What changed in this filing

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Item 1. Financial Statements

2021-08-03 compared with 2021-05-04 · 102 added, 83 removed, 424 unchanged (30% of the section changed)

41 unchanged sentences

(in thousands, except per unit amounts)

Three Months Ended March 31,

Three Months Ended June 30, Six Months Ended June 30,

2021 2020 2021 2020

Contract operations $ 151,800 $ 162,993 $ 304,325 $ 335,787

13 unchanged sentences

Interest expense, net ( 32,350 ) ( 31,815 ) ( 64,638 ) ( 64,293 )

Other 45 24 70 47

Total other expense ( 32,305 ) ( 31,791 ) ( 64,568 ) ( 64,246 )

11 unchanged sentences

(in thousands, except per unit amounts)

For the Three Months Ended March 31, 2021

For the Six Months Ended June 30, 2021

Common units Warrants Total

7 unchanged sentences

Partners’ capital ending balance, March 31, 2021 261,835 13,979 275,814

For the Three Months Ended March 31, 2020

Vesting of phantom units 277 — 277

Distributions and DERs, $ 0.525 per unit

( 50,963 ) — ( 50,963 )

Issuance of common units under the DRIP 402 — 402

Unit-based compensation for equity classified awards 54 — 54

Net loss attributable to common unitholders’ interests ( 9,500 ) — ( 9,500 )

Partners’ capital ending balance, June 30, 2021 $ 202,105 $ 13,979 $ 216,084

For the Six Months Ended June 30, 2020

Common units Warrants Total

7 unchanged sentences

Partners’ capital ending balance, March 31, 2020 502,637 13,979 516,616

Vesting of phantom units 659 — 659

Distributions and DERs, $ 0.525 per unit

( 50,801 ) — ( 50,801 )

Issuance of common units under the DRIP 612 — 612

Unit-based compensation for equity classified awards 56 — 56

Net loss attributable to common unitholders’ interests ( 9,504 ) — ( 9,504 )

Partners’ capital ending balance, June 30, 2020 $ 443,659 $ 13,979 $ 457,638

See accompanying notes to unaudited condensed consolidated financial statements.

2 unchanged sentences

(in thousands)

Three Months Ended March 31,

Six Months Ended June 30,

Cash flows from operating activities:

4 unchanged sentences

Amortization of debt issuance costs 4,578 3,946

Unit-based compensation expense (benefit) 4,182 ( 1,829 )

Unit-based compensation expense 8,442 2,739

Deferred income tax expense (benefit) ( 133 ) 272

24 unchanged sentences

Net cash used in financing activities ( 128,802 ) ( 83,644 )

Increase (decrease) in cash and cash equivalents 97 ( 8 )

Decrease in cash and cash equivalents — ( 8 )

Cash and cash equivalents, beginning of period 2 10

17 unchanged sentences

We primarily provide compression services in a number of 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.” As of March 31, 2021, the General Partner was wholly-owned by ETO.

On April 1, 2021, Energy Transfer LP (“ET”), ETO and certain of their affiliates consummated an internal reorganization.

In connection with the reorganization, ETO merged with and into ET, with ET surviving the merger (the “ETO Merger”).

As a result of the ETO Merger, the General Partner became wholly-owned by ET.

USA Compression GP, LLC, a Delaware limited liability company, serves as our general partner and is referred to herein as the “General Partner.” Prior to April 1, 2021, the General Partner was wholly owned by Energy Transfer Operating, L.P.

(“ETO”), an affiliate of Energy Transfer LP.

On April 1, 2021, Energy Transfer LP, ETO and certain of their affiliates consummated an internal reorganization.

In connection with the reorganization, ETO merged with and into Energy Transfer LP, with Energy Transfer LP surviving the merger (the “ET Merger”).

As a result of the ET Merger, the General Partner became wholly owned by Energy Transfer LP.

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

3 unchanged sentences

In the opinion of our management, such financial information reflects all normal recurring adjustments necessary for a fair presentation of these interim unaudited condensed consolidated financial statements in accordance with GAAP.

Operating results for the three months ended March 31, 2021 are not necessarily indicative of the results that may be expected for the year ending December 31, 2021.

Operating results for the three and six months ended June 30, 2021 are not necessarily indicative of the results that may be expected for the year ending December 31, 2021.

Certain information and footnote disclosures normally included in annual consolidated financial statements prepared in accordance with GAAP have been condensed or omitted pursuant to the rules and regulations of the SEC.

