes			$	1,146					$	887
Supplemental non-cash transactions:
Non-cash distributions to certain common unitholders (DRIP)			$	1,454					$	1,577
Transfers from inventories to property and equipment, net			$	39,027					$	14,392
Changes in capital expenditures included in accounts payable and accrued liabilities			$	2,681					$	12,022
Changes in financing costs included in accounts payable and accrued liabilities			$	6					$	(265)
Exercise and conversion of warrants into common units			$	—					$	5,167

See accompanying notes to unaudited condensed consolidated financial statements.

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USA COMPRESSION PARTNERS, LP

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(1) Organization and Description of Business

Unless otherwise indicated, the terms “our,” “we,” “us,” “the Partnership,” and similar language refer to USA Compression Partners, LP, collectively with its consolidated subsidiaries.

We are a Delaware limited partnership. Through our operating subsidiaries, we provide natural gas compression services to customers under fixed-term contracts in the natural gas and crude oil industries, using compression packages that we design, engineer, own, operate, and maintain. We also own and operate a fleet of equipment used to provide natural gas treating services, such as carbon dioxide and hydrogen sulfide removal, cooling, and dehydration. We provide compression services in shale plays throughout the U.S., including the Utica, Marcellus, Permian Basin, Delaware Basin, Eagle Ford, Mississippi Lime, Granite Wash, Woodford, Barnett, Haynesville, Niobrara, and Fayetteville shales.

USA Compression GP, LLC, a Delaware limited liability company, serves as our general partner and is referred to herein as the “General Partner.” The General Partner is wholly owned by Energy Transfer.

The accompanying unaudited condensed consolidated financial statements include the accounts of the Partnership and its subsidiaries, all of which are wholly owned by us.

(2) Basis of Presentation and Significant Accounting Policies

Basis of Presentation

Our accompanying unaudited condensed consolidated financial statements have been prepared in accordance with GAAP and pursuant to SEC rules and regulations.

In the opinion of our management, financial information presented herein reflects all normal recurring adjustments necessary for the fair presentation of these interim unaudited condensed consolidated financial statements in accordance with GAAP. Operating results for the three and nine months ended September 30, 2023, are not necessarily indicative of the results that may be expected for the year ending December 31, 2023. Certain information and footnote disclosures normally included in annual consolidated financial statements prepared in accordance with GAAP have been condensed or omitted in accordance with SEC rules and regulations. Therefore, these interim unaudited condensed consolidated financial statements should be read in conjunction with our audited consolidated financial statements contained in our annual report on Form 10-K for the year ended December 31, 2022, filed on February 14, 2023 (our “2022 Annual Report”).

Use of Estimates

Our unaudited condensed consolidated financial statements have been prepared in conformity with GAAP, which includes the use of estimates and assumptions by management that affect the reported amounts of assets, liabilities, revenues, expenses, and disclosure of contingent assets and liabilities that existed as of the date of the unaudited condensed consolidated financial statements. Although these estimates were based on management’s available knowledge of current and expected future events, actual results could differ from these estimates.

Significant Accounting Policies

Cash and Cash Equivalents

Cash and cash equivalents consist of all cash balances. We consider investments in highly liquid financial instruments purchased with an original maturity of 90 days or less to be cash equivalents.

Trade Accounts Receivable

Trade accounts receivable are recorded at their invoiced amounts.

Allowance for Credit Losses

We evaluate allowance for credit losses with reference to our trade accounts receivable balances, which are measured at amortized cost. Due to the short-term nature of our trade accounts receivable, we consider the amortized cost of trade accounts receivable to equal the receivable’s carrying amounts, excluding the allowance for credit losses.

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Our determination of the allowance for credit losses requires us to make estimates and judgments regarding our customers’ ability to pay amounts due. We continuously evaluate the financial strength of our customers and the overall business climate in which our customers operate, and make adjustments to the allowance for credit losses as necessary. We evaluate the financial strength of our customers by reviewing the aging of their receivables owed to us, our collection experiences with the customer, correspondence, financial information, and third-party credit ratings. We evaluate the business climate in which our customers operate by reviewing various publicly available materials regarding our customers’ industry, including the solvency of various companies in the industry.

Inventories

Inventories consist of serialized and non-serialized parts primarily used on compression units. All inventories are stated at the lower of cost or net realizable value. Serialized parts inventories are determined using the specific-identification cost method, while non-serialized parts inventories are determined using the weighted-average cost method. Purchases of inventories are considered operating activities within the unaudited condensed consolidated statements of cash flows.

Property and Equipment

Property and equipment are carried at cost except for (i) certain acquired assets which are recorded at fair value on their respective acquisition dates and (ii) impaired assets which are recorded at fair value as of the last impairment evaluation date for which an adjustment was required. Overhauls and major improvements that increase the value or extend the life of compression equipment are capitalized and depreciated over three to five years. Ordinary maintenance and repairs are charged to cost of operations, exclusive of depreciation and amortization.

When property and equipment is retired or sold, the associated carrying value and the related accumulated depreciation are removed from our accounts and any related gains or losses are recorded within the unaudited condensed consolidated statements of operations within the period of sale or disposition.

Capitalized interest is calculated by multiplying our monthly effective interest rate on outstanding variable-rate indebtedness by the amount of qualifying costs, which include upfront payments to acquire certain compression units. Capitalized interest was $0.2 million and $0.8 million for the three and nine months ended September 30, 2023, respectively, and $0.3 million and $0.6 million for the three and nine months ended September 30, 2022, respectively.

Impairment of Long-Lived Assets

The carrying value of long-lived assets that are not expected to be recovered from future cash flows are written down to estimated fair value. We test long-lived assets for impairment when events or circumstances indicate that a long-lived asset’s carrying value may not be recoverable or will no longer be utilized within the operating fleet. The most common circumstance requiring compression units to be evaluated for impairment involves idle units that do not meet the desired performance characteristics of our revenue-generating horsepower.

The carrying value of a long-lived asset is not recoverable if the asset’s carrying value exceeds the sum of the undiscounted cash flows expected to be generated from the use and eventual disposition of the asset. If the carrying value of the long-lived asset exceeds the sum of the undiscounted cash flows associated with the asset, an impairment loss equal to the amount of the carrying value exceeding the fair value of the asset is recognized. The fair value of the asset is measured using quoted market prices or, in the absence of quoted market prices, based on an estimate of discounted cash flows, the expected net sale proceeds compared to the other similarly configured fleet units that we recently sold or a review of other units recently offered for sale by third parties, or the estimated component value of the equipment we plan to continue using.

Refer to Note 5 for more detailed information about impairment charges during the three and nine months ended September 30, 2023, and 2022.

Identifiable Intangible Assets

Identifiable intangible assets are recorded at cost and amortized using the straight-line method over their estimated useful lives, which is the period over which the assets are expected to contribute directly or indirectly to our future cash flows. The estimated useful lives of our intangible assets range from 15 to 25 years.

Revenue Recognition

Revenue is recognized when obligations under the terms of a contract with our customer are satisfied; generally, this occurs with the provision of services or the transfer of goods. Revenue is measured at the amount of consideration we expect to receive

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in exchange for providing services or transferring goods. Incidental items, if any, that are immaterial in the context of the contract are recognized as expenses.

Income Taxes

USA Compression Partners, LP is organized as a partnership for U.S. federal and state income tax purposes. As a result, our partners are responsible for U.S. federal and state income taxes on their distributive share of our items of income, gain, loss, or deduction. Texas also imposes an entity-level income tax on partnerships that is based on Texas-sourced taxable margin (the “Texas Margin Tax”). Texas Margin Tax impacts are included within our unaudited condensed consolidated financial statements. Our wholly owned finance subsidiary, USA Compression Finance Corp. (“Finance Corp”), is a corporation for U.S. federal and state income tax purposes and any resulting tax impacts attributable to Finance Corp are included within our unaudited condensed consolidated financial statements.

Pass-Through Taxes

Sales taxes incurred on behalf of, and passed through to, customers are accounted for on a net basis.

Fair-Value Measurements

Accounting standards applicable to fair-value measurements establish a framework for measuring fair value and stipulate disclosures about fair-value measurements. The standards apply to recurring and non-recurring financial and non-financial assets and liabilities that require or permit fair-value measurements. Among the required disclosures is the fair-value hierarchy of inputs we use to value an asset or a liability. The three levels of the fair-value hierarchy are described as follows:

Level 1 inputs are quoted prices (unadjusted) in active markets for identical assets or liabilities that we have the ability to access at the measurement date.

Level 2 inputs are those other than quoted prices included within Level 1 that are observable for the asset or liability, either directly or indirectly.

Level 3 inputs are unobservable inputs for the asset or liability.

As of September 30, 2023, and December 31, 2022, our financial instruments primarily consisted of cash and cash equivalents, trade accounts receivable, trade accounts payable, long-term debt, and, as of September 30, 2023, a derivative instrument. The book values of cash and cash equivalents, trade accounts receivable, and trade accounts payable are representative of fair value due to their short-term maturities. Our revolving credit facility applies floating interest rates to amounts drawn under the facility; therefore, the carrying amount of our revolving credit facility approximates its fair value.

The fair value of our Senior Notes 2026 and Senior Notes 2027 were estimated using quoted prices in inactive markets and are considered Level 2 measurements. The following table summarizes the aggregate principal amount and fair value of our Senior Notes 2026 and Senior Notes 2027 (in thousands):

			September 30, 2023						December 31, 2022
Senior Notes 2026, aggregate principal			$	725,000					$	725,000
Fair value of Senior Notes 2026			708,688						706,875
Senior Notes 2027, aggregate principal			750,000						750,000
Fair value of Senior Notes 2027			720,938						725,625

The fair value of our derivative instrument, which is an interest-rate swap, was estimated based on inputs from actively quoted public markets, including interest-rate forward curves, and is considered a Level 2 measurement. The following table summarizes the gross fair value of our interest-rate swap (in thousands):

			September 30, 2023						December 31, 2022
Interest-rate swap			$	14,243					$	—

See Note 7 below for additional information on the interest-rate swap.

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Operating Segment

We operate in a single business segment, the compression services business.

(3) Trade Accounts Receivable

The allowance for credit losses, which was $0.8 million and $1.2 million at September 30, 2023 and December 31, 2022, respectively, represents our best estimate of the amount of probable credit losses included within our existing accounts receivable balance.

The following summarizes activity within our trade accounts receivable allowance for credit losses balance (in thousands):

			Allowance for Credit Losses
Balance as of December 31, 2022			$	1,164
Write-offs charged against the allowance			(462)
Recoveries collected			82
Balance as of September 30, 2023			$	784

For the nine months ended September 30, 2022, we recognized a reversal of $0.7 million to our provision for expected credit losses. Favorable market conditions for customers, attributable to sustained increases in commodity prices, was the primary factor supporting the recorded decrease to the allowance for credit losses for the nine months ended September 30, 2022. No change to our provision for expected credit losses was recognized for the three months ended September 30, 2022.

