5 unchanged sentences
Risks Related to Our Business
−Removed: • The ongoing global COVID-19 pandemic and recent oil market developments have had and may continue to have an adverse effect on our business and results of operations.
• We may not generate sufficient cash from operations following the establishment of cash reserves and payment of fees and expenses, including cost reimbursements to the General Partner, to enable us to make cash distributions on our common units at the current level.
−Removed: • A long-term reduction in the demand for, or production of, natural gas or crude oil could adversely affect the demand for our services or the prices we charge for our services, which could result in a decrease in our revenues and cash available for distribution to unitholders.
+Added: • An extended reduction in the demand for, or production of, natural gas or crude oil could adversely affect the demand for our services or the prices we charge for our services, which could result in a decrease in our revenues and cash available for distribution to unitholders.
+Added: • Pandemics and other public health crises, including the ongoing global COVID-19 pandemic, may have an adverse effect on our business and results of operations.
• We have several key customers.
The loss of any of these customers would result in a decrease in our revenues and cash available for distribution.
−Removed: • The deterioration of the financial condition of our customers could adversely affect our business.
−Removed: • We are exposed to counterparty credit risk.
−Removed: Nonpayment and nonperformance by our customers, suppliers or vendors could reduce our revenues, increase our expenses and otherwise have a negative impact on our ability to conduct our business, operating results, cash flows and ability to make distributions to our unitholders.
+Added: • We face significant competition that may cause us to lose market share and reduce our cash available for distribution.
• Our customers may choose to vertically integrate their operations by purchasing and operating their own compression fleet, increasing the number of compression units they currently own or using alternative technologies for enhancing crude oil production.
• A significant portion of our services are provided to customers on a month-to-month basis, and we cannot be sure that such customers will continue to utilize our services.
−Removed: • We may be unable to grow our cash flows if we are unable to expand our business, which could limit our ability to maintain or increase the level of distributions to our common unitholders.
−Removed: • Our debt level may limit our flexibility in obtaining additional financing, pursuing other business opportunities and paying distributions.
−Removed: • The terms of the Credit Agreement and the Indentures restrict our current and future operations, particularly our ability to respond to changes or to take certain actions, may limit our ability to pay distributions and may limit our ability to capitalize on acquisitions and other business opportunities.
−Removed: • A prolonged or severe sudden downturn in the economic environment, such as the severe impact of the COVID-19 pandemic, could cause an impairment of identifiable intangible assets and reduce our earnings.
+Added: • Our debt level, including any increases in interest rates, may limit our flexibility in obtaining additional financing, pursuing other business opportunities and paying distributions.
• We depend on a limited number of suppliers and are vulnerable to product shortages and price increases, which could have a negative impact on our results of operations.
+Added: • We may be unable to grow our cash flows if we are unable to expand our business, which could limit our ability to maintain or increase the level of distributions to our common unitholders.
+Added: • We may be unable to grow successfully through acquisitions, which may negatively impact our operations and limit our ability to maintain or increase the level of distributions on our common units.
+Added: • Our ability to fund purchases of additional compression units and expansion capital expenditures in the future is dependent on our ability to access external capital.
Risks Related to Governmental Legislation and Regulation
−Removed: • We are subject to substantial environmental regulation, and changes in these regulations could increase our costs or liabilities.
+Added: • We and our customers are subject to substantial environmental regulation, and changes in these regulations could increase our and their costs or liabilities and result in decreased demand for our services.
• New regulations, proposed regulations and proposed modifications to existing regulations under the Clean Air Act, if implemented, could result in increased compliance costs.
1 unchanged sentence
• Holders of our common units have limited voting rights and are not entitled to elect the General Partner or its directors.
−Removed: • ETO owns and controls the General Partner, and the General Partner has sole responsibility for conducting our business and managing our operations.
−Removed: The General Partner and its affiliates, including ETO, have conflicts of interest with us and limited fiduciary duties, and they may favor their own interests to the detriment of us and our unitholders.
+Added: • Energy Transfer owns and controls the General Partner, and the General Partner has sole responsibility for conducting our business and managing our operations.
+Added: The General Partner and its affiliates, including Energy Transfer, have conflicts of interest with us and limited fiduciary duties, and they may favor their own interests to the detriment of us and our unitholders.
• The Partnership Agreement limits the General Partner’s fiduciary duties to our unitholders.
2 unchanged sentences
• We may issue additional limited partner interests without the approval of unitholders, subject to certain Preferred Unit approval rights, which would dilute unitholders’ existing ownership interests and may increase the risk that we will not have sufficient available cash to maintain or increase our per common unit distribution level.
−Removed: • The General Partner has a call right that may require you to sell your common units at an undesirable time or price.
+Added: • The General Partner has a call right that may require holders of our common units to sell their common units at an undesirable time or price.
• Unitholders may not have limited liability if a court finds that limited partner actions constitute control of our business.
19 unchanged sentences
Risks Related to Our Business
−Removed: The ongoing global COVID-19 pandemic and recent oil market developments have had and may continue to have an adverse effect on our business and results of operations.
−Removed: The COVID-19 pandemic that began in early 2020 has caused volatility in the capital markets and negatively impacted the worldwide economy, including the oil and gas industry.
−Removed: Demand for crude oil and natural gas has declined due in part to the COVID-19 outbreak and associated government imposed restrictions and decreased consumer demand, which have had, and may continue to have, a negative impact on many of our customers involved in the domestic exploration and production of crude oil and natural gas.
−Removed: In addition, turmoil between the members of OPEC+ in 2020 resulted in Saudi Arabia discounting its price and increasing its supply of oil into the global marketplace in early 2020.
−Removed: The dual forces of increased supply and reduced demand due to COVID-19 caused oil prices to fall substantially, adversely affecting some of our customers.
−Removed: As a result, some producers chose to delay, or shut-in, production.
−Removed: While the extent of the impact these events will have on our results of operations and financial condition is uncertain, they are examples of events that caused a reduction in the demand for, price of and level of production of natural gas and crude oil in the regions where we provide compression services, which potentially could cause:
−Removed: • a negative impact on our results of operations and financial condition;
−Removed: • the deterioration of the financial condition of our customers, suppliers and vendors;
−Removed: • a hindrance on our ability to pay distributions, service our debt and other liabilities, and comply with certain restrictive financial covenants in the Credit Agreement and the Indentures (the “Indentures”) governing the Senior Notes 2026 and Senior Notes 2027 (collectively, the “Senior Notes”);
−Removed: • renegotiation of our service contracts at lower rates;
−Removed: • additional costs to us, which could be significant, in connection with litigation and bankruptcies resulting from customer financial deterioration.
−Removed: Furthermore, market volatility could increase our cost of capital and block our access to the equity and debt capital markets, which could eventually impede our ability to grow, make distributions to our unitholders at current levels and comply with the terms of our debt agreements.
−Removed: Additionally, if COVID-19 were to significantly spread into our workforce, this could hinder our ability to provide services and otherwise perform our contractual obligations to our customers.
−Removed: The duration of the COVID-19 pandemic and the magnitude of its repercussions cannot be reasonably estimated at this time, and depending on its duration and severity, it could materially adversely affect our financial condition and results of operations.
We may not generate sufficient cash from operations following the establishment of cash reserves and payment of fees and expenses, including cost reimbursements to the General Partner, to enable us to make cash distributions on our common units at the current level.
21 unchanged sentences
• the amount of cash reserves established by the General Partner.
−Removed: A long-term reduction in the demand for, or production of, natural gas or crude oil could adversely affect the demand for our services or the prices we charge for our services, which could result in a decrease in our revenues and cash available for distribution to unitholders.
+Added: An extended reduction in the demand for, or production of, natural gas or crude oil could adversely affect the demand for our services or the prices we charge for our services, which could result in a decrease in our revenues and cash available for distribution to unitholders.
The demand for our compression services depends upon the continued demand for, and production of, natural gas and crude oil.
Demand may be affected by, among other factors, natural gas prices, crude oil prices, weather, availability of alternative energy sources, global health pandemics (such as COVID-19), governmental regulation and the overall demand for energy.
−Removed: Any further or extended reduction in the demand for natural gas or crude oil would likely further depress the level of production activity and result in a decline in the demand for our compression services, which could result in a reduction in our revenues and our cash available for distribution.
+Added: Any extended reduction in the demand for natural gas or crude oil could depress the level of production activity and result in a decline in the demand for our compression services, which could result in a reduction in our revenues and our cash available for distribution.
In particular, lower natural gas or crude oil prices over the long term could result in a decline in the production of natural gas or crude oil, respectively, resulting in reduced demand for our compression services.
3 unchanged sentences
Following disputes between the members of OPEC+ about production levels and the price of oil and amid the outbreak of COVID-19, the price of oil declined rapidly beginning in March 2020.