10 unchanged sentences

Allowance for Credit Losses

We evaluate our allowance for credit losses related to our two financial assets measured at amortized cost:

(i) trade accounts receivable and (ii) net investment in lease related to our sales-type lease discussed further in Note 7.

Due to the short-

term nature of our trade accounts receivable, we consider the amortized cost to be the same as the carrying amount of the receivable, excluding the allowance for credit losses.

Our determination of the allowance for credit losses requires us to make estimates and judgments regarding our customers’ ability to pay amounts due and is the same process for both of our financial assets as they have similar risk characteristics.

We evaluate our allowance for credit losses related to our trade accounts receivable measured at amortized cost.

Due to the short-term nature of our trade accounts receivable, we consider the amortized cost to be the same as the carrying amount of the receivable, excluding the allowance for credit losses.

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.

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Capitalized interest is calculated by multiplying our monthly effective interest rate on outstanding debt by the amount of qualifying costs, which include upfront payments to acquire certain compression units.

Capitalized interest was $ 3,000 and $ 142,000 for the three months ended March 31, 2021 and 2020, respectively.

Capitalized interest was $ 98,000 and $ 101,000 for the three and six months ended June 30, 2021, respectively, and $ 44,000 and $ 186,000 for the three and six months ended June 30, 2020, respectively.

Impairment of Long-Lived Assets

5 unchanged sentences

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 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 use.

Refer to Note 5 for more detailed information about impairment charges during the three months ended March 31, 2021 and 2020.

Refer to Note 5 for more detailed information about impairment charges during the three and six months ended June 30, 2021 and 2020.

Identifiable Intangible Assets

22 unchanged sentences

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

As of March 31, 2021, our financial instruments consisted primarily of cash and cash equivalents, trade accounts receivable, trade accounts payable and long-term debt.

As of June 30, 2021, our financial instruments consisted primarily of cash and cash equivalents, trade accounts receivable, trade accounts payable and long-term debt.

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.

10 unchanged sentences

(3) Trade Accounts Receivable

The allowance for credit losses, which was $ 3.5 million and $ 5.0 million as of March 31, 2021 and December 31, 2020, respectively, is our best estimate of the amount of probable credit losses included in our existing accounts receivable.

The allowance for credit losses, which was $ 3.5 million and $ 5.0 million as of June 30, 2021 and December 31, 2020, respectively, is our best estimate of the amount of probable credit losses included in our existing accounts receivable.

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

3 unchanged sentences

Writeoffs charged against the allowance ( 194 )

Balance as of March 31, 2021 $ 3,541

For the three months ended March 31, 2021, we recognized a $ 1.3 million reversal of our provision for expected credit losses.

Improved market conditions for customers due to a recovery in crude oil prices was the primary factor contributing to the decrease to the allowance for credit losses for the three months ended March 31, 2021.

For the three months ended March 31, 2020, we recognized a $ 1.5 million provision for expected credit losses.

Low crude oil prices, driven by decreased demand for and global oversupply of crude oil as a result of the COVID-19 pandemic, was the primary factor contributing to the higher allowance for credit losses for the three months ended March 31, 2020.

Balance as of June 30, 2021 $ 3,538

We recognized a $ 1.3 million reversal of our provision for expected credit losses for the six months ended June 30, 2021.

Improved market conditions for customers due to a recovery in crude oil prices was the primary factor contributing to the decrease to the allowance for credit losses for the six months ended June 30, 2021.

For the three and six months ended June 30, 2020, we recognized a $ 2.2 million and $ 3.7 million provision for expected credit losses, respectively.

(4) Inventories

24 unchanged sentences

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

Three Months Ended March 31,

Three Months Ended June 30, Six Months Ended June 30,

2021 2020 2021 2020

Depreciation expense $ 51,882 $ 52,993 $ 105,567 $ 104,410

Gain on disposition of assets 1,105 787 2,360 1,801

As of March 31, 2021 and December 31, 2020, there was $ 2.0 million and $ 2.8 million , respectively, of property and equipment purchases in accounts payable and accrued liabilities.

As of June 30, 2021 and December 31, 2020, there was $ 2.3 million and $ 2.8 million , respectively, of property and equipment purchases in accounts payable and accrued liabilities.

On a quarterly basis, we evaluate the future deployment of our idle fleet under current market conditions.