(4)  Inventories

Components of inventories are as follows (in thousands):

			September 30, 2023						December 31, 2022
Serialized parts			$	52,515					$	46,923
Non-serialized parts			53,942						46,831
Total inventories			$	106,457					$	93,754

(5)  Property and Equipment and Identifiable Intangible Assets

Property and Equipment

Property and equipment consisted of the following (in thousands):

			September 30, 2023						December 31, 2022
Compression and treating equipment			$	3,813,438					$	3,658,000
Computer equipment			32,811						34,941
Automobiles and vehicles			43,031						34,947
Leasehold improvements			9,343						8,997
Buildings			3,464						3,464
Furniture and fixtures			843						795
Land			77						77
Total property and equipment, gross			3,903,007						3,741,221
Less: accumulated depreciation and amortization			(1,704,870)						(1,568,297)
Total property and equipment, net			$	2,198,137					$	2,172,924

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Depreciation is calculated using the straight-line method over the estimated useful lives of the assets as follows:

Compression and treating equipment, acquired new			25 years
Compression and treating equipment, acquired used			5 - 25 years
Furniture and fixtures			3 - 10 years
Vehicles and computer equipment			1 - 10 years
Buildings			5 years
Leasehold improvements			5 years

Depreciation expense on property and equipment and loss (gain) on disposition of assets were as follows (in thousands):

			Three Months Ended September 30,												Nine Months Ended September 30,
			2023						2022						2023						2022
Depreciation expense			$	56,756					$	51,427					$	161,591					$	154,761
Loss (gain) on disposition of assets			(3,865)						1,118						(3,932)						1,970

On a quarterly basis, we evaluate the future deployment of our idle fleet assets under current market conditions. For the three and nine months ended September 30, 2023, we retired three and 42 compression units, respectively, representing approximately 2,100 and 37,700 of aggregate horsepower, respectively, that previously were used to provide compression services in our business. As a result, we recorded impairments of compression equipment of $0.9 million and $12.3 million for the three and nine months ended September 30, 2023, respectively.

For the three and nine months ended September 30, 2022, we retired two and 12 compression units, respectively, representing approximately 1,100 and 2,500 of aggregate horsepower, respectively, that previously were used to provide compression services in our business. As a result, we recorded impairments of compression equipment of $0.5 million and $0.9 million for the three and nine months ended September 30, 2022, respectively.

The primary circumstances supporting these impairments were: (i) unmarketability of certain compression units into the foreseeable future, (ii) excessive maintenance costs associated with certain fleet assets, and (iii) prohibitive retrofitting costs that likely would prevent certain compression units from securing customer acceptance. These compression units were written down to their estimated salvage values, if any.

Identifiable Intangible Assets

Identifiable intangible assets, net consisted of the following (in thousands):

			Customer Relationships						Trade Names						Total
Net balance as of December 31, 2022			$	250,744					$	24,288					$	275,032
Amortization expense			(19,579)						(2,456)						(22,035)
Net balance as of September 30, 2023			$	231,165					$	21,832					$	252,997

Accumulated amortization of intangible assets was $297.7 million and $275.6 million as of September 30, 2023, and December 31, 2022, respectively.

(6)  Other Current Liabilities

Components of other current liabilities included the following (in thousands):

			September 30, 2023						December 31, 2022
Accrued interest expense			$	6,799					$	32,763
Accrued payroll and benefits			13,385						6,474
Accrued unit-based compensation liability			31,842						17,743
Accrued capital expenditures			12,709						10,028

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(7) Derivative Instrument

In April 2023, we entered into an interest-rate swap to manage interest-rate risk associated with the floating-rate Credit Agreement. The interest-rate swap’s notional principal amount is $700 million and has a termination date in April 2025. Under the interest-rate swap, we pay a fixed interest rate of 3.785% and receive floating interest-rate payments that are indexed to the one-month SOFR.

We do not apply hedge accounting to our currently outstanding derivative. Our derivative is carried on the unaudited condensed consolidated balance sheets at fair value and is classified as current or long-term depending on the expected timing of settlement, and gains and losses associated with the derivative instrument are recognized currently in gain on derivative instrument within the unaudited condensed consolidated statements of operations. Cash flows related to cash settlements for the periods presented are classified as operating activities within the unaudited condensed consolidated statements of cash flows.

The following table summarizes the location and fair value of our derivative instrument on our unaudited condensed consolidated balance sheets (in thousands):

Balance Sheet Classification						September 30, 2023						December 31, 2022
Derivative instrument						$	10,730					$	—
Derivative instrument, long term						3,513						—

The following table summarizes the location and amounts recognized related to our derivative instrument within our unaudited condensed consolidated statements of operations (in thousands):

			Three Months Ended September 30,												Nine Months Ended September 30,
Income Statement Classification			2023						2022						2023						2022
Gain on derivative instrument			$	3,437					$	—					$	17,987					$	—

(8)  Long-term Debt

Our long-term debt, of which there is no current portion, consisted of the following (in thousands):

			September 30, 2023						December 31, 2022
Senior Notes 2026, aggregate principal			$	725,000					$	725,000
Senior Notes 2027, aggregate principal			750,000						750,000
Less: deferred financing costs, net of amortization			(11,626)						(14,307)
Total senior notes, net			1,463,374						1,460,693
Revolving credit facility			813,075						645,956
Total long-term debt, net			$	2,276,449					$	2,106,649

Revolving Credit Facility

The Credit Agreement matures on December 8, 2026, except that if any portion of the Senior Notes 2026 are outstanding on December 31, 2025, the Credit Agreement will mature on December 31, 2025.

The Credit Agreement has an aggregate commitment of $1.6 billion (subject to availability under our borrowing base). The Partnership’s obligations under the Credit Agreement are guaranteed by the guarantors party to the Credit Agreement, which currently consists of all of the Partnership’s subsidiaries. In addition, under the Credit Agreement the Partnership’s Secured Obligations (as defined therein) are secured by: (i) substantially all of the Partnership’s assets and substantially all of the assets of the guarantors party to the Credit Agreement, excluding real property and other customary exclusions; and (ii) all of the equity interests of the Partnership’s U.S. restricted subsidiaries (subject to customary exceptions).

As of September 30, 2023, we had outstanding borrowings under the Credit Agreement of $813.1 million, $786.9 million of availability and, subject to compliance with the applicable financial covenants, available borrowing capacity of $434.3 million. Our weighted-average interest rate in effect for all borrowings under the Credit Agreement for the nine months ended September 30, 2023, was 7.57%, and our weighted-average interest rate under the Credit Agreement as of September 30,

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2023, was 7.99%. There were no letters of credit issued under the Credit Agreement as of September 30, 2023. We pay an annualized commitment fee of 0.375% on the unused portion of the aggregate commitment.

The Credit Agreement permits us to make distributions of available cash to unitholders so long as (i) no default under the facility has occurred, is continuing, or would result from the distribution; (ii) immediately prior to and after giving effect to such distribution, we are in compliance with the facility’s financial covenants; and (iii) immediately prior to and after giving effect to such distribution, (a) on or before September 30, 2023, we have availability under the Credit Agreement of at least $250 million and (b) after September 30, 2023, we have availability under the Credit Agreement of at least $100 million.

The Credit Agreement also contains various financial covenants, including covenants requiring us to maintain:

•a minimum EBITDA (as defined in the Credit Agreement) interest coverage ratio of 2.5 to 1.0, determined as of the last day of each fiscal quarter, with EBITDA and interest expense annualized for the most-recent fiscal quarter;

•a ratio of total secured indebtedness to EBITDA not greater than 3.0 to 1.0 or less than 0.0 to 1.0, determined as of the last day of each fiscal quarter, with EBITDA annualized for the most-recent fiscal quarter; and

•a maximum funded debt-to-EBITDA ratio, defined in the Credit Agreement as the Total Leverage Ratio, determined as of the last day of each fiscal quarter with EBITDA annualized for the most-recent fiscal quarter, of (i) 5.50 to 1.00 through the third quarter of 2023 and (ii) 5.25 to 1.00 thereafter. In addition, the Partnership may increase the applicable ratio by 0.25 for any fiscal quarter during which a Specified Acquisition (as defined in the Credit Agreement) occurs and for the following two fiscal quarters, but in no event shall the maximum ratio exceed 5.50 to 1.00 for any fiscal quarter as a result of such increase.

As of September 30, 2023, we were in compliance with all of our covenants under the Credit Agreement.

The Credit Agreement is a “revolving credit facility” that includes a lockbox arrangement, whereby remittances from customers are forwarded to a bank account controlled by the administrative agent and are applied to reduce borrowings under the facility.

Senior Notes 2026

On March 23, 2018, the Partnership and Finance Corp co-issued the Senior Notes 2026. The Senior Notes 2026 mature on April 1, 2026, and accrue interest at the rate of 6.875% per year. Interest on the Senior Notes 2026 is payable semi-annually in arrears on each of April 1 and October 1.

The indenture governing the Senior Notes 2026 (the “2026 Indenture”) contains certain financial covenants that we must comply with in order to make certain restricted payments as described in the 2026 Indenture. As of September 30, 2023, we were in compliance with such financial covenants under the 2026 Indenture.

The Senior Notes 2026 are fully and unconditionally guaranteed (the “2026 Guarantees”), jointly and severally, on a senior unsecured basis by all of our existing subsidiaries (other than Finance Corp), and will be fully and unconditionally guaranteed, jointly and severally, by each of our future restricted subsidiaries that either borrows under, or guarantees, the Credit Agreement or guarantees certain of our other indebtedness (collectively, the “Guarantors”). The Senior Notes 2026 and the 2026 Guarantees are general unsecured obligations and rank equally in right of payment with all of the Guarantors’, Finance Corp’s, and our existing and future senior indebtedness and senior to the Guarantors’, Finance Corp’s, and our future subordinated indebtedness, if any. The Senior Notes 2026 and the 2026 Guarantees effectively are subordinated in right of payment to all of the Guarantors’, Finance Corp’s, and our existing and future secured debt, including debt under the Credit Agreement and guarantees thereof, to the extent of the value of the assets securing such debt, and are structurally subordinate to all indebtedness of any of our subsidiaries that do not guarantee the Senior Notes 2026.

Senior Notes 2027

On March 7, 2019, the Partnership and Finance Corp co-issued the Senior Notes 2027. The Senior Notes 2027 mature on September 1, 2027, and accrue interest at the rate of 6.875% per year. Interest on the Senior Notes 2027 is payable semi-annually in arrears on each of March 1 and September 1.

The indenture governing the Senior Notes 2027 (the “2027 Indenture”) contains certain financial covenants that we must comply with in order to make certain restricted payments as described in the 2027 Indenture. As of September 30, 2023, we were in compliance with such financial covenants under the 2027 Indenture.

The Senior Notes 2027 are fully and unconditionally guaranteed (the “2027 Guarantees”), jointly and severally, on a senior unsecured basis by the Guarantors. The Senior Notes 2027 and the 2027 Guarantees are general unsecured obligations and rank

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equally in right of payment with all of the Guarantors’, Finance Corp’s, and our existing and future senior indebtedness and senior to the Guarantors’, Finance Corp’s, and our future subordinated indebtedness, if any. The Senior Notes 2027 and the 2027 Guarantees effectively are subordinated in right of payment to all of the Guarantors’, Finance Corp’s, and our existing and future secured debt, including debt under the Credit Agreement and guarantees thereof, to the extent of the value of the assets securing such debt, and are structurally subordinate to all indebtedness of any of our subsidiaries that do not guarantee the Senior Notes 2027.