−Removed: As of the end of December 2020, the North American rig count was 351 rigs, the price of WTI crude oil was $48.35 per barrel and Henry Hub natural gas spot prices were $2.36 per MMBtu.
−Removed: The current decline in commodity prices and crude oil and natural gas production has resulted in a decline in the demand for our compression services, which resulted in a reduction of our revenues and our cash available for distribution.
−Removed: In addition, any future decreases in the rate at which crude oil and natural gas reserves are developed, whether due to increased governmental regulation, limitations on exploration and production activity or other factors, could have a material adverse effect on our business.
+Added: At the end of December 2020, the North American rig count was 351 rigs, the price of WTI crude oil was $48.35 per barrel and Henry Hub natural gas spot prices were $2.36 per MMBtu.
+Added: The decline in commodity prices and the demand for and production of crude oil and natural gas resulted in a decline in the demand for our compression services, which resulted in a reduction of our revenues and our cash available for distribution in 2020 and 2021.
In addition, a small portion of our fleet is used in gas lift applications in connection with crude oil production using horizontal drilling techniques.
−Removed: During periods of low crude oil prices, we typically experience pressure on service rates from our customers in gas lift applications, and we have started to experience such effects.
+Added: During periods of low crude oil prices, we typically experience pressure on service rates and utilization from our customers in gas lift applications, and we experienced such effects in 2020, as an example.
+Added: Any future decreases in the rate at which crude oil and natural gas reserves are developed, whether due to increased governmental regulation, limitations on exploration and production activity or other factors, could have a material adverse effect on our business.
Additionally, unconventional sources, such as shales, tight sands and coalbeds, can be less economically feasible to produce in low commodity price environments, in part due to costs related to compression requirements, and a reduction in demand for natural gas or gas lift for crude oil may cause such sources of natural gas or crude oil to become uneconomic to drill and produce, which has negatively impacted, and may continue to negatively impact, the demand for our services.
Further, if demand for our services decreases going forward, we may be asked to renegotiate our service contracts at lower rates.
+Added: Pandemics and other public health crises, including the ongoing global COVID-19 pandemic, may have an adverse effect on our business and results of operations.
+Added: Pandemics, such as the COVID-19 pandemic, or other public health crises could significantly reduce the demand for, price of and level of production of natural gas and crude oil, which could have an adverse impact on our business and results of operations.
+Added: The COVID-19 pandemic that began in early 2020 caused volatility in the capital markets and negatively impacted the worldwide economy, including the oil and gas industry.
+Added: Demand for crude oil and natural gas declined in 2020 due in part to the COVID-19 pandemic and associated government imposed restrictions and decreased consumer demand.
+Added: This reduced demand also contributed to a decline in commodity prices and production.
+Added: These declines had, and may again in the future have, a negative impact on many of our customers involved in the domestic exploration and production of crude oil and natural gas, which in turn had and may continue to have, an adverse effect on our business and results of operations.
+Added: A reduction in the demand for, price of and level of production of natural gas and crude oil in the regions where we provide compression services, could potentially cause:
+Added: • a negative impact on our results of operations and financial condition;
+Added: • the deterioration of the financial condition of our customers, suppliers and vendors;
+Added: • a hindrance on our ability to pay distributions, service our debt and other liabilities, and comply with certain restrictive financial covenants in the Credit Agreement and the Indentures (the “Indentures”) governing the Senior Notes 2026 and Senior Notes 2027 (collectively, the “Senior Notes”);
+Added: • renegotiation of our service contracts at lower rates;
+Added: • additional costs to us, which could be significant, in connection with litigation and bankruptcies resulting from customer financial deterioration.
+Added: Furthermore, market volatility could increase our cost of capital and block our access to the equity and debt capital markets, which could eventually impede our ability to grow, make distributions to our unitholders at current levels and comply with the terms of our debt agreements.
+Added: Additionally, if COVID-19 or other pandemics were to significantly spread into our workforce, this could hinder our ability to provide services and otherwise perform our contractual obligations to our customers.
+Added: The duration of the COVID-19 pandemic and the magnitude of its repercussions cannot be reasonably estimated at this time, and depending on its duration and severity, it could materially adversely affect our financial condition and results of operations.
We have several key customers.
4 unchanged sentences
The loss of all or even a portion of the compression services we provide to our key customers, as a result of competition or otherwise, could have a material adverse effect on our business, results of operations, financial condition and cash available for distribution.
−Removed: The deterioration of the financial condition of our customers could adversely affect our business.
−Removed: During times when the natural gas or crude oil markets weaken, such as during the COVID-19 pandemic, our customers are more likely to experience financial difficulties, including being unable to access debt or equity financing, which could result in a reduction in our customers’ spending for our services.
−Removed: For example, our customers could seek to preserve capital by using lower cost providers, not renewing month-to-month contracts or determining not to enter into any new compression service contracts.
−Removed: A significant decline in commodity prices may cause certain of our customers to reconsider their near-term capital budgets, which may impact large-scale natural gas infrastructure and crude oil production activities.
−Removed: Reduced demand for our services could adversely affect our business, results of operations, financial condition and cash flows.
−Removed: We are exposed to counterparty credit risk.
−Removed: Nonpayment and nonperformance by our customers, suppliers or vendors could reduce our revenues, increase our expenses and otherwise have a negative impact on our ability to conduct our business, operating results, cash flows and ability to make distributions to our unitholders.
−Removed: Weak economic conditions and widespread financial distress, including as a result of the COVID-19 pandemic, has had and could reduce the liquidity of our customers, suppliers or vendors, making it more difficult for them to meet their obligations to us.
−Removed: We are therefore subject to heightened risks of loss resulting from nonpayment or nonperformance by our customers, suppliers and vendors.
−Removed: Severe financial problems encountered by our customers, suppliers and vendors could limit our ability to collect amounts owed to us, or to enforce the performance of obligations owed to us under contractual arrangements.
−Removed: In the event that any of our customers was to enter into bankruptcy, we could lose all or a portion of the amounts owed to us by such customer, and we may be forced to cancel all or a portion of our service contracts with such customer at significant expense to us.
−Removed: For example, as of December 31, 2020, two customers accounted for 13% and 11% of our trade account receivables, net balance, respectively.
−Removed: If either of these customers was to enter bankruptcy or failed to pay us, it could adversely affect our business, results of operations, financial condition and cash flows.
−Removed: In addition, nonperformance by suppliers or vendors who have committed to provide us with critical products or services could raise our costs or interfere with our ability to successfully conduct our business.
−Removed: All of the above may be exacerbated in the future as the COVID-19 outbreak and the governmental responses thereto continue.
−Removed: These factors, combined with volatile prices of oil and natural gas, may precipitate a continued economic slowdown and/or a recession.
We face significant competition that may cause us to lose market share and reduce our cash available for distribution.
15 unchanged sentences
These customers can generally terminate their month-to-month compression services contracts on 30 days’ written notice.
−Removed: If a significant number of these customers were to terminate their month-to-month services, or attempt to renegotiate their month-to-month contracts at substantially lower rates, it could have a material adverse effect on our business, results of operations, financial condition and cash available for distribution.
+Added: If a significant number of
+Added: these customers were to terminate their month-to-month services, or attempt to renegotiate their month-to-month contracts at substantially lower rates, it could have a material adverse effect on our business, results of operations, financial condition and cash available for distribution.
+Added: Our debt level, including any increases in interest rates, may limit our flexibility in obtaining additional financing, pursuing other business opportunities and paying distributions.
+Added: As of December 31, 2021, we had $2.0 billion of total debt, net of amortized deferred financing costs, outstanding under our Credit Agreement and Senior Notes.
+Added: The Credit Agreement has an aggregate commitment of $1.6 billion (subject to availability under our borrowing base), with a further potential increase of up to $200 million.
+Added: 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.
+Added: As of December 31, 2021, we had outstanding borrowings under the Credit Agreement of $516.3 million, $1.1 billion of borrowing base availability and, subject to compliance with the applicable financial covenants, available borrowing capacity of $261.9 million.
+Added: As of December 31, 2021, we had $725.0 million and $750.0 million aggregate principal amount outstanding on our Senior Notes 2026 and Senior Notes 2027, respectively.
+Added: The Senior Notes 2026 and Senior Notes 2027 accrue interest at the rate of 6.875% per year.
+Added: Our ability to incur additional debt is also subject to limitations in the Credit Agreement, including certain financial covenants.
+Added: As of December 31, 2021, our leverage ratio under the Credit Agreement was 5.09x.