For the three months ended March 31, 2021, we determined to retire 12 compressor units for a total of approximately 5,600 horsepower that were previously used to provide compression services in our business.

As a result, we recorded an impairment of compression equipment of $ 2.6 million for the three months ended March 31, 2021.

For the three and six months ended June 30, 2021, we determined to retire 10 and 22 compressor units, respectively, for a total of approximately 4,000 and 9,600 horsepower, respectively, that were previously used to provide compression services in our business.

As a result, we recorded impairments of compression equipment of $ 2.4 million and $ 5.0 million for the three and six months ended June 30, 2021, respectively.

For the three and six months ended June 30, 2020 , we determined to retire 11 compressor units for a total of approximately 5,100 horsepower that were previously used to provide compression services in our business.

As a result, we recorded an impairment of compression equipment of $ 3.9 million for the three and six months ended June 30, 2020.

The primary causes for these impairments were:

1 unchanged sentence

These compression units were written down to their respective estimated salvage values, if any.

No impairment was recorded for the three months ended March 31, 2020.

Identifiable Intangible Assets

3 unchanged sentences

Amortization expense ( 13,052 ) ( 1,638 ) ( 14,690 )

Net balance as of March 31, 2021 $ 296,426 $ 30,020 $ 326,446

Accumulated amortization of intangible assets was $ 224.2 million and $ 216.9 million as of March 31, 2021 and December 31, 2020, respectively.

Net balance as of June 30, 2021 $ 289,900 $ 29,201 $ 319,101

Accumulated amortization of intangible assets was $ 231.6 million and $ 216.9 million as of June 30, 2021 and December 31, 2020, respectively.

The expected amortization of the intangible assets for each of the five succeeding years is $ 29.4 million.

4 unchanged sentences

Such estimates and assumptions include revenue growth rates, EBITDA margins, weighted average costs of capital and future market conditions, among others.

We believe the estimates and assumptions used were reasonable and based on available market information, but variations in any of the assumptions could have resulted in materially different calculations of fair value and determinations of whether or not an impairment is indicated.

We believe the estimates and assumptions used

were reasonable and based on available market information, but variations in any of the assumptions could have resulted in materially different calculations of fair value and determinations of whether or not an impairment is indicated.

Under the income approach, we determined fair value based on estimated future cash flows, including estimates for capital expenditures, discounted to present value using the risk-adjusted industry rate, which reflects the overall level of inherent risk of the Partnership.

3 unchanged sentences

In addition, we estimated a reasonable control premium representing the incremental value that would accrue to us if we were to be acquired.

Based on the quantitative goodwill impairment test described above, our carrying amount exceeded fair value and as a result, we recognized a goodwill impairment of $ 619.4 million for the three months ended March 31, 2020.

(6) Other Current Liabilities

10 unchanged sentences

We granted a bargain purchase option to a customer with respect to certain compressor packages leased to the customer.

The bargain purchase option provides the customer with an option to acquire the equipment at a value significantly less than the fair market value at the end of the lease term in 2021.

We accounted for this option as a sales-type lease resulting in a current installment receivable included in other accounts receivable of $ 1.9 million and $ 2.9 million as of March 31, 2021 and December 31, 2020, respectively.

As of March 31, 2021, there is no allowance for credit losses on our net investment in the sales-type lease based on our collections experience with the customer.

Revenue and interest income related to the lease is recognized over the lease term.

We recognize maintenance revenue within contract operations revenue and interest income within interest expense, net.

The bargain purchase option provided the customer with an option to acquire the equipment at a value significantly less than the fair market value at the end of the lease term.

During the second quarter of 2021, the customer exercised its bargain purchase option resulting in a gain of $ 1.1 million recognized within gain on disposition of assets for the three and six months ended June 30, 2021.

Prior to the customer exercising its bargain purchase option, revenue and interest income related to the lease was recognized over the lease term.

We recognized maintenance revenue within contract operations revenue and interest income within interest expense, net.

Maintenance revenue and interest income were as follows (in thousands):

Three Months Ended March 31,

Three Months Ended June 30, Six Months Ended June 30,

2021 2020 2021 2020

Maintenance revenue $ — $ 322 $ 323 $ 645

Interest income — 105 48 229

Lease payments expected to be received subsequent to March 31, 2021 are as follows (in thousands):

Lease Payments

Total installment receivables (1) 1,938

present value discount

Present value of installment receivables $ 1,878

______________________

(1) As discussed above, the installment receivable lease term ends in 2021.