We have no assets or operations independent of our subsidiaries, and there are no significant restrictions on our ability to obtain funds from our subsidiaries by dividend or loan. Each of the Guarantors is 100% owned by us. None of the assets of our subsidiaries represent restricted net assets pursuant to Rule 4-08(e)(3) of Regulation S-X under the Securities Act of 1933, as amended.

(9)  Preferred Units

We had 500,000 Preferred Units outstanding as of September 30, 2023 and December 31, 2022, respectively, with a face value of $1,000 per Preferred Unit.

The Preferred Units rank senior to our common units with respect to distributions and liquidation rights. The holders of the Preferred Units are entitled to receive cumulative quarterly cash distributions equal to $24.375 per Preferred Unit.

We have declared and paid per-unit quarterly cash distributions to the holders of the Preferred Units of record as follows:

Payment Date						Distribution per Preferred Unit
February 4, 2022						$	24.375
May 6, 2022						24.375
August 5, 2022						24.375
November 4, 2022						24.375
Total 2022 distributions						$	97.50
February 3, 2023						$	24.375
May 5, 2023						24.375
August 4, 2023						24.375
Total 2023 distributions						$	73.125

Announced Quarterly Distribution

On October 12, 2023, we declared a cash distribution of $24.375 per unit on our Preferred Units. The distribution will be paid on November 3, 2023, to the holders of the Preferred Units of record as of the close of business on October 23, 2023.

Changes in the Preferred Units’ balance are as follows (in thousands):

			Preferred Units
Balance as of December 31, 2022			$	477,309
Net income allocated to Preferred Units			36,563
Cash distributions on Preferred Units			(36,563)
Balance as of September 30, 2023			$	477,309

Redemption and Conversion Features

As of April 2, 2023, 100% of the Preferred Units are convertible, at the option of the holder, into common units in accordance with the terms of our Second Amended and Restated Agreement of Limited Partnership (the “Partnership Agreement”). The conversion rate for the Preferred Units is the quotient of (i) the sum of (a) $1,000, plus (b) any unpaid cash distributions on the applicable Preferred Unit, divided by (ii) $20.0115 for each Preferred Unit.

As of April 2, 2023, we have the option to redeem all or any portion of the Preferred Units then outstanding, subject to certain minimum redemption threshold amounts, for a redemption price set forth in the Partnership Agreement. On or after

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April 2, 2028, each holder of the Preferred Units will have the right to require us to redeem all or a portion of their Preferred Units, subject to certain minimum redemption threshold amounts, for a redemption price set forth in the Partnership Agreement, which we may elect to pay up to 50% in common units, subject to certain additional limits.

(10) Partners’ Deficit

Common Units

The change in common units outstanding was as follows:

			Common Units Outstanding
Number of common units outstanding, December 31, 2022			98,227,656
Issuance of common units under the DRIP			71,589
Number of common units outstanding, September 30, 2023			98,299,245

As of September 30, 2023, Energy Transfer held 46,056,228 common units, including 8,000,000 common units held by the General Partner and controlled by Energy Transfer.

Cash Distributions

We have declared and paid per-unit quarterly distributions to our limited partner unitholders of record, including holders of our common and phantom units, as follows (dollars in millions, except distribution per unit):

Payment Date						Distribution per Limited Partner Unit						Amount Paid to Common Unitholders						Amount Paid to Phantom Unitholders						Total Distribution
February 4, 2022						$	0.525					$	51.1					$	1.2					$	52.3
May 6, 2022						0.525						51.1						1.2						52.3
August 5, 2022						0.525						51.4						1.1						52.5
November 4, 2022						0.525						51.5						1.0						52.5
Total 2022 distributions						$	2.10					$	205.1					$	4.5					$	209.6
February 3, 2023						$	0.525					$	51.6					$	1.1					$	52.7
May 5, 2023						0.525						51.6						1.1						52.7
August 4, 2023						0.525						51.6						1.2						52.8
Total 2023 distributions						$	1.575					$	154.8					$	3.4					$	158.2

Announced Quarterly Distribution

On October 12, 2023, we announced a cash distribution of $0.525 per unit on our common units. The distribution will be paid on November 3, 2023, to common unitholders of record as of the close of business on October 23, 2023.

DRIP

During the nine months ended September 30, 2023, distributions of $1.5 million were reinvested under the DRIP resulting in the issuance of 71,589 common units.

Warrants

As of September 30, 2023, and December 31, 2022, we had warrants outstanding to purchase 10,000,000 common units with a strike price of $19.59 per common unit that may be exercised by the holders at any time prior to April 2, 2028.

On April 27, 2022, a tranche of warrants with the right to purchase 5,000,000 common units with a strike price of $17.03 per common unit was exercised in full by the holders. The exercise of the warrants was net settled by the Partnership for 534,308 common units.

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Income (Loss) Per Unit

The computation of income (loss) per unit is based on the weighted-average number of participating securities, which includes our common units and certain equity-based awards outstanding during the applicable period. Basic income (loss) per unit is determined by dividing net income (loss) allocated to participating securities after deducting the amount distributed on Preferred Units, by the weighted-average number of participating securities outstanding during the period. Income (loss) attributable to unitholders is allocated to participating securities based on their respective shares of the distributed and undistributed earnings for the period. To the extent cash distributions exceed net income (loss) attributable to unitholders for the period, the excess distributions are allocated to all participating securities outstanding based on their respective ownership percentages.

Diluted income (loss) per unit is computed using the treasury stock method, which considers the potential issuance of limited partner units associated with our long-term incentive plan and warrants. Unvested phantom units and unexercised warrants are not included in basic income (loss) per unit, as they are not considered to be participating securities, but are included in the calculation of diluted income (loss) per unit to the extent they are dilutive, and in the case of warrants to the extent they are considered “in the money.”

For the three months ended September 30, 2023, approximately 1,316,000 and 655,000 incremental unvested phantom units and “in the money” outstanding warrants, respectively, represent the difference between our basic and diluted weighted-average common units outstanding. For the nine months ended September 30, 2023, approximately 1,185,000 and 460,000 incremental unvested phantom units and “in the money” outstanding warrants, respectively, represent the difference between our basic and diluted weighted-average common units outstanding.

For the three and nine months ended September 30, 2022, approximately 959,000 and 938,000 incremental unvested phantom units, respectively, were excluded from the calculation of diluted income (loss) per unit because the impact was anti-dilutive. For the nine months ended September 30, 2022, approximately 57,000 incremental “in the money” then-outstanding warrants were excluded from the calculation of diluted income (loss) per unit because the impact was anti-dilutive. Our outstanding warrants not “in the money” were excluded from the calculation for the three and nine months ended September 30, 2022.

(11) Revenue Recognition

Disaggregation of Revenue

The following table disaggregates our revenue by type of service (in thousands):

			Three Months Ended September 30,												Nine Months Ended September 30,
			2023						2022						2023						2022
Contract operations revenue			$	209,841					$	174,704					$	605,386					$	504,043
Retail parts and services revenue			7,244						4,909						15,743						10,443
Total revenues			$	217,085					$	179,613					$	621,129					$	514,486

The following table disaggregates our revenue by timing of provision of services or transfer of goods (in thousands):

			Three Months Ended September 30,												Nine Months Ended September 30,
			2023						2022						2023						2022
Services provided over time:
Primary term			$	161,293					$	129,598					$	466,763					$	356,143
Month-to-month			48,548						45,106						138,623						147,900
Total services provided over time			209,841						174,704						605,386						504,043
Services provided or goods transferred at a point in time			7,244						4,909						15,743						10,443
Total revenues			$	217,085					$	179,613					$	621,129					$	514,486

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Deferred Revenue

We record deferred revenue when cash payments are received or due in advance of our performance. Components of deferred revenue were as follows (in thousands):

			Balance sheet location						September 30, 2023						December 31, 2022
Current (1)			Deferred revenue						$	63,053					$	62,345
Noncurrent			Other liabilities						5,457						2,789
Total									$	68,510					$	65,134

________________________________

(1)We recognized $1.2 million and $58.1 million of revenue during the three and nine months ended September 30, 2023, respectively, related to our deferred revenue balance as of December 31, 2022.

Performance Obligations

As of September 30, 2023, the aggregate amount of transaction price allocated to unsatisfied performance obligations related to our contract operations revenue was $964.7 million. We expect to recognize these remaining performance obligations as follows (in thousands):

			2023 (remainder)						2024						2025						2026						Thereafter						Total
Remaining performance obligations			$	162,472					$	444,320					$	191,261					$	100,665					$	65,979					$	964,697

(12) Transactions with Related Parties

We provide natural gas compression and treating services to entities affiliated with Energy Transfer, which as of September 30, 2023, owned approximately 47% of our limited partner interests and 100% of the General Partner.

Revenue recognized from those entities affiliated with Energy Transfer on our unaudited condensed consolidated statements of operations were as follows (in thousands):

			Three Months Ended September 30,												Nine Months Ended September 30,
			2023						2022						2023						2022
Related-party revenues			$	5,216					$	3,693					$	15,759					$	11,398

We had approximately $0.4 million and $52 thousand of related-party receivables on our unaudited condensed consolidated balance sheets as of September 30, 2023, and December 31, 2022, respectively, from those entities affiliated with Energy Transfer.

(13) Commitments and Contingencies

(a)Major Customers

One customer accounted for approximately 11% of total revenues for the three and nine months ended September 30, 2023. No customer accounted for 10% or more of total revenues for the three and nine months ended September 30, 2022.

(b)Litigation

From time to time, we and our subsidiaries may be involved in various claims and litigation arising in the ordinary course of business. In management’s opinion, the resolution of such matters is not expected to have a material adverse effect on our consolidated financial position, results of operations, or cash flows.

(c)Equipment Purchase Commitments

Our future capital commitments are comprised of binding commitments under purchase orders for new compression units ordered but not received. The commitments as of September 30, 2023, were $101.3 million, all of which is expected to be settled within the next twelve months and $63.0 million of which is expected to be settled by year-end 2023.

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(d)Tax Contingencies

Our compliance with state and local sales tax regulations is subject to audit by various taxing authorities. Certain taxing authorities have either claimed or issued an assessment that specific operational processes, which we and others in our industry regularly conduct, result in transactions that are subject to state sales taxes. We and others in our industry have disputed these claims and assessments based on either existing tax statutes or published guidance by the taxing authorities.

We currently are protesting certain assessments made by the Oklahoma Tax Commission (“OTC”). We believe it is reasonably possible that we could incur losses related to this assessment depending on whether the administrative law judge assigned by the OTC accepts our position that the transactions are not taxable and we ultimately lose any and all subsequent legal challenges to such determination. We estimate that the range of losses we could incur is from $0 to approximately $28.2 million, including penalties and interest.