+Added: Financial covenants in the Credit Agreement permit a maximum leverage ratio of not greater than 5.75 to 1.00 through the second fiscal quarter of 2022;
+Added: 5.50 to 1.00 from the third fiscal quarter of 2022 through the third fiscal quarter of 2023;
+Added: and 5.25 to 1.00 thereafter (except that we may increase the applicable Total Leverage Ratio by 0.25 for any fiscal quarter during which a Specified Acquisition (as defined in the Credit Agreement) occurs and the following two fiscal quarters, but in no event shall the maximum Total Leverage Ratio exceed 5.50 to 1.00 for any fiscal quarter as a result of such increase), an Interest Coverage Ratio (as defined in the Credit Agreement) of not less than 2.50 to 1.00 and a Secured Leverage Ratio (as defined in the Credit Agreement) of not greater than 3.00 to 1.00 or less than 0.00 to 1.00.
+Added: As of February 10, 2022, we had outstanding borrowings under the Credit Agreement of $549.9 million.
+Added: Our level of debt could have important consequences to us, including the following:
+Added: • our ability to obtain additional financing, if necessary, for working capital, capital expenditures, acquisitions or other purposes may not be available or such financing may not be available on favorable terms;
+Added: • we will need a portion of our cash flow to make payments on our indebtedness, reducing the funds that would otherwise be available for operating activities, future business opportunities and distributions;
+Added: • our debt level will make us more vulnerable than our competitors with less debt to competitive pressures or a downturn in our business or the economy generally.
+Added: Our ability to service our debt will depend upon, among other things, our future financial and operating performance, which will be affected by prevailing economic conditions and financial, business, regulatory and other factors, some of which are beyond our control.
+Added: In addition, our ability to service our debt under the Credit Agreement could be impacted by market interest rates, as all of our outstanding borrowings under the Credit Agreement are subject to variable interest rates that fluctuate with changes in market interest rates.
+Added: A substantial increase in the interest rates applicable to our outstanding borrowings could have a material negative impact on our cash available for distribution.
+Added: For example, a one percent increase in the effective interest rate on our outstanding borrowings under the Credit Agreement as of December 31, 2021 would result in an annual increase in our interest expense of approximately $5.2 million.
+Added: If our operating results are not sufficient to service our current or future indebtedness, we could be forced to take actions such as reducing the level of distributions on our common units, curtailing or delaying our business activities, acquisitions, investments or capital expenditures, selling assets, restructuring or refinancing our debt or seeking additional equity capital.
+Added: We may be unable to effect any of these actions on terms satisfactory to us or at all.
+Added: We depend on a limited number of suppliers and are vulnerable to product shortages and price increases, which could have a negative impact on our results of operations.
+Added: The substantial majority of the components for our natural gas compression equipment are supplied by Caterpillar Inc., Cummins Inc.
+Added: and Arrow Engine Company for engines, Air-X-Changers and Alfa Laval (US) for coolers, and Ariel Corporation, Cooper Machinery Services Gemini products and Arrow Engine Company for compressor frames and cylinders.
+Added: Our reliance on these suppliers involves several risks, including price increases and a potential inability to obtain an adequate supply of required components in a timely manner.
+Added: We also rely primarily on four vendors, A G Equipment Company, Alegacy Equipment, LLC, Standard Equipment Corp.
+Added: and Genis Holdings LLC, to package and assemble our compression units.
+Added: We do not have long-term contracts with these suppliers or packagers, and a partial or complete loss of any of these sources could have a negative impact on our results of operations and could damage our customer relationships.
+Added: Some of these suppliers manufacture the components we purchase in a single facility, and any damage to that facility could lead to significant delays in delivery of completed compression units to us.
+Added: Additionally, if we are not able to pass along increases to our costs due to inflation on parts, fluids, labor and other aspects of our business, it may adversely affect our results of operations and cash flows.
We may be unable to grow our cash flows if we are unable to expand our business, which could limit our ability to maintain or increase the level of distributions to our common unitholders.
21 unchanged sentences
Inspections may not be performed on every asset, and environmental problems, such as groundwater contamination, may not be observable even when an inspection is undertaken.
−Removed: Integration of assets acquired in past acquisitions or future acquisitions with our existing business can be a complex, time-consuming and costly process, particularly in the case of material acquisitions such as the CDM Acquisition, which significantly increased our size and expanded the geographic areas in which we operate.
−Removed: A failure to successfully integrate the acquired assets with our existing business in a timely manner may have a material adverse effect on our business, financial condition, results of operations or cash available for distribution to our unitholders.
−Removed: The difficulties of integrating past and future acquisitions with our business include, among other things:
−Removed: • operating a larger combined organization in new geographic areas and new lines of business;
−Removed: • hiring, training or retaining qualified personnel to manage and operate our growing business and assets;
−Removed: • integrating management teams and employees into existing operations and establishing effective communication and information exchange with such management teams and employees;
−Removed: • diversion of management’s attention from our existing business;
−Removed: • assimilation of acquired assets and operations, including additional regulatory programs;
−Removed: • loss of customers;
−Removed: • loss of key employees;
−Removed: • maintaining an effective system of internal controls in compliance with the Sarbanes-Oxley Act of 2002 as well as other regulatory compliance and corporate governance matters;
−Removed: • integrating new technology systems for financial reporting.
−Removed: If any of these risks or other unanticipated liabilities or costs were to materialize, we may not realize the desired benefits from past and future acquisitions, resulting in a negative impact on our results of operations.
−Removed: For example, subsequent to the CDM Acquisition the attrition rate of specialized field technicians exceeded our projections and, as a result, we incurred unanticipated costs in 2018 to utilize third-party contractors to service our compression units at a greater cost than we would have incurred to compensate employees to perform the same work.
−Removed: We may not be successful in integrating acquisitions into our existing operations within our anticipated time frame, which may result in unforeseen operational difficulties or diminished financial performance or require a disproportionate amount of our management’s attention.
−Removed: In addition, acquired assets may perform at levels below the forecasts used to evaluate their acquisition, due to factors beyond our control.
−Removed: If the acquired assets perform at levels below the forecasts, then our future results of operations could be negatively impacted.
Our ability to fund purchases of additional compression units and expansion capital expenditures in the future is dependent on our ability to access external capital.
2 unchanged sentences
However, we may not be able to obtain equity or debt financing on terms favorable to us or at all.
−Removed: To the extent we are unable to efficiently finance growth through external sources, our ability to maintain or increase the level of distributions on our common units could be significantly impaired.
+Added: To the extent we are unable
+Added: to efficiently finance growth through external sources, our ability to maintain or increase the level of distributions on our common units could be significantly impaired.
In addition, because we distribute all of our available cash, excluding prudent operating reserves, we may not grow as quickly as businesses that are able to reinvest their available cash to expand ongoing operations.
2 unchanged sentences
Similarly, our incurrence of borrowings or other debt to finance our growth strategy would increase our interest expense, which in turn would decrease our cash available for distribution.
−Removed: Our debt level may limit our flexibility in obtaining additional financing, pursuing other business opportunities and paying distributions.
−Removed: As of December 31, 2020, we had $1.9 billion of total debt, net of amortized deferred financing costs, outstanding comprised of our Credit Agreement and Senior Notes.
−Removed: 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.
−Removed: As of December 31, 2020, we had outstanding borrowings under the Credit Agreement of $473.8 million, $1.1 billion of borrowing base availability and, subject to compliance with the applicable financial covenants, available borrowing capacity of $284.2 million.
−Removed: As of December 31, 2020, we had $725.0 million and $750.0 million aggregate principal amount outstanding on our Senior Notes 2026 and Senior Notes 2027, respectively.
−Removed: The Senior Notes 2026 and Senior Notes 2027 accrue interest at the rate of 6.875% per year.
−Removed: Our ability to incur additional debt is also subject to limitations in the Credit Agreement, including certain financial covenants.
−Removed: As of December 31, 2020, our leverage ratio under the Credit Agreement was 5.03x.
−Removed: Financial covenants in the Credit Agreement permit a maximum leverage ratio of (i) 5.75 to 1.00 for the fiscal quarters ending September 30, 2020 and December 31, 2020, (ii) 5.50 to 1.00 for the fiscal quarters ending March 31, 2021 and June 30, 2021 and (iii) 5.25 to 1.00 for
−Removed: the fiscal quarters ending September 30, 2021 and December 31, 2021 (reverting back to 5.00 to 1.00 for each fiscal quarter thereafter).
−Removed: As of February 11, 2021, we had outstanding borrowings under the Credit Agreement of $498.2 million.
−Removed: Our level of debt could have important consequences to us, including the following:
−Removed: • our ability to obtain additional financing, if necessary, for working capital, capital expenditures, acquisitions or other purposes may not be available or such financing may not be available on favorable terms;
−Removed: • we will need a portion of our cash flow to make payments on our indebtedness, reducing the funds that would otherwise be available for operating activities, future business opportunities and distributions;
−Removed: • our debt level will make us more vulnerable than our competitors with less debt to competitive pressures or a downturn in our business or the economy generally.