(8) Long-term Debt

8 unchanged sentences

Revolving Credit Facility

As of March 31, 2021, we were in compliance with all of our covenants under the Credit Agreement.

As of June 30, 2021, we were in compliance with all of our covenants under the Credit Agreement.

The Credit Agreement has an aggregate commitment of $ 1.6 billion (subject to availability under our borrowing base), with a further potential increase of $ 400 million, and has a maturity date of April 2, 2023, which we expect to maintain for the term.

As of March 31, 2021, we had outstanding borrowings under the Credit Agreement of $ 502.7 million, $ 1.1 billion of borrowing base availability and, subject to compliance with the applicable financial covenants, available borrowing capacity of $ 203.9 million.

Our weighted average interest rate in effect for all borrowings under the Credit Agreement as of March 31, 2021 was 3.20 %, with a weighted average interest rate of 3.06 % for the three months ended March 31, 2021.

There were no letters of credit issued as of March 31, 2021.

As of June 30, 2021, we had outstanding borrowings under the Credit Agreement of $ 473.4 million, $ 1.1 billion of borrowing base availability and, subject to compliance with the applicable financial covenants, available borrowing capacity of $ 217.4 million.

Our weighted average interest rate in effect for all borrowings under the Credit Agreement as of June 30, 2021 was 2.91 %, with a weighted average interest rate of 3.06 % for the six months ended June 30, 2021.

There were no letters of credit issued as of June 30, 2021.

We pay a commitment fee of 0.375 % on the unused portion of the Credit Agreement.

3 unchanged sentences

• a minimum EBITDA to interest coverage ratio of 2.5 to 1.0, determined as of the last day of each fiscal quarter, for the annualized trailing three months;

• a maximum funded debt to EBITDA ratio, determined as of the last day of each fiscal quarter, for the annualized trailing three months of (i) 5.50 to 1.00 for the fiscal quarters ending March 31, 2021 and June 30, 2021 and (ii) 5.25 to 1.00 for the fiscal quarters ending September 30, 2021 and December 31, 2021 (reverting to 5.00 to 1.00 after the Covenant Relief Period).

• a maximum funded debt to EBITDA ratio, determined as of the last day of each fiscal quarter, for the annualized trailing three months of (i) 5.50 to 1.00 for the fiscal quarter ending June 30, 2021 and (ii) 5.25 to 1.00 for the fiscal quarters ending September 30, 2021 and December 31, 2021 (reverting to 5.00 to 1.00 after the Covenant Relief Period).

In addition, the amendment provides that the 0.50 increase in maximum funded debt to EBITDA ratio applicable to certain future acquisitions (for the six consecutive month period in which any such acquisition occurs) is only available beginning with the fiscal quarter ending September 30, 2021, and in any case shall not increase the maximum funded debt to EBITDA ratio above 5.50 to 1.00.

8 unchanged sentences

The indenture governing the Senior Notes 2026 (the “2026 Indenture”) contains certain financial ratios that we must comply with in order to make certain restricted payments as described in the 2026 Indenture.

As of March 31, 2021, we were in compliance with such financial covenants under the 2026 Indenture.

As of June 30, 2021, 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 are effectively 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 subordinated to all indebtedness of any of our subsidiaries that do not guarantee the Senior Notes 2026.

The Senior Notes 2026 and the 2026 Guarantees are effectively 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 subordinated to all indebtedness of any of our subsidiaries that do not guarantee the Senior Notes 2026.

Senior Notes 2027

3 unchanged sentences

The indenture governing the Senior Notes 2027 (the “2027 Indenture”) contains certain financial ratios that we must comply with in order to make certain restricted payments as described in the 2027 Indenture.

As of March 31, 2021, we were in compliance with such financial covenants under the 2027 Indenture.

As of June 30, 2021, 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.

5 unchanged sentences

(9) Preferred Units

We had 500,000 Preferred Units outstanding as of March 31, 2021 and December 31, 2020, respectively, with a face value of $ 1,000 per Preferred Unit.

We had 500,000 Preferred Units outstanding as of June 30, 2021 and December 31, 2020, respectively, with a face value of $ 1,000 per Preferred Unit.

The Preferred Units rank senior to the common units with respect to distributions and rights upon liquidation.