Our U.S. federal income tax returns for the 2019 and 2020 tax years currently are under examination by the Internal Revenue Service (“IRS”). The IRS has issued preliminary partnership examination changes, along with imputed underpayment computations, for the 2019 and 2020 tax years. Under the Bipartisan Budget Act, there are several procedural steps, including an appeals process, to complete before a final imputed underpayment, if any, is determined. Based on to-date discussions with the IRS, we estimate a potential range of loss from a final imputed underpayment of $0 to approximately $25 million, including interest, for potential adjustments resulting from the IRS examination. Once a final partnership imputed underpayment, if any, is determined, our General Partner may either elect to pay the imputed underpayment (including any applicable penalties and interest) directly to the IRS or, if eligible, issue a revised information statement to each unitholder, and former unitholder, with respect to an audited and adjusted return.

(e)Environmental

Our operations are subject to federal, state, and local laws, rules, and regulations regarding water quality, hazardous and solid waste management, air quality control, and other environmental matters. These laws, rules, and regulations require that we conduct our operations in a specified manner and to obtain and comply with a wide variety of environmental registrations, licenses, permits, inspections, and other approvals. Failure to comply with applicable environmental laws, rules, and regulations may expose us to significant fines, penalties, and/or interruptions in operations. Our environmental policies and procedures are designed to achieve compliance with such applicable laws, rules, and regulations. These evolving laws, rules, and regulations, and claims for damages to property, employees, other persons, and the environment resulting from current or past operations may result in significant expenditures and liabilities in the future.

(14) Subsequent Events

Interest-rate Swap Modification

In October 2023, we modified our existing interest-rate swap to continue to manage interest-rate risk associated with the floating-rate Credit Agreement. The notional principal amount under the modified interest-rate swap remains $700 million and the termination date was extended from April 1, 2025 to December 31, 2025. Under the original interest-rate swap, we paid a fixed interest rate of 3.785% and received floating interest rate payments that were indexed to the one-month SOFR. Under the modified interest-rate swap, we pay a fixed interest rate of 3.9725% and continue to receive floating interest rate payments that are indexed to the one-month SOFR.

Warrants Exercise

On October 27, 2023, the tranche of warrants with the right to purchase 10,000,000 common units with a strike price of $19.59 per common unit was exercised in full by the holders. The exercise of the warrants will be net settled by the Partnership for approximately 2,360,000 common units.

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ITEM 2.    Management’s Discussion and Analysis of Financial Condition and Results of Operations

USA Compression Partners, LP (the “Partnership”) is a Delaware limited partnership that operates as one of the nation’s largest independent providers of natural gas compression services in terms of total compression fleet horsepower. We are managed by our general partner, USA Compression GP, LLC (the “General Partner”), which is wholly owned by Energy Transfer. All references in this section to the Partnership, as well as the terms “our,” “we,” “us,” and “its” refer to USA Compression Partners, LP, together with its consolidated subsidiaries, unless the context otherwise requires or where otherwise indicated.

DISCLOSURE REGARDING FORWARD-LOOKING STATEMENTS

This report contains “forward-looking statements.” All statements other than statements of historical fact contained in this report are forward-looking statements, including, without limitation, statements regarding our plans, strategies, prospects, and expectations concerning our business, results of operations, and financial condition. Many of these statements can be identified by words such as “believe,” “expect,” “intend,” “project,” “anticipate,” “estimate,” “continue,” “if,” “outlook,” “will,” “could,” “should,” or similar words or the negatives thereof.

Known material factors that could cause our actual results to differ from those represented within these forward-looking statements are described in Part I, Item 1A “Risk Factors” of our annual report on Form 10-K for the year ended December 31, 2022, filed on February 14, 2023 (our “2022 Annual Report”), in Part II, Item 1A “Risk Factors” in our Quarterly Report for the quarter ended March 31, 2023, as well as our subsequent filings with the SEC. Important factors that could cause our actual results to differ materially from the expectations reflected in these forward-looking statements include, among other things:

•changes in general economic conditions, including inflation or supply chain disruptions and changes in economic conditions of the crude oil and natural gas industries, including any impact from the ongoing military conflict involving Russia and Ukraine;

•changes in the long-term supply of and demand for crude oil and natural gas, including as a result of actions taken by governmental authorities and other third parties in response to world health events, and the resulting disruption in the oil and gas industry and impact on demand for oil and gas;

•competitive conditions in our industry, including competition for employees in a tight labor market;

•changes in the availability and cost of capital, including changes to interest rates;

•renegotiation of material terms of customer contracts;

•actions taken by our customers, competitors, and third-party operators;

•operating hazards, natural disasters, epidemics, pandemics, weather-related impacts, casualty losses, and other matters beyond our control;

•the deterioration of the financial condition of our customers, which may result in the initiation of bankruptcy proceedings with respect to certain customers;

•the restrictions on our business that are imposed under our long-term debt agreements;

•information technology risks including the risk from cyberattacks, cybersecurity breaches, and other disruptions to our information systems;

•the effects of existing and future laws and governmental regulations; and

•the effects of future litigation.

New factors emerge from time to time, and it is not possible for us to predict or anticipate all factors that could affect results reflected in the forward-looking statements contained herein. Should one or more of the risks or uncertainties described in this Quarterly Report on Form 10-Q occur, or should underlying assumptions prove incorrect, actual results and plans could differ materially from those expressed in any forward-looking statements.

All forward-looking statements included in this report are based on information available to us as of the date of this report and speak only as of the date of this report. Except as required by law, we undertake no obligation to publicly update or revise any forward-looking statement, whether as a result of new information, future events, or otherwise. All subsequent written and oral forward-looking statements attributable to us or persons acting on our behalf are expressly qualified in their entirety by the foregoing cautionary statements.

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Operating Highlights

The following table summarizes certain horsepower and horsepower-utilization percentages for the periods presented and excludes certain gas-treating assets for which horsepower is not a relevant metric.

			Three Months Ended September 30,																		Nine Months Ended September 30,
			2023						2022						Increase						2023						2022						Increase
Fleet horsepower (at period end) (1)			3,735,490						3,711,205						0.7		%				3,735,490						3,711,205						0.7		%
Total available horsepower (at period end) (2)			3,836,120						3,761,205						2.0		%				3,836,120						3,761,205						2.0		%
Revenue-generating horsepower (at period end) (3)			3,395,630						3,128,845						8.5		%				3,395,630						3,128,845						8.5		%
Average revenue-generating horsepower (4)			3,356,008						3,090,910						8.6		%				3,302,354						3,032,406						8.9		%
Average revenue per revenue-generating horsepower per month (5)			$	19.10					$	17.53					9.0		%				$	18.65					$	17.20					8.4		%
Revenue-generating compression units (at period end)			4,251						4,034						5.4		%				4,251						4,034						5.4		%
Average horsepower per revenue-generating compression unit (6)			795						767						3.7		%				787						761						3.4		%
Horsepower utilization (7):
At period end			93.9		%				90.9		%				3.0		%				93.9		%				90.9		%				3.0		%
Average for the period (8)			93.6		%				90.3		%				3.3		%				93.2		%				87.7		%				5.5		%

________________________________

(1)Fleet horsepower is horsepower for compression units that have been delivered to us (and excludes units on order). As of September 30, 2023, we had 100,000 large horsepower on order for delivery, all of which is expected to be delivered within the next twelve months and 62,500 large horsepower of which is expected to be delivered by year-end 2023.

(2)Total available horsepower is revenue-generating horsepower under contract for which we are billing a customer, horsepower in our fleet that is under contract but is not yet generating revenue, horsepower not yet in our fleet that is under contract but not yet generating revenue and that is subject to a purchase order, and idle horsepower. Total available horsepower excludes new horsepower on order for which we do not have an executed compression services contract.

(3)Revenue-generating horsepower is horsepower under contract for which we are billing a customer.

(4)Calculated as the average of the month-end revenue-generating horsepower for each of the months in the period.

(5)Calculated as the average of the result of dividing the contractual monthly rate, excluding standby or other temporary rates, for all units at the end of each month in the period by the sum of the revenue-generating horsepower at the end of each month in the period.

(6)Calculated as the average of the month-end revenue-generating horsepower per revenue-generating compression unit for each of the months in the period.

(7)Horsepower utilization is calculated as (i) the sum of (a) revenue-generating horsepower, (b) horsepower in our fleet that is under contract but is not yet generating revenue, and (c) horsepower not yet in our fleet that is under contract but not yet generating revenue and that is subject to a purchase order, divided by (ii) total available horsepower less idle horsepower that is under repair. Horsepower utilization based on revenue-generating horsepower and fleet horsepower as of September 30, 2023, and 2022, was 90.9% and 84.3%, respectively.

(8)Calculated as the average utilization for the months in the period based on utilization at the end of each month in the period. Average horsepower utilization based on revenue-generating horsepower and fleet horsepower for the three months ended September 30, 2023, and 2022, was 90.0% and 83.4%, respectively. Average horsepower utilization based on revenue-generating horsepower and fleet horsepower for the nine months ended September 30, 2023, and 2022, was 88.7% and 82.1%, respectively.

The 2.0% increase in total available horsepower and 0.7% increase in fleet horsepower as of September 30, 2023, compared to September 30, 2022, primarily were driven by new compression units added to our fleet to meet incremental demand from customers for our compression services, partially offset by compression units impaired since the previous period.

The 8.5% increase in revenue-generating horsepower and 5.4% increase in revenue-generating compression units as of September 30, 2023, compared to September 30, 2022, primarily were driven by both the redeployment of, and addition of new, larger-horsepower compression units due to increased demand for our services commensurate with increased production levels in the basins in which we operate.

The 9.0% and 8.4% increases in average revenue per revenue-generating horsepower per month for the three and nine months ended September 30, 2023, compared to the three and nine months ended September 30, 2022, respectively, primarily

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were due to higher market-based rates on newly deployed and redeployed compression units, and CPI-based and other market-based price increases on existing customer contracts that occur as market conditions permit.

The 3.7% and 3.4% increases in average horsepower per revenue-generating compression unit during the three and nine months ended September 30, 2023, compared to the three and nine months ended September 30, 2022, respectively, were due to both the redeployment of, and addition of new, larger-horsepower compression units.

Horsepower utilization increased to 93.9% as of September 30, 2023, compared to 90.9% as of September 30, 2022. The increase primarily was due to an increase in revenue-generating horsepower, which was driven by a combination of the redeployment of certain previously idle compression units as well as the deployment of new compression units added to the fleet. The increase in horsepower utilization resulted from increased demand for our services, consistent with increased production levels in the basins in which we operate. The above-stated factors also drove the increase in average horsepower utilization for the three and nine months ended September 30, 2023, as compared to the three and nine months ended September 30, 2022.

Horsepower utilization based on revenue-generating horsepower and fleet horsepower increased to 90.9% as of September 30, 2023, compared to 84.3% as of September 30, 2022. The increase in horsepower utilization based on revenue-generating horsepower and fleet horsepower primarily was driven by the redeployment of certain previously idle compression units as well as the deployment of new compression units added to the fleet. The increase in horsepower utilization based on revenue-generating horsepower and fleet horsepower resulted from increased demand for our services, consistent with increased production levels in the basins in which we operate. The above-stated factors also drove the increase in average horsepower utilization based on revenue-generating horsepower and fleet horsepower for the three and nine months ended September 30, 2023, as compared to the three and nine months ended September 30, 2022.