−Removed: Our ability to service our debt will depend upon, among other things, our future financial and operating performance, which will be affected by prevailing economic conditions and financial, business, regulatory and other factors, some of which are beyond our control.
−Removed: In addition, our ability to service our debt under the Credit Agreement could be impacted by market interest rates, as all of our outstanding borrowings under the Credit Agreement are subject to variable interest rates that fluctuate with changes in market interest rates.
−Removed: A substantial increase in the interest rates applicable to our outstanding borrowings could have a material negative impact on our cash available for distribution.
−Removed: If our operating results are not sufficient to service our current or future indebtedness, we could be forced to take actions such as reducing the level of distributions on our common units, curtailing or delaying our business activities, acquisitions, investments or capital expenditures, selling assets, restructuring or refinancing our debt or seeking additional equity capital.
−Removed: We may be unable to effect any of these actions on terms satisfactory to us or at all.
The terms of the Credit Agreement and the Indentures restrict our current and future operations, particularly our ability to respond to changes or to take certain actions, may limit our ability to pay distributions and may limit our ability to capitalize on acquisitions and other business opportunities.
17 unchanged sentences
If we were unable to repay amounts due and payable under the Credit Agreement, those lenders could proceed against the collateral securing that indebtedness.
−Removed: We may not be able to replace
−Removed: the Credit Agreement, or if we are, any subsequent replacement of the Credit Agreement or any new indebtedness could be equally or more restrictive.
+Added: We may not be able to replace the Credit Agreement, or if we are, any subsequent replacement of the Credit Agreement or any new indebtedness could be equally or more restrictive.
These restrictions may negatively affect our ability to grow in accordance with our strategy.
1 unchanged sentence
Please read Part II, Item 7 “Management’s Discussion and Analysis of Financial Condition and Results of Operations – Liquidity and Capital Resources – Revolving Credit Facility and – Senior Notes”.
+Added: The deterioration of the financial condition of our customers could adversely affect our business.
+Added: During times when the natural gas or crude oil markets weaken, such as during the COVID-19 pandemic, our customers are more likely to experience financial difficulties, including being unable to access debt or equity financing, which could result
+Added: in a reduction in our customers’ spending for our services.
+Added: For example, our customers could seek to preserve capital by using lower cost providers, not renewing month-to-month contracts or determining not to enter into any new compression service contracts.
+Added: A significant decline in commodity prices may cause certain of our customers to reconsider their near-term capital budgets, which may impact large-scale natural gas infrastructure and crude oil production activities.
+Added: Reduced demand for our services could adversely affect our business, results of operations, financial condition and cash flows.
+Added: We are exposed to counterparty credit risk.
+Added: Nonpayment and nonperformance by our customers, suppliers or vendors could reduce our revenues, increase our expenses and otherwise have a negative impact on our ability to conduct our business, operating results, cash flows and ability to make distributions to our unitholders.
+Added: Weak economic conditions and widespread financial distress, including as a result of the COVID-19 pandemic, did and could again reduce the liquidity of our customers, suppliers or vendors, making it more difficult for them to meet their obligations to us.
+Added: We are therefore subject to heightened risks of loss resulting from nonpayment or nonperformance by our customers, suppliers and vendors.
+Added: Severe financial problems encountered by our customers, suppliers and vendors could limit our ability to collect amounts owed to us, or to enforce the performance of obligations owed to us under contractual arrangements.
+Added: In the event that any of our customers was to enter into bankruptcy, we could lose all or a portion of the amounts owed to us by such customer, and we may be forced to cancel all or a portion of our service contracts with such customer at significant expense to us.
+Added: For example, as of December 31, 2021, one customer accounted for 14% of our trade account receivables, net balance.
+Added: If this customer was to enter bankruptcy or failed to pay us, it could adversely affect our business, results of operations, financial condition and cash flows.
+Added: In addition, nonperformance by suppliers or vendors who have committed to provide us with critical products or services could raise our costs or interfere with our ability to successfully conduct our business.
+Added: All of the above may be exacerbated in the future by the COVID-19 pandemic and the governmental responses thereto continue.
The Preferred Units have rights, preferences and privileges that are not held by, and are preferential to the rights of, holders of our common units.
5 unchanged sentences
Also, because distributions on our common units are not cumulative, if we do not pay distributions on our common units with respect to any quarter, our common unitholders will not be entitled to receive distributions covering any prior periods if we later recommence paying distributions on our common units.
−Removed: The Preferred Units are convertible into common units in accordance with the terms of the Partnership Agreement by the holders of the Preferred Units or by us in certain circumstances, beginning April 2, 2021.
+Added: The Preferred Units are convertible into common units in accordance with the terms of the Partnership Agreement by the holders of the Preferred Units or by us in certain circumstances.
Our obligation to pay distributions on the Preferred Units, or on the common units issued following the conversion of the Preferred Units, could impact our liquidity and reduce the amount of cash flow available for working capital, capital expenditures, growth opportunities, acquisitions, and other general Partnership purposes.
12 unchanged sentences
These events could cause us to record impairments of identifiable intangible assets.
−Removed: For the year ended December 31, 2020, we recognized a goodwill impairment of $619.4 million.
If we determine that any of our identifiable intangible assets are impaired, we will be required to take an immediate charge to earnings with a corresponding reduction of partners’ capital resulting in an increase in balance sheet leverage as measured by debt to total capitalization.
10 unchanged sentences
Additionally, our ability to hire, train and retain qualified personnel will continue to be important and could become more challenging as we grow and to the extent energy industry market conditions are competitive.
−Removed: When general industry conditions are favorable, the competition for experienced operational and field technicians increases as other energy and manufacturing companies’ needs for the same personnel increases.
+Added: When labor markets are tight, such as when general industry conditions are favorable, the competition for experienced operational and field technicians increases as other energy and manufacturing companies’ needs for the same personnel increases.
Our ability to grow or even to continue our current level of service to our current customers could be adversely impacted if we are unable to successfully hire, train and retain these important personnel.
−Removed: We depend on a limited number of suppliers and are vulnerable to product shortages and price increases, which could have a negative impact on our results of operations.
−Removed: The substantial majority of the components for our natural gas compression equipment are supplied by Caterpillar Inc., Cummins Inc.
−Removed: and Arrow Engine Company for engines, Air-X-Changers and Alfa Laval (US) for coolers, and Ariel Corporation, GE Oil & Gas Gemini products and Arrow Engine Company for compressor frames and cylinders.
−Removed: Our reliance on these suppliers involves several risks, including price increases and a potential inability to obtain an adequate supply of required components in a timely manner.
−Removed: We also rely primarily on four vendors, A G Equipment Company, Alegacy Equipment, LLC, Standard Equipment Corp.
−Removed: and Genis Holdings LLC, to package and assemble our compression units.
−Removed: We do not have long-term contracts with these suppliers or packagers, and a partial or complete loss of any of these sources could have a negative impact on our results of operations and could damage our customer relationships.
−Removed: Some of these suppliers manufacture the components we purchase in a single facility, and any damage to that facility could lead to significant delays in delivery of completed compression units to us.
+Added: Integration of assets acquired in past acquisitions or future acquisitions with our existing business can be a complex, time-consuming and costly process, particularly in the case of material acquisitions such as the CDM Acquisition, which significantly increased our size and expanded the geographic areas in which we operate.
+Added: A failure to successfully integrate the acquired assets with our existing business in a timely manner may have a material adverse effect on our business, financial condition, results of operations or cash available for distribution to our unitholders.
+Added: The difficulties of integrating past and future acquisitions with our business include, among other things:
+Added: • operating a larger combined organization in new geographic areas and new lines of business;
+Added: • hiring, training or retaining qualified personnel to manage and operate our growing business and assets;
+Added: • integrating management teams and employees into existing operations and establishing effective communication and information exchange with such management teams and employees;
+Added: • diversion of management’s attention from our existing business;
+Added: • assimilation of acquired assets and operations, including additional regulatory programs;
+Added: • loss of customers;
+Added: • loss of key employees;
+Added: • maintaining an effective system of internal controls in compliance with the Sarbanes-Oxley Act of 2002 as well as other regulatory compliance and corporate governance matters;
+Added: • integrating new technology systems for financial reporting.
+Added: If any of these risks or other unanticipated liabilities or costs were to materialize, we may not realize the desired benefits from past and future acquisitions, resulting in a negative impact on our results of operations.
+Added: For example, subsequent to the CDM Acquisition the attrition rate of specialized field technicians exceeded our projections and, as a result, we incurred unanticipated costs in 2018 to utilize third-party contractors to service our compression units at a greater cost than we would have incurred to compensate employees to perform the same work.