8 unchanged sentences

February 5, 2021 $ 24.375

May 7, 2021 24.375

2021 total distributions $ 48.750

Announced Quarterly Distribution

On April 14, 2021, we declared a cash distribution of $ 24.375 per unit on the Preferred Units.

The distribution will be paid on May 7, 2021 to the holders of the Preferred Units of record as of close of business on April 26, 2021.

On July 15, 2021, we declared a cash distribution of $ 24.375 per unit on the Preferred Units.

The distribution will be paid on August 6, 2021 to the holders of the Preferred Units of record as of close of business on July 26, 2021.

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

3 unchanged sentences

Cash distributions on Preferred Units ( 24,375 )

Balance as of March 31, 2021 $ 477,309

Balance as of June 30, 2021 $ 477,309

Redemption and Conversion Features

10 unchanged sentences

Issuance of common units under the DRIP 60,735

Number of units outstanding as of March 31, 2021 97,022,290

As of March 31, 2021, ETO held 46,056,228 common units, including 8,000,000 common units held by the General Partner and controlled by ETO.

Number of units outstanding as of June 30, 2021 97,067,220

As of June 30, 2021, ET held 46,056,228 common units, including 8,000,000 common units held by the General Partner and controlled by ET.

Cash Distributions

7 unchanged sentences

February 5, 2021 $ 0.525 $ 50.9 $ 1.1 $ 52.0

May 7, 2021 0.525 50.9 1.1 52.0

2021 total distributions $ 1.05 $ 101.8 $ 2.2 $ 104.0

Announced Quarterly Distribution

On April 14, 2021, we announced a cash distribution of $ 0.525 per unit on our common units.

The distribution will be paid on May 7, 2021 to common unitholders of record as of the close of business on April 26, 2021.

During the three months ended March 31, 2021, distributions of $ 0.5 million were reinvested under the DRIP resulting in the issuance of 33,981 common units.

As of March 31, 2021 and December 31, 2020, we had two tranches of warrants outstanding, which includes warrants to purchase (i) 5,000,000 common units with a strike price of $ 17.03 per common unit and (ii) 10,000,000 common units with a strike price of $ 19.59 per common unit (collectively, the “Warrants”).

On July 15, 2021, we announced a cash distribution of $ 0.525 per unit on our common units.

The distribution will be paid on August 6, 2021 to common unitholders of record as of the close of business on July 26, 2021.

During the six months ended June 30, 2021, distributions of $ 0.9 million were reinvested under the DRIP resulting in the issuance of 60,735 common units.

As of June 30, 2021 and December 31, 2020, we had two tranches of warrants outstanding, which includes warrants to purchase (i) 5,000,000 common units with a strike price of $ 17.03 per common unit and (ii) 10,000,000 common units with a strike price of $ 19.59 per common unit (collectively, the “Warrants”).

The Warrants may be exercised by the holders at any time before April 2, 2028.

6 unchanged sentences

Unvested phantom units and unexercised Warrants are not included in basic loss per unit, as they are not considered to be participating securities, but are included in the calculation of diluted 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 March 31, 2021 and 2020, approximately 710,000 and 489,000 incremental unvested phantom units, respectively, were excluded from the calculation of diluted loss per unit because the impact was anti-dilutive and our outstanding Warrants are no t included in the computation as they are not considered “in the money” for either period.

For the three and six months ended June 30, 2021, approximately 803,000 and 757,000 incremental unvested phantom units, respectively, were excluded from the calculation of diluted loss per unit because the impact was anti-dilutive and our outstanding Warrants are no t included in the computation as they are not considered “in the money” for either period.

For the three and six months ended June 30, 2020, approximately 551,000 and 520,000 incremental unvested phantom units, respectively, were excluded from the calculation of diluted loss per unit because the impact was anti-dilutive and our outstanding Warrants are no t included in the computation as they are not considered “in the money” for either period.

(11) Revenue Recognition

1 unchanged sentence

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

Three Months Ended March 31,

Three Months Ended June 30, Six Months Ended June 30,

2021 2020 2021 2020

Contract operations revenue $ 154,733 $ 166,101 $ 310,202 $ 342,003

2 unchanged sentences

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

Three Months Ended March 31,

Three Months Ended June 30, Six Months Ended June 30,

2021 2020 2021 2020

Services provided over time:

6 unchanged sentences

We record contract assets when we have completed performance under a contract but our right to consideration is not yet unconditional.

We had no contract assets as of March 31, 2021 and December 31, 2020.