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Financial Results of Operations

Three months ended September 30, 2023, compared to the three months ended September 30, 2022

The following table summarizes our results of operations for the periods presented (dollars in thousands):

			Three Months Ended September 30,												Increase
			2023						2022						(Decrease)
Revenues:
Contract operations			$	204,716					$	171,019					19.7		%
Parts and service			7,153						4,901						45.9		%
Related party			5,216						3,693						41.2		%
Total revenues			217,085						179,613						20.9		%
Costs and expenses:
Cost of operations, exclusive of depreciation and amortization			74,928						59,453						26.0		%
Depreciation and amortization			64,101						58,772						9.1		%
Selling, general, and administrative			20,085						14,663						37.0		%
Loss (gain) on disposition of assets			(3,865)						1,118						*
Impairment of compression equipment			882						504						*
Total costs and expenses			156,131						134,510						16.1		%
Operating income			60,954						45,103						35.1		%
Other income (expense):
Interest expense, net			(43,257)						(35,142)						23.1		%
Gain on derivative instrument			3,437						—						*
Other			23						27						(14.8)		%
Total other expense			(39,797)						(35,115)						13.3		%
Net income before income tax expense			21,157						9,988						111.8		%
Income tax expense			255						376						(32.2)		%
Net income			$	20,902					$	9,612					117.5		%

________________________________

*Not meaningful

Contract operations revenue. The $33.7 million increase in contract operations revenue for the three months ended September 30, 2023, compared to the three months ended September 30, 2022, primarily was due to (i) a 9.0% increase in average revenue per revenue-generating horsepower per month, as a result of higher market-based rates on newly deployed and redeployed compression units, and CPI-based and other market-based price increases on existing customer contracts that occur as market conditions permit, (ii) an 8.6% increase in average revenue-generating horsepower as a result of increased demand for our services, consistent with increased production levels in the basins in which we operate, and (iii) a $6.5 million increase in revenues attributable to natural gas treating services.

Average revenue per revenue-generating horsepower per month associated with our compression services provided on a month-to-month basis did not differ significantly from the average revenue per revenue-generating horsepower per month associated with our compression services provided under contracts in their primary term during the period.

Parts and service revenue. The $2.3 million increase in parts and service revenue for the three months ended September 30, 2023, compared to the three months ended September 30, 2022, primarily was due to an increase in maintenance work performed on units at customer locations that are outside the scope of our core maintenance activities and that are offered as a convenience, and in directly reimbursable freight and crane charges that are the financial responsibility of the customers. Demand for retail parts and services fluctuates from period to period based on varying customer needs.

Related-party revenue. Related-party revenue was earned through related-party transactions that occur in the ordinary course of business with various affiliated entities of Energy Transfer. The $1.5 million increase in related-party revenue for the three months ended September 30, 2023, compared to the three months ended September 30, 2022, primarily was due to an increase in revenues attributable to natural gas treating services driven by increased demand for these services from these

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entities and increased average revenue per revenue-generating horsepower per month, consistent with the overall increase to our contract operations revenue.

Cost of operations, exclusive of depreciation and amortization. The $15.5 million increase in cost of operations, exclusive of depreciation and amortization, for the three months ended September 30, 2023, compared to the three months ended September 30, 2022, primarily was due to (i) a $6.5 million increase in direct expenses, primarily driven by fluids and parts due to higher costs and increased usage associated with increased revenue-generating horsepower, (ii) a $4.2 million increase in direct labor costs due to increased headcount associated with increased revenue-generating horsepower and higher employee costs, (iii) a $2.5 million increase in retail parts and service expenses, for which a corresponding increase in parts and service revenue also occurred, (iv) a $0.7 million increase in other indirect expenses primarily due to increased consumption and costs of supplies associated with increased revenue-generating horsepower, and (v) a $0.6 million increase in outside maintenance costs due to greater use and higher costs of third-party labor during the current period.

Depreciation and amortization expense. The $5.3 million increase in depreciation and amortization expense for the three months ended September 30, 2023, compared to the three months ended September 30, 2022, primarily was due to new compression units placed in service to meet incremental demand from customers and overhauls and major improvements to compression units.

Selling, general, and administrative expense. The $5.4 million increase in selling, general, and administrative expense for the three months ended September 30, 2023, compared to the three months ended September 30, 2022, primarily was due to (i) a $5.0 million increase in unit-based compensation expense, attributable to mark-to-market changes to our unit-based compensation liability that occurred as a result of changes to our per-unit trading price as of September 30, 2023 and (ii) a $0.8 million increase in employee-related expenses driven by higher employee costs and increased headcount, partially offset by (iii) a $0.5 million decrease in severance charges, primarily attributable to the departure of one of our executives during the third quarter of 2022.

Loss (gain) on disposition of assets. The $3.9 million gain on disposition of assets for the three months ended September 30, 2023 primarily was due to the sale of certain natural gas treating assets to an existing customer. The $1.1 million loss on disposition of assets for the three months ended September 30, 2022 primarily was due to various disposals of assets.

Impairment of compression equipment. The $0.9 million and $0.5 million impairments of compression equipment for the three months ended September 30, 2023 and 2022, respectively, primarily resulted from our evaluation of the future deployment of our idle fleet under then-existing market conditions. The primary circumstances supporting these impairments were: (i) unmarketability of certain compression units into the foreseeable future, (ii) excessive maintenance costs associated with certain fleet assets, and (iii) prohibitive retrofitting costs that likely would prevent certain compression units from securing customer acceptance. These compression units were written down to their estimated salvage values, if any.

As a result of our evaluation during the three months ended September 30, 2023 and 2022, respectively, we retired three and two compression units, respectively, representing approximately 2,100 and 1,100 of aggregate horsepower, respectively, that previously were used to provide compression services in our business.

Interest expense, net. The $8.1 million increase in interest expense, net for the three months ended September 30, 2023, compared to the three months ended September 30, 2022, primarily was due to higher weighted-average interest rates and increased borrowings under the Credit Agreement.

The weighted-average interest rate applicable to borrowings under the Credit Agreement was 7.88% and 4.94% for the three months ended September 30, 2023 and 2022, respectively, and average outstanding borrowings under the Credit Agreement were $770.5 million and $576.0 million for the three months ended September 30, 2023 and 2022, respectively.

Gain on derivative instrument. In April 2023, we entered into an interest-rate swap in which we pay a fixed interest rate and receive floating interest rate payments that are indexed to the one-month SOFR. The $3.4 million gain on derivative instrument for the three months ended September 30, 2023, resulted from the increase in fair value of the interest-rate swap due to an increase in the interest-rate forward curve during the current period. We had no derivative instruments outstanding for the three months ended September 30, 2022.

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Nine months ended September 30, 2023, compared to the nine months ended September 30, 2022

The following table summarizes our results of operations for the periods presented (dollars in thousands):

			Nine Months Ended September 30,
			2023						2022						Increase
Revenues:
Contract operations			$	590,237					$	492,656					19.8		%
Parts and service			15,133						10,432						45.1		%
Related party			15,759						11,398						38.3		%
Total revenues			621,129						514,486						20.7		%
Costs and expenses:
Cost of operations, exclusive of depreciation and amortization			211,515						168,343						25.6		%
Depreciation and amortization			183,626						176,795						3.9		%
Selling, general, and administrative			54,136						43,842						23.5		%
Loss (gain) on disposition of assets			(3,932)						1,970						*
Impairment of compression equipment			12,346						936						*
Total costs and expenses			457,691						391,886						16.8		%
Operating income			163,438						122,600						33.3		%
Other income (expense):
Interest expense, net			(125,092)						(100,059)						25.0		%
Gain on derivative instrument			17,987						—						*
Other			104						68						52.9		%
Total other expense			(107,001)						(99,991)						7.0		%
Net income before income tax expense			56,437						22,609						149.6		%
Income tax expense			1,010						657						53.7		%
Net income			$	55,427					$	21,952					152.5		%

________________________________

*Not meaningful

Contract operations revenue. The $97.6 million increase in contract operations revenue for the nine months ended September 30, 2023, compared to the nine months ended September 30, 2022, primarily was due to (i) an 8.9% increase in average revenue-generating horsepower as a result of increased demand for our services, consistent with increased production levels in the basins in which we operate, (ii) an 8.4% increase in average revenue per revenue-generating horsepower per month, as a result of higher market-based rates on newly deployed and redeployed compression units, and CPI-based and other market-based price increases on existing customer contracts that occur as market conditions permit, and (iii) a $19.9 million increase in revenues attributable to natural gas treating services.

Average revenue per revenue-generating horsepower per month associated with our compression services provided on a month-to-month basis did not differ significantly from the average revenue per revenue-generating horsepower per month associated with our compression services provided under contracts in their primary term during the period.

Parts and service revenue. The $4.7 million increase in parts and service revenue for the nine months ended September 30, 2023, compared to the nine months ended September 30, 2022, primarily was due to an increase in maintenance work performed on units at customer locations that are outside the scope of our core maintenance activities and that are offered as a convenience, and in directly reimbursable freight and crane charges that are the financial responsibility of the customers. Demand for retail parts and services fluctuates from period to period based on varying customer needs.

Related-party revenue. Related-party revenue was earned through related-party transactions that occur in the ordinary course of business with various affiliated entities of Energy Transfer. The $4.4 million increase in related-party revenue for the nine months ended September 30, 2023, compared to the nine months ended September 30, 2022, primarily was due to (i) an increase in revenues attributable to natural gas treating services driven by increased demand for these services from these entities, (ii) increased average revenue-generating horsepower under contract with these entities, and (iii) increased average revenue per revenue-generating horsepower per month, consistent with the overall increase to our contract operations revenue.

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Cost of operations, exclusive of depreciation and amortization. The $43.2 million increase in cost of operations, exclusive of depreciation and amortization, for the nine months ended September 30, 2023, compared to the nine months ended September 30, 2022, primarily was due to (i) a $22.0 million increase in direct expenses, primarily driven by fluids and parts due to higher costs and increased usage associated with increased revenue-generating horsepower, (ii) a $9.4 million increase in direct labor costs due to increased headcount associated with increased revenue-generating horsepower and higher employee costs, (iii) a $4.5 million increase in retail parts and service expenses, for which a corresponding increase in parts and service revenue also occurred, (iv) a $3.8 million increase in outside maintenance costs due to greater use and higher costs of third-party labor during the current period, (v) a $1.2 million increase in other indirect expenses primarily due to increased consumption and costs of supplies associated with increased revenue-generating horsepower, and (vi) a $0.9 million increase in expenses related to our vehicle fleet, primarily due to increased usage and maintenance costs associated with increased revenue-generating horsepower.

Depreciation and amortization expense. The $6.8 million increase in depreciation and amortization expense for the nine months ended September 30, 2023, compared to the nine months ended September 30, 2022, primarily was due to new compression units placed in service to meet incremental demand from customers and overhauls and major improvements to compression units.

Selling, general, and administrative expense. The $10.3 million increase in selling, general, and administrative expense for the nine months ended September 30, 2023, compared to the nine months ended September 30, 2022, primarily was due to (i) a $7.9 million increase in unit-based compensation expense, attributable to mark-to-market changes to our unit-based compensation liability that occurred as a result of changes to our per-unit trading price as of September 30, 2023, (ii) a $1.9 million increase in employee-related expenses driven by higher employee costs and increased headcount, and (iii) a $0.7 million reversal of previously recognized credit losses in the prior comparable period, partially offset by (iv) a $0.7 million decrease in severance charges, primarily attributable to the departure of one of our executives during the third quarter of 2022.

