What changed in this filing

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Item 9A. Controls and Procedures

2022-02-15 compared with 2021-02-16 · 401 added, 669 removed, 1820 unchanged (37% of the section changed)

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Other Information

Disclosure Regarding Foreign Jurisdictions that Prevent Inspections

Not applicable.

Directors, Executive Officers and Corporate Governance

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Our general partner, USA Compression GP, LLC (the “General Partner”), manages our operations and activities.

As a result of several transactions (the “Transactions”) that closed on April 2, 2018 (the “Transactions Date”), the General Partner is solely owned by Energy Transfer Operating, L.P.

(“ETO”), a wholly owned subsidiary of Energy Transfer LP (“ET” and, collectively with ETO and their affiliates, “Energy Transfer”).

The General Partner is wholly owned by Energy Transfer LP (“Energy Transfer”).

The General Partner has a board of directors (the “Board”) that manages our business.

The Board is not elected by our unitholders and is not subject to re-election on a regular basis in the future.

As the sole member of the General Partner, ETO is entitled under the limited liability company agreement of the General Partner (the “GP LLC Agreement”) to appoint all directors of the General Partner, subject to rights and restrictions contained in other agreements.

The GP LLC Agreement provides that the Board shall consist of between two and nine persons, at least two of whom are required to meet the independence standards required of directors who serve on an audit committee of a board of directors established by the Exchange Act, and the rules and regulations of the SEC thereunder, and by the NYSE pertaining to qualification for service on an audit committee.

The Board is comprised of nine members, eight of whom were designated by ETO and one of whom was designated by EIG Management Company, LLC (“EIG Management”) pursuant to that certain Board Representation Agreement among us, the General Partner, Energy Transfer Equity, L.P.

(whose wholly owned subsidiary, Energy Transfer Partners, L.L.C.

acquired the General Partner in the Transactions and subsequently contributed it to ETO in connection with a merger among several Energy Transfer entities that closed in October 2018) and EIG Veteran Equity Aggregator, L.P.

(along with its affiliated funds, “EIG”) on the Transactions Date in connection with our private placement to EIG and FS Energy and Power Fund (“FS Energy”) of Preferred Units and warrants to purchase common units of the Partnership (the “Warrants”).

As the sole member of the General Partner, Energy Transfer is entitled under the limited liability company agreement of the General Partner (the “GP LLC Agreement”) to appoint all directors of the General Partner, subject to rights and restrictions contained in other agreements.

The GP LLC Agreement provides that the Board shall consist of between two and eleven persons.

The Board is comprised of ten members, nine of whom were designated by Energy Transfer and one of whom was designated by EIG Management Company, LLC (“EIG Management”) pursuant to that certain Board Representation Agreement (the “Board Representation Agreement”) among us, the General Partner, Energy Transfer and EIG Veteran Equity Aggregator, L.P.

(along with its affiliated funds, “EIG”) entered into on April 2, 2018 (the “Transactions Date”) in connection with our private placement to EIG and FS Energy and Power Fund (“FS Energy”) of Preferred Units and warrants to purchase common units of the Partnership (the “Warrants”).

Under the Board Representation Agreement, EIG Management has the right to designate one member of the Board for so long as EIG and FS Energy own, in the aggregate, more than 5% of the Partnership’s outstanding common units (taking into account the common units issuable upon conversion of the Preferred Units and exercise of the Warrants).

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Hartman to serve on the Board.

Three members of the Board are independent as defined under the independence standards established by the NYSE and the SEC.

Four members of the Board are independent as defined under the independence standards established by the NYSE and the SEC.

Although the NYSE does not require a publicly traded limited partnership like us to have a majority of independent directors on the Board or to establish a compensation committee or a nominating committee, the Board has elected to have a standing compensation committee (the “Compensation Committee”).

We do not have a nominating committee in light of the fact that ETO and EIG currently collectively appoint all of the members of the Board.

We do not have a nominating committee in light of the fact that Energy Transfer and EIG currently collectively appoint all of the members of the Board.

Long, our President and Chief Executive Officer (“CEO”), is currently the only management member of the Board.

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Hartman, Glenn E.

Joyce and William S.

Brett Smith and William S.

Waldheim are independent directors under the standards established by the NYSE and the Exchange Act.

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Hartman because (i) the Preferred Units and Warrants do not confer voting rights sufficient to participate in the control of the Partnership or influence its management, (ii) the Board Representation Agreement does not grant to EIG a sufficient number of seats on the Board to significantly influence or control its decision making or materially influence the management or operation of the Partnership and (iii) the Board has determined that ownership of even a significant amount of the Partnership’s securities does not, by itself, preclude a finding of independence.

Smith is President of, and owns limited partnership interests in, Promontory Exploration, LP, Rubicon Oil & Gas II LP and Quientesa Royalty LP, which entities own non-operating working or royalty interests in wells and receive proceeds from liquids production purchased by a subsidiary of Energy Transfer under agreements with well operators.

The Board determined that Mr.

Smith’s association with these entities did not preclude the independence of Mr.

The Board’s Role in Risk Oversight

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The Audit Committee consists of Messrs.

Hartman, Joyce and Waldheim, and Mr.

Hartman, Joyce, Smith and Waldheim, and Mr.

Waldheim serves as chairman of the Audit Committee.

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Waldheim is an “audit committee financial expert” as defined in Item 407(d)(5)(ii) of SEC Regulation S-K, and that each of Messrs.

Hartman, Joyce and Waldheim is “independent” within the meaning of the applicable NYSE and Exchange Act rules governing audit committee independence.

Hartman, Joyce, Smith and Waldheim is “independent” within the meaning of the applicable NYSE and Exchange Act rules governing audit committee independence.

The Audit Committee assists the Board in its oversight of the integrity of our financial statements and our compliance with legal and regulatory requirements as well as the effectiveness of our corporate policies and internal controls.

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However, the Board established the Compensation Committee to, among other things, oversee our compensation program described below in Part III, Item 11 “Executive Compensation.” The Compensation Committee consists of Messrs.

Joyce and Waldheim and is chaired by Mr.

Joyce, Smith and Waldheim and is chaired by Mr.

The Compensation Committee establishes and reviews general policies related to our compensation and benefits and is responsible for making recommendations to the Board with respect to the compensation and benefits of the Board.

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Under the charter of the Compensation Committee (the “Compensation Committee Charter”), a director serving as a member of the Compensation Committee may not be an officer of or employed by the General Partner, us or our subsidiaries.

During 2020, neither Mr.

Joyce nor Mr.

During 2021, none of Mr.

Waldheim was an officer or employee of Energy Transfer or any of its affiliates, or served as an officer of any company with respect to which any of our executive officers served on such company’s board of directors.

In addition, neither Mr.

Joyce nor Mr.

In addition, none of Mr.

Waldheim is a former employee of Energy Transfer or any of its affiliates.

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The members of the conflicts committee may not be officers or employees of the General Partner or directors, officers or employees of its affiliates, including Energy Transfer, and must meet the independence and experience standards established by the NYSE and the Exchange Act to serve on the Audit Committee, and certain other requirements.

Any matters approved by the conflicts committee in good faith will be conclusively deemed to be fair and reasonable to us, approved by all of our partners and not a breach by the General Partner of any duties it may owe us or our unitholders.

Any matters approved by the conflicts

committee in good faith will be conclusively deemed to be fair and reasonable to us, approved by all of our partners and not a breach by the General Partner of any duties it may owe us or our unitholders.

Corporate Governance Guidelines and Code of Ethics

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Ramsey 66 Director

Brett Smith 62 Director

Waldheim 65 Director

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Liuzzi served as our Senior Vice President – Strategic Development since joining us in April 2013.

joined us after nine years in investment banking, since 2008 at Barclays, where he was most recently a Director in the Global Natural Resources Group in Houston.

Liuzzi joined us after nine years in investment banking, since 2008 at Barclays, where he was most recently a Director in the Global Natural Resources Group in Houston.

At Barclays, Mr.

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Curia has served on the Board since April 2018.

Curia has also served as a director on the board of directors of the general partner of Sunoco LP (NYSE:

SUN) since August 2014 and as its Executive Vice President-Human Resources since April 2015.

Curia joined ETO in July 2008 and was appointed the Executive Vice President and Chief Human Resources Officer of the general partner of ET LP in January 2015.

Prior to joining Energy Transfer, Mr.

Curia has also served as a director on the board of directors of the general partner of Sunoco LP, a subsidiary of Energy Transfer LP, since August 2014 and as its Executive Vice President-Human Resources since April 2015.

Curia was appointed the Executive Vice President and Chief Human Resources Officer of the general partner of Energy Transfer LP in January 2015.

Curia joined Energy Transfer Operating, L.P.

(“ETO”), a subsidiary of Energy Transfer LP which has since merged with Energy Transfer LP, in July 2008.

Prior to joining ETO, Mr.

Curia held HR leadership positions at both Valero Energy Corporation and Pennzoil and has more than three decades of Human Resources experience in the oil and gas field.

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Hartman has served on the Board since April 2018.

Hartman is a Managing Director at EIG Global Energy Partners and is the co-head of EIG’s midstream investment team.

In this capacity, he invests in and monitors energy midstream investments.

Hartman is a Managing Director at EIG Global Energy Partners and leads EIG’s infrastructure investment team, where he invests in and monitors energy infrastructure investments.

Prior to joining EIG in 2014, Mr.

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from the University of Texas.

Hartman was selected to serve on the Board because of his financial and investment acumen and experience with the midstream energy sector.

Hartman was selected to serve on the Board because of his financial and investment acumen and experience with the midstream and infrastructure energy sectors.

Joyce has served on the Board since April 2018.

Joyce has served as Chief Administrative Officer of Apex International Energy (“Apex”) since January 2017.

He previously served as Director – HR and Administration since he joined Apex in April 2016.

He previously served as Director – HR and Administration since he joined

Apex in April 2016.

Prior to joining Apex, he spent over 17 years with Apache Corporation where his last position was Director of Global Human Resources in which he managed the HR functions of the international regions of Apache (Australia, Argentina, UK, Egypt).

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Long has served on the Board since April 2018.

He has also served on the board of directors of the general partner of Sunoco LP since May 2016.

Long was appointed as Co-Chief Executive Officer of the general partner of ET LP effective January 2021.

Long previously served as the Chief Financial Officer of the general partner of ET LP from February 2016 until January 2021.

Long has also served as a director of the general partner of ET LP since April 2019.

Long also serves as Co-Chief Executive Officer of ETO’s general partner and was previously Chief Financial Officer of ETO’s general partner.

Long was appointed as Co-Chief Executive Officer of the general partner of Energy Transfer LP effective January 2021.

Long previously served as their Chief Financial Officer from February 2016 until January 2021.

Long has also served as a director of the general partner of Energy Transfer LP since April 2019.

Long served as Co-Chief Executive Officer of ETO’s general partner from January 2021 until its merger into Energy Transfer LP in April 2021 and was previously its Chief Financial Officer.

He also served on the board of directors of the general partner of Sunoco LP from May 2016 until May 2021.

Long also served as the Chief Financial Officer and as a director of PennTex Midstream Partners, LP’s general partner from November 2016 to July 2017.

Long also served as Executive Vice President and Chief Financial Officer of Regency GP LLC from November 2010 to April 2015.

From May 2008 to November 2010, Mr.

Long served as Vice President and Chief Financial Officer of Matrix Service Company.

Prior to joining Matrix, he served as Vice President and Chief Financial Officer of DCP Midstream Partners LP, a publicly traded natural gas and natural gas liquids midstream business company located in Denver, Colorado.

In that position, he was responsible for all financial aspects of the company since its formation in December 2005.

From 1998 to 2005, Mr.

Long served in several executive positions with subsidiaries of Duke Energy Corp., one of the nation’s largest electric power companies.

Long was selected to serve on the Board because of his understanding of energy-related corporate finance gained through his extensive experience in the energy industry.

Mason has served on the Board since April 2018.

Mason became Executive Vice President and General Counsel of the general partner of ET LP in December 2015, and has served as the Executive Vice President, General Counsel and President - LNG of the general partner of ET LP since October 2018 following the merger of ET LP and ETO.

Mason also served as a director of PennTex Midstream Partners, LP’s general partner from November 2016 to July 2017.

Mason became Executive Vice President and General Counsel of the general partner of Energy Transfer LP in December 2015, and has also served as the Executive Vice President, General Counsel and President - LNG of the general partner of Energy Transfer LP since October 2018 following the merger of Energy Transfer Equity, L.P.

and Energy Transfer Partners, L.P.

In February 2021, Mr.

Mason assumed leadership responsibility over Energy Transfer LP’s new Alternative Energy Group, which focuses on the development of alternative energy projects aimed at continuing to reduce Energy Transfer LP’s environmental footprint throughout its operations.

Mason previously served as Senior Vice President, General Counsel and Secretary of ETO’s general partner from April 2012 to December 2015, as Vice President, General Counsel and Secretary from June 2008 and as General Counsel and Secretary from February 2007.

Prior to joining Energy Transfer, he was a partner in the Houston office of Vinson & Elkins L.L.P.

Prior to joining ETO, he was a partner in the Houston office of Vinson & Elkins L.L.P.

Mason has specialized in securities offerings and mergers and acquisitions for more than 25 years.

Mason also previously served on the Board of Directors of the general partner of Sunoco Logistics Partners L.P.

from October 2012 to April 2017 and also served on the Board of Directors of the general partner of PennTex Midstream Partners, LP from November 2016 to July 2017.

Mason was selected to serve on the Board because of his decades of legal experience in securities, mergers and acquisitions and corporate governance in the energy sector.

Ramsey has served on the Board since April 2018.

Ramsey was appointed as a director of the general partner of ET LP in July 2012 and as a director of ETO’s general partner in November 2015.

Ramsey has been the Chief Operating Officer of the general partner of ET LP since October 2018 following the merger of ET LP and ETO, and currently serves as President and Chief Operating Officer of ETO’s general partner since November 2015.

Ramsey currently serves as the Chief Operating Officer of the general partner of Energy Transfer LP, a position he has held since October 2018 following the merger of Energy Transfer Equity, L.P.

and Energy Transfer Partners, L.P.

Since July 2012, Mr.

Ramsey has also been a member of the board of directors of the general partner of Energy Transfer LP.

Additionally, Mr.

Ramsey serves as Chairman of the Board of Directors of the general partner of Sunoco, LP.

Ramsey previously served as President, Chief Operating Officer and as a member of the Board of Directors of Energy Transfer Partners, L.P.

Ramsey also served as President and Chief Operating Officer and Chairman of the board of directors of PennTex Midstream Partners, LP’s general partner from November 2016 to July 2017.

Since August 2014, Mr.

Ramsey has served on the board of directors of the general partner of Sunoco LP, having served as the chairman of the board of directors of the general partner of Sunoco LP since April 2015.

Ramsey previously served as President of RPM Exploration, Ltd., a private oil and gas exploration partnership, and previously served as a director of RSP Permian, Inc.

where he served on the audit and compensation committees.

Ramsey formerly served as President of DDD Energy, Inc.

until its sale in 2002.

From 1996 to 2000, Mr.

Ramsey served as President and Chief Executive Officer of OEC Compression Corporation, Inc., a publicly traded oil field service company, providing gas compression services to a variety of energy clients.

Previously, Mr.

Ramsey served as Vice President of Nuevo Energy Company, an independent energy company.

Additionally, he was employed by Torch Energy Advisors, Inc., a company providing management and operations services to energy companies including Nuevo Energy, last serving as Executive Vice President.

Ramsey joined Torch Energy as Vice President of Land and was named Senior Vice President of Land in 1992.

Ramsey also served as the President and Chief Operating Officer of the general partner of ETO since November 2015, and was a member of their board since November 2015, each until its merger into Energy Transfer LP in April 2021.

Ramsey formerly served as a board member of RSP Permian, Inc.

and on its audit and compensation committees.

Prior to joining management at Energy Transfer, Mr.

Ramsey served as President of RPM Exploration, Ltd., a private oil and gas partnership.

In addition to his work in the energy business, Mr.

Ramsey serves on the board of directors of the National Association of Manufacturers, and as a Trustee of the Southwestern Medical Foundation.

He is the former Chairman of the University of Texas Chancellor’s Council.

Ramsey holds a B.B.A.

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from South Texas College of Law.

Ramsey is a graduate of Harvard Business School Advanced Management Program.

Ramsey is licensed to practice law in the State of Texas.

He is qualified to practice in the Western District of Texas and the U.S.

Court of Appeals for the Fifth Circuit.

Ramsey formerly served as a director of Southern Union Company.

Ramsey was selected to serve on the Board in recognition of his vast knowledge of the energy space and valuable industry, operational and management experience.

Brett Smith has served on the Board since April 2021.

Smith has also served as President and Managing Partner of Rubicon Oil & Gas, LLC since October 2000, President of Rubicon Oil & Gas II, LP since May 2005, President of Quientesa Royalty LP since February 2005, President of Acton Energy LP since October 2008 and President of Promontory Exploration, LP since 2017.

Smith was President of Rubicon Oil & Gas, LP from October 2000 to May 2005.

For more than 30 years Mr.