We had no contract assets as of June 30, 2021 and December 31, 2020.

Deferred Revenue

1 unchanged sentence

Components of deferred revenue were as follows (in thousands):

Balance sheet location March 31,

Balance sheet location June 30,

2021 December 31,

3 unchanged sentences

________________________________

(1) We recognized $ 39.3 million of revenue during the three months ended March 31, 2021 related to our deferred revenue balance as of December 31, 2020.

(1) We recognized $ 1.4 million and $ 40.8 million of revenue during the three and six months ended June 30, 2021, respectively, related to our deferred revenue balance as of December 31, 2020.

Performance Obligations

As of March 31, 2021, we had unsatisfied performance obligations related to our contract operations revenue of $ 467.4 million.

As of June 30, 2021, we had unsatisfied performance obligations related to our contract operations revenue of $ 476.4 million.

We expect to recognize these remaining performance obligations as follows (in thousands):

3 unchanged sentences

(12) Transactions with Related Parties

We provide compression services to entities affiliated with ETO, which as of March 31, 2021 owned approximately 47 % of our limited partner interests and 100 % of the General Partner.

Revenue recognized from such affiliated ETO entities on our unaudited condensed consolidated statements of operations were as follows (in thousands):

Three Months Ended March 31,

We provide compression services to entities affiliated with ET, which as of June 30, 2021 owned approximately 47 % of our limited partner interests and 100 % of the General Partner.

Revenue recognized from such affiliated ET entities on our unaudited condensed consolidated statements of operations were as follows (in thousands):

Three Months Ended June 30, Six Months Ended June 30,

2021 2020 2021 2020

Related party revenues $ 2,944 $ 2,922 $ 5,894 $ 6,079

We had $ 0 and $ 120,000 within related party receivables and $ 6,000 and $ 0 within accounts payable on our unaudited condensed consolidated balance sheets as of March 31, 2021 and December 31, 2020, respectively, from such affiliated ETO entities.

Additionally, the Partnership had a $ 44.9 million related party receivable from ETO as of March 31, 2021 and December 31, 2020 related to indemnification for sales tax contingencies.

We had $ 40,000 and $ 120,000 within related party receivables on our unaudited condensed consolidated balance sheets as of June 30, 2021 and December 31, 2020, respectively, from such affiliated ET entities.

Additionally, the Partnership had a $ 44.9 million related party receivable from ET as of June 30, 2021 and December 31, 2020 related to indemnification for sales tax contingencies.

See Note 13 for more information related to such sales tax contingencies.

1 unchanged sentence

(a) Major Customers

We did not have revenue from any single customer representing 10% or more of total revenue for the three months ended March 31, 2021 or 2020.

We did not have revenue from any single customer representing 10% or more of total revenue for the three and six months ended June 30, 2021 or 2020.

(b) Litigation

5 unchanged sentences

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 are currently in discussions with the Oklahoma Tax Commission (“OTC”) regarding its assessment.

We believe it is reasonably possible that we could incur losses related to this assessment depending on whether the OTC accepts our position that the transactions are not taxable and we ultimately lose any and all subsequent legal challenges to such determination by the OTC.

We are currently 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 $ 23.1 million, including penalty and interest.

The upper end of this range assumes that all compression services in Oklahoma are taxable, which we believe is remote.

As of March 31, 2021 and December 31, 2020, we have recorded a $ 44.9 million accrued liability and $ 44.9 million related party receivable from ETO related to open audits with the Office of the Texas Comptroller of Public Accounts.

As of June 30, 2021 and December 31, 2020, we have recorded a $ 44.9 million accrued liability and $ 44.9 million related party receivable from ET related to open audits with the Office of the Texas Comptroller of Public Accounts.

For more information, see Note 17 to the consolidated financial statements included in our 2020 Annual Report.

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Accounting for Convertible Instruments and Contracts in an Entity’s Own Equity.

ASU 2020-06 changes how entities account for convertible instruments and contracts in an entity’s own equity, as well as updates guidance on earnings per unit and other related disclosures.

ASU 2020-06 changes how entities account for convertible instruments and contracts in

an entity’s own equity, as well as updates guidance on earnings per unit and other related disclosures.

The amendments in this update are effective for interim and annual periods beginning after December 15, 2021, with early adoption permitted for fiscal years beginning after December 15, 2020.

2 unchanged sentences

Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-Q

Item 1. Financial Statements