Loss (gain) on disposition of assets. The $3.9 million gain on disposition of assets for the nine months ended September 30, 2023 primarily was due to the sale of certain natural gas treating assets to an existing customer. The $2.0 million loss on disposition of assets for the nine months ended September 30, 2022 primarily was due to various disposals of assets.

Impairment of compression equipment. The $12.3 million and $0.9 million impairments of compression equipment for the nine months ended September 30, 2023 and 2022, respectively, primarily resulted from our evaluation of the future deployment of idle fleet assets under then-existing market conditions. The primary circumstances supporting these impairments were: (i) unmarketability of certain compression units into the foreseeable future, (ii) excessive maintenance costs associated with certain fleet assets, and (iii) prohibitive retrofitting costs that likely would prevent certain compression units from securing customer acceptance. These compression units were written down to their estimated salvage values, if any.

As a result of our evaluations during the nine months ended September 30, 2023 and 2022, we retired 42 and 12 compression units, respectively, with approximately 37,700 and 2,500 aggregate horsepower, respectively, that previously were used to provide compression services in our business.

Interest expense, net. The $25.0 million increase in interest expense, net for the nine months ended September 30, 2023, compared to the nine months ended September 30, 2022, primarily was due to higher weighted-average interest rates and increased borrowings under the Credit Agreement.

The weighted-average interest rate applicable to borrowings under the Credit Agreement was 7.57% and 3.79% for the nine months ended September 30, 2023 and 2022, respectively, and average outstanding borrowings under the Credit Agreement were $728.5 million and $561.1 million for the nine months ended September 30, 2023 and 2022, respectively.

Gain on derivative instrument. In April 2023, we entered into an interest-rate swap in which we pay a fixed interest rate and receive floating interest rate payments that are indexed to the one-month SOFR. The $18.0 million gain on derivative instrument for the nine months ended September 30, 2023, resulted from the increase in fair value of the interest-rate swap due to an increase in the interest-rate forward curve during the current period. We had no derivative instruments outstanding for the nine months ended September 30, 2022.

Income tax expense. The $0.4 million increase in income tax expense for the nine months ended September 30, 2023, compared to the nine months ended September 30, 2022, primarily was related to taxes associated with the Texas Margin Tax.

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Other Financial Data

The following table summarizes other financial data for the periods presented (dollars in thousands):

Other Financial Data: (1)						Three Months Ended September 30,												Increase						Nine Months Ended September 30,												Increase
						2023						2022						(Decrease)						2023						2022						(Decrease)
Gross margin						$	78,056					$	61,388					27.2		%				$	225,988					$	169,348					33.4		%
Adjusted gross margin						$	142,157					$	120,160					18.3		%				$	409,614					$	346,143					18.3		%
Adjusted gross margin percentage (2)						65.5		%				66.9		%				(1.4)		%				65.9		%				67.3		%				(1.4)		%
Adjusted EBITDA						$	130,164					$	109,156					19.2		%				$	373,323					$	312,987					19.3		%
Adjusted EBITDA percentage (2)						60.0		%				60.8		%				(0.8)		%				60.1		%				60.8		%				(0.7)		%
DCF						$	71,574					$	55,181					29.7		%				$	201,225					$	160,903					25.1		%
DCF Coverage Ratio						1.39		x				1.07		x				29.9		%				1.30		x				1.04		x				25.0		%

________________________________

(1)Adjusted gross margin, Adjusted EBITDA, Distributable Cash Flow (“DCF”), and DCF Coverage Ratio are all non-GAAP financial measures. Definitions of each measure, as well as reconciliations of each measure to its most directly comparable financial measure(s) calculated and presented in accordance with GAAP, can be found below under the caption “Non-GAAP Financial Measures”.

(2)Adjusted gross margin percentage and Adjusted EBITDA percentage are calculated as a percentage of revenue.

Gross margin. The $16.7 million increase in gross margin for the three months ended September 30, 2023, compared to the three months ended September 30, 2022, was due to (i) a $37.5 million increase in revenues, offset by (ii) a $15.5 million increase in cost of operations, exclusive of depreciation and amortization, and (iii) a $5.3 million increase in depreciation and amortization.

The $56.6 million increase in gross margin for the nine months ended September 30, 2023, compared to the nine months ended September 30, 2022, was due to (i) a $106.6 million increase in revenues, offset by (ii) a $43.2 million increase in cost of operations, exclusive of depreciation and amortization, and (iii) a $6.8 million increase in depreciation and amortization.

Adjusted gross margin and Adjusted gross margin percentage. The $22.0 million increase in Adjusted gross margin for the three months ended September 30, 2023, compared to the three months ended September 30, 2022, was due to a $37.5 million increase in revenues, offset by a $15.5 million increase in cost of operations, exclusive of depreciation and amortization.

The $63.5 million increase in Adjusted gross margin for the nine months ended September 30, 2023, compared to the nine months ended September 30, 2022, was due to a $106.6 million increase in revenues, offset by a $43.2 million increase in cost of operations, exclusive of depreciation and amortization.

The 1.4% decreases in Adjusted gross margin percentage for the three and nine months ended September 30, 2023, compared to the three and nine months ended September 30, 2022, respectively, primarily were due to the inflation-driven increase in cost of operations, exclusive of depreciation and amortization, that preceded related CPI-based and other market-based price increases on customer contracts that occur as market conditions permit.

Adjusted EBITDA and Adjusted EBITDA percentage. The $21.0 million increase in Adjusted EBITDA for the three months ended September 30, 2023, compared to the three months ended September 30, 2022, primarily was due to a $22.0 million increase in Adjusted gross margin, partially offset by a $0.9 million increase in selling, general, and administrative expenses, excluding unit-based compensation expense, transaction expenses, and severance charges.

The $60.3 million increase in Adjusted EBITDA for the nine months ended September 30, 2023, compared to the nine months ended September 30, 2022, primarily was due to a $63.5 million increase in Adjusted gross margin, partially offset by a $3.1 million increase in selling, general and administrative expenses, excluding unit-based compensation expense, severance charges, and transaction expenses.

The 0.8% and 0.7% decreases in Adjusted EBITDA percentage for the three and nine months ended September 30, 2023, compared to the three and nine months ended September 30, 2022, respectively, primarily were due to the inflation-driven increase in cost of operations, exclusive of depreciation and amortization, that preceded related CPI-based and other market-based price increases on customer contracts that occur as market conditions permit.

DCF. The $16.4 million increase in DCF for the three months ended September 30, 2023, compared to the three months ended September 30, 2022, primarily was due to (i) a $22.0 million increase in Adjusted gross margin, (ii) a $2.5 million

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increase in cash received on derivative instrument, and (iii) a $0.9 million decrease in maintenance capital expenditures, partially offset by (iv) an $8.1 million increase in cash interest expense, net and (v) a $0.9 million increase in selling, general, and administrative expenses, excluding unit-based compensation expense and severance charges.

The $40.3 million increase in DCF for the nine months ended September 30, 2023, compared to the nine months ended September 30, 2022, primarily was due to (i) a $63.5 million increase in Adjusted gross margin, (ii) a $3.7 million increase in cash received on derivative instrument, and (iii) $1.4 million decrease in maintenance capital expenditures, partially offset by (iii) a $25.0 million increase in cash interest expense, net and (iv) a $3.1 million increase in selling, general and administrative expenses, excluding unit-based compensation expense, severance charges, and transaction expenses.

DCF Coverage Ratio. The increase in DCF Coverage Ratio for the three and nine months ended September 30, 2023, compared to the three and nine months ended September 30, 2022, was due to the increase in DCF, partially offset by increased distributions due to an increase in the number of outstanding common units.

Liquidity and Capital Resources

Overview

We operate in a capital-intensive industry, and our primary liquidity needs include financing the purchase of additional compression units, making other capital expenditures, servicing our debt, funding working capital, and paying cash distributions on our outstanding preferred and common equity. Our principal sources of liquidity include cash generated by operating activities, borrowings under the Credit Agreement, and issuances of debt and equity securities, including common units under the DRIP.

We believe cash generated by operating activities and, where necessary, borrowings under the Credit Agreement will be sufficient to service our debt, fund working capital, fund our estimated expansion capital expenditures, fund our maintenance capital expenditures, and pay distributions to our unitholders for the next 12 months.

Because we distribute all of our available cash, which excludes prudent operating reserves, we expect to fund any future expansion capital expenditures or acquisitions primarily with capital from external financing sources, such as borrowings under the Credit Agreement and issuances of debt and equity securities, including under the DRIP.

Capital Expenditures

The compression services business is capital intensive, requiring significant investment to maintain, expand, and upgrade existing operations. Our capital requirements primarily have consisted of, and we anticipate that our capital requirements will continue primarily to consist of, the following:

•maintenance capital expenditures, which are capital expenditures made to maintain the operating capacity of our assets and extend their useful lives, to replace partially or fully depreciated assets, or other capital expenditures that are incurred in maintaining our existing business and related operating income; and

•expansion capital expenditures, which are capital expenditures made to expand the operating capacity or operating-income capacity of assets, including by acquisition of compression units or through modification of existing compression units to increase their capacity, or to replace certain partially or fully depreciated assets that at the time of replacement were not generating operating income.

We classify capital expenditures as maintenance or expansion on an individual-asset basis. Over the long term, we expect that our maintenance capital expenditure requirements will continue to increase as the overall size and age of our fleet increases. Our aggregate maintenance capital expenditures for the nine months ended September 30, 2023 and 2022, were $18.6 million and $20.0 million, respectively. We currently plan to spend approximately $26.0 million in maintenance capital expenditures for the year 2023, including parts consumed from inventory.

Without giving effect to any equipment that we may acquire pursuant to any future acquisitions, we currently plan to spend between $270.0 million and $280.0 million in expansion capital expenditures for the year 2023. Our expansion capital expenditures for the nine months ended September 30, 2023 and 2022, were $185.3 million and $99.0 million, respectively.

As of September 30, 2023, we had binding commitments to purchase $101.3 million worth of additional compression units and serialized parts, all of which is expected to be settled within the next twelve months and $63.0 million of which is expected to be settled by year-end 2023.

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Cash Flows

The following table summarizes our sources and uses of cash for the nine months ended September 30, 2023 and 2022, (in thousands):

			Nine Months Ended September 30,
			2023						2022
Net cash provided by operating activities			$	180,281					$	178,491
Net cash used in investing activities			(153,391)						(86,415)
Net cash used in financing activities			(26,919)						(92,070)

Net cash provided by operating activities. The $1.8 million increase in net cash provided by operating activities for the nine months ended September 30, 2023, compared to the nine months ended September 30, 2022, primarily was due to (i) a $63.5 million increase in Adjusted gross margin, partially offset by (ii) a $31.2 million increase in inventory purchases and (iii) a $27.1 million increase in cash paid for interest expense, net of capitalized amounts.

Net cash used in investing activities. The $67.0 million increase in net cash used in investing activities for the nine months ended September 30, 2023, compared to the nine months ended September 30, 2022, primarily was due to a $71.0 million increase in capital expenditures, for purchases of new compression units, overhauls and major improvements, and purchases of other equipment, partially offset by a $4.1 million increase in proceeds from disposition of property and equipment.