Smith has been active in assembling exploration prospects in the Permian Basin, Oklahoma, New Mexico and the Rocky Mountain areas.

Smith served on the board of directors of the general partner of ETO and on its audit committee from

February 2018 through April 2021.

Smith also previously served on the board of directors of Sunoco LP and was a member of its audit and compensation committees.

Smith was selected to serve on the Board based on his experience as an executive in the oil and gas industry, as well as his recent experience on the board of another publicly traded limited partnership.

Waldheim has served on the Board since April 2018.

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from February 2016 through December 2018.

He previously served as President of DCP Midstream where he had overall responsibility for DCP Midstream’s affairs including commercial, trading and business development until his retirement in 2015.

He previously served as President of DCP Midstream LP where he had overall responsibility for DCP Midstream’s affairs including commercial, trading and business development until his retirement in 2015.

Prior to this, Mr.

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From 2005 to 2008, he was Group Vice President of Commercial for DCP Midstream, managing its upstream and downstream commercial business.

Waldheim started his professional career in 1978

with Champlin Petroleum as an auditor and financial analyst and served in roles involving NGL and crude oil distribution and marketing.

Waldheim started his professional career in 1978 with Champlin Petroleum as an auditor and financial analyst and served in roles involving NGL and crude oil distribution and marketing.

He served as Vice President of NGL and Crude Oil Marketing for Union Pacific Fuels from 1987 until 1998 at which time it was acquired by DCP Midstream.

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Whitehurst has served on the Board since April 2019.

Whitehurst currently serves as the Chief Financial Officer of the general partner of ET LP, a position he has held since January 2021.

Whitehurst currently serves as the Chief Financial Officer of the general partner of Energy Transfer LP, a position he has held since January 2021.

Prior to that, Mr.

Whitehurst served as the Executive Vice President and Head of Tax of LE GP since August 2014.

Prior to joining Energy Transfer, Mr.

Whitehurst served as their Executive Vice President – Head of Tax since August 2014.

Whitehurst also served as the Chief Financial Officer of the general partner of ETO from January 2021 until its merger into Energy Transfer LP in April 2021, and prior to that was their Executive Vice President—Head of Tax since August 2014.

Prior to joining Energy Transfer LP, Mr.

Whitehurst was a partner in the Washington, DC office of Bingham McCutchen LLP and an attorney in the Washington, DC offices of both McKee Nelson LLP and Hogan & Hartson.

Whitehurst has specialized in partnership taxation and has advised Energy Transfer in his role as outside counsel since 2006.

Whitehurst has specialized in partnership taxation and has advised Energy Transfer LP in his role as outside counsel since 2006.

Whitehurst was selected to serve on the Board because of his strong background in the energy sector and specialized knowledge of the taxation structure and issues unique to partnerships.

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Section 16(a) of the Exchange Act requires that the members of the Board, our executive officers and persons who own more than 10 percent of a registered class of our equity securities file initial reports of ownership and reports of changes in ownership of our common units and other equity securities with the SEC and any exchange or other system on which such securities are traded or quoted.

To our knowledge and based solely on a review of Section 16(a) forms filed electronically with the SEC, we believe that all reporting obligations of the members of the Board, our executive officers and greater than 10 percent unitholders under Section 16(a) were satisfied during the year ended December 31, 2020, with the exception of one late Form 4 filing on behalf of Mr.

Tracy Owens reporting a vesting of phantom units.

Common Unit Ownership by Directors and Executive Officers

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Under the terms of the Partnership Agreement, we are ultimately managed by the General Partner, which is controlled by Energy Transfer.

All of our employees, including our executive officers, are employees of USA Compression Management Services, LLC (“USAC Management”), a wholly owned subsidiary of the General Partner.

All of our employees, including our executive officers, are employees of USA Compression Management Services, LLC

(“USAC Management”), a wholly owned subsidiary of the General Partner.

References to “our officers” and “our directors” refer to the officers and directors of the General Partner.

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Kimble, Vice President, Human Resources.

Manias, Former Vice President and Chief Operating Officer.

Manias left the Partnership effective June 1, 2020.

Scheller was appointed as our new Vice President and Chief Operating Officer effective June 2, 2020.

Compensation Philosophy and Objectives

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Our executive compensation program is administered by the Compensation Committee.

The Compensation Committee considers market trends in compensation, including the practices of identified competitors, and the alignment of the

compensation program with the Partnership’s compensation philosophy described above.

The Compensation Committee considers market trends in compensation, including the practices of identified competitors, and the alignment of the compensation program with the Partnership’s compensation philosophy described above.

Specifically, for the NEOs, the Compensation Committee:

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Periodically, we engage a third-party consultant to provide the Compensation Committee with market information about compensation levels at peer companies to assist in evaluating compensation levels for our executives, including the NEOs.

In the latter part of 2019, the Compensation Committee engaged Longnecker & Associates (“Longnecker”), who is also the independent compensation advisor to Energy Transfer, to provide an updated targeted market review and benchmarking for certain members of our senior leadership team (the “2019 Longnecker Report”).

The Compensation Committee relied on the results of the 2019 Longnecker Report for information on base salary, bonus and general compensation items for 2020 for the NEOs.

The long-term equity incentive awards granted to our NEOs in December 2020 were based on the then-determined 2021 base salaries of the NEOs.

In 2019, Longnecker & Associates (“Longnecker”), who was also the independent compensation advisor to Energy Transfer in 2019, was engaged to provide an updated targeted market review and benchmarking for certain members of our senior leadership team (the “2019 Longnecker Report”).

In 2020, the Compensation Committee determined that the 2019 Longnecker Report was completed recently enough to be utilized as a data source in reviewing and setting 2021 NEO compensation levels.

In connection with its engagement of Longnecker in 2019, based on the information presented to it, the Compensation Committee assessed the independence of Longnecker under applicable SEC and NYSE rules and concluded that Longnecker’s work for the Compensation Committee did not raise any conflicts of interest.

Our peer group, as selected by the Compensation Committee in consultation with Longnecker, included the following companies for purposes of the 2019 Longnecker Report:

As a result, the Compensation Committee relied on the results of the 2019 Longnecker Report for information on base salary, bonus and general compensation items for 2021 for the NEOs (as discussed below, our Compensation Committee utilized another report in determining the number of equity awards that should be granted to our NEOs in December 2021).

For purposes of the 2019 Longnecker Report, our peer group, as selected by the Compensation Committee in consultation with Longnecker, included the following companies:

Company Ticker

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Tallgrass Energy, LP TGE

During 2021, Meridian Compensation Partners, LLC (“Meridian”), the independent compensation advisor to Energy Transfer, was engaged to conduct a new report on market information and compensation levels of our peer companies that provided the Compensation Committee with assistance in setting NEO compensation for the 2022 year (the “2021 Meridian Report”).

The Compensation Committee also utilized the 2021 Meridian Report when determining the number of equity awards that should be granted to our NEOs in December 2021, which were based on the then-determined 2022 base salaries of the NEOs.

In connection with the engagement of Meridian, based on the information presented to it, the Compensation Committee assessed the independence of Meridian under applicable SEC and NYSE rules and concluded that Meridian’s work for the Compensation Committee did not raise any conflicts of interest.

For purposes of the 2021 Meridian Report, our peer group included the following companies:

Company Ticker

Antero Midstream Corporation AM

Archrock, Inc.

Crestwood Equity Partners LP CEQP

DCP Midstream, LP DCP

Enerflex Ltd.

Enlink Midstream, LLC ENLC

Equitrans Midstream Corporation ETRN

Exterran Corporation EXTN

Genesis Energy, L.P.

Holly Energy Partners, L.P.

Martin Midstream Partners L.P.

NuStar Energy, L.P.

Summit Midstream Partners, LP SMLP

TETRA Technologies, Inc.

Western Midstream Partners, LP WES

Elements of the Compensation Program

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Base Salary for 2021

Base salaries for the NEOs have generally been set at a level deemed necessary to attract and retain individuals with superior talent.

Base salaries for the NEOs have generally been set at a level deemed appropriate by the Compensation Committee to attract and retain individuals with superior talent.

Base salary increases are determined based upon the job responsibilities, demonstrated proficiency and performance of the NEO and market conditions.

In connection with determining base salaries for each of the NEOs for 2020, other than Mr.

Scheller, the Compensation Committee and CEO utilized the 2019 Longnecker Report to determine comparable salaries for such executive roles within our peer group, and determined that the NEOs’ base salaries were generally in line with the market, and provided a merit increase for each NEO for the 2020 year.

Scheller’s base salary was determined in June 2020 in connection with his promotion to Vice President and Chief Operating Officer, based on available market data, including the 2019 Longnecker Report, and the role, contribution, skills, experience and performance of Mr.

Scheller relative to his peers at the Partnership.

The 2020 base salaries (and 2019 base salaries, where applicable, for comparison purposes) for the NEOs, including our CEO, are set forth in the following table:

Name and Principal Position 2020 Base Salary ($) 2019 Base Salary ($)

In connection with determining base salaries for each of the NEOs for 2021, the Compensation Committee and CEO utilized the 2019 Longnecker Report to determine comparable salaries for such executive roles within our peer group, and determined that the NEOs’ base salaries were generally in line with the market, and provided a merit increase for certain NEOs for the 2021 year.

The 2021 base salaries and 2020 base salaries for the NEOs, including our CEO, are set forth in the following table:

Name and Principal Position 2021 Base Salary ($)

2020 Base Salary ($)

Long, President and Chief Executive Officer 664,050 664,050

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Kimble, Vice President, Human Resources 325,000 316,900

Manias, Former Vice President and Chief Operating Officer 450,205 (2) 437,091

________________________

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Scheller in 2020.

Manias left the Partnership effective June 1, 2020.

The amount above reflects his annualized base salary for 2020.

See “ – Summary Compensation Table” below for the salary received by Mr.

Manias in 2020.

Scheller and Mr.

Porter were not NEOs in 2019;

therefore, only their 2020 Base Salary is reported.

Annual Cash Incentive Compensation for 2021

In February 2019, the Compensation Committee made several modifications to the Partnership’s previous annual cash incentive program and approved the USA Compression Partners, LP Amended and Restated Annual Cash Incentive Plan (the “Bonus Plan”), which replaced the previous annual cash bonus plan and was effective for fiscal year 2019.

Each of the NEOs is entitled to participate in the Bonus Plan and their potential bonus is governed by the Bonus Plan and, for Messrs.

Each of the NEOs is entitled to participate in the USA Compression Partners, LP Amended and Restated Annual Cash Incentive Plan (the “Bonus Plan”) and their potential bonus is governed by the Bonus Plan and, for Messrs.

Porter and Kimble, also governed by their respective employment agreements.

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Although the Bonus Plan is generally based upon our satisfaction of certain performance measures that were previously established for the 2021 year, the Compensation Committee retains the authority to use its business judgement to make decisions or adjustments to the Bonus Plan’s funding pool or the individual bonus awards resulting from the guidelines set forth below.

The Bonus Plan contains four payout factors and corresponding percentages that comprise the total annual target bonus for all eligible employees, including the NEOs (the “Annual Target Bonus Pool”), as shown in the following chart.

The Bonus Plan contains four

payout factors and corresponding percentages that comprise the total annual target bonus for all eligible employees, including the NEOs (the “Annual Target Bonus Pool”), as shown in the following chart.

Bonus Plan Payout Factors

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For the 2021 year, the Compensation Committee set a target bonus amount (the “Target Bonus”) for each NEO prior to the first quarter of the 2021 year, which was set as a percentage of the NEO’s base salary.

Scheller’s Target Bonus was determined in June 2020 in connection with his appointment as Vice President and Chief Operating Officer.

For the bonus applicable to the 2020 year, the Target Bonus, as a percentage of base salary and as a dollar amount, is reflected in the table

For the bonus applicable to the 2021 year, the Target Bonus, as a percentage of base salary and as a dollar amount, is reflected in the table below.

Name Percentage of Base Salary Amount ($)

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Kimble, Vice President, Human Resources 90 % 292,500

Manias, Former Vice President and Chief Operating Officer 100 % 450,205

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(1) In connection with his appointment as Vice President and Chief Operating Officer on June 2, 2020, the Compensation Committee increased Mr.

Scheller’s Target Bonus from 60% of his base salary to 85% of his base salary and increased his base salary.

The Percentage of Base Salary column reflects this increased Target Bonus and the value reflected in the Amount column assumes that Mr.

Scheller’s increased Target Bonus and base salary were applicable for all of 2020.

Scheller’s actual Target Bonus for 2020 approved by the Compensation Committee was determined on a pro-rated basis, based on the amount of time he spent in his role as Vice President and Chief Operating Officer during 2020.

Scheller’s Target Bonus based on the prorated formula is $230,675.

The annual cash bonus pool targets for 2021 were based on the determination of the Compensation Committee in consultation with Longnecker, and in consideration of the available compensation data and the role, contribution, skills, experience and performance of an individual relative to his or her peers at the Partnership.

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Kimble, Vice President, Human Resources 301,275

Manias, Former Vice President and Chief Operating Officer (1) —

________________________

Manias left the Partnership effective June 1, 2020.

Scheller was appointed as our new Vice President and Chief Operating Officer effective June 2, 2020.

Long-Term Equity Incentive Awards

The Board adopted the LTIP, which is designed to promote our interests, as well as the interests of our unitholders, by rewarding our officers, directors and certain of our employees for delivering desired performance results, as well as by strengthening our ability to attract, retain and motivate qualified individuals to serve as officers, directors and employees.

The LTIP, which has been in effect since 2013, is designed to promote our interests, as well as the interests of our unitholders, by rewarding our officers, directors and certain of our employees for delivering desired performance results, as

well as by strengthening our ability to attract, retain and motivate qualified individuals to serve as officers, directors and employees.

The LTIP provides for the grant, from time to time at the discretion of the Compensation Committee, of unit awards, restricted units, phantom units, unit options, unit appreciation rights, DERs and other common unit-based awards, although since our initial public offering in 2013 the Board has only granted awards of phantom units with DERs under the LTIP.

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The target level of annual long-term incentive awards for each of the NEOs is expressed as a percentage of the NEO’s base salary.

In determining the level of the December 2020 grants of Phantom Units to the NEOs, the Compensation Committee, taking into account market data and the role, contribution, skills, experience and performance of an NEO relative to his or her peers at the Partnership, determined each of the NEOs’ long-term incentive targets.

In determining the level of the December 2021 grants of Phantom Units to the NEOs, the Compensation Committee, taking into account market data contained in the 2021 Meridian Report and the role, contribution, skills, experience and performance of an NEO relative to his or her peers at the Partnership, determined each of the NEOs’ long-term incentive targets.

Due to the fact that determinations were made in late 2021, the base salaries used for these calculations were the then-determined base salaries set for the 2022 calendar year.

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Kimble, Vice President, Human Resources 175 % 568,750

________________________

Manias left the Partnership prior to the grant of the long-term incentive awards for 2020.

Under the LTIP, the Compensation Committee has the discretion to determine whether any portion of Phantom Units should be settled in cash upon vesting.

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Retention Phantom Unit Awards

In 2018 the Compensation Committee approved an additional grant of Phantom Units to each of Messrs.

Long, Liuzzi and Manias, and in 2019 approved an additional grant of Phantom Units to each of Messrs.

In each of 2018 and 2019 the Compensation Committee approved an additional grant of Phantom Units to each of Messrs.

Long and Liuzzi, in each case in recognition of the importance of such NEO to the Partnership’s long term success and to encourage their retention by providing additional time-based compensation.

These Phantom Units are referred to as “Retention Units” and were issued pursuant to Retention Phantom Unit Agreements entered into between our General Partner and the applicable NEO on the grant date of the award (the “Retention Agreements”).

The Compensation Committee did not award any Retention Units to our NEOs in 2020.

The Compensation Committee did not award any Retention Units to our NEOs in 2020 or 2021.

The Retention Units will vest incrementally, with 60% of the Retention Units vesting on the third December 5 following the grant and 40% on the fifth December 5 following the grant.

(ii) a Change in Control (as defined under the LTIP and set forth below under “Potential Payments upon Termination or Change in Control”) or (iii) the death or Disability (as defined under the LTIP and set forth below under “Potential Payments upon Termination or Change in Control”) of the NEO.

The Retention Agreements also provide for the vesting of 100% of the then-unvested Retention Units upon (i) the NEO’s termination of employment without Cause or for Good Reason (each as defined in the Retention Agreement and set forth below under “Potential Payments upon Termination or Change in Control”), (ii) a Change in Control (as defined under the LTIP and set forth below under “Potential Payments upon Termination or Change in Control”) or (iii) the death or Disability (as defined under the LTIP and set forth below under “Potential Payments upon Termination or Change in Control”) of the NEO.

In addition, Mr.

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The NEOs are eligible under the same plans as all other employees with respect to our (i) medical, dental, vision, disability and life insurance benefits and (ii) a defined contribution plan that is tax-qualified under Section 401(k) of the Internal Revenue Code (the “401(k) Plan”).

In addition, we currently provide one or more NEOs with (a) an annual automobile allowance;

(b) club memberships;

and (c) personal tax support.