+Added: We may not be successful in integrating acquisitions into our existing operations within our anticipated time frame, which may result in unforeseen operational difficulties or diminished financial performance or require a disproportionate amount of our management’s attention.
+Added: In addition, acquired assets may perform at levels below the forecasts used to evaluate their acquisition, due to factors beyond our control.
+Added: If the acquired assets perform at levels below the forecasts, then our future results of operations could be negatively impacted.
The CDM Acquisition could expose us to additional unknown and contingent liabilities.
The CDM Acquisition could expose us to additional unknown and contingent liabilities.
−Removed: We performed due diligence in connection with the CDM Acquisition and attempted to verify the representations made by ETO in connection therewith, but there may be unknown and contingent liabilities of which we are currently unaware.
−Removed: ETO has agreed to indemnify us for losses or claims relating to the operation of the business or otherwise only to a limited extent and for a limited period of time, and certain of ETO’s indemnification obligations lapsed in late 2019.
+Added: We performed due diligence in connection with the CDM Acquisition and attempted to verify the representations made by Energy Transfer in connection therewith, but there may be unknown and contingent liabilities of which we are currently unaware.
+Added: Energy Transfer has agreed to indemnify us for losses or claims relating to the operation of the business or otherwise only to a limited extent and for a limited period of time, and certain of Energy Transfer’s indemnification obligations lapsed in late 2019.
There is a risk that we could ultimately be liable for obligations relating to the CDM Acquisition for which indemnification is not available, which could materially adversely affect our business, results of operations and cash flow.
+Added: From time to time, we are subject to various claims, tax audits, litigation and other proceedings that could ultimately be resolved against us and require material future cash payments or charges, which could impair our financial condition or results of operations.
+Added: The size, nature and complexity of our business make us susceptible to various claims, tax audits, litigation and binding arbitration proceedings.
+Added: We are currently, and may in the future become, subject to various claims, which, if not resolved within amounts we have accrued, if any, could have a material adverse effect on our financial position, results of operations or cash flows, including our ability to pay distributions.
+Added: Similarly, any claims, even if fully indemnified or insured, could negatively impact our reputation among our customers and the public, and make it more difficult for us to compete effectively or obtain adequate insurance in the future.
+Added: See Part I, Item 3 “Legal Proceedings” and Note 16 to our consolidated financial statements in Part II, Item 8 “Financial Statements and Supplementary Data” for additional information regarding certain legal proceedings to which we are a party.
Risks Related to Governmental Legislation and Regulation
−Removed: We are subject to substantial environmental regulation, and changes in these regulations could increase our costs or liabilities.
−Removed: We are subject to stringent and complex federal, state and local laws and regulations, including laws and regulations regarding the discharge of materials into the environment, emissions controls and other environmental protection and occupational health and safety concerns, as discussed in detail in Item 1 “Business – Our Operations – Environmental and
−Removed: Safety Regulations”.
+Added: We and our customers are subject to substantial environmental regulation, and changes in these regulations could increase our and their costs or liabilities and result in decreased demand for our services.
+Added: We are subject to stringent and complex federal, state and local laws and regulations, including laws and regulations regarding the discharge of materials into the environment, emissions controls and other environmental protection and occupational health and safety concerns, as discussed in detail in Item 1 “Business – Our Operations – Governmental Regulations”.
Environmental laws and regulations may, in certain circumstances, impose strict liability for environmental contamination, which may render us liable for remediation costs, natural resource damages and other damages as a result of our conduct that was lawful at the time it occurred or the conduct of, or conditions caused by, prior owners or operators or other third parties.
20 unchanged sentences
New regulations, proposed regulations and proposed modifications to existing regulations under the Clean Air Act, if implemented, could result in increased compliance costs.
−Removed: New regulations or proposed modifications to existing regulations under the Clean Air Act (“CAA”), as discussed in detail in Item 1 “Business – Our Operations – Environmental and Safety Regulations”, may lead to adverse impacts on our business, financial condition, results of operations, and cash available for distribution.
+Added: New regulations or proposed modifications to existing regulations under the Clean Air Act (“CAA”), as discussed in detail in Item 1 “Business – Our Operations – Governmental Regulations”, may lead to adverse impacts on our business, financial condition, results of operations, and cash available for distribution.
For example, in 2015, the EPA finalized a rule strengthening the primary and secondary National Ambient Air Quality Standards (“NAAQS”) for ground level ozone, both of which are 8-hour concentration standards of 70 parts per billion.
4 unchanged sentences
Specifically, the EPA’s rule package included New Source Performance Standards to address emissions of sulfur dioxide and volatile organic compounds (“VOCs”) and a separate set of emissions standards to address hazardous air pollutants frequently associated with oil and natural gas production and processing activities.
−Removed: The rules established specific new requirements regarding emissions from compressors and controllers at natural gas processing plants, dehydrators, storage tanks
−Removed: and other production equipment as well as the first federal air standards for natural gas wells that are hydraulically fractured.
−Removed: In June 2016, the EPA took steps to expand on these regulations when it published New Source Performance Standards, known as Subpart OOOOa, that require certain new, modified or reconstructed facilities in the oil and natural gas sector to reduce methane gas and VOC emissions.
−Removed: These Subpart OOOOa standards would have expanded the 2012 New Source Performance Standards by using certain equipment-specific emissions control practices, requiring additional controls for pneumatic controllers and pumps as well as compressors, and imposing leak detection and repair requirements for natural gas compressor and booster stations.
−Removed: However, in September 2020, the EPA issued a final rule that removed the transmission and storage segment from the 2016 New Source Performance Standards, rescinded VOCs and methane emissions standards for the transmission and storage segment, and rescinded methane emissions standards for the production and processing segments.
−Removed: Various states and industry and environmental groups are separately challenging the EPA’s 2016 standards and its September 2020 final rule.
−Removed: Notwithstanding the current court challenges, on January 20, 2021, President Biden issued an executive order directing the EPA to consider publishing for notice and comment a proposed rule suspending, revising, or rescinding the September 2020 rule, which could result in more stringent methane emission rulemaking.
+Added: The rules established specific new requirements regarding emissions from compressors and controllers at natural gas processing plants, dehydrators, storage tanks and other production equipment as well as the first federal air standards for natural gas wells that are hydraulically fractured.
+Added: In June 2016, the EPA took steps to expand on these regulations when it published New Source Performance Standards, known as Subpart OOOOa, that required certain new, modified or reconstructed facilities in the oil and natural gas sector to reduce methane gas and VOC emissions.
+Added: These Subpart OOOOa standards expanded the 2012 New Source Performance Standards by using certain equipment-specific emissions control practices, requiring additional controls for pneumatic controllers and pumps as well as compressors, and imposing leak detection and repair requirements for natural gas compressor and booster stations.
+Added: In addition, in November 2021, the EPA proposed a rule to further reduce methane and VOC emissions from new and existing sources in the oil and gas sector.
Any additional regulation of air emissions from the oil and gas sector could result in increased expenditures for pollution control equipment, which could impact our customers’ operations and negatively impact our business.
4 unchanged sentences
Congress has considered legislation to reduce GHG emissions.
−Removed: President Biden could seek to pursue legislative, regulatory or executive initiatives that restrict GHG emissions.
−Removed: Other energy legislation and initiatives could include a carbon tax or cap and trade program.
−Removed: Independent of Congress, and as discussed in detail in Item 1 “Business – Our Operations – Environmental and Safety Regulations”, the EPA has taken to adopt regulations controlling GHG emissions under its existing CAA authority.
+Added: In addition, federal or state governmental agencies could seek to pursue legislative, regulatory or executive initiatives that restrict GHG emissions.
+Added: Other energy legislation and initiatives could include a carbon tax, methane fee or cap and trade program.
+Added: Independent of Congress, and as discussed in detail in Item 1 “Business – Our Operations – Governmental Regulations”, the EPA has taken steps to adopt regulations controlling GHG emissions under its existing CAA authority.
Further, although Congress has not passed such legislation, many states have begun to address GHG emissions, primarily through the planned development of emissions inventories or regional GHG cap and trade programs.
Depending on the particular program, we could be required to control GHG emissions or to purchase and surrender allowances for GHG emissions resulting from our operations.
−Removed: Federal and possibly state governments may impose significant restrictions on fossil-fuel exploration, production and use such as limitations or bans on hydraulic fracturing of oil and gas wells, bans or restrictions on new leases for production of minerals on federal properties, and imposing restrictive requirements on new pipeline infrastructure or fossil-fuel export facilities.
−Removed: For example, on January 27, 2021, President Biden issued an executive order directing the Secretary of the Interior to pause approval of new oil and natural gas leases on public lands or in offshore waters pending completion of a comprehensive review and reconsideration of federal oil and gas permitting and leasing practices.