Net cash used in financing activities. The $65.2 million decrease in net cash used in financing activities for the nine months ended September 30, 2023, compared to the nine months ended September 30, 2022, primarily was due to a $65.1 million increase in net borrowings under the Credit Agreement.

Revolving Credit Facility

As of September 30, 2023, we had outstanding borrowings under the Credit Agreement of $813.1 million, $786.9 million of availability and, subject to compliance with the applicable financial covenants, available borrowing capacity of $434.3 million. The increase in available borrowing capacity compared to the second quarter of 2023 primarily was due to the inclusion this quarter of recurring tax expenses, consistent with the calculation of EBITDA under the Credit Agreement. As of September 30, 2023, we were in compliance with all of our covenants under the Credit Agreement.

As of October 26, 2023, we had outstanding borrowings under the Credit Agreement of $850.0 million.

For a more detailed description of the Credit Agreement, see Note 8 to our unaudited condensed consolidated financial statements in Part I, Item 1 “Financial Statements” of this report and Note 9 to the consolidated financial statements in Part II, Item 8 “Financial Statements and Supplementary Data” included in our 2022 Annual Report.

Senior Notes

As of September 30, 2023, we had $725.0 million and $750.0 million aggregate principal amount outstanding on our Senior Notes 2026 and Senior Notes 2027, respectively.

The Senior Notes 2026 are due on April 1, 2026, and accrue interest at the rate of 6.875% per year. Interest on the Senior Notes 2026 is payable semi-annually in arrears on each of April 1 and October 1.

The Senior Notes 2027 are due on September 1, 2027, and accrue interest at the rate of 6.875% per year. Interest on the Senior Notes 2027 is payable semi-annually in arrears on each of March 1 and September 1.

For more detailed descriptions of the Senior Notes 2026 and Senior Notes 2027, see Note 8 to our unaudited condensed consolidated financial statements in Part I, Item 1 “Financial Statements” of this report and Note 9 to the consolidated financial statements in Part II, Item 8 “Financial Statements and Supplementary Data” included in our 2022 Annual Report.

Derivative Instrument

In April 2023, we entered into an interest-rate swap to manage interest-rate risk associated with the floating-rate Credit Agreement. See Note 7 to our unaudited condensed consolidated financial statements in Part I, Item 1 “Financial Statements” of this report for additional information on the interest-rate swap.

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In October 2023, we modified this interest-rate swap. See Note 14 to our unaudited condensed consolidated financial statements in Part I, Item 1 “Financial Statements” of this report for additional information on the modified interest-rate swap.

DRIP

During the nine months ended September 30, 2023, distributions of $1.5 million were reinvested under the DRIP resulting in the issuance of 71,589 common units. Such distributions are treated as non-cash transactions in the accompanying unaudited condensed consolidated statements of cash flows included under Part I, Item 1 “Financial Statements” of this report.

Non-GAAP Financial Measures

Adjusted Gross Margin

Adjusted gross margin is a non-GAAP financial measure. We define Adjusted gross margin as revenue less cost of operations, exclusive of depreciation and amortization expense. We believe Adjusted gross margin is useful to investors as a supplemental measure of our operating profitability. Adjusted gross margin primarily is impacted by the pricing trends for service operations and cost of operations, including labor rates for service technicians, volume, and per-unit costs for lubricant oils, quantity and pricing of routine preventative maintenance on compression units, and property tax rates on compression units. Adjusted gross margin should not be considered an alternative to, or more meaningful than, gross margin or any other measure presented in accordance with GAAP. Moreover, our Adjusted gross margin, as presented, may not be comparable to similarly titled measures of other companies. Because we capitalize assets, depreciation and amortization of equipment is a necessary element of our cost structure. To compensate for the limitations of Adjusted gross margin as a measure of our performance, we believe it is important to consider gross margin determined under GAAP, as well as Adjusted gross margin, to evaluate our operating profitability.

The following table reconciles Adjusted gross margin to gross margin, its most directly comparable GAAP financial measure, for each of the periods presented (in thousands):

			Three Months Ended September 30,												Nine Months Ended September 30,
			2023						2022						2023						2022
Total revenues			$	217,085					$	179,613					$	621,129					$	514,486
Cost of operations, exclusive of depreciation and amortization			(74,928)						(59,453)						(211,515)						(168,343)
Depreciation and amortization			(64,101)						(58,772)						(183,626)						(176,795)
Gross margin			$	78,056					$	61,388					$	225,988					$	169,348
Depreciation and amortization			64,101						58,772						183,626						176,795
Adjusted gross margin			$	142,157					$	120,160					$	409,614					$	346,143

Adjusted EBITDA

We define EBITDA as net income (loss) before net interest expense, depreciation and amortization expense, and income tax expense (benefit). We define Adjusted EBITDA as EBITDA plus impairment of compression equipment, impairment of goodwill, interest income on capital leases, unit-based compensation expense (benefit), severance charges, certain transaction expenses, loss (gain) on disposition of assets, loss (gain) on derivative instrument, and other. We view Adjusted EBITDA as one of management’s primary tools for evaluating our results of operations, and we track this item on a monthly basis as an absolute amount and as a percentage of revenue compared to the prior month, year-to-date, prior year, and budget. Adjusted EBITDA is used as a supplemental financial measure by our management and external users of our financial statements, such as investors and commercial banks, to assess:

•the financial performance of our assets without regard to the impact of financing methods, capital structure, or the historical cost basis of our assets;

•the viability of capital expenditure projects and the overall rates of return on alternative investment opportunities;

•the ability of our assets to generate cash sufficient to make debt payments and pay distributions; and

•our operating performance as compared to those of other companies in our industry without regard to the impact of financing methods and capital structure.

We believe Adjusted EBITDA provides useful information to investors because, when viewed in conjunction with our GAAP results and the accompanying reconciliations, it may provide a more complete assessment of our performance as

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compared to considering solely GAAP results. We also believe that external users of our financial statements benefit from having access to the same financial measures that management uses to evaluate the results of our business.

Adjusted EBITDA should not be considered an alternative to, or more meaningful than, net income (loss), operating income (loss), cash flows from operating activities, or any other measure presented in accordance with GAAP. Moreover, our Adjusted EBITDA, as presented, may not be comparable to similarly titled measures of other companies.

Because we use capital assets, depreciation, impairment of compression equipment, loss (gain) on disposition of assets, and the interest cost of acquiring compression equipment also are necessary elements of our aggregate costs. Unit-based compensation expense related to equity awards granted to employees also is a meaningful business expense. Therefore, measures that exclude these cost elements have material limitations. To compensate for these limitations, we believe that it is important to consider net income (loss) and net cash provided by operating activities as determined under GAAP, as well as Adjusted EBITDA, to evaluate our financial performance and liquidity. Our Adjusted EBITDA excludes some, but not all, items that affect net income (loss) and net cash provided by operating activities, and these excluded items may vary among companies. Management compensates for the limitations of Adjusted EBITDA as an analytical tool by reviewing comparable GAAP measures, understanding the differences between the measures, and incorporating this knowledge into their decision making.

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The following table reconciles Adjusted EBITDA to net income and net cash provided by operating activities, its most directly comparable GAAP financial measures, for each of the periods presented (in thousands):

			Three Months Ended September 30,												Nine Months Ended September 30,
			2023						2022						2023						2022
Net income			$	20,902					$	9,612					$	55,427					$	21,952
Interest expense, net			43,257						35,142						125,092						100,059
Depreciation and amortization			64,101						58,772						183,626						176,795
Income tax expense			255						376						1,010						657
EBITDA			$	128,515					$	103,902					$	365,155					$	299,463
Unit-based compensation expense (1)			8,024						3,008						17,652						9,716
Transaction expenses (2)			—						—						—						27
Severance charges			45						624						89						875
Loss (gain) on disposition of assets			(3,865)						1,118						(3,932)						1,970
Gain on derivative instrument			(3,437)						—						(17,987)						—
Impairment of compression equipment (3)			882						504						12,346						936
Adjusted EBITDA			$	130,164					$	109,156					$	373,323					$	312,987
Interest expense, net			(43,257)						(35,142)						(125,092)						(100,059)
Non-cash interest expense			1,819						1,814						5,460						5,451
Income tax expense			(255)						(376)						(1,010)						(657)
Transaction expenses			—						—						—						(27)
Severance charges			(45)						(624)						(89)						(875)
Cash received on derivative instrument			2,528						—						3,744						—
Other			(65)						(33)						(46)						(916)
Changes in operating assets and liabilities			(40,817)						(25,586)						(76,009)						(37,413)
Net cash provided by operating activities			$	50,072					$	49,209					$	180,281					$	178,491

________________________________

(1)For the three and nine months ended September 30, 2023, unit-based compensation expense included $1.1 million and $3.3 million, respectively, of cash payments related to quarterly payments of DERs on outstanding phantom unit awards. For the three and nine months ended September 30, 2022, unit-based compensation expense included $1.1 million and $3.4 million, respectively, of cash payments related to quarterly payments of DERs on outstanding phantom unit awards and $1.1 million for the three and nine months ended September 30, 2022, related to the cash portion of the settlement of phantom unit awards upon vesting. The remainder of unit-based compensation expense for all periods was related to non-cash adjustments to the unit-based compensation liability.

(2)Represents certain expenses related to potential and completed transactions and other items. We believe it is useful to investors to exclude these expenses.

(3)Represents non-cash charges incurred to decrease the carrying value of long-lived assets with recorded values that are not expected to be recovered through future cash flows.

Distributable Cash Flow

We define DCF as net income (loss) plus non-cash interest expense, non-cash income tax expense (benefit), depreciation and amortization expense, unit-based compensation expense (benefit), impairment of compression equipment, impairment of goodwill, certain transaction expenses, severance charges, loss (gain) on disposition of assets, change in fair value of derivative instrument, proceeds from insurance recovery, and other, less distributions on Preferred Units and maintenance capital expenditures.

We believe DCF is an important measure of operating performance because it allows management, investors, and others to compare the cash flows that we generate (after distributions on the Preferred Units but prior to any retained cash reserves established by the General Partner and the effect of the DRIP) to the cash distributions that we expect to pay our common unitholders.

DCF should not be considered an alternative to, or more meaningful than, net income (loss), operating income (loss), cash flows from operating activities, or any other measure presented in accordance with GAAP. Moreover, our DCF, as presented, may not be comparable to similarly titled measures of other companies.

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Because we use capital assets, depreciation, impairment of compression equipment, loss (gain) on disposition of assets, the interest cost of acquiring compression equipment, and maintenance capital expenditures are necessary components of our aggregate costs. Unit-based compensation expense related to equity awards granted to employees also is a meaningful business expense. Therefore, measures that exclude these cost elements have material limitations. To compensate for these limitations, we believe that it is important to consider net income (loss) and net cash provided by operating activities as determined under GAAP, as well as DCF, to evaluate our financial performance and liquidity. Our DCF excludes some, but not all, items that affect net income (loss) and net cash provided by operating activities, and these excluded items may vary among companies. Management compensates for the limitations of DCF as an analytical tool by reviewing comparable GAAP measures, understanding the differences between the measures, and incorporating this knowledge into their decision making.