During 2020, we also provided one or more NEOs with personal administrative support.

In addition, we currently provide one or more NEOs with an annual automobile allowance and club memberships.

The Compensation Committee has determined it is appropriate to offer these perquisites in order to provide compensation opportunities competitive with those offered by similarly situated public companies.

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Please see the description of the Employment Agreements under “Potential Payments upon Termination or Change in Control” for further details on the terms of the Employment Agreements.

Each of Messrs.

Long, Liuzzi and Manias entered into a Termination Agreement and Mutual Release with USAC Management (and, with respect to Mr.

Long, USA Compression Partners, LLC) providing for (i) the termination, effective as of November 1, 2018, of the employment agreements to which each of Messrs.

Long, Liuzzi and Manias had been party and (ii) a mutual release by each party to the other(s) of all obligations, claims and causes of action arising under the applicable employment agreement.

Risk Assessment Related to Our Compensation Structure

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We do not have any Compensation Committee interlocks.

Joyce and Waldheim are the only members of the Compensation Committee, and during 2020 neither Mr.

Joyce, Smith and Waldheim are the only members of the Compensation Committee, and during 2021 neither Mr.

Joyce nor Mr.

Smith nor Mr.

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Joyce nor Mr.

Smith nor Mr.

Waldheim is a former employee of Energy Transfer or any of its affiliates.

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The following table provides information concerning compensation of our NEOs for the fiscal years presented below, as applicable.

Name and Principal Position Year Salary ($) Bonus

Name and Principal Position Year Salary ($) Unit

($) (1) Non-Equity Incentive Plan Compensation ($) (2) All Other

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2019 307,670 554,560 268,288 163,538 1,294,056

Manias 2020 200,356 — — — 2,507,199 2,707,555

Former Vice President and Chief Operating Officer 2019 437,092 — 1,012,957 476,430 375,506 2,301,985

________________________

(1) Represents the awards earned under our previous bonus plan for the year ended December 31, 2018.

(1) The Phantom Unit values reflect the grant date fair value of the awards calculated in accordance with the Financial Accounting Standards Board’s (“FASB”) Accounting Standard Codification (“ASC”) Topic 718, disregarding the estimated likelihood of forfeitures.

For a discussion of the assumptions utilized in determining the fair value of these awards, please see Note 14 in Part II, Item 8 “Financial Statements and Supplementary Data”.

The awards reflected in the 2018 year row reflect both Phantom Units and performance-based Phantom Unit awards, which performance-based Phantom Unit awards were all accelerated in connection with the Transactions and are no longer outstanding.

(3) Represents the awards earned under the Bonus Plan for 2020 and 2019 for each of the NEOs.

(2) Represents the awards earned under the Bonus Plan for each of the NEOs.

Amounts earned for the 2021 year will be paid after the Partnership’s audited financials are finalized.

(4) See the chart and footnote (5) below for a detailed breakdown of amounts reported in this column for 2020:

Name DERs Automobile Allowance Employer 401(k) Contributions Club Membership Dues Administrative Support Tax Support Parking

(3) See the chart below for a detailed breakdown of amounts reported in this column for 2021:

Name DERs Automobile Allowance Employer 401(k) Contributions Club Membership Dues Parking

$ 1,447,349 $ 18,000 $ 14,500 $ 15,895 $ 8,407

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$ 251,004 — $ 14,500 — $ 3,446

Manias $ 215,265 — $ 10,018 — — $ 0 $ 406

Manias left the Partnership effective June 1, 2020.

In connection with his departure, he received a separation payment of $1,340,997 and, pursuant to his Retention Agreement dated November 1, 2018, a release payment in the amount of $165,375.

Additionally, 59,626 unvested Phantom Units granted to Mr.

Manias under his Retention Agreement dated November 1, 2018 and his Employee Phantom Unit Agreement dated February 12, 2018 vested in connection with his departure, which units had a value of $775,138 on the date of Mr.

Manias’s departure.

Grants of Plan-Based Awards during the Year Ended December 31, 2021

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Vice President, Human Resources 12/5/2021 10/28/2021 38,018 568,749

Manias (5) 2/13/2020 450,205 531,242

Former Vice President and Chief Operating Officer

________________________

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(3) The Phantom Units granted on December 5, 2021 were granted in tandem with a corresponding DER.

(4) The reported grant date fair value of unit awards was calculated by multiplying $12.44, the closing price of the Partnership’s common units on December 4, 2020, the last business day prior to the date of grant (December 5, 2020), due to the grant date falling on a Saturday, by the number of units granted, as required by FASB ASC Topic 718.

Manias left the Partnership effective June 1, 2020.

(4) The reported grant date fair value of unit awards was calculated by multiplying $14.96, the closing price of the Partnership’s common units on December 3, 2021, the last business day prior to the date of grant (December 5, 2021), due to the grant date falling on a Sunday, by the number of units granted, as required by FASB ASC Topic 718.

Outstanding Equity Awards as of December 31, 2021

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2020 Grant 213,520 (5) 3,725,924

2021 Grant 182,880 (6) 3,191,256

Liuzzi, Vice President, Chief Financial Officer and Treasurer

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2020 Grant 82,797 (5) 1,444,808

2021 Grant 70,915 (6) 1,237,467

Scheller, Vice President and Chief Operating Officer

15,947 (2)(3) 216,879

2018 Grant 5,486 (2) 95,731

2019 Grant 31,446 (3) 548,733

2020 Grant 49,236 (5) 859,168

2021 Grant 48,195 (6) 841,003

Christopher W.

Porter, Vice President, General Counsel and Secretary

30,718 (2)(3) 417,765

2018 Grant 11,138 (2) 194,358

2019 Grant 31,698 (3) 553,130

2020 Grant 46,422 (5) 810,064

2021 Grant 48,128 (6) 839,834

Kimble, Vice President, Human Resources

44,934 (2)(3) 611,102

2018 Grant 14,770 (2) 257,737

2019 Grant 34,878 (3) 608,621

2020 Grant 45,719 (5) 797,797

2021 Grant 38,018 (6) 663,414

________________________

(1) On November 1, 2018, Mr.

Liuzzi received a grant of 90,000 Retention Units and 35,000 Retention Units, respectively, pursuant to the LTIP and applicable Retention Agreement.

The Retention Units vest incrementally, with 60% of the Retention Units vesting on December 5, 2021 and 40% of the Retention Units vesting on December 5, 2023.

Liuzzi received a grant of 90,000 Retention Units and 35,000 Retention Units, respectively, pursuant to the LTIP and applicable Retention Agreement, of which 36,000 and 14,000 remain unvested as of December 31, 2021, respectively.

These remaining unvested Retention Units will vest on December 5, 2023.

(2) Includes Phantom Units granted pursuant to the LTIP on December 5, 2018 to each of the NEOs, of which the following remain unvested as of December 31, 2021:

Long - 70,749;

Liuzzi - 27,434;

Scheller - 5,486;

Porter - 11,138;

Kimble - 14,770.

These remaining unvested Retention Units will vest on December 5, 2023.

(3) Includes Phantom Units granted pursuant to the LTIP on December 5, 2019 to each of the NEOs:

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The Phantom Units granted on December 5, 2019 vest incrementally, with 60% of the Phantom Units vesting on December 5, 2022 and the remaining 40% of the Phantom Units vesting on December 5, 2024.

(3) Includes Phantom Units granted pursuant to the LTIP on February 12, 2018 that had not vested as of December 31, 2020.

On February 15, 2021, the remaining unvested Phantom Units awarded on February 12, 2018 held by the NEOs vested as follows:

11,518 to Mr.

and 8,007 to Mr.

(4) On December 5, 2019, Mr.

Liuzzi received a grant of 41,764 and 25,911 Retention Units, respectively, pursuant to the LTIP and applicable Retention Agreement.

The Retention Units vest incrementally, with 60% of the Retention Units vesting on December 5, 2022 and 40% of the Retention Units vesting on December 5, 2024.

(5) Includes Phantom Units granted pursuant to the LTIP on December 5, 2020 to each of the NEOs:

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The Phantom Units granted on December 5, 2020 vest incrementally, with 60% of the Phantom Units vesting on December 5, 2023 and the remaining 40% of the Phantom Units vesting on December 5, 2025.

(5) On December 5, 2019, Mr.

Liuzzi received a grant of 41,764 and 25,911 Retention Units, respectively, pursuant to the LTIP and applicable Retention Agreement.

The Retention Units vest incrementally, with 60% of the Retention Units vesting on December 5, 2022 and 40% of the Retention Units vesting on December 5, 2024.

(6) Includes Phantom Units granted pursuant to the LTIP on December 5, 2021 to each of the NEOs:

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and 38,018 to Mr.

The Phantom Units granted on December 5, 2020 vest

incrementally, with 60% of the Phantom Units vesting on December 5, 2023 and the remaining 40% of the Phantom Units vesting on December 5, 2025.

The Phantom Units granted on December 5, 2021 vest incrementally, with 60% of the Phantom Units vesting on December 5, 2024 and the remaining 40% of the Phantom Units vesting on December 5, 2026.

(7) The market value of Phantom Units is calculated by multiplying $17.45, the closing price of the Partnership’s common units on December 31, 2021, by the number of Phantom Units outstanding.

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There are no options outstanding on the Partnership’s common units.

Long did not have any awards vest during the 2020 year.

Name Number of Phantom Units Vested

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Kimble, Vice President, Human Resources 30,164 (4) 452,134

Manias, Former Vice President and Chief Operating Officer 88,082 (4)(5) 1,205,393

________________________

Long settled approximately 50% of his newly vested Phantom Units in cash in the amount of $1,197,742 (before taxes), which cash settlement was reported as a disposition of those Phantom Units.

The remaining 80,062 Phantom Units vested following such cash settlement.

Liuzzi settled approximately 50% of his newly vested Phantom Units in cash in the amount of $551,700 (before taxes), which cash settlement was reported as a disposition of those Phantom Units.

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The remaining 15,081 Phantom Units vested following such cash settlement.

Manias settled approximately 50% of his newly vested Phantom Units in cash in the amount of $602,696 (before taxes), which cash settlement was reported as a disposition of those Phantom Units.

The remaining 44,041 Phantom Units vested following the applicable cash settlement.

(5) Pursuant to the terms of Mr.

Manias’s Retention Agreement dated November 1, 2018 and Phantom Unit Agreement dated February 12, 2018, 59,626 unvested Phantom Units granted to Mr.

Manias under such agreements vested in connection with his departure on June 1, 2020.

(6) The value realized on vesting of Phantom Units for Messrs.

Liuzzi, Scheller, Porter and Kimble was calculated by multiplying $15.12, the closing price of the Partnership’s common units on February 14, 2020, the last business day prior to the date of vesting (February 15, 2020), which vesting date fell on a Saturday, by the number of Phantom Units vesting.

(7) The value realized on vesting of Phantom Units for Mr.

Manias was calculated by adding the following amounts:

(i) the amount determined by multiplying $15.12, the closing price of the Partnership’s common units on February 14, 2020, the last business day prior to the date of vesting (February 15, 2020), which vesting date fell on a Saturday, by the number of Phantom Units vesting on February 15, 2020, and (ii) the amount determined by multiplying $13.00, the closing price of the Partnership’s common units on June 1, 2020, by the number of Phantom Units vesting on that date.

(5) The value realized on vesting of 11,518, 2,230, 2,872 and 8,007 Phantom Units for Messrs.

Liuzzi, Scheller, Porter and Kimble was calculated by multiplying $15.07, the closing price of the Partnership’s common units on February 12, 2021, the last business day prior to the date of vesting (February 15, 2021), which vesting date fell on a federal holiday, by the number of Phantom Units vesting on such date.

The value realized on vesting of 160,125, 62,153, 8,231, 16,708 and 22,157 Phantom Units for Messrs.

Long, Liuzzi, Scheller, Porter and Kimble was calculated by multiplying $14.96, the closing price of the Partnership’s common units on December 4, 2021, the last business day prior to the date of vesting (December 5, 2021), which vesting date fell on a Saturday, by the number of Phantom Units vesting on such date.

Potential Payments upon Termination or Change in Control

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On November 1, 2018, each of Messrs.

Long, Liuzzi and Manias entered into a Retention Agreement providing for a grant of Retention Units that will vest incrementally, with 60% of the Retention Units vesting on December 5, 2021 and the remaining 40% of the Retention Units vesting on December 5, 2023.

Also, on December 5, 2019, each of Messrs.

Long and Liuzzi entered into a Retention Agreement providing for a grant of Retention Units that will vest incrementally, with 60% of the

Retention Units vesting on December 5, 2022 and 40% of the Retention Units vesting on December 5, 2024.

Long and Liuzzi entered into a Retention Agreement providing for a grant of Retention Units that will vest incrementally, with 60% of the Retention Units vesting on December 5, 2021 and the remaining 40% of the Retention Units vesting on December 5, 2023.

On December 5, 2019, each of Messrs.

Long and Liuzzi entered into another Retention Agreement providing for a grant of Retention Units that will vest incrementally, with 60% of the Retention

Units vesting on December 5, 2022 and 40% of the Retention Units vesting on December 5, 2024.

For the purposes of the following description, the “Company” means USA Compression GP, LLC.

The Retention Agreements provide for the vesting of 100% of the then-unvested Retention Units upon (i) the NEO’s termination of employment without Cause or for Good Reason (each as defined in the Retention Agreement and described below), (ii) a Change in Control (as defined under the LTIP and as described below) or (iii) the death or Disability (as defined under the LTIP and as described below) of the NEO.

In the event of the NEO’s termination of employment without Cause or for Good Reason, provided that the NEO executes and does not revoke a general release and waiver of claims, the NEO will also be entitled to a severance payment intended to capture the value of future distributions associated with Retention Units forfeited for tax withholding purposes upon vesting.

The Retention Agreements provide for the vesting of 100% of the then-unvested Retention Units upon (i) the NEO’s termination of employment by the Company without Cause or for separation by the NEO for Good Reason (each as defined in the Retention Agreement and described below), (ii) a Change in Control (as defined under the LTIP and as described below) or (iii) the death or Disability (as defined under the LTIP and as described below) of the NEO.

In the event of the NEO’s termination of employment by the Company without Cause or separation by the NEO for Good Reason, provided that the NEO executes and does not revoke a general release and waiver of claims, the NEO will also be entitled to a severance payment intended to capture the value of future distributions associated with Retention Units forfeited for tax withholding purposes upon vesting.

Pursuant to the terms of Mr.

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(x) the NEO must provide written notice to the Company of the existence of the Good Reason condition within a period not to exceed 30 days of the initial existence of the condition;

(y) the Company shall have not less than thirty (30) days following its receipt of such during which it may remedy the condition;

(y) the Company shall have not less than 30 days following its receipt of such during which it may remedy the condition;

and (z) the NEO’s termination of employment must occur within the 90 day period after the initial existence of the condition specified in such notice.

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If the NEO has been employed by the Company, the Partnership or their Affiliates for at least 10 years and is over age 68 at the time of his voluntary retirement, 50% of his then-unvested Phantom Units will be forfeited, and the remainder will vest, at the time of retirement.

Prior to November 1, 2018, we had historically included double-trigger change in control provisions for our outstanding LTIP awards, such that in order for accelerated vesting of Phantom Units to occur in connection with a change in control, such change in control must be followed by a termination of employment by the Company without Cause or by the NEO with Good Reason (each as defined in the applicable Phantom Unit award agreement).

Under the LTIP award agreements entered into prior to the Transactions, in the event of cessation of the NEO’s service for any reason that is not in connection with a change in control transaction, all Phantom Units that have not vested prior to or in connection with such cessation of service shall automatically be forfeited.

However, because the agreements contained the double-trigger vesting provisions described below, and the Transactions were deemed to satisfy the first trigger of a change in control transaction, a termination by the Company without Cause or by the NEO for Good Reason following the Transactions would result in the acceleration of the Phantom Units granted prior to the Transactions.

For purposes of this description, the “Company” means USA Compression GP, LLC.