+Added: Federal and possibly state governments may impose significant restrictions on fossil-fuel exploration, production and use such as limitations or bans on hydraulic fracturing of oil and gas wells, bans or restrictions on new leases for production of minerals on federal properties, and impose restrictive requirements on new pipeline infrastructure or fossil-fuel export facilities.
Litigation risks are also increasing, as a number of cities, local governments and other plaintiffs have sued companies engaged in the exploration and production of fossil fuels in state and federal courts, alleging various legal theories to recover for the impacts of alleged global warming effects, such as rising sea levels.
1 unchanged sentence
Although a number of these lawsuits have been dismissed, others remain pending and the outcome of these cases remains difficult to predict.
−Removed: Although it is not currently possible to predict with specificity how any proposed or future GHG legislation, regulation, agreements or initiatives will impact our business, any legislation or regulation of GHG emissions that may be imposed in areas in which we conduct business or on the assets we operate, including a carbon tax or cap and trade program, could result in increased compliance or operating costs or additional operating restrictions or reduced demand for our services, and could have a material adverse effect on our business, financial condition and results of operations.
−Removed: Finally, it should be noted that some scientists have concluded that increasing concentrations of GHG in Earth’s atmosphere may produce climate changes that have significant weather-related effects, such as increased frequency and severity of storms, droughts, floods and other climatic events.
−Removed: If any of those effects were to occur, they could have an adverse effect on our assets and operations.
−Removed: Also, recent activism directed at shifting funding away from companies with energy-related assets could result in a reduction of funding for the energy sector overall, which could have an adverse effect on our ability to obtain external financing.
+Added: Although it is not currently possible to predict with specificity how any proposed or future GHG legislation, regulation, agreements or initiatives will impact our business, any legislation or regulation of GHG emissions that may be imposed in areas in which we conduct business or on the assets we operate, including a carbon tax, methane fee or cap and trade program, could result in increased compliance or operating costs or additional operating restrictions or reduced demand for our services, and could have a material adverse effect on our business, financial condition and results of operations.
+Added: Additionally, the SEC announced its intention to promulgate rules requiring climate disclosures.
+Added: Although the form and substance of these requirements is not yet known, this may result in additional costs to comply with any such disclosure requirements.
+Added: Climate change may increase the frequency and severity of weather events that could result in severe personal injury, property damage and environmental damage, which could curtail our or our customers’ operations and otherwise materially adversely affect our cash flows.
+Added: Some scientists have concluded that increasing concentrations of GHG in Earth’s atmosphere may produce climate changes that have significant weather-related effects, such as increased frequency and severity of storms, droughts, floods and other climatic events.
+Added: If any of those effects were to occur, they could have an adverse effect on our assets and operations, including damages to our or our customers’ facilities and assets from powerful wind or rising waters.
+Added: We may experience increased insurance costs, or difficulty obtaining adequate insurance coverage, for our assets in areas subject to more frequent severe weather.
+Added: We may not be able to recoup these increased costs through the rates we charge our customers.
+Added: Extreme weather events could cause damage to property or facilities that could exceed our insurance coverage and our business, financial condition and results of operations could be adversely affected.
+Added: Another possible consequence of climate change is increased volatility in seasonal temperatures.
+Added: The market for NGLs and natural gas is generally impacted by periods of colder weather and warmer weather, so any changes in climate could affect the market for those fuels, and thus demand for our services.
+Added: Despite the use of the term “global warming” as a shorthand for climate change, some studies indicate that climate change could cause some areas to experience temperatures substantially colder than their historical averages.
+Added: As a result, it is difficult to predict how the market for our services could be affected by increased temperature volatility.
+Added: A climate-related decrease in demand for crude oil and natural gas could negatively affect our business.
+Added: Supply and demand for crude oil and natural gas is dependent upon a variety of factors, many of which are beyond our control.
+Added: These factors include, among others, the potential adoption of new government regulations, including those related to fuel conservation measures and climate change regulations, technological advances in fuel economy and energy generation devices.
+Added: For example, legislative, regulatory or executive actions intended to reduce emissions of GHGs could increase the cost of consuming crude oil and natural gas, thereby potentially causing a reduction in the demand for such products.
+Added: transition to alternative fuels or energy sources, whether resulting from potential new government regulation, carbon taxes or consumer preferences could result in decreased demand for crude oil, natural gas and NGLs.
+Added: Any decrease in demand for these products could consequently reduce demand for our services and could have a negative effect on our business.
+Added: Also, recent activism directed at shifting funding away from companies with energy-related assets could result in a reduction of funding for the energy sector overall, which could have an adverse effect on our ability to obtain external financing as well as negatively affect the cost of, and terms for, financing to fund capital expenditures or other aspects of our business.
+Added: Increased attention to ESG matters and conservation measures may adversely impact our business
+Added: Increasing attention to, and societal expectations on companies to address climate change and other environmental and social impacts, investor and societal expectations regarding voluntary environmental, social and governance (“ESG”) disclosures, and consumer demand for alternative forms of energy may result in increased costs, reduced demand for fossil fuels and consequently demand for our services, reduced profits, increased risk of investigations and litigation, and negative impacts on the value of our assets and access to capital.
+Added: Increasing attention to climate change and environmental conservation, for example, may result in demand shifts for oil and natural gas products and additional governmental investigations and private litigation against us or our customers.
+Added: To the extent that societal pressures or political or other factors are involved, it is possible that such liability could be imposed without regard to our causation of or contribution to the asserted damage, or to other mitigating factors.
+Added: In addition, organizations that provide information to investors on corporate governance and related matters have developed ratings processes for evaluating companies on their approach to ESG matters.
+Added: Unfavorable ESG ratings and recent activism directed at shifting funding away from companies with energy-related assets could lead to increased negative investor sentiment toward us and our industry and to the diversion of investment to other industries, which could have a negative impact on our access to and costs of capital.
+Added: Additionally, to the extent ESG matters negatively impact our reputation, we may not be able to compete as effectively to recruit or retain employees, which may adversely affect our operations.
+Added: Such ESG matters may also impact our customers or suppliers, which may adversely impact our business, financial condition, or results of operations.
Increased regulation of hydraulic fracturing could result in reductions of, or delays in, natural gas production by our customers, which could adversely impact our revenue.
A significant portion of our customers’ natural gas production is developed from unconventional sources that require hydraulic fracturing as part of the completion process.
−Removed: Hydraulic fracturing involves the injection of water, sand and chemicals
−Removed: under pressure into the rock formation to stimulate gas production.
+Added: Hydraulic fracturing involves the injection of water, sand and chemicals under pressure into the rock formation to stimulate gas production.
Several states have adopted or are considering adopting regulations that could impose more stringent permitting, public disclosure or waste restrictions that may restrict or prohibit hydraulic fracturing.
−Removed: In addition, members of the U.S.
−Removed: Congress are and a number of federal agencies historically have been requested to review, and under the Biden administration, may be requested to review again, a variety of environmental issues associated with hydraulic fracturing, which may lead to new or more strict regulation.
+Added: In addition, from time to time, there have been various proposals to regulate hydraulic fracturing at the federal level.
Any new laws or regulations regarding hydraulic fracturing could negatively impact our customers’ ability to produce natural gas, which could adversely impact our revenue.
11 unchanged sentences
We cannot predict the future of any such legislation or tort liability.
−Removed: If additional levels of regulation, restrictions and permits were required through the adoption of new laws and regulations at the federal or state level or the development of new interpretations of those requirements by the agencies that issue the required permits, that could lead to operational delays, increased operating costs and process prohibitions that could reduce demand for our compression services, which would materially adversely affect our revenue and results of operations.
+Added: If additional levels of regulation, restrictions and permits were required through the adoption of new laws and regulations at the federal or state level or the development of new interpretations of those requirements by the agencies that issue the required permits, that could lead to operational delays,
+Added: increased operating costs and process prohibitions that could reduce demand for our compression services, which would materially adversely affect our revenue and results of operations.
Risks Inherent in an Investment in Us
2 unchanged sentences
Common unitholders have no right to elect the General Partner or the board of directors of the General Partner (the “Board”).
−Removed: ETO is the sole member of the General Partner and has the right to appoint the majority of the members of the Board, including all but one of its independent directors.
−Removed: Also, pursuant to that certain Board Representation Agreement entered into by us, the General Partner, ET LP and EIG Veteran Equity Aggregator, L.P.
+Added: Energy Transfer is the sole member of the General Partner and has the right to appoint the majority of the members of the Board, including all but one of its independent directors.
+Added: Also, pursuant to that certain Board Representation Agreement entered into by us, the General Partner, Energy Transfer and EIG Veteran Equity Aggregator, L.P.