The following table reconciles DCF to net income and net cash provided by operating activities, its most directly comparable GAAP financial measures, for each of the periods presented (in thousands):

			Three Months Ended September 30,												Nine Months Ended September 30,
			2023						2022						2023						2022
Net income			$	20,902					$	9,612					$	55,427					$	21,952
Non-cash interest expense			1,819						1,814						5,460						5,451
Depreciation and amortization			64,101						58,772						183,626						176,795
Non-cash income tax benefit			(65)						(33)						(46)						(216)
Unit-based compensation expense (1)			8,024						3,008						17,652						9,716
Transaction expenses (2)			—						—						—						27
Severance charges			45						624						89						875
Loss (gain) on disposition of assets			(3,865)						1,118						(3,932)						1,970
Change in fair value of derivative instrument			(909)						—						(14,243)						—
Impairment of compression equipment (3)			882						504						12,346						936
Distributions on Preferred Units			(12,188)						(12,188)						(36,563)						(36,563)
Maintenance capital expenditures (4)			(7,172)						(8,050)						(18,591)						(20,040)
DCF			$	71,574					$	55,181					$	201,225					$	160,903
Maintenance capital expenditures			7,172						8,050						18,591						20,040
Transaction expenses			—						—						—						(27)
Severance charges			(45)						(624)						(89)						(875)
Distributions on Preferred Units			12,188						12,188						36,563						36,563
Other			—						—						—						(700)
Changes in operating assets and liabilities			(40,817)						(25,586)						(76,009)						(37,413)
Net cash provided by operating activities			$	50,072					$	49,209					$	180,281					$	178,491

________________________________

(1)For the three and nine months ended September 30, 2023, unit-based compensation expense included $1.1 million and $3.3 million, respectively, of cash payments related to quarterly payments of DERs on outstanding phantom unit awards. For the three and nine months ended September 30, 2022, unit-based compensation expense included $1.1 million and $3.4 million, respectively, of cash payments related to quarterly payments of DERs on outstanding phantom unit awards and $1.1 million for the three and nine months ended September 30, 2022, related to the cash portion of the settlement of phantom unit awards upon vesting. The remainder of unit-based compensation expense for all periods was related to non-cash adjustments to the unit-based compensation liability.

(2)Represents certain expenses related to potential and completed transactions and other items. We believe it is useful to investors to exclude these expenses.

(3)Represents non-cash charges incurred to decrease the carrying value of long-lived assets with recorded values that are not expected to be recovered through future cash flows.

(4)Reflects actual maintenance capital expenditures for the period presented. Maintenance capital expenditures are capital expenditures made to maintain the operating capacity of our assets and extend their useful lives, replace partially or fully depreciated assets, or other capital expenditures that are incurred in maintaining our existing business and related cash flow.

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DCF Coverage Ratio

DCF Coverage Ratio is defined as the period’s DCF divided by distributions declared to common unitholders in respect of such period. We believe DCF Coverage Ratio is an important measure of operating performance because it permits management, investors, and others to assess our ability to pay distributions to common unitholders out of the cash flows that we generate. Our DCF Coverage Ratio, as presented, may not be comparable to similarly titled measures of other companies.

The following table summarizes our DCF Coverage Ratio for the periods presented (dollars in thousands):

			Three Months Ended September 30,												Nine Months Ended September 30,
			2023						2022						2023						2022
DCF			$	71,574					$	55,181					$	201,225					$	160,903
Distributions for DCF Coverage Ratio (1)			$	51,608					$	51,447					$	154,789					$	153,989
DCF Coverage Ratio			1.39		x				1.07		x				1.30		x				1.04		x

________________________________

(1)Represents distributions to the holders of our common units as of the record date.

Critical Accounting Estimates

The Partnership’s critical accounting estimates are described in Part II, Item 7 “Critical Accounting Estimates” of our 2022 Annual Report. There have been no material changes to our critical accounting estimates since the date of our 2022 Annual Report.

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ITEM 3.    Quantitative and Qualitative Disclosures About Market Risk

Commodity Price Risk

Market risk is the risk of loss arising from adverse changes in market rates and prices. We do not take title to any natural gas or crude oil in connection with our rendered services, and accordingly, we do not bear direct exposure to fluctuating commodity prices. However, the demand for our compression services depends on the continued demand for, and production of, natural gas and crude oil. Sustained low natural gas or crude oil prices over the long term could result in a decline in the production of natural gas or crude oil, which could result in reduced demand for our compression services. We do not intend to hedge our indirect exposure to fluctuating commodity prices. A one percent decrease in average revenue-generating horsepower during the nine months ended September 30, 2023, would result in an annual decrease of approximately $7.4 million and $4.8 million in our revenue and Adjusted gross margin, respectively. Adjusted gross margin is a non-GAAP financial measure. For a reconciliation of Adjusted gross margin to gross margin, its most directly comparable financial measure, calculated and presented in accordance with GAAP, please read Part I, Item 2 “Management’s Discussion and Analysis of Financial Condition and Results of Operations – Non-GAAP Financial Measures” of this report.

Interest Rate Risk

We are exposed to market risk due to variable interest rates under the Credit Agreement.

As of September 30, 2023, we had $813.1 million of variable-rate indebtedness outstanding at a weighted-average interest rate of 7.99%. Based on our September 30, 2023 variable-rate indebtedness outstanding, a one percent increase or decrease in the effective interest rate would result in an annual increase or decrease, respectively, in our interest expense of approximately $8.1 million.

In April 2023, we entered into an interest-rate swap to manage interest-rate risk associated with the floating-rate Credit Agreement. As of September 30, 2023, the interest-rate swap’s notional principal amount was $700 million and it had a termination date in April 2025. Under the interest-rate swap, we pay a fixed interest rate, which as of September 30, 2023 was 3.785%, and receive floating interest rate payments that are indexed to the one-month SOFR. Based on the fixed interest rate as of September 30, 2023, a one percent increase or decrease in the SOFR interest-rate forward curve would result in an increase or decrease, respectively, in the fair value of this interest-rate swap of $11.2 million, prior to any discount factors or credit valuation adjustments.

In October 2023, we modified this interest-rate swap. See Note 14 to our unaudited condensed consolidated financial statements in Part I, Item 1 “Financial Statements” of this report for additional information on the modified interest-rate swap.

For further information regarding our exposure to interest rate fluctuations on our debt obligations, see Note 8 to our unaudited condensed consolidated financial statements under Part I, Item 1 “Financial Statements” of this report.

Credit Risk

Our credit exposure generally relates to receivables for services provided. If any significant customer of ours should have credit or financial problems resulting in a delay or failure to pay the amount it owes us, it could have a material adverse effect on our business, financial condition, results of operations, and cash flows.

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ITEM 4.    Controls and Procedures

Management’s Evaluation of Disclosure Controls and Procedures

As required by Rule 13a-15(b) of the Exchange Act, we have evaluated, under the supervision and with the participation of our management, including our principal executive officer and principal financial officer, the effectiveness of the design and operation of our disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) under the Exchange Act) as of the end of the period covered by this report. Our disclosure controls and procedures are designed to provide reasonable assurance that the information required to be disclosed by us in reports that we file or submit under the Exchange Act is accumulated and communicated to our management, including our principal executive officer and principal financial officer, as appropriate to allow timely decisions regarding required disclosures, and is recorded, processed, summarized, and reported within the time periods specified in the rules and forms of the SEC. Based on the evaluation, our principal executive officer and principal financial officer have concluded that our disclosure controls and procedures were effective as of September 30, 2023, at the reasonable assurance level.

Changes in Internal Control over Financial Reporting

There were no changes in our internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) during the last fiscal quarter that materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

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PART II.  OTHER INFORMATION

ITEM 1.    Legal Proceedings

From time to time, we and our subsidiaries may be involved in various claims, proceedings, and litigation arising in the ordinary course of business. In management’s opinion, the resolution of such matters is not expected to have a material adverse effect on our consolidated financial position, results of operations, or cash flows. See “Tax Contingencies” in Note 13 to our unaudited condensed consolidated financial statements in Part I, Item 1 “Financial Statements” of this report for more information on certain of these proceedings.

ITEM 1A.    Risk Factors

Security holders and potential investors in our securities should carefully consider the risk factors set forth in Part I, Item 1A “Risk Factors” of our 2022 Annual Report, in Part II, Item 1A “Risk Factors” in our Quarterly Report for the quarter ended March 31, 2023, and in subsequent filings we make with the SEC. We have identified these risk factors as important factors that could cause our actual results to differ materially from those contained in any written or oral forward-looking statements made by us or on our behalf.

ITEM 6.    Exhibits

The following documents are filed, furnished, or incorporated by reference as part of this report:

Exhibit Number						Description
3.1						Certificate of Limited Partnership of USA Compression Partners, LP (incorporated by reference to Exhibit 3.1 to Amendment No. 3 of the Partnership’s registration statement on Form S-1 (Registration No. 333-174803) filed on December 21, 2011)
3.2						Second Amended and Restated Agreement of Limited Partnership of USA Compression Partners, LP (incorporated by reference to Exhibit 3.1 to the Partnership’s Current Report on Form 8-K (File No. 001-35779) filed on April 6, 2018)
22.1						List of Subsidiary Guarantors and Co-Issuer (incorporated by reference to Exhibit 22.1 to the Partnership’s Annual Report on Form 10-K for the year ended December 31, 2022 (File No. 001-35779) filed on February 14, 2023)
31.1*						Certification of Chief Executive Officer pursuant to Rule 13a-14(a) under the Securities Exchange Act of 1934
31.2*						Certification of Principal Financial Officer pursuant to Rule 13a-14(a) under the Securities Exchange Act of 1934
32.1#						Certification of Chief Executive Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
32.2#						Certification of Principal Financial Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
101.1*						The following materials from USA Compression Partners, LP’s Quarterly Report on Form 10-Q for the three and nine months ended September 30, 2023, formatted in Inline XBRL (eXtensible Business Reporting Language): (i) our unaudited condensed consolidated balance sheets as of September 30, 2023 and December 31, 2022, (ii) our unaudited condensed consolidated statements of operations for the three and nine months ended September 30, 2023 and 2022, (iii) our unaudited condensed consolidated statements of changes in partners’ capital (deficit) for the nine months ended September 30, 2023 and 2022, (iv) our unaudited condensed consolidated statements of cash flows for the nine months ended September 30, 2023 and 2022, and (v) the related notes to our unaudited condensed consolidated financial statements.
104*						The cover page from this Quarterly Report on Form 10-Q for the quarterly period ended September 30, 2023, formatted in Inline XBRL (included with Exhibit 101.1)

________________________________

*    Filed herewith.

#    Furnished herewith. Not considered to be “filed” for the purposes of Section 18 of the Securities Exchange Act of 1934 or otherwise subject to the liabilities of that section.

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SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

October 31, 2023			USA COMPRESSION PARTNERS, LP
			By:			USA Compression GP, LLC its General Partner
			By:			/s/ G. Tracy Owens
						G. Tracy Owens
						Vice President of Finance and Chief Accounting Officer (Principal Financial and Accounting Officer)

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