A “Change in Control” is defined under the LTIP as follows:

(a) with respect to Awards granted before April 3, 2018, the occurrence of any of the following events:

(i) any “person” or “group” within the meaning of Sections 13(d) and 14(d)(2) of the Exchange Act, other than the Company, Riverstone Holdings LLC or an Affiliate of the Company (as determined immediately prior to such event) or Riverstone Holdings LLC, shall become the beneficial owner, by way of merger, consolidation, recapitalization, reorganization or otherwise, of 50% or more of the combined voting power of the equity interests in the Company or the Partnership;

(ii) the limited partners of the Partnership approve, in one or a series of transactions, a plan of complete liquidation of the Partnership;

(iii) the sale or other disposition by either the Company or the Partnership of all or substantially all of its assets in one or more transactions to any Person other than the Company, the Partnership, Riverstone Holdings LLC or an Affiliate of the Company, the Partnership or Riverstone Holdings LLC;

or (iv) a transaction resulting in a Person other than the Company, Riverstone Holdings LLC or an Affiliate of the Company (as determined immediately prior to such event) or Riverstone Holdings LLC being the sole general partner of the Partnership;

(b) with respect to Awards granted on or after April 3, 2018, means the occurrence of any of the following events:

(i) any “person” or “group” within the meaning of Sections 13(d) and 14(d)(2) of the Exchange Act, other than the Company, Energy Transfer LP, a Delaware limited partnership (“ET”), Energy Transfer Operating, L.P., a Delaware limited partnership (“ETO”), an Affiliate of the Company (as determined immediately prior to such event), or an Affiliate of, or successor to, ET or ETO, shall become the beneficial owner, by way of merger, consolidation, recapitalization, reorganization or otherwise, of 50% or more of the combined voting power of the equity interests in the Company or the Partnership;

A “Change in Control” as defined under the LTIP means, with respect to Awards granted on or after April 3, 2018, the occurrence of any of the following events:

(i) any “person” or “group” within the meaning of Sections 13(d) and 14(d)(2) of the Exchange Act, other than the Company, Energy Transfer, an Affiliate of the Company (as determined immediately prior to such event), or an Affiliate of, or successor to, Energy Transfer, shall become the beneficial owner, by way of merger, consolidation, recapitalization, reorganization or otherwise, of 50% or more of the combined voting power of the equity interests in the Company or the Partnership;

(ii) the limited partners of the Partnership approve, in one or a series of transactions, a plan of complete liquidation of the Partnership;

(iii) the sale or other disposition by either the Company or the Partnership of all or substantially all of its assets in one or more transactions to any Person other than the Company, the Partnership, ET, ETO, an Affiliate of the Company (as determined immediately prior to such event), the Partnership, or an Affiliate of, or successor to, ET or ETO;

or (iv) a transaction resulting in a Person other than the Company, ET, ETO, an Affiliate of the Company (as determined immediately prior to such event), or an Affiliate of, or successor to, ET or ETO being the sole general partner of the Partnership.

However, if an LTIP award is subject to section 409A of the Internal Revenue Code, a “Change in Control” will be defined in accordance with section 409A of the Internal Revenue Code and the regulations promulgated thereunder.

(iii) the sale or other disposition by either the Company or the Partnership of all or substantially all of its assets in one or more transactions to any Person other than the Company, the Partnership, Energy Transfer, an Affiliate of the Company (as determined immediately prior to such event), the Partnership, or an Affiliate of, or successor to, Energy Transfer;

or (iv) a transaction resulting in a Person other than the Company, Energy Transfer, an Affiliate of the Company (as determined immediately prior to such event), or an Affiliate of, or successor to, Energy Transfer being the sole general partner of the Partnership.

However, if an LTIP award is subject to section 409A of the Code, a “Change in Control” will be defined in accordance with section 409A of the Code and the regulations promulgated thereunder.

“Disability” as defined under the LTIP means, as determined by the Compensation Committee in its discretion exercised in good faith, a physical or mental condition of the NEO that would entitle him or her to payment of disability income payments under the Company’s or the Partnership’s or one of its subsidiaries’ long-term disability insurance policy or plan for employees as then in effect;

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3,220,863 893,295 2,874,584 15,038 2,327,568

Former Vice President and Chief Operating Officer

Salary — — — — —

Bonus — — — — —

Accelerated Vesting of Phantom Units — — — — —

Accelerated Vesting of Retention Units — — — — —

Severance Payment under Retention Agreements — — — — —

________________________

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(8) In the event of the NEO’s cessation of service for any reason (other than death or Disability), 100% of the NEO’s Phantom Units that have not vested prior to or in connection with such cessation of service shall be automatically forfeited.

Notwithstanding the foregoing, with respect to the Phantom Units granted on December 5, 2018, December 5, 2019 and December 5, 2020 (collectively, the “December LTIP Phantom Units”), if the NEO retires after attaining the age of 65, 60% of his then-unvested December LTIP Phantom Units will be forfeited, and the remainder will vest, at the time of retirement and, if the NEO is over age 68 at the time of retirement, 50% of his then-unvested December LTIP Phantom Units will be forfeited, and the remainder will vest, at the time of retirement.

Notwithstanding the foregoing, with respect to the Phantom Units granted on December 5, 2018, December 5, 2019, December 5, 2020 and December 5, 2021 (collectively, the “December LTIP Phantom Units”), if the NEO retires after attaining the age of 65, 60% of his then-unvested December LTIP Phantom Units will be forfeited, and the remainder will vest, at the time of retirement and, if the NEO is over age 68 at the time of retirement, 50% of his then-unvested December LTIP Phantom Units will be forfeited, and the remainder will vest, at the time of retirement.

In the event of the death or Disability (as defined under the LTIP) of the NEO, 100% of the then-unvested December LTIP Phantom Units shall vest in full immediately prior to such NEO’s cessation of service due to death or Disability.

In the event of a Change in Control (as defined under the LTIP), 100% of the NEO’s outstanding, unvested December LTIP Phantom Units would vest.

As noted above, the Phantom Units granted prior to the Transactions contained a double-trigger change in control provision, and the Transactions satisfied the first trigger,

therefore they could become vested upon a termination by the Company without Cause or by the NEO without Good Reason that occurred on December 31, 2020.

(9) The Retention Agreements for Messrs.

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Long and Liuzzi, provided that the NEO executes and does not revoke a general release and waiver of claims, the NEO will be entitled to a severance payment intended to capture the value of future distributions associated with Retention Units forfeited for tax withholding purposes, which payment would be paid within 60 days of the NEO’s date of separation.

Manias left the Partnership effective June 1, 2020.

In recognition of his service and contributions to us, we paid Mr.

Manias a separation payment of $1,340,997, as approved by our Compensation Committee.

Under the terms of Mr.

Manias’s Retention Agreement dated November 1, 2018, in connection with his departure (i) Mr.

Manias received a $165,375 release payment and (ii) all 45,000 unvested Phantom Units granted to Mr.

Manias under that agreement vested.

Additionally, pursuant to the terms of Mr.

Manias’s Phantom Unit Agreement dated February 12, 2018, the 14,626 unvested Phantom Units granted to Mr.

Manias pursuant to that agreement vested in connection with his departure.

These Phantom Units had a value of $585,000 and $190,138, respectively, on the date they vested.

In connection with Mr.

Manias’s departure and receipt of the payments and Phantom Units described in this footnote, Mr.

Manias executed a Full Release and Waiver of Claims in our favor, pursuant to which he released all claims against us and acknowledged his continuing obligations under his Retention Agreement dated November 1, 2018 and his Phantom Unit Agreement dated February 12, 2018, including the non-solicitation and non-disparagement provisions therein.

Manias also received $10,389 of earned but unpaid base salary as of June 1, 2020, the date of his departure, bringing the total amount received by Mr.

Manias pursuant to his departure to $2,291,899.

The tax withholding rate as of December 31, 2021 for each of the NEOs applicable to the vesting of the Retention Units would have been 39.35%.

CEO Pay Ratio

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All references to “our” employees within this section shall refer to the applicable USAC Management employees.

In accordance with Item 402(u), we are basing the following pay-ratio information on the same median employee that we selected in 2020.

There has been no change in our employee population or employee compensation arrangements that we believe would result in a significant change to our pay ratio disclosure for 2021.

For 2021, our last completed fiscal year:

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Waldheim 132,500 99,998 50,744 283,242

Brett Smith (4) 91,875 (4) 36,625 3,938 132,438

________________________

3 unchanged sentences

19,619 Phantom Units;

2,500 Phantom Units and Mr.

19,619 Phantom Units.

The Phantom Units granted in 2021 to Messrs.

Joyce and Waldheim vest incrementally, with 60% of the Phantom Units vesting on December 5, 2022 and the remaining 40% of the Phantom Units vesting on December 5, 2024.

Joyce, Smith and Waldheim vest incrementally, with 60% of the Phantom Units vesting on December 5, 2023 and the remaining 40% of the Phantom Units vesting on December 5, 2025.

In the event of the director’s cessation of service due to death, Disability or a Change in Control, 100% of his outstanding, unvested Phantom Units will vest immediately prior to such event.

(2) Amounts in this column reflect the value of DERs, received by the directors with respect to their outstanding Phantom Unit awards.

Joyce and Waldheim, the amount shown includes DERs paid with respect to the Partnership’s quarterly distribution on its common units with respect to each quarter in the 2020 year.

Hartman was appointed to the Board pursuant to that certain Board Representation Agreement entered to among us, the General Partner, ET LP and EIG on the Transactions Date in connection with our private placement to EIG of Preferred Units and Warrants.

Joyce, Smith and Waldheim, the amount shown includes DERs paid with respect to the Partnership’s quarterly distribution on its common units with respect to each quarter in the 2021 year that such director held Phantom Units.

Hartman was appointed to the Board pursuant to that certain Board Representation Agreement entered to among us, the General Partner, Energy Transfer and EIG on the Transactions Date in connection with our private placement to EIG of Preferred Units and Warrants.

Hartman does not receive compensation for his service on the Board.

Smith was appointed to the Board on April 30, 2021, therefore he received cash compensation related to his service for the second, third and fourth quarters of 2021.

On July 30, 2018 the Board adopted the Amended and Restated Outside Director Compensation Policy (the “Director Compensation Policy”), which provides for:

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Security Ownership of Certain Beneficial Owners and Management and Related Unitholder Matters

Pursuant to the terms of the Equity Restructuring Agreement the Partnership entered into on January 15, 2018, at any time after the first anniversary of the Transactions Date, ETO has the right to contribute (or cause any of its subsidiaries to contribute) to the Partnership all of the outstanding equity interests in any of its subsidiaries that owns the General Partner Interest (as defined in the Equity Restructuring Agreement) in exchange for $10,000,000 (the “GP Contribution”);

provided that the GP Contribution will occur automatically if at any time following the Transactions Date (i) ETO or one of its affiliates (including ET LP) owns, directly or indirectly, the General Partner Interest and (ii) ETO and its affiliates (including ET LP) collectively own less than 12,500,000 of the Partnership’s common units.

Pursuant to the terms of the Equity Restructuring Agreement the Partnership entered into on January 15, 2018, at any time after the first anniversary of the Transactions Date, Energy Transfer has the right to contribute (or cause any of its subsidiaries to contribute) to the Partnership all of the outstanding equity interests in any of its subsidiaries that owns the General Partner Interest (as defined in the Equity Restructuring Agreement) in exchange for $10,000,000 (the “GP Contribution”);

provided that the GP Contribution will occur automatically if at any time following the Transactions Date (i) Energy Transfer or one of its affiliates owns, directly or indirectly, the General Partner Interest and (ii) Energy Transfer and its affiliates collectively own less than 12,500,000 of the Partnership’s common units.

Security Ownership of Certain Beneficial Owners and Management

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Any fractional common units are rounded down to the nearest whole number.

The table also presents information with respect to ET LP’s common units beneficially owned as of February 11, 2021, by each current director and named executive officer of the General Partner and by all directors and executive officers of the General Partner as a group.

As of February 11, 2021, ET LP had 2,702,436,307 common units outstanding.

The table also presents information with respect to Energy Transfer’s common units beneficially owned as of February 10, 2022, by each current director and named executive officer of the General Partner and by all directors and executive officers of the General Partner as a group.

As of February 10, 2022, Energy Transfer had 3,082,828,515 common units outstanding.

Any fractional common units are rounded down to the nearest whole number.

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Beneficially Owned Percentage of

Energy Transfer Operating, L.P.

(1) (2) 46,056,228 47.48 % — *

Energy Transfer LP (1) (2) 46,056,228 47.30 % — *

(3) 17,437,632 17.91 % — *

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Kimble 98,260 * 500 *

Manias 246,772 * — *

Christopher R.

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Ramsey — * 568,077 *

Brett Smith — * 38,339 *

Waldheim 9,762 * — *

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* Less than 1%.

(1) Energy Transfer Operating, L.P.

has shared voting and dispositive power over 46,056,228 common units based on a Schedule 13D/A filed on August 5, 2019 with the SEC.

(1) Energy Transfer LP has shared voting and dispositive power over 46,056,228 common units based on a Schedule 13D/A filed on August 5, 2019 with the SEC.

The Schedule 13D/A was filed jointly by Energy Transfer LP, LE GP, LLC, Kelcy L.

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and Energy Transfer Operating, L.P.

(collectively, the “ET Reporting Companies”).

The principal business address of each of the ET Reporting Companies, other than USA Compression GP, LLC, is 8111 Westchester Drive, Suite 600, Dallas, Texas 75225.

(collectively, the “Energy Transfer Reporting Companies”).

The principal business address of each of the Energy Transfer Reporting Companies, other than USA Compression GP, LLC, is 8111 Westchester Drive, Suite 600, Dallas, Texas 75225.

The principal business address of USA Compression GP, LLC is 111 Congress Avenue, Suite 2400, Austin, Texas 78701.

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(3) Invesco Ltd.

has the sole power to dispose or to direct the disposition of 18,181,762 common units based on a Schedule 13G/A filed on February 12, 2021 with the SEC.

has the sole power to dispose or to direct the disposition of and sole power to vote or to direct the vote of 17,437,632 common units based on a Schedule 13G/A filed on February 11, 2022 with the SEC.

Invesco Ltd., in its capacity as a parent holding company to its investment advisers, may be deemed to beneficially own these 17,437,632 common units which are held of record by clients of Invesco Ltd.

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The Warrants became exercisable on April 2, 2019 and will expire on April 2, 2028.

EIG owns 420,664 Preferred Units, 140,221 of which will be convertible within 60 days into 7,007,038 common units at the election of the holder.

At the option of the holder of Preferred Units, (i) from and after April 2, 2021, 33 1/3% of the Preferred Units are convertible into common units, (ii) from and after April 2, 2022, 66 2/3% of the Preferred Units are convertible into common units and (iii) from and after April 2, 2023, all of the Preferred Units are convertible into common units.

EIG owns 420,664 Preferred Units, 280,442 of which are convertible or will be convertible within 60 days into 14,014,077 common units at the election of the holder.

Preferred Units are convertible into common units.

Upon (1) exercise of the Warrants in full and assuming the Partnership does not elect to settle the Warrants in common units on a net basis, and (2) conversion of all 280,442 Preferred Units, EIG would have sole voting and dispositive power over 26,633,998 common units of the Partnership based on the Schedule 13D/A filed on February 1, 2022 with the SEC and our records.

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Long is the trustee.

The ET LP common units reported as owned by Mr.

Long include 12,000 common units held directly by Mr.

Long, 4,000 common units held by Aladdin Partners, L.P., and 6,144 common units held by certain trusts of which Mr.

The Energy Transfer LP common units reported as owned by Mr.

Long include 4,000 common units held by Aladdin Partners, L.P., and 6,144 common units held by certain trusts of which Mr.

Long is the trustee.

(6) Includes 11,518 common units that Mr.

Liuzzi has the right to acquire within 60 days upon the vesting and/or settlement of his Phantom Units, subject to Compensation Committee discretion.

(7) Includes 2,230 common units that Mr.

Scheller has the right to acquire within 60 days upon the vesting and/or settlement of his Phantom Units, subject to Compensation Committee discretion.

(8) Includes 2,872 common units that Mr.

Porter has the right to acquire within 60 days upon the vesting and/or settlement of his Phantom Units, subject to Compensation Committee discretion.

(9) Includes 8,007 common units that Mr.

Kimble has the right to acquire within 60 days upon the vesting and/or settlement of his Phantom Units, subject to Compensation Committee discretion.

Whitehurst holds 186,898 of ET LP’s common units in a margin account.

(11) Includes 24,627 of our common units that certain of our directors and executive officers have the right to receive within 60 days upon the vesting and/or settlement of Phantom Units held by such directors and executive officers.

Whitehurst holds 235,130 of Energy Transfer LP’s common units and 3,500 of our common units in a margin account.

Securities Authorized for Issuance Under Equity Compensation Plans

In connection with our IPO on January 18, 2013, the Board adopted the LTIP.

The Board adopted the LTIP in January 2013.

On November 1, 2018, the Board approved and adopted the First Amendment to the LTIP (the “First Amendment”) with immediate effectiveness.

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(ii) provided that common units withheld to satisfy the exercise price or tax withholding obligations with respect to an award will not be considered to be common units that have been delivered under the LTIP;

(iii) for awards granted on or after April 3, 2018, modifies the definition of “Change in Control” under the LTIP to refer to Energy Transfer Operating, L.P., Energy Transfer LP and their Affiliates (as defined under the LTIP) and successors;

(iii) for awards granted on or after April 3, 2018, modifies the definition of “Change in Control” under the LTIP to refer to Energy Transfer and its Affiliates (as defined under the LTIP) and successors;

(iv) updated the tax withholding provision of the LTIP and (v) extended the term of the LTIP until November 1, 2028.

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Services Agreement

In connection with our formation and IPO, we and other parties have entered into the agreements described below.

We and other parties have entered into the agreements described below.

These agreements were not the result of arm’s length negotiations, and they, or any of the transactions that they provide for, may not be effected on terms as favorable to the parties to these agreements as could have been obtained from unaffiliated third parties.

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We or one of our subsidiaries pays USAC Management for the allocable expenses it incurs in its performance under the Services Agreement.