(along with its affiliated funds, “EIG”) in connection with our private placement of Preferred Units and Warrants to EIG, EIG Management Company, LLC has the right to designate one of the members of the Board for so long as the holders of the Preferred Units hold more than 5% of the Partnership’s outstanding common units in the aggregate (taking into account the common units that would be issuable upon conversion of the Preferred Units and exercise of the Warrants).
1 unchanged sentence
Common unitholders are currently unable to remove the General Partner because the General Partner and its affiliates own sufficient number of our common units to prevent its removal.
−Removed: The vote of the holders of at least 66 2/3% of all outstanding common units is required to remove the General Partner, and ETO currently owns over 33 1/3% of our outstanding common units.
+Added: The vote of the holders of at least 66 2/3% of all outstanding common units is required to remove the General Partner, and Energy Transfer currently owns over 33 1/3% of our outstanding common units.
As a result of these limitations, the price of our common units may decline because of the absence or reduction of a takeover premium in the trading price.
Furthermore, the Partnership Agreement contains provisions limiting the ability of common unitholders to call meetings or to obtain information about our operations, as well as other provisions limiting our common unitholders’ ability to influence the manner or direction of management.
−Removed: ETO owns and controls the General Partner, and the General Partner has sole responsibility for conducting our business and managing our operations.
−Removed: The General Partner and its affiliates, including ETO, have conflicts of interest with us and limited fiduciary duties, and they may favor their own interests to the detriment of us and our unitholders.
−Removed: ETO owns and controls the General Partner and appoints all of the officers and a majority of the directors of the General Partner, some of whom are also officers and directors of ETO.
+Added: Energy Transfer owns and controls the General Partner, and the General Partner has sole responsibility for conducting our business and managing our operations.
+Added: The General Partner and its affiliates, including Energy Transfer, have conflicts of interest with us and limited fiduciary duties, and they may favor their own interests to the detriment of us and our unitholders.
+Added: Energy Transfer owns and controls the General Partner and appoints all of the officers and a majority of the directors of the General Partner, some of whom are also officers and directors of Energy Transfer.
Although the General Partner has a fiduciary duty to manage us in a manner that is beneficial to us and our unitholders, the directors and officers of the General Partner also have a fiduciary duty to manage the General Partner in a manner that is beneficial to its owner.
2 unchanged sentences
These conflicts include the following situations, among others:
−Removed: • neither the Partnership Agreement nor any other agreement requires ETO to pursue a business strategy that favors us;
−Removed: • ETO and its affiliates are not prohibited from engaging in businesses or activities that are in direct competition with us or from offering business opportunities or selling assets to our competitors;
+Added: • neither the Partnership Agreement nor any other agreement requires Energy Transfer to pursue a business strategy that favors us;
+Added: • Energy Transfer and its affiliates are not prohibited from engaging in businesses or activities that are in direct competition with us or from offering business opportunities or selling assets to our competitors;
• the General Partner is allowed to take into account the interests of parties other than us, such as its owner, in resolving conflicts of interest;
2 unchanged sentences
• the General Partner determines the amount and timing of asset purchases and sales, borrowings, issuance of additional partnership interests and the creation, reduction or increase of reserves, each of which can affect the amount of cash that is distributed to our unitholders;
−Removed: • the General Partner determines the amount and timing of any capital expenditures and whether a capital expenditure is classified as a maintenance capital expenditure, which reduces operating surplus, or an expansion capital expenditure, which does not reduce operating surplus.
+Added: • the General Partner determines the amount and timing of any capital expenditures and whether a capital expenditure is classified as a maintenance capital expenditure, which reduces operating surplus, or an expansion capital expenditure,
+Added: which does not reduce operating surplus.
This determination can affect the amount of cash that is distributed to our unitholders;
40 unchanged sentences
The General Partner may transfer its general partner interest to a third party in a merger or in a sale of all or substantially all of its assets without the consent of the common unitholders.
−Removed: Furthermore, the Partnership Agreement does not restrict the ability of ETO to transfer all or a portion of its ownership interest in the General Partner to a third party.
+Added: Furthermore, the Partnership Agreement does not restrict the ability of Energy Transfer to transfer all or a portion of its ownership interest in the General Partner to a third party.
The new owner of the General Partner would then be in a position to replace the majority of the Board, and all of the officers, of the General Partner with its own designees and thereby exert significant control over the decisions made by the Board and the officers of the General Partner.
4 unchanged sentences
We may issue additional limited partner interests without the approval of unitholders, subject to certain Preferred Unit approval rights, which would dilute unitholders’ existing ownership interests and may increase the risk that we will not have sufficient available cash to maintain or increase our per common unit distribution level.
−Removed: The Partnership Agreement does not limit the number or timing of additional limited partner interests that we may issue, including limited partner interests that are convertible into or senior to our common units, without the approval of our common unitholders as long as the newly issued limited partner interests are not senior to, or pari passu with, the Preferred Units.
+Added: The Partnership Agreement does not limit the number or timing of additional limited partner interests that we may issue, including limited partner interests that are convertible into or senior to our common units, without the approval of our common
+Added: unitholders as long as the newly issued limited partner interests are not senior to, or pari passu with, the Preferred Units.
With the consent of a majority of the Preferred Units, we may issue an unlimited number of limited partner interests that are senior to our common units and pari passu with the Preferred Units.
8 unchanged sentences
• the market price of our common units may decline.
−Removed: ETO and the holders of the Preferred Units may sell our common units in the public or private markets, and such sales could have an adverse impact on the trading price of our common units.
−Removed: As of December 31, 2020, ETO beneficially owns an aggregate of 46,056,228 common units in us.
−Removed: We have granted certain registration rights to ETO and its affiliates with respect to any common units they own, and have filed a registration statement with the SEC for the benefit of the holders of the Preferred Units with respect to any common units they may receive upon conversion of the Preferred Units or exercise of the Warrants.
+Added: Energy Transfer and the holders of the Preferred Units may sell our common units in the public or private markets, and such sales could have an adverse impact on the trading price of our common units.
+Added: As of December 31, 2021, Energy Transfer beneficially owns an aggregate of 46,056,228 common units in us.
+Added: We have granted certain registration rights to Energy Transfer and its affiliates with respect to any common units they own, and have filed a registration statement with the SEC for the benefit of the holders of the Preferred Units with respect to any common units they may receive upon conversion of the Preferred Units or exercise of the Warrants.
Any sales of these common units in the public or private markets could have an adverse impact on the price of our common units.
3 unchanged sentences
These holders may also incur a tax liability upon a sale of their common units.
−Removed: As of December 31, 2020, the General Partner and its affiliates (including ETO), beneficially own an aggregate of approximately 47% of our outstanding common units.
+Added: As of December 31, 2021, the General Partner and its affiliates (including Energy Transfer), beneficially own an aggregate of approximately 47% of our outstanding common units.
Unitholders may not have limited liability if a court finds that limited partner actions constitute control of our business.
7 unchanged sentences
Under Section 17-607 of the Delaware Revised Uniform Limited Partnership Act (the “Delaware Act”), we may not make a distribution if the distribution would cause our liabilities to exceed the fair value of our assets.
−Removed: The Delaware Act provides that for a period of three years from the date of an impermissible distribution, limited partners who received the distribution and who knew at the time of the distribution that it violated Delaware law will be liable to the limited partnership for the distribution amount.
+Added: The Delaware Act provides that for a period of three years from the date of an impermissible distribution, limited partners who received the distribution and
+Added: who knew at the time of the distribution that it violated Delaware law will be liable to the limited partnership for the distribution amount.
Liabilities to partners on account of their interest in the Partnership and liabilities that are nonrecourse to the Partnership are not counted for purposes of determining whether a distribution is permissible.
7 unchanged sentences
federal securities laws.
−Removed: This exclusive forum provision may limit the ability of a limited partner to commence
−Removed: litigation in a forum that the limited partner prefers, or may require a limited partner to incur additional costs in order to commence litigation in Delaware, each of which may discourage such lawsuits against us or our general partner’s directors or officers.
+Added: This exclusive forum provision may limit the ability of a limited partner to commence litigation in a forum that the limited partner prefers, or may require a limited partner to incur additional costs in order to commence litigation in Delaware, each of which may discourage such lawsuits against us or our general partner’s directors or officers.
Alternatively, if a court were to find this exclusive forum provision inapplicable to, or unenforceable in respect of, one or more of the specified types of actions or proceedings described above, we may incur additional costs associated with resolving such matters in other jurisdictions, which could negatively affect our business, results of operations and financial condition.
12 unchanged sentences
If we were treated as a corporation for federal income tax purposes, we would pay federal income tax on our taxable income at the corporate tax rate, and would likely pay state and local income tax at varying rates.
−Removed: Distributions would generally be taxed again as corporate dividends (to the extent of our current and accumulated earnings and profits), and no income, gains, losses, deductions or credits would flow through to you.