These expenses include, among other things, salary, bonus, cash incentive compensation and other amounts paid to persons who perform services for us or on our behalf and other expenses allocated by USAC Management to us.

Management has substantial discretion to determine in good faith which expenses to incur on our behalf and what portion to allocate to us.

These expenses include, among other things, salary, bonus, cash incentive compensation and other amounts paid to

persons who perform services for us or on our behalf and other expenses allocated by USAC Management to us.

USAC Management has substantial discretion to determine in good faith which expenses to incur on our behalf and what portion to allocate to us.

On November 3, 2017, the Services Agreement was amended to extend its term to December 31, 2022.

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Transactions with Energy Transfer

We provide compression services to entities affiliated with Energy Transfer, which became a related party of ours on the Transactions Date as a result of the Transactions and its resultant ownership and control of the General Partner and ownership of approximately 47% of our limited partner interests as of December 31, 2020 (including the 8,000,000 common units owned by the General Partner).

We provide compression services to entities affiliated with Energy Transfer, which became a related party of ours on the Transactions Date.

As of December 31, 2021, Energy Transfer has ownership and control of the General Partner and ownership of approximately 47% of our limited partner interests (including the 8,000,000 common units owned by the General Partner).

We recognized $12.0 million in revenue from compression services from entities affiliated with Energy Transfer for the year ended December 31, 2021.

We may provide compression services to entities affiliated with Energy Transfer in the future, and any significant transactions will be disclosed.

The following table summarizes payments and receivables between us and Energy Transfer during 2020.

The following table summarizes payments, revenues and other receivables between us and Energy Transfer during 2021.

Transaction Explanation Amount/Value

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$ 12.0 million

Sales Tax Contingency Receivable from ETO as of December 31, 2020 related to indemnification for sales tax contingencies incurred by the USA Compression Predecessor.

$ 44.9 million

Accounts receivable Receivables for compression services provided to entities affiliated with Energy Transfer as of December 31, 2020.

Sales Tax Contingency Receivable from Energy Transfer as of December 31, 2021 related to indemnification for sales tax contingencies incurred.

$ 44.9 million

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001-35779) filed on March 7, 2019)

4.6 Registration Rights Agreement, dated as of April 2, 2018, by and among USA Compression Partners, LP, ETE, ETP and USA Compression Holdings, LLC (incorporated by reference to Exhibit 4.1 to the Partnership’s Current Report on Form 8-K (File No.

4.6 Registration Rights Agreement, dated as of April 2, 2018, by and among USA Compression Partners, LP, Energy Transfer Equity, L.P., Energy Transfer Partners, L.P.

and USA Compression Holdings, LLC (incorporated by reference to Exhibit 4.1 to the Partnership’s Current Report on Form 8-K (File No.

001-35779) filed on April 6, 2018)

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001-35779) filed on February 18, 2020)

10.1 Sixth Amended and Restated Credit Agreement, dated as of April 2, 2018, by and among the Partnership, as borrower, USAC OpCo 2, LLC, USAC Leasing 2, LLC, USA Compression Partners, LLC, USAC Leasing, LLC, CDM Resource Management LLC and CDM Environmental & Technical Services LLC and USA Compression Finance Corp., the lenders party thereto from time to time, JPMorgan Chase Bank, N.A., as agent and an LC issuer, JPMorgan Chase Bank, N.A., Barclays Bank PLC, Regions Capital Markets, a division of Regions Bank, RBC Capital Markets and Wells Fargo Bank, N.A., as joint lead arrangers and joint book runners, Barclays Bank PLC, Regions Bank, RBC Capital Markets and Wells Fargo Bank, N.A., as syndication agents, and MUFG Union Bank, N.A., SunTrust Bank and The Bank of Nova Scotia, as senior managing agents (incorporated by reference to Exhibit 10.1 to the Partnership’s Current Report on Form 8-K (File No.

001-35779) filed on April 6, 2018)

10.2 Amendment No.

1 to Sixth Amended and Restated Credit Agreement, dated as of August 3, 2020, among USA Compression Partners LP, as borrower, each of the Guarantors and Lenders party thereto and JPMorgan Chase bank, N.A., as an LC Issuer and as the Agent (incorporated by reference to Exhibit 10.1 to the Partnership’s Current Report on Form 8-K (File No.

001-35779) filed on August 3, 2020)

10.1 Seventh Amended and Restated Credit Agreement, dated as of December 8, 2021, among USA Compression Partners, LP, as borrower, the guarantors party thereto from time to time, the lenders party thereto from time to time and JPMorgan Chase Bank, N.A., as administrative agent and issuing bank (incorporated by reference to Exhibit 10.1 to the Partnership’s Current Report on Form 8-K (File No.

001-35779) filed on December 8, 2021)

10.2† Long-Term Incentive Plan of USA Compression Partners, LP (incorporated by reference to Exhibit 10.1 to the Partnership’s Current Report on Form 8-K (File No.

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10.5† Employment Agreement, dated December 14, 2016, between USA Compression Management Services, LLC and Christopher W.

Porter (incorporated by reference to Exhibit 10.6 to the Partnership’s Annual Report on Form 10-K for the year ended December 31, 2020 (File No.

001-35779) filed on February 16, 2021)

10.6 Services Agreement, dated effective January 1, 2013, by and among USA Compression Partners, LP, USA Compression GP, LLC and USA Compression Management Services, LLC (incorporated by reference to Exhibit 10.11 to Amendment No.

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001-35779) filed on November 6, 2018)

10.13† USA Compression Partners, LP Annual Cash Incentive Program (incorporated by reference to Exhibit 10.12 to the Partnership’s Annual Report on Form 10-K for the year ended December 31, 2013 (File No.

001-35779) filed on February 20, 2014)

10.12† USA Compression Partners, LP Amended and Restated Annual Cash Incentive Plan (incorporated by reference to Exhibit 10.21 to the Partnership’s Annual Report on Form 10-K for the year ended December 31, 2019 (File No.

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(ii) our Consolidated Statements of Operations for the years ended December 31, 2021, 2020 and 2019;

(iii) our Consolidated Statement of Partners’ Capital and Predecessor Parent Company Net Investment for the years ended December 31, 2020, 2019 and 2018;

(iii) our Consolidated Statement of Partners’ Capital for the years ended December 31, 2021, 2020 and 2019;

(iv) our Consolidated Statements of Cash Flows for the years ended December 31, 2021, 2020 and 2019;

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Liuzzi (Principal Financial Officer)

Tracy Owens Vice President, Finance and Chief Accounting Officer

Tracy Owens Vice President of Finance and Chief Accounting Officer

Tracy Owens (Principal Accounting Officer)

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Christopher R.

/s/ Matthew S.

Hartman Director

Joyce Director

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Ramsey Director

Brett Smith Director

/s/ William S.

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INDEX TO CONSOLIDATED FINANCIAL STATEMENTS

Report of Independent Registered Public Accounting Firm

Report of Independent Registered Public Accounting Firm (PCAOB ID Number 248 )

Consolidated Balance Sheets as of December 31, 2021 and 2020

Consolidated Statements of Operations for the years ended December 31, 2021, 2020 and 2019

Consolidated Statements of Changes in Partners’ Capital and Predecessor Parent Company Net Investment for the years ended December 31, 2020, 2019 and 2018

Consolidated Statements of Changes in Partners’ Capital for the years ended December 31, 2021, 2020 and 2019

Consolidated Statements of Cash Flows for the years ended December 31, 2021, 2020 and 2019

Notes to Consolidated Financial Statements

Supplemental Selected Quarterly Financial Data

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

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Opinion on the financial statements

We have audited the accompanying consolidated balance sheets of USA Compression Partners, LP (a Delaware limited partnership) and subsidiaries (the “Partnership”) as of December 31, 2020 and 2019, the related consolidated statements of operations, changes’ in partners’ capital and predecessor parent company net investment, and cash flows for each of the three years in the period ended December 31, 2020, and the related notes (collectively referred to as the “financial statements”).

We have audited the accompanying consolidated balance sheets of USA Compression Partners, LP (a Delaware limited partnership) and subsidiaries (the “Partnership”) as of December 31, 2021 and 2020, the related consolidated statements of operations, changes in partners’ capital, and cash flows for each of the three years in the period ended December 31, 2021, and the related notes (collectively referred to as the “financial statements”).

In our opinion, the financial statements present fairly, in all material respects, the financial position of the Partnership as of December 31, 2021 and 2020, and the results of its operations and its cash flows for each of the three years in the period ended December 31, 2021, in conformity with accounting principles generally accepted in the United States of America.

We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (“PCAOB”), the Partnership’s internal control over financial reporting as of December 31, 2020, based on criteria established in the 2013 Internal Control—Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (“COSO”), and our report dated February 16, 2021 expressed an unqualified opinion thereon.

We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (“PCAOB”), the Partnership’s internal control over financial reporting as of December 31, 2021, based on criteria established in the 2013 Internal Control—Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (“COSO”), and our report dated February 15, 2022 expressed an unqualified opinion.

Basis for opinion

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We believe that our audits provide a reasonable basis for our opinion.

Critical audit matter

The critical audit matter communicated below is a matter arising from the current period audit of the financial statements that was communicated or required to be communicated to the audit committee and that:

(1) relates to accounts or disclosures that are material to the financial statements and (2) involved our especially challenging, subjective, or complex judgments.

The communication of critical audit matters does not alter in any way our opinion on the financial statements, taken as a whole, and we are not, by communicating the critical audit matter below, providing a separate opinion on the critical audit matter or on the accounts or disclosures to which it relates.

Goodwill Impairment Assessment

As described in Note 6 to the consolidated financial statements, the Partnership recognized a goodwill impairment of $619.4 million during the year ended December 31, 2020.

Annually, or whenever events or changes in circumstances indicate potential impairment has occurred, the Partnership evaluates the recoverability of the carrying value of goodwill.

The COVID-19 pandemic and the corresponding decrease in demand for crude oil, natural gas liquids and natural gas negatively impacted the Partnership’s current and projected operating results, cash flow and market capitalization.

Therefore, the Partnership determined that a triggering event had occurred and completed an interim goodwill impairment assessment of its single reporting unit during the first quarter of 2020.

The results of the quantitative impairment test indicated that the reporting unit had a carrying value that exceeded its fair value.

As a result, the Partnership recorded $619.4 million of impairment charges to goodwill during the fiscal year ended December 31, 2020.

We identified the Partnership’s goodwill impairment assessment as a critical audit matter.

The determination of the fair value of the reporting unit was a critical audit matter due to the significant judgment required by management when determining the fair value of a reporting unit.

In particular, the fair value estimates were sensitive to significant assumptions such as management’s cash flow projections, discount rates, and the inherent uncertainty around the timing of increases or decreases in future projected results utilized to estimate the fair value of the reporting unit.

Our audit procedures related to the estimation of the fair value of the reporting unit included the following procedures, among others.

We tested the effectiveness of controls relating to management’s review of the assumptions used to develop the future cash flows, the reconciliation of cash flows prepared by management to the data used in the valuation analyses, and the discount rate used.

In addition to testing the effectiveness of controls, we also performed the following:

• Evaluated the reasonableness of management’s forecasted financial results by:

• Testing forecasted revenues and gross margins by comparing forecasted amounts to actual historical results to identify material changes, corroborating the basis for increases or decreases in forecasted revenues and gross margins, as applicable, and

• Testing significant costs and cash expenditures by comparing to historical trends and evaluating significant deviations from recent actual amounts.

• Utilized an internal valuation specialist to evaluate:

• The methodologies used and whether they were acceptable for the underlying assets or operations and whether such methodologies were being applied correctly,

• The appropriateness of the discount rate by recalculating the weighted average cost of capital or developing independent ranges of the acceptable discount rate and comparing those ranges to the amounts selected and applied by management, and

• The qualifications of the valuation specialists engaged by the Partnership based on their credentials and experience.

Critical audit matters

Critical audit matters are matters arising from the current period audit of the financial statements that were communicated or required to be communicated to the audit committee and that:

(1) relate to accounts or disclosures that are material to the financial statements and (2) involved our especially challenging, subjective, or complex judgments.

We determined that there are no critical audit matters.

/s/ GRANT THORNTON LLP

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Identifiable intangible assets, net 304,411 333,791

Goodwill — 619,411

Other assets 16,072 11,955

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Selling, general and administrative 56,082 59,981 64,397

Loss on disposition of assets 146 940 12,964

Loss (gain) on disposition of assets ( 2,588 ) 146 940

Impairment of compression equipment 5,121 8,090 5,894

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Total other expense ( 129,719 ) ( 128,547 ) ( 127,066 )

Net income (loss) before income tax expense (benefit) ( 593,399 ) 41,318 ( 13,025 )

Income tax expense (benefit) 1,333 2,186 ( 2,474 )

Net income (loss) before income tax expense 11,153 ( 593,399 ) 41,318

Income tax expense 874 1,333 2,186

Net income (loss) 10,279 ( 594,732 ) 39,132

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Consolidated Statements of Changes in Partners’ Capital

And Predecessor Parent Company Net Investment

(in thousands)

Limited Partners

Common Units Class B Units Warrants Predecessor Parent

Investment Total

Ending balance, December 31, 2017 $ — $ — $ — $ 1,664,870 $ 1,664,870

Predecessor net loss for the period January 1, 2018 to April 1, 2018 — — — ( 23,370 ) ( 23,370 )

Predecessor parent company net contribution for the period January 1, 2018 to April 1, 2018 — — — 26,730 26,730

Allocation of Predecessor parent company net investment 1,668,230 — — ( 1,668,230 ) —

Deemed distribution for additional interest in USA Compression Predecessor ( 36,111 ) — — — ( 36,111 )

Purchase Price Adjustment for USA Compression Partners, LP ( 654,340 ) — — — ( 654,340 )

Issuance of common units for the Equity Restructuring 135,440 — — — 135,440

Issuance of common units for the CDM Acquisition 324,910 — — — 324,910

Issuance of Class B Units for the CDM Acquisition — 86,125 — — 86,125

Issuance of Warrants — — 13,979 — 13,979

Common Units Class B Units Warrants Total

Partners’ capital ending balance, December 31, 2018

$ 1,289,731 $ 75,146 $ 13,979 $ 1,378,856

Vesting of phantom units 2,926 — — 2,926

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Unit-based compensation for equity classified awards 160 — — 160

Net loss attributable to common and Class B unitholders’ interests for the period April 2, 2018 to December 31, 2018 ( 12,632 ) ( 10,979 ) — — ( 23,611 )

Net loss attributable to common and Class B unitholders’ interests ( 1,774 ) ( 7,844 ) — ( 9,618 )

Conversion of Class B Units to common units 67,302 ( 67,302 ) — —

Partners’ capital ending balance, December 31, 2019

1,166,619 — 13,979 1,180,598

Vesting of phantom units 1,748 — — 1,748

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Unit-based compensation for equity classified awards 215 — — 215

Net loss attributable to common and Class B unitholders’ interests ( 1,774 ) ( 7,844 ) — — ( 9,618 )

Conversion of Class B Units to common units 67,302 ( 67,302 ) — — —

Net loss attributable to common unitholders’ interests ( 643,482 ) — — ( 643,482 )

Partners’ capital ending balance, December 31, 2020

323,676 — 13,979 337,655

Vesting of phantom units 3,821 — — 3,821

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Partners’ capital ending balance, December 31, 2021

$ 87,129 $ — $ 13,979 $ 101,108

See accompanying notes to consolidated financial statements.

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Deferred income tax expense (benefit) ( 42 ) 530 1,376

Loss on disposition of assets 146 940 12,964

Loss (gain) on disposition of assets ( 2,588 ) 146 940

Impairment of compression equipment 5,121 8,090 5,894

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Accounts payable 9,023 ( 3,745 ) ( 5,764 )

Other liabilities ( 7 ) ( 8 ) ( 4,879 )

Accrued liabilities and deferred revenue ( 5,195 ) ( 10,744 ) 36,901

Other liabilities — ( 7 ) ( 8 )

Net cash provided by operating activities 265,425 293,198 300,580

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Proceeds from insurance recovery 1,559 1,324 4,181

Acquisition of USA Compression Predecessor — — ( 1,231,478 )

Assumed cash acquired in business combination of USA Compression Partners, LP — — 710,506

Net cash used in investing activities ( 39,188 ) ( 105,099 ) ( 144,490 )

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Payments on revolving credit facility ( 655,147 ) ( 706,384 ) ( 1,499,090 )

Proceeds from issuance of Preferred Units and Warrants, net — — 479,100

Cash paid related to net settlement of unit-based awards ( 3,174 ) ( 1,125 ) ( 1,714 )

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Deferred financing costs ( 9,960 ) ( 3,875 ) ( 13,679 )

Contributions from Parent, net — — 28,520

Other ( 558 ) ( 772 ) ( 1,035 )

Net cash provided by (used in) financing activities ( 188,107 ) ( 156,179 ) 549,409

Net cash used in financing activities ( 226,239 ) ( 188,107 ) ( 156,179 )

Decrease in cash and cash equivalents ( 2 ) ( 8 ) ( 89 )

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Non-cash distributions to certain common unitholders (DRIP) $ 1,775 $ 1,901 $ 997

Transfers from (to) inventories to (from) property and equipment $ 17,435 $ 21,822 $ ( 10,602 )

Transfers from inventories to property and equipment $ 10,793 $ 17,435 $ 21,822

Change in capital expenditures included in accounts payable and accrued liabilities $ 720 $ ( 8,557 ) $ 3,408

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Conversion of Class B Units to common units $ — $ — $ 67,302

Predecessor’s non-cash contribution to Predecessor’s Parent $ — $ — $ ( 1,790 )

Deemed distribution for additional interest in USA Compression Predecessor $ — $ — $ ( 36,111 )

Issuance of common units for the CDM Acquisition $ — $ — $ 324,910

Issuance of Class B Units for the CDM Acquisition $ — $ — $ 86,125

Issuance of common units for the Equity Restructuring $ — $ — $ 135,440

See accompanying notes to consolidated financial statements.

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(1) Organization and Description of Business

Unless the context otherwise requires or where otherwise indicated, the terms “our,” “we,” “us,” “the Partnership” and similar language when used in the present or future tense and for periods on and subsequent to April 2, 2018 (the “Transactions Date”) refer to USA Compression Partners, LP, collectively with its consolidated operating subsidiaries, including the USA Compression Predecessor.

Unless the context otherwise requires or where otherwise indicated, the term “USA Compression Predecessor,” as well as the terms “our,” “we,” “us” and “its” when used in a historical context or in reference to periods prior to the Transactions Date, refer to CDM Resource Management LLC (“CDM Resource”) and CDM Environmental & Technical Services LLC (“CDM E&T”) collectively, which has been deemed to be the predecessor of the Partnership for financial reporting purposes.

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

We are a Delaware limited partnership.

Through our operating subsidiaries, we provide compression services under fixed-term contracts with customers in the natural gas and crude oil industries, using natural gas compression packages that we design, engineer, own, operate and maintain.

We also own and operate a fleet of equipment used to provide natural gas treating services, such as carbon dioxide and hydrogen sulfide removal, cooling, and dehydration.

We primarily provide compression services in a number of shale plays throughout the U.S., including the Utica, Marcellus, Permian Basin, Delaware Basin, Eagle Ford, Mississippi Lime, Granite Wash, Woodford, Barnett, Haynesville, Niobrara and Fayetteville shales.

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

(“ETO”) since October 2018, when Energy Transfer Equity, L.P.

(“ETE”) and Energy Transfer Partners, L.P.

(“ETP”) completed the merger of ETP with a wholly owned subsidiary of ETE in a unit-for-unit exchange (the “ETE Merger”).

Following the closing of the ETE Merger, ETE changed its name to “Energy Transfer LP” (“ET LP”) and ETP changed its name to “Energy Transfer Operating, L.P.” Upon the closing of the ETE Merger, ETE contributed to ETO 100 % of the limited liability company interests in the General Partner.

References herein to “ETO” refer to ETP for periods prior to the ETE Merger and ETO following the ETE Merger, and references to “ET LP” refer to ETE for periods prior to the ETE Merger and ET LP following the ETE Merger.

The USA Compression Predecessor owned and operated a fleet of compressors used to provide natural gas compression services for customer specific systems.

The USA Compression Predecessor also owned and operated a fleet of equipment used to provide natural gas treating services, such as carbon dioxide and hydrogen sulfide removal, cooling, and dehydration.

The USA Compression Predecessor had operations located in Texas, Oklahoma, Louisiana, Arkansas, Pennsylvania, New Mexico, Colorado, Ohio, and West Virginia.

Certain of our operating subsidiaries are borrowers under a revolving credit facility and the Partnership is a guarantor of that revolving credit facility (see Note 10).

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

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

The Partnership is a borrower under a revolving credit facility and its subsidiaries are guarantors of that revolving credit facility (see Note 9).

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

Net loss attributable to partners is allocated to our common units and participating securities using the two-class income allocation method.

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None of our employees are subject to collective bargaining agreements.

CDM Acquisition

On the Transactions Date, we consummated the transactions contemplated by the Contribution Agreement dated January 15, 2018, pursuant to which, among other things, we acquired all of the issued and outstanding membership interests of the USA Compression Predecessor from ETO (the “CDM Acquisition”) in exchange for aggregate consideration of approximately $ 1.7 billion, consisting of (i) 19,191,351 common units representing limited partner interests in us (the “common units”), (ii) 6,397,965 Class B units representing limited partner interests in us (“Class B Units”) and (iii) $ 1.2 billion in cash (including customary closing adjustments).

On July 30, 2019, 6,397,965 Class B Units automatically converted into common units on a one-for-one basis, resulting in the issuance of 6,397,965 common units to ETO.

Following the conversion, there are no longer Class B Units outstanding.

USA COMPRESSION PARTNERS, LP

Notes to Consolidated Financial Statements

General Partner Purchase Agreement

On the Transactions Date, and in connection with the closing of the CDM Acquisition, we consummated the transactions contemplated by the Purchase Agreement dated January 15, 2018, by and among ET LP, Energy Transfer Partners, L.L.C., USA Compression Holdings, LLC (“USA Compression Holdings”) and, solely for certain purposes therein, R/C IV USACP Holdings, L.P.

and ETO, pursuant to which, among other things, ET LP acquired from USA Compression Holdings (i) all of the outstanding limited liability company interests in the General Partner and (ii) 12,466,912 common units for cash consideration paid by ET LP to USA Compression Holdings equal to $ 250.0 million (the “GP Purchase”).

Upon the closing of the ETE Merger, ET LP contributed all of the interests in the General Partner and the 12,466,912 common units to ETO.

Equity Restructuring Agreement

On the Transactions Date, and in connection with the closing of the CDM Acquisition, we consummated the transactions contemplated by the Equity Restructuring Agreement dated January 15, 2018 (the “Equity Restructuring Agreement”), pursuant to which, among other things, the Partnership, the General Partner and ET LP agreed to cancel the Partnership’s Incentive Distribution Rights (“IDRs”) and convert the General Partner’s interest into a non-economic general partner interest, in exchange for the Partnership’s issuance of 8,000,000 common units to the General Partner (the “Equity Restructuring”).

In addition, at any time after one year following the Transactions Date, ET LP has the right to contribute (or cause any of its subsidiaries to contribute) to us all of the outstanding equity interests in any of its subsidiaries that owns the general partner interest in us in exchange for $ 10.0 million (the “GP Contribution”);

provided that the GP Contribution will occur automatically if at any time following the Transactions Date (i) ET LP or one of its subsidiaries (including ETO) owns, directly or indirectly, the general partner interest in us and (ii) ET LP and its subsidiaries (including ETO) collectively own less than 12,500,000 of our common units.

The CDM Acquisition, GP Purchase and Equity Restructuring are collectively referred to as the “Transactions.”

(2) Basis of Presentation and Significant Accounting Policies

(2) Basis of Presentation and Accounting Policies

Basis of Presentation

The Partnership

Our accompanying consolidated financial statements have been prepared in conformity with GAAP and pursuant to the rules and regulations of the SEC.

As noted below, the historical consolidated financial statements of the Partnership reflect the historical consolidated financial statements of the USA Compression Predecessor in accordance with the applicable accounting and financial reporting guidance.

The historical consolidated financial statements reflect the consolidated balance sheet and statement of operations of the Partnership, which includes the USA Compression Predecessor, as of and for all periods subsequent to the Transactions Date and includes only the USA Compression Predecessor for all periods prior to the Transactions Date.

The consolidated financial statements give effect to the business combination and the Transactions discussed in Note 1 under the acquisition method of accounting, and the business combination has been accounted for in accordance with the applicable reverse merger accounting guidance.

ET LP acquired a controlling financial interest in us through the acquisition of the General Partner.

As a result, the USA Compression Predecessor was deemed to be the accounting acquirer of the Partnership because its ultimate parent company obtained control of the Partnership through its control of the General Partner.

Consequently, the USA Compression Predecessor was deemed to be the predecessor of the Partnership for financial reporting purposes, and the historical consolidated financial statements of the Partnership reflect the USA Compression Predecessor for all periods prior to the Transactions Date.

The USA Compression Predecessor’s assets and liabilities retained their historical carrying values.

Additionally, the Partnership’s assets acquired and liabilities assumed by the USA Compression Predecessor in the business combination were recorded at their fair values measured as of the Transactions Date.

The excess of the assumed purchase price of the Partnership over the estimated fair values of the Partnership’s net assets acquired were recorded as goodwill.

The assumed purchase price and fair value of the Partnership was determined using acceptable fair value methods.

Additionally, because the USA Compression Predecessor was reflected at ET LP’s historical cost, the difference between the $ 1.7 billion in consideration paid by the Partnership and ET LP’s historical carrying values (net book value) at the Transactions Date were recorded as a decrease to partners’ capital in the amount of $ 36.1 million.

USA COMPRESSION PARTNERS, LP

Notes to Consolidated Financial Statements

USA Compression Predecessor

ETO allocated various corporate overhead expenses to the USA Compression Predecessor based on a percentage of assets, net income (loss), or Adjusted EBITDA.

These allocations are not necessarily indicative of the cost that the USA Compression Predecessor would have incurred had it operated as an independent standalone entity.

The USA Compression Predecessor also historically relied upon ETO for funding operating and capital expenditures as necessary.

As a result, the historical financial statements of the USA Compression Predecessor may not fully reflect or be necessarily indicative of what the USA Compression Predecessor’s results of operations and cash flows would have been or will be in the future.

Certain expenses incurred by ETO are only indirectly attributable to the USA Compression Predecessor.

As a result, certain assumptions and estimates are made in order to allocate a reasonable share of such expenses to the USA Compression Predecessor, so that the accompanying financial statements reflect substantially all costs of doing business.

The allocations and related estimates and assumptions are described more fully in Note 14.

Certain amounts of the USA Compression Predecessor’s revenues are derived from related party transactions, as described more fully in Note 14.

Significant Accounting Policies

Use of Estimates

The preparation of our consolidated financial statements in conformity with GAAP requires us to make estimates and assumptions that affect the amounts reported in these consolidated financial statements and the accompanying results.

Although these estimates are based on management’s available knowledge of current and expected future events, actual results could differ from these estimates.

Accounting Policies

Cash and Cash Equivalents

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Trade Accounts Receivable

Trade accounts receivable are recorded at the invoiced amount and do not bear interest.

Trade accounts receivable are recorded at the invoiced amount.

Allowance for Credit Losses

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Topic 326 requires immediate recognition of estimated credit losses expected to occur over the remaining life of many financial assets.

USA COMPRESSION PARTNERS, LP

Notes to Consolidated Financial Statements

To adopt Topic 326, we evaluated our allowance for credit losses related to our two financial assets measured at amortized cost:

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There was no cumulative effect adjustment to partners’ capital upon adoption.

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

We continuously evaluate the financial strength of our customers based on collection experience, the overall business climate in which our customers operate and specific identification of customer credit losses and make adjustments to the allowance as necessary.

Our evaluation of our customers’ financial strength is based on the aging of their respective receivables balance, customer correspondence, financial information and third-party credit ratings.

Our evaluation of the business climate in which our customers operate is based on a review of various publicly available materials regarding our customers’ industries, including the solvency of various companies in the industry.

The USA Compression Predecessor determined its allowance for credit losses based upon historical write-off experience and specific identification of unrecoverable amounts.

Our determination of the allowance for credit losses requires us to make estimates and judgments regarding our customers’ ability to pay amounts due.

We continuously evaluate the financial strength of our customers and the overall business climate in which our customers operate, and make adjustments to the allowance for credit losses as necessary.

We evaluate the financial strength of our customers by reviewing the aging of their receivables, our collection experience with the customer, correspondence, financial information and third-party credit ratings.

We evaluate the business climate in which our customers operate by reviewing various publicly available materials regarding our customers’ industry, including the solvency of various companies in the industry.

Inventories consist of serialized and non-serialized parts used primarily on compression units.

All inventories are stated at the lower of cost or net realizable value.

Serialized parts inventories are determined using the specific identification method, while non-serialized parts inventories are determined using the weighted average cost method.

Serialized parts inventories are determined using the specific identification cost method, while non-serialized parts inventories are determined using the weighted average cost method.

Purchases of inventories are considered operating activities in the Consolidated Statements of Cash Flows.

USA COMPRESSION PARTNERS, LP

Notes to Consolidated Financial Statements

Property and Equipment

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

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

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

Capitalized interest was $ 0.2 million, $ 0.2 million and $ 0.5 million for the years ended December 31, 2021, 2020 and 2019, respectively.

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We test long-lived assets for impairment when events or circumstances indicate that the assets’ carrying value may not be recoverable or will no longer be utilized in the operating fleet.

The most common circumstance requiring compression units to be evaluated for impairment is when idle units do not meet the performance characteristics of our active revenue generating horsepower.

The most common circumstance requiring compression units to be evaluated for impairment is when idle units do not meet the desired performance characteristics of our active revenue generating horsepower.

The carrying value of a long-lived asset is not recoverable if it exceeds the sum of the undiscounted cash flows expected to result from the use and eventual disposition of the asset.

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Refer to Note 5 for more detailed information about impairment charges during the years ended December 31, 2021, 2020 and 2019.

USA COMPRESSION PARTNERS, LP

Notes to Consolidated Financial Statements

Identifiable Intangible Assets

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

The estimated useful lives range from 15 to 25 years.

The estimated useful lives of our intangible assets range from 15 to 25 years.

We assess identifiable intangible assets for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable.

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Goodwill is not amortized, but is reviewed for impairment annually based on the carrying values as of October 1, or more frequently if impairment indicators arise that suggest the carrying value of goodwill may not be recovered.

We recorded a $ 619.4 million goodwill impairment for the year ended December 31, 2020 and did no t record any goodwill impairment during the years ended December 31, 2019 and 2018.

We recorded a $ 619.4 million goodwill impairment for the year ended December 31, 2020, which reduced our goodwill balance to zero, and did no t record any goodwill impairment during the year ended December 31, 2019.

Refer to the Goodwill section in Note 5 for more information about the goodwill impairment assessment performed during the years ended December 31, 2020 and 2019.

USA COMPRESSION PARTNERS, LP

Notes to Consolidated Financial Statements

Predecessor Parent Company Net Investment

The USA Compression Predecessor participated in a centralized cash management function managed by ETO.

Balances payable to or due from ETO generated under this arrangement are reflected in Predecessor parent company net investment.

ETO’s net investment in the operations of the USA Compression Predecessor is presented within the consolidated statements of changes in partners’ capital and predecessor parent company net investment.

Predecessor parent company net investment represents the accumulated net earnings of the operations of the USA Compression Predecessor and accumulated net contributions from ETO.

Net contributions for the period January 1, 2018 to April 1, 2018 were primarily comprised of intercompany operations and expense, cash clearing and other financing activities, and general and administrative cost allocations to the USA Compression Predecessor.

Revenue Recognition

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generally this occurs with the transfer of our services or goods.

Revenue is measured as the amount of consideration we expect to receive in exchange for providing services or transferring goods.

Revenue is measured at the amount of consideration we expect to receive in exchange for providing services or transferring goods.

Incidental items, if any, that are immaterial in the context of the contract are recognized as expenses.

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As a result, our partners are responsible for U.S.

federal and state income taxes based upon their distributive share of the Partnership’s income, gain, loss, or deduction.

Texas imposes an entity-level income tax on partnerships that is based on Texas sourced taxable margin.

The Partnership has included in the consolidated financial statements a provision for Texas Margin Tax.

federal and state income taxes based upon their distributive share of our items of income, gain, loss, or deduction.

Texas imposes an entity-level income tax on partnerships that is based on Texas sourced taxable margin (the “Texas Margin Tax”).

We have included in the consolidated financial statements a provision for Texas Margin Tax.

Refer to Note 8 for more detailed information about the Texas Margin Tax for the years ended December 31, 2021, 2020 and 2019.

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

The book values of cash and cash equivalents, trade accounts receivable, and trade accounts payable are representative of fair value due to their short-term maturities.

The carrying amount of our revolving credit facility approximates fair value due to the floating interest rates associated with the debt.

The fair value of our Senior Notes 2026 and Senior Notes 2027 were estimated using quoted prices in inactive markets and are considered Level 2 measurements.

The book values of cash and cash equivalents, trade accounts receivable,

USA COMPRESSION PARTNERS, LP

Notes to Consolidated Financial Statements

and trade accounts payable are representative of fair value due to their short-term maturities.

The carrying amount of our revolving credit facility approximates fair value due to the floating interest rates associated with the debt.

The fair value of our Senior Notes 2026 and Senior Notes 2027 were estimated using quoted prices in inactive markets and are considered Level 2 measurements.

The following table summarizes the aggregate principal amount and fair value of our Senior Notes 2026 and Senior Notes 2027 (in thousands):

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Refer to Note 5 for further information on our goodwill impairment analysis.

Use of Estimates

Although these estimates are based on management’s available knowledge of current and expected future events, actual results could differ from these estimates.

Operating Segment

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

(3) Acquisitions

The USA Compression Predecessor was deemed to be the accounting acquirer of the Partnership in the business combination because its ultimate parent company obtained control of the Partnership through its control of the General Partner.

Consequently, the USA Compression Predecessor’s assets and liabilities retained their historical carrying values.

The Partnership’s assets acquired and liabilities assumed by the USA Compression Predecessor were recorded at their fair values measured as of the Transactions Date.

The excess of the assumed purchase price of the Partnership over the estimated fair values of the Partnership’s net assets acquired were recorded as goodwill.

The assumed purchase price and fair value of the Partnership was determined using a combination of an income and cost valuation methodology, the fair value of the Partnership’s common units as of the Transactions Date and the consideration paid by ET LP for the General Partner and IDRs.

The property and equipment of the USA Compression Predecessor is reflected at historical carrying value, which is less than the consideration paid for the business.

The excess of the consideration paid over the historical carrying value was $ 36.1 million and is reflected as a decrease to partners’ capital.

The Partnership incurred $ 21.7 million in transaction-related expenses prior to the Transactions Date, which were recognized by the Partnership when incurred in the periods prior to the Transactions Date, and therefore are not included within the results of operations presented within the consolidated financial statements for the year ended December 31, 2018.

For the period from April 2, 2018 to December 31, 2018, we recognized $ 269.2 million in revenues and $ 23.1 million in net income attributable to the Partnership’s historical assets.

USA COMPRESSION PARTNERS, LP

Notes to Consolidated Financial Statements

The following table summarizes the assumed purchase price and fair value and the allocation to the assets acquired and liabilities assumed (in thousands):

Assumed purchase price allocation to USA Compression Partners, LP:

Current assets

Other long-term assets

Customer relationships

Total identifiable assets acquired

Current liabilities

Long-term debt

( 1,526,865 )

Other long-term liabilities

Total liabilities assumed

( 1,638,868 )

Net identifiable assets acquired

Net assets acquired

April 2, 2018 Transactions:

Cash assumed in the CDM Acquisition

$ ( 710,506 )

Issuance of Preferred Units

Issuance of Class B Units for the CDM Acquisition

Issuance of Warrants

Issuance of common units for the Equity Restructuring

Issuance of common units for the CDM Acquisition

Purchase price adjustment for USA Compression Partners, LP

$ ( 654,340 )

________________________

(1) Goodwill recognized from the business combination primarily related to the value attributed to additional growth opportunities, synergies and operating leverage within the Partnership’s areas of operation.

Transition Services Agreement

In connection with the closing of the Transactions, we entered into an agreement with the USA Compression Predecessor and ETO pursuant to which ETO and its affiliates provided certain services to us with respect to the business and operations of the USA Compression Predecessor’s existing assets, including information technology, accounting and emissions testing services, for a period of three months following the closing of the Transactions.

Expenses associated with the transition services agreement were $ 0.7 million for the year ended December 31, 2018.

Unaudited Pro Forma Financial Information

The following unaudited pro forma condensed financial information for the year ended December 31, 2018 gives effect to the Transactions as if they had occurred on January 1, 2018.

The unaudited pro forma condensed financial information has been included for comparative purposes only and is not necessarily indicative of the results that might have occurred had the Transactions taken place on the dates indicated and is not intended to be a projection of future events.

The pro forma adjustments for the periods presented consist of (i) adjustments to combine the USA Compression Predecessor’s and the Partnership’s historical results of operations for the periods, (ii) adjustments to interest expense to include interest expense for additional revolving credit facility borrowings and include the interest expense associated with our Senior Notes 2026 (see Note 10), (iii) adjustments to depreciation and amortization expense attributable to adjustments recorded as a result of the purchase price allocation to the Partnership’s assets and liabilities and (iv) adjustments to net loss attributable to common units and Class B Units attributable to distributions on the Partnership’s Preferred Units.

USA COMPRESSION PARTNERS, LP

Notes to Consolidated Financial Statements

The following table presents the unaudited pro forma revenues, net loss and basic and diluted net loss per unit information for the year ended December 31, 2018 (in thousands, except per unit amounts):

Total revenues $ 662,091

Net loss ( 44,894 )

Net loss attributable to common and Class B unitholders’ interests ( 93,644 )

Basic and diluted net loss per common unit and Class B Unit ( 0.98 )

The pro forma net loss for the year ended December 31, 2018 includes expenses that were a direct result of the Transactions, including $ 1.0 million in employee severance charges attributable to employees not retained by the Partnership subsequent to the Transactions and $ 21.7 million in transaction expenses, including advisory, audit and legal fees.

These expenses were recognized by the Partnership as they were incurred during the period from January 1, 2018 to April 1, 2018, but because the USA Compression Predecessor’s historical condensed consolidated financial statements were reflected for that period, the condensed consolidated financial statements presented in accordance with GAAP for the year ended December 31, 2018 do not reflect such expenses incurred as a direct result of the Transactions.

(3) Trade Accounts Receivable

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Writeoffs charged against the allowance ( 264 )

Recoveries collected 39

Balance, December 31, 2021 $ 2,057

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(1) On January 1, 2020, we adopted Topic 326 using the modified retrospective approach, refer to Note 2 for more information.

The potential negative impact to our customers of low crude oil prices during 2020, driven by decreased demand for and global oversupply of crude oil as a result of the COVID-19 pandemic, is the primary factor contributing to the increase to the allowance for credit losses for the year ended December 31, 2020.

We cannot predict the duration of these conditions or the severity of their impact on our customers and the collectability of their accounts receivable.

Improved market conditions for customers due to the recovery in commodity prices during 2021 was the primary factor contributing to the decrease to the allowance for credit losses for the year ended December 31, 2021.

The potential negative impact to our customers of low commodity prices during 2020, driven by decreased demand for and global oversupply of crude oil as a result of the COVID-19 pandemic, was the primary factor contributing to the increase to the allowance for credit losses for the year ended December 31, 2020.

USA COMPRESSION PARTNERS, LP

Notes to Consolidated Financial Statements

During the year ended December 31, 2019, we recorded $ 1.1 million to the current-period provision for expected credit losses.

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$ 85,816 $ 84,632

USA COMPRESSION PARTNERS, LP

Notes to Consolidated Financial Statements

(5) Property and Equipment, Identifiable Intangible Assets and Goodwill

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Depreciation expense on property and equipment was $ 209.4 million, $ 209.6 million and $ 202.0 million for the years ended December 31, 2021, 2020 and 2019, respectively.

The Partnership implemented a change in the estimated useful lives of the USA Compression Predecessor’s property and equipment to conform to the Partnership’s historical asset lives, which is accounted for as a change in accounting estimate beginning on the Transactions Date on a prospective basis.

This change resulted in a $ 33.8 million increase to both operating income and net income for the year ended December 31, 2018, and a $ 0.42 increase to both basic and diluted earnings per common unit and Class B Unit for year ended December 31, 2018.

During the years ended December 31, 2020, 2019 and 2018, there were net losses on the disposition of assets of $ 0.1 million, $ 0.9 million and $ 13.0 million, respectively.

For the year ended December 31, 2018, these net losses were primarily related to disposals of various property and equipment by the USA Compression Predecessor.

During the years ended December 31, 2021, there was a gain on disposition of assets of $ 2.6 million.

During the years ended December 31, 2020 and 2019, there was a loss on disposition of assets of $ 0.1 million and $ 0.9 million, respectively.

For the years ended December 31, 2021, 2020 and 2019, we evaluated the future deployment of our idle fleet under current market conditions and determined to retire 26 , 37 and 33 compressor units, respectively, for a total of approximately 11,000 , 15,000 and 11,000 horsepower, respectively, that were previously used to provide compression services in our business.

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The primary causes for these impairments were:

(i) units were not considered marketable in the foreseeable future, (ii) units were subject to excessive maintenance costs or (iii) units were unlikely to be accepted by customers due to certain performance characteristics of the unit, such as the inability to meet current quoting criteria without excessive retrofitting costs.

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

USA COMPRESSION PARTNERS, LP

Notes to Consolidated Financial Statements

characteristics of the unit, such as the inability to meet current quoting criteria without excessive retrofitting costs.

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

Identifiable Intangible Assets

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

As of December 31, 2020 and 2019, the Partnership had $ 0 and $ 619.4 million of goodwill, respectively.

During the first quarter of 2020 certain potential impairment indicators were identified, specifically (i) the decline in the market price of our common units, (ii) the decline in global commodity prices and (iii) the COVID-19 pandemic;

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

As of October 1, 2019 and 2018, we performed a qualitative assessment of relevant events and circumstances potentially indicating the likelihood of goodwill impairment.

As of October 1, 2019, we performed a qualitative assessment of relevant events and circumstances potentially indicating the likelihood of goodwill impairment.

The qualitative assessment included weighting such factors as (i) macroeconomic conditions, (ii) industry and market considerations, (iii) cost factors, (iv) overall financial performance of the reporting unit, (v) other relevant entity-specific events, and (vi) consideration of whether there was a sustained decrease in the price of our units.

Upon completion of our qualitative assessment, we concluded that it was not more likely than not that the fair value of our single reporting unit was less than its carrying value and that our goodwill was no t impaired for the years ended December 31, 2019 and 2018.

USA COMPRESSION PARTNERS, LP

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Accrued unit-based compensation liability 13,280 9,183

Accrued capital expenditures 2,800 11,357

________________________

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We maintain both finance leases and operating leases, primarily related to office space, warehouse facilities and certain corporate equipment.

Our leases have remaining lease terms of up to nine years , some of which include options that permit renewals for additional periods.

Our leases have remaining lease terms of up to eight years , some of which include options that permit renewals for additional periods.

We determine if an arrangement is a lease at inception.

Operating leases are included in lease right-of-use assets, accrued liabilities and operating lease liabilities in our consolidated balance sheets.

Operating leases are included in lease right-of-use (“ROU”) assets, accrued liabilities and operating lease liabilities in our consolidated balance sheets.

Finance leases are included in property and equipment, accrued liabilities and other liabilities in our consolidated balance sheets.

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Total lease costs $ 6,183 $ 6,585 $ 6,298

USA COMPRESSION PARTNERS, LP

Notes to Consolidated Financial Statements

The weighted average remaining lease terms and weighted average discount rates were as follows:

Year Ended December 31,

2021 2020 2019

Weighted average remaining lease term:

Operating leases 8 years 8 years

Finance leases 3 years 4 years

Operating leases 7 years 8 years 8 years

Finance leases 3 years 3 years 4 years

Weighted average discount rate:

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Finance leases 3.9 % 2.6 % 2.6 %

USA COMPRESSION PARTNERS, LP

Notes to Consolidated Financial Statements

Supplemental cash flow information related to leases consisted of the following (in thousands):

Year Ended December 31,

2021 2020 2019

Cash paid for amounts included in the measurement of lease liabilities:

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Present value of lease liabilities $ 21,777 $ 1,423 $ 23,200

As of December 31, 2020, we have no t entered into any additional leases that have not yet commenced.

As of December 31, 2021, we have no t entered into any additional leases that have not yet commenced that create significant rights and obligations.

Lessor Accounting

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

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

We accounted for this option as a sales type lease resulting in a current installment receivable included in other accounts receivable of $ 2.9 million and $ 4.0 million, and a long-term installment receivable included in other assets of $ 0 and $ 2.9 million as of December 31, 2020 and December 31, 2019, respectively.

As of December 31, 2020, there is no allowance for credit losses on our net investment in the sales-type lease based on our collections experience with the customer.

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

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

Maintenance revenue recognized for the years ended December 31, 2020, 2019 and 2018 was $ 1.3 million, $ 1.3 million and $ 1.0 million, respectively.

Interest income recognized for the years ended December 31, 2020, 2019 and 2018 was $ 0.4 million, $ 0.7 million and $ 0.7 million, respectively.

Lease payments expected to be received subsequent to December 31, 2020 are as follows (in thousands):

Total installment receivables (1) $ 3,356

present value discount ( 431 )

Present value of installment receivables $ 2,925

________________________

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

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

During 2021, the customer exercised its bargain purchase option resulting in a gain of $ 1.1 million recognized within loss (gain) on disposition of assets for the year ended December 31, 2021.

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

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

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

Maintenance revenue recognized for the years ended December 31, 2021, 2020 and 2019 was

USA COMPRESSION PARTNERS, LP

Notes to Consolidated Financial Statements

$ 0.3 million, $ 1.3 million and $ 1.3 million, respectively.

Interest income recognized for the years ended December 31, 2021, 2020 and 2019 was $ 0.1 million, $ 0.4 million and $ 0.7 million, respectively.

ASC Topic 842 provides lessors with a practical expedient to not separate non-lease components from the associated lease components and, instead, to account for those components as a single component if the non-lease components otherwise would be accounted for under ASC Topic 606 Revenue from Contracts with Customers (“ASC Topic 606”) and certain conditions are met.

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(8) Income Tax Expense (Benefit)

We, including the USA Compression Predecessor, are subject to the Texas Margin Tax, which applies a tax to our gross margin.

We are subject to the Texas Margin Tax, which applies a tax to our gross margin.

We do not conduct business in any other state where a similar tax is applied.

1 unchanged sentence

The tax base to which the tax is applied is the least of (i) 70 % of total revenues for federal income tax purposes, (ii) total revenue less cost of goods sold or (iii) total revenue less compensation for federal income tax purposes.

Components of our income tax expense (benefit) are as follows (in thousands):

Components of our income tax expense are as follows (in thousands):

Year Ended December 31,

3 unchanged sentences

Deferred tax expense (benefit) ( 42 ) 530 1,376

530 1,376 ( 2,663 )

Total income tax expense (benefit)

$ 1,333 $ 2,186 $ ( 2,474 )

Total income tax expense $ 874 $ 1,333 $ 2,186

Deferred income tax balances are the direct effect of temporary differences between the financial statement carrying amounts and the tax basis of assets and liabilities at the enacted tax rates expected to be in effect when the taxes are actually paid or recovered.

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We do not expect to incur interest charges or penalties related to our tax positions, but if such charges or penalties are incurred, our policy is to account for interest charges and penalties as income tax expense in the Consolidated Statements of Operations.

In general, we are not currently subject to examination by the IRS, and most state jurisdictions, for the 2014 and prior tax years.

Federal income tax returns for years 2019 and 2020 are currently under examination by the Internal Revenue Service (“IRS”) and our Texas Margin Tax returns for report years 2018 through 2021 are currently under examination by the Texas Comptroller of Public Accounts.

The Bipartisan Budget Act of 2015 provides that any tax adjustments (including any applicable penalties and interest) resulting from partnership audits will generally be determined at the partnership level for tax years beginning after December 31, 2017.

To the extent possible under these rules, our general partner may elect to either pay the taxes (including any applicable penalties and interest) directly to the Internal Revenue Service or, if we are eligible, issue a revised information statement to each unitholder and former unitholder with respect to an audited and adjusted return.

To the extent possible under these rules, our 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.

The Bipartisan Budget Act of 2015 allows a partnership to elect to apply these provisions to any return of the partnership filed for partnership taxable years beginning after the date of the enactment, November 2, 2015.

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Revolving Credit Facility

On the Transactions Date, we entered into the Credit Agreement.

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

The Credit Agreement was amended on August 3, 2020 (the “Amendment Effective Date”) to amend, among other things, the requirements of certain covenants and the date on which certain covenants in the Credit Agreement must be met beginning on the Amendment Effective Date until the last day of the fiscal quarter ending December 31, 2021 (the “Covenant Relief Period”).

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

Credit Agreement

On December 8, 2021, the Partnership amended and restated its existing credit agreement by entering into the Seventh Amended and Restated Credit Agreement (the “Credit Agreement”), by and among USA Compression Partners, LP, as borrower, the guarantors party thereto from time to time (the “Guarantors”), the lenders party thereto from time to time, and JPMorgan Chase Bank, N.A., as administrative agent and issuing bank.

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

The Credit Agreement has an aggregate commitment of $ 1.6 billion (subject to availability under our borrowing base), with a further potential increase of up to $ 200 million.

The Partnership’s obligations under the Credit Agreement are guaranteed by the Guarantors, which currently consists of all of the Partnership’s existing subsidiaries.

In addition, the Partnership’s obligations under the Credit Agreement are secured by:

(i) substantially all of the Partnership’s assets and substantially all of the assets of the Guarantors, excluding real property and other customary exclusions;

and (ii) all of the equity interests of the Partnership’s U.S.

restricted subsidiaries (subject to customary exceptions).

Borrowings under the Credit Agreement bear interest at a per annum interest rate equal to, at the Partnership’s option, either the Alternate Base Rate or SOFR plus the applicable margin.

“Alternate Base Rate” means the greatest of (i) the prime rate, (ii) the applicable federal funds effective rate plus 0.50 % and (iii) one-month SOFR rate plus 1.00 %.

The applicable margin for borrowings varies (a) in the case of SOFR loans, from 2.00 % to 2.75 % per annum and (b) in the case of Base Rate loans, from 1.00 % to 1.75 % per annum, and are determined based on a total leverage ratio pricing grid.

In addition, the Borrower is required to pay commitment fees based on the daily unused amount of the Credit Agreement in an amount per annum equal to 0.375 %.

Amounts borrowed and repaid under the Credit Agreement may be re-borrowed, subject to borrowing base availability.

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

In addition, the Credit Agreement contains various covenants that may limit, among other things, our ability to (subject to exceptions):

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• make certain acquisitions.

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

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

• a maximum funded debt to EBITDA ratio, determined as of the last day of each fiscal quarter, for the annualized trailing three months of (i) 5.75 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 the fiscal quarters ending September 30, 2021 and December 31, 2021 (reverting back to 5.00 to 1.00 after the Covenant Relief Period).

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

In addition, during the Covenant Relief Period, the applicable margin for Eurodollar borrowings is increased from a range of 2.00 % – 2.75 % to a range of 2.25 % – 3.00 %.

The amendment further provides that the Partnership becomes guarantor of the obligations of all other guarantors under the Credit Agreement.

USA COMPRESSION PARTNERS, LP

Notes to Consolidated Financial Statements

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

• a minimum EBITDA to interest coverage ratio of 2.5 to 1.0, determined as of the last day of each fiscal quarter, with EBITDA and interest expense annualized for the fiscal quarter most recently ended;

• a ratio of total secured indebtedness to EBITDA not greater than 3.00 to 1.00 or less than 0.00 to 1.00, determined as of the last day of each fiscal quarter, with EBITDA annualized for the fiscal quarter most recently ended;

• a maximum funded debt to EBITDA ratio, determined as of the last day of each fiscal quarter with EBITDA annualized for the fiscal quarter most recently ended, (i) 5.75 to 1.00 through the second fiscal quarter of 2022, (ii) 5.50 to 1.00 from the third quarter of 2022 through the third quarter of 2023 and (iii) 5.25 to 1.00 thereafter.

In addition, the Partnership may increase the applicable ratio by 0.25 for any fiscal quarter during which a Specified Acquisition (as defined in the Credit Agreement) occurs and the following two fiscal quarters, but in no event shall the maximum ratio exceed 5.50 to 1.00 for any fiscal quarter as a result of such increase.

If a default exists under the Credit Agreement, the lenders will be able to accelerate the maturity on the amount then outstanding and exercise other rights and remedies.

In connection with entering into the amended Credit Agreement, we paid certain upfront fees and arrangement fees to the arrangers, syndication agents and senior managing agents of the Credit Agreement in the amount of $ 14.3 million during the year ended December 31, 2018.

In connection with the Credit Agreement amendment, we incurred arrangement fees, consent fees and other fees in the amount of $ 3.4 million during the year ended December 31, 2020.

In connection with entering into the Credit Agreement, we paid certain upfront fees and arrangement fees to the arrangers, syndication agents and senior managing agents of the Credit Agreement in the amount of $ 10.0 million during the year ended December 31, 2021.

These fees were capitalized to loan costs and are amortized over the remaining term of the Credit Agreement.

In connection with an amendment to our prior credit agreement, we incurred arrangement fees, consent fees and other fees in the amount of $ 3.4 million during the year ended December 31, 2020.

These fees were capitalized to loan costs and are amortized over the remaining term of the credit agreement.

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

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Eligible compression units consist of compressor packages that are under service contracts, leased or rented and carried in the financial statements as fixed assets.

Our weighted-average interest rate in effect for all borrowings under the Credit Agreement as of December 31, 2020 was 2.95 %, with a weighted-average interest rate of 3.27 % for the year ended December 31, 2020.

Our weighted-average interest rate in effect for all borrowings under the Credit Agreement and our prior credit agreement for the year ended December 31, 2021 was 2.98 %, and our weighted-average interest rate under the Credit Agreement as of December 31, 2021 was 2.68 %.

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

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(“Finance Corp”) co-issued the Senior Notes 2027.

The Senior Notes 2027 are due on September 1, 2027 and accrue interest from March 7, 2019 at the rate of 6.875 % per year.

Interest on the Senior Notes 2027 is payable semi-annually in arrears on each of March 1 and September 1, with the first such payment having occurred on September 1, 2019.

The Senior Notes 2027 mature on September 1, 2027 and accrue interest from at the rate of 6.875 % per year.

Interest on the Senior Notes 2027 is payable semi-annually in arrears on each of March 1 and September 1.

At any time prior to September 1, 2022, we may redeem up to 35 % of the aggregate principal amount of the Senior Notes 2027 at a redemption price equal to 106.875 % of the principal amount, plus accrued and unpaid interest, if any, to the redemption date, in an amount not greater than the net proceeds from one or more equity offerings, provided that at least 65 % of the aggregate principal amount of the Senior Notes 2027 remains outstanding immediately after the occurrence of such redemption (excluding Senior Notes 2027 held by us and our subsidiaries) and redemption occurs within 180 days of the date of the closing of such equity offering.

Prior to September 1, 2022, we may redeem all or a part of the Senior Notes 2027 at a redemption price equal to the sum of (i) the principal amount thereof, plus (ii) a make-whole premium at the redemption date, plus accrued and unpaid interest, if any, to the redemption date.

USA COMPRESSION PARTNERS, LP

Notes to Consolidated Financial Statements

On or after September 1, 2022, we may redeem all or a part of the Senior Notes 2027 at redemption prices (expressed as percentages of the principal amount) set forth below, plus accrued and unpaid interest, if any, to the applicable redemption date, if redeemed during the twelve-month period beginning on September 1 of the years indicated below:

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If we experience a change of control followed by a ratings decline, unless we have previously exercised or concurrently exercise our right to redeem the Senior Notes 2027 (as described above), we may be required to offer to repurchase the Senior Notes 2027 at a purchase price equal to 101 % of the principal amount repurchased, plus accrued and unpaid interest, if any, to the repurchase date.

USA COMPRESSION PARTNERS, LP

Notes to Consolidated Financial Statements

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

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The Senior Notes 2027 are fully and unconditionally guaranteed (the “2027 Guarantees”), jointly and severally, on a senior unsecured basis by all of our existing subsidiaries (other than Finance Corp), and will be fully and unconditionally guaranteed, jointly and severally, by each of our future restricted subsidiaries that either borrows under, or guarantees, the Credit Agreement or guarantees certain of our other indebtedness (collectively, the “Guarantors”).

The Senior Notes 2027 and the 2027 Guarantees are general unsecured obligations and rank equally in right of payment with all of the Guarantors’ and our existing and future senior indebtedness and senior to the Guarantors’ and our future subordinated indebtedness, if any.

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

The Senior Notes 2027 and the 2027 Guarantees are general unsecured obligations and rank equally in right of payment with all of the Guarantors’, Finance Corp’s, and our existing and future senior indebtedness and senior to the Guarantors’, Finance Corp’s, and our future subordinated indebtedness, if any.

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

On December 18, 2019, the Partnership closed an exchange offer whereby holders of the Senior Notes 2027 exchanged all of the Senior Notes 2027 for an equivalent amount of senior notes (“Exchange Notes 2027”) registered under the Securities Act.

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On March 23, 2018, the Partnership and Finance Corp co-issued the Senior Notes 2026.

The Senior Notes 2026 are due on April 1, 2026 and accrue interest from March 23, 2018 at the rate of 6.875 % per year.

Interest on the Senior Notes 2026 is payable semi-annually in arrears on each of April 1 and October 1, with the first such payment having occurred on October 1, 2018.

At any time prior to April 1, 2021, we may redeem up to 35 % of the aggregate principal amount of the Senior Notes 2026 at a redemption price equal to 106.875 % of the principal amount, plus accrued and unpaid interest, if any, to the redemption date, in an amount not greater than the net proceeds from one or more equity offerings, provided that at least 65 % of the aggregate principal amount of the Senior Notes 2026 remains outstanding immediately after the occurrence of such redemption (excluding Senior Notes 2026 held by us and our subsidiaries) and redemption occurs within 180 days of the date of the closing of such equity offering.

Prior to April 1, 2021, we may redeem all or a part of the Senior Notes 2026 at a redemption price equal to the sum of (i) the principal amount thereof, plus (ii) a make-whole premium at the redemption date, plus accrued and unpaid interest, if any, to the redemption date.

On or after April 1, 2021, we may redeem all or a part of the Senior Notes 2026 at redemption prices (expressed as percentages of the principal amount) set forth below, plus accrued and unpaid interest, if any, to the applicable redemption date, if redeemed during the twelve-month period beginning on April 1 of the years indicated below:

The Senior Notes 2026 mature on April 1, 2026 and accrue interest from March 23, 2018 at the rate of 6.875 % per year.

Interest on the Senior Notes 2026 is payable semi-annually in arrears on each of April 1 and October 1.

We may redeem all or a part of the Senior Notes 2026 at redemption prices (expressed as percentages of the principal amount) set forth below, plus accrued and unpaid interest, if any, to the applicable redemption date, if redeemed during the twelve-month period beginning on April 1 of the years indicated below:

Year Percentages

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2024 and thereafter 100.000 %

If we experience a change of control followed by a ratings decline, unless we have previously exercised or concurrently exercise our right to redeem the Senior Notes 2026 (as described above), we may be required to offer to repurchase the Senior Notes 2026 at a purchase price equal to 101 % of the principal amount repurchased, plus accrued and unpaid interest, if any, to the repurchase date.

USA COMPRESSION PARTNERS, LP

Notes to Consolidated Financial Statements

Notes 2026 at a purchase price equal to 101 % of the principal amount repurchased, plus accrued and unpaid interest, if any, to the repurchase date.

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

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

In connection with issuing the Senior Notes 2026, we incurred certain issuance costs in the amount of $ 17.3 million during the year ended December 31, 2018, which is amortized over the term of the Senior Notes 2026.

The Senior Notes 2026 are fully and unconditionally guaranteed (the “2026 Guarantees”), jointly and severally, on a senior unsecured basis by the Guarantors.

The Senior Notes 2026 and the 2026 Guarantees are general unsecured obligations and rank equally in right of payment with all of the Guarantors’ and our existing and future senior indebtedness and senior to the Guarantors’ and our future subordinated indebtedness, if any.

The Senior Notes 2026 and the 2026 Guarantees are effectively subordinated in right of payment to all of the Guarantors and our existing and future secured debt, including debt under the Credit Agreement and guarantees thereof, to the extent of the value of the assets securing such debt, and are structurally subordinated to all indebtedness of any of our subsidiaries that do not guarantee the Senior Notes 2026.

The Senior Notes 2026 and the 2026 Guarantees are general unsecured obligations and rank equally in right of payment with all of the Guarantors’, Finance Corp’s, and our existing and future senior indebtedness and senior to the Guarantors’, Finance Corp’s, and our future subordinated indebtedness, if any.

The Senior Notes 2026 and the 2026 Guarantees are effectively subordinated in right of payment to all of the Guarantors, Finance Corp’s, and our existing and future secured debt, including debt under the Credit Agreement and guarantees thereof, to the extent of the value of the assets securing such debt, and are structurally subordinated to all indebtedness of any of our subsidiaries that do not guarantee the Senior Notes 2026.

On January 14, 2019, the Partnership closed an exchange offer whereby holders of the Senior Notes 2026 exchanged all of the Senior Notes 2026 for an equivalent amount of senior notes (“Exchange Notes 2026”) registered under the Securities Act.

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Subsidiary Guarantors

On April 20, 2017, the Partnership filed a Registration Statement on Form S-3 (the “Registration Statement”) with the SEC to register the issuance and sale of, among other securities, debt securities, which may be co-issued by Finance Corp (together with the Partnership, the “Issuers”) and fully and unconditionally guaranteed on a joint and several basis by the Partnership’s operating subsidiaries for the benefit of each holder and the trustee.

Such guarantees will be subject to release, subject to certain limitations, as follows (i) upon the sale, exchange or transfer, by way of a merger or otherwise, to any person that is not our affiliate, of all of our direct or indirect limited partnership or other equity interest in such subsidiary guarantor;

The Partnership may from time to time file a Registration Statement on Form S-3 with the SEC to register the issuance and sale of, among other securities, debt securities, which may be co-issued by Finance Corp (together with the Partnership, the “Issuers”) and fully and unconditionally guaranteed on a joint and several basis by the Partnership’s operating subsidiaries for the benefit of each holder and the trustee.

Such guarantees are expected to be subject to release, subject to certain limitations, as follows (i) upon the sale, exchange or transfer, by way of a merger or otherwise, to any person that is not our affiliate, of all of our direct or indirect limited partnership or other equity interest in such subsidiary guarantor;

or (ii) upon delivery by an Issuer of a written notice to the trustee of the release or discharge of all guarantees by such subsidiary guarantor of any debt of the Issuers other than obligations arising under the indenture governing such debt and any debt securities issued under such indenture, except a discharge or release by or as a result of payment under such guarantees.

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Year Ending December 31,

2026 1,241,342

Thereafter 750,000

(10) Preferred Units

Preferred Unit and Warrant Private Placement

On the Transactions Date, we completed a private placement of $ 500 million in the aggregate of (i) newly authorized and established Preferred Units and (ii) warrants to purchase common units (the “Warrants”) pursuant to a Series A Preferred Unit and Warrant Purchase Agreement dated January 15, 2018, with certain investment funds managed or advised by EIG Global Energy Partners (collectively, the “Preferred Unitholders”).

We issued 500,000 Preferred Units with a face value of $ 1,000 per Preferred Unit and issued two tranches of Warrants to the Preferred Unitholders, which included Warrants to purchase 5,000,000 common units with a strike price of $ 17.03 per unit and 10,000,000 common units with a strike price of $ 19.59 per unit.

On April 2, 2018, we completed a private placement of $ 500 million in the aggregate of (i) newly authorized and established Preferred Units and (ii) warrants to purchase common units (the “Warrants”) pursuant to a Series A Preferred Unit and Warrant Purchase Agreement dated January 15, 2018, with certain investment funds managed or advised by EIG Global Energy Partners (collectively, the “Preferred Unitholders”).

We issued 500,000 Preferred Units with a face value of $ 1,000 per Preferred Unit and issued two tranches of Warrants to the Preferred Unitholders, which included Warrants to purchase

USA COMPRESSION PARTNERS, LP

Notes to Consolidated Financial Statements

5,000,000 common units with a strike price of $ 17.03 per unit and 10,000,000 common units with a strike price of $ 19.59 per unit.

On November 13, 2018, the Partnership filed a Registration Statement on Form S-3 to register 41,202,553 common units that are potentially issuable upon conversion of the Preferred Units and exercise of the Warrants.

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Payment date Distribution per Preferred Unit

February 8, 2019 $ 24.375

May 10, 2019 24.375

August 9, 2019 24.375

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Total 2021 distributions

________________________

(1) Pro-rated initial distribution

Announced Quarterly Distribution

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Redemption and Conversion Features

The Preferred Units are convertible, at the option of the Preferred Unitholders, into common units in accordance with the terms of the Partnership Agreement as follows:

one third on or after April 2, 2021, two thirds on or after April 2, 2022, and the remainder on or after April 2, 2023.

The conversion rate for the Preferred Units shall be the quotient of (a) the sum of (i) $ 1,000 , plus (ii) any unpaid cash distributions on the applicable Preferred Unit, divided by (b) $ 20.0115 for each Preferred Unit.

The Preferred Units are convertible, at the option of the holder, into common units in accordance with the terms of our Second Amended and Restated Agreement of Limited Partnership (the “Partnership Agreement”) as follows:

one third on or after April 2, 2021, two thirds on or after April 2, 2022, and 100% are convertible on or after April 2, 2023.

The conversion rate for the Preferred Units is the quotient of (a) the sum of (i) $ 1,000 , plus (ii) any unpaid cash distributions on the applicable Preferred Unit, divided by (b) $ 20.0115 for each Preferred Unit.

The Preferred Unitholders are entitled to vote on an as-converted basis with the common unitholders and (as proportionately adjusted for unit splits, unit distributions and similar transactions) will have certain other class voting rights with respect to any amendment to the Partnership Agreement that would adversely affect any rights, preferences or privileges of the Preferred Units.

In addition, upon certain events involving a change of control the Preferred Unitholders may elect, among other potential elections, to convert their Preferred Units to common units at the then change of control conversion rate.

On or after April 2, 2023, we have the option to redeem all or any portion of the Preferred Units then outstanding.

On or after April 2, 2028, the Preferred Unitholders have the right to require us to redeem all or a portion of the Preferred Units then outstanding, the purchase price for which we may elect to pay up to 50 % in common units, subject to certain additional limits.

The Preferred Units are presented as temporary equity in the mezzanine section of the consolidated balance sheets because the redemption provisions on or after April 2, 2028 are outside the Partnership’s control.

The Preferred Units were recorded at their issuance date fair value, net of issuance cost.

Net income allocations increase the carrying value and declared distributions decrease the carrying value of the Preferred Units.

As the Preferred Units are not

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

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

The Preferred Units are presented as

USA COMPRESSION PARTNERS, LP

Notes to Consolidated Financial Statements

currently redeemable and it is not probable that they will become redeemable, adjustment to the initial carrying value is not necessary and would only be required if it becomes probable that the Preferred Units would become redeemable.

temporary equity in the mezzanine section of the consolidated balance sheets because the redemption provisions on or after April 2, 2028 are outside the Partnership’s control.

The Preferred