+Added: Distributions would generally
+Added: be taxed again as corporate dividends (to the extent of our current and accumulated earnings and profits), and no income, gains, losses, deductions or credits would flow through to you.
Because a tax would be imposed upon us as a corporation, our cash available for distribution would be substantially reduced.
12 unchanged sentences
federal income tax laws or the Treasury Department’s interpretation of the qualifying income rules in a manner that could impact our ability to qualify as a partnership in the future.
−Removed: Any modification to the federal income tax laws and interpretations thereof may or may not be applied retroactively and could make it more difficult or impossible for us to meet the exception for certain publicly traded partnerships to be treated as
−Removed: partnerships for federal income tax purposes.
+Added: Any modification to the federal income tax laws and interpretations thereof may or may not be applied retroactively and could make it more difficult or impossible for us to meet the exception for certain publicly traded partnerships to be treated as partnerships for federal income tax purposes.
We are unable to predict whether any changes or other proposals will ultimately be enacted.
19 unchanged sentences
If the IRS makes audit adjustments to our income tax returns for tax years beginning after December 31, 2017, it (and some states) may assess and collect any taxes (including any applicable penalties and interest) resulting from such audit adjustments directly from us, in which case our cash available for distribution to our unitholders might be substantially reduced.
−Removed: Pursuant to the Bipartisan Budget Act of 2015, for tax years beginning after December 31, 2017, if the IRS makes audit adjustments to our income tax returns, it (and some states) may assess and collect any taxes (including any applicable penalties and interest) resulting from such audit adjustments directly from us.
−Removed: To the extent possible under the new rules, the General Partner may elect to either pay the taxes (including any applicable penalties and interest) directly to the IRS or, if we are eligible, issue a revised information statement to each unitholder and former unitholder with respect to an audited and adjusted return.
−Removed: Although the General Partner may elect to have our unitholders and former unitholders take such audit adjustment into account and pay any resulting taxes (including applicable penalties or interest) in accordance with their interests in us during the tax year under audit, there can be no assurance that such election will be practical, permissible or effective in all circumstances.
−Removed: As a result, our current unitholders may bear some or all of the tax liability resulting from such audit adjustment, even if such unitholders did not own units in us during the tax year under audit.
+Added: For tax years beginning after December 31, 2017, if the IRS makes audit adjustments to our income tax returns, it (and some states) may assess and collect any taxes (including any applicable penalties and interest) resulting from such audit adjustments directly from us.
+Added: Federal income tax returns for years 2019 and 2020 are currently under examination by the IRS.
+Added: To the extent possible under applicable rules, the General Partner may pay such taxes (including any applicable penalties and interest) directly to the IRS or, if we are eligible, elect to issue a revised Schedule K-1 to each unitholder and former unitholder with respect to an audited and adjusted return.
+Added: No assurances can be made that such election will be practical, permissible or effective in all circumstances.
+Added: As a result, our current unitholders may bear some or all of the tax liability resulting from such audit adjustment, even if such unitholders did not own units during the tax year under audit.
If, as a result of any such audit adjustment, we are required to make payments of taxes, penalties and interest, our cash available for distribution to our unitholders might be reduced.
−Removed: These rules are not applicable for tax years beginning on or prior to December 31, 2017.
Tax gain or loss on the disposition of our common units could be more or less than expected.
If our unitholders sell common units, they will recognize a gain or loss for federal income tax purposes equal to the difference between the amount realized and their tax basis in those common units.
−Removed: Because distributions in excess of their allocable share of our net taxable income decrease their tax basis in their common units, the amount, if any, of such prior excess distributions with respect to the common units a unitholder sells will, in effect, become taxable income to the unitholder if it sells such common units at a price greater than its tax basis in those common units, even if the price received is less than its
−Removed: original cost.
+Added: Because distributions in excess of their allocable share of our net taxable income decrease their tax basis in their common units, the amount, if any, of such prior excess distributions with respect to the common units a unitholder sells will, in effect, become taxable income to the unitholder if it sells such common units at a price greater than its tax basis in those common units, even if the price received is less than its original cost.
In addition, because the amount realized includes a unitholder’s share of our nonrecourse liabilities, a unitholder that sells common units may incur a tax liability in excess of the amount of cash received from the sale.
24 unchanged sentences
unitholder, the transferee is generally required to withhold 10% of the amount realized on such transfer if any portion of the gain on such transfer would be treated as effectively connected income.
−Removed: The application of the withholding requirement on transfers of publicly traded interests, including our units, are suspended until December 31, 2021.
−Removed: For transfers of units occurring after December 31, 2021, the amount realized on a transfer of units will generally be the amount of gross proceeds paid to the broker effecting the applicable transfer on behalf of the transferor, and such broker will generally be responsible for the relevant withholding obligations.
+Added: Treasury regulations provide that the “amount realized” on a transfer of an interest in a publicly traded partnership will generally be the amount of gross proceeds paid to the broker effecting the applicable transfer on behalf of the transferor.
+Added: Treasury regulations and recent Treasury guidance further provide that withholding on a transfer of an interest in a publicly traded partnership will not be imposed on a transfer that occurs on or prior to December 31, 2022, and after that date, if effected through a broker, the obligation to withhold is imposed on the transferor’s broker.
unitholders should consult their tax advisors regarding the impact of these rules on an investment in our units.
6 unchanged sentences
The IRS may challenge this treatment, which could change the allocation of items of income, gain, loss and deduction among our unitholders.
−Removed: We generally prorate our items of income, gain, loss and deduction for federal income tax purposes between transferors and transferees of our units each month based upon the ownership of our units on the first day of each month (the “Allocation
−Removed: Date”), instead of on the basis of the date a particular unit is transferred.
+Added: We generally prorate our items of income, gain, loss and deduction for federal income tax purposes between transferors and transferees of our units each month based upon the ownership of our units on the first day of each month (the “Allocation Date”), instead of on the basis of the date a particular unit is transferred.
Similarly, we generally allocate (i) certain deductions for depreciation of capital additions, (ii) gain or loss realized on a sale or other disposition of our assets, and (iii) in the discretion of the general partner, any other extraordinary item of income, gain, loss or deduction based upon ownership on the Allocation Date.
21 unchanged sentences
As we make acquisitions or expand our business, we may control assets or conduct business in additional states or foreign jurisdictions that impose an income tax.
−Removed: It is your responsibility to file all foreign, federal, state and local tax returns and pay any taxes due in these jurisdictions.
+Added: It is our unitholders’ responsibility to file all foreign, federal, state and local tax returns and pay any taxes due in these jurisdictions.
Unitholders should consult with their own tax advisors regarding the filing of such tax returns, the payment of such taxes, and the deductibility of any taxes paid.
2 unchanged sentences
Effective internal controls are necessary for us to provide reliable financial reports, prevent fraud and to operate successfully as a publicly traded partnership.
−Removed: Although we continuously evaluate the effectiveness of and improve upon our
−Removed: internal controls, our efforts to develop and maintain our internal controls may not be successful, and we may be unable to maintain effective controls over our financial processes and reporting in the future or to comply with our obligations under Section 404 of the Sarbanes-Oxley Act of 2002 (“Section 404”).
+Added: Although we continuously evaluate the effectiveness of and improve upon our internal controls, our efforts to develop and maintain our internal controls may not be successful, and we may be unable to maintain effective controls over our financial processes and reporting in the future or to comply with our obligations under Section 404 of the Sarbanes-Oxley Act of 2002 (“Section 404”).
For example, Section 404 requires us to, among other things, review and report annually on the effectiveness of our internal control over financial reporting.
−Removed: In addition, our independent registered public accountants are required to assess the effectiveness of our internal control over financial reporting since we ceased to be an emerging growth company under the Jumpstart Our Business Startups Act (the “JOBS Act”) on December 31, 2018.
+Added: In addition, our independent registered public accountants are required to assess the effectiveness of our internal control over financial reporting.
Any failure to develop, implement or maintain effective internal controls or to improve our internal controls could harm our operating results or cause us to fail to meet our reporting obligations.
6 unchanged sentences
Further, insurance covering the risks we face or in the amounts we desire may not be available in the future or, if available, the premiums may not be commercially justifiable.
−Removed: If we were to incur substantial liability and such damages were not covered by insurance or were in excess of policy limits, or if we were to incur liability at a time when we are not able to obtain liability insurance, our business, results of operations and financial condition could be adversely affected.
+Added: If we were to incur substantial liability and such damages
+Added: were not covered by insurance or were in excess of policy limits, or if we were to incur liability at a time when we are not able to obtain liability insurance, our business, results of operations and financial condition could be adversely affected.
Cybersecurity breaches and other disruptions of our information systems could compromise our information and operations and expose us to liability, which would cause our business and reputation to suffer.
14 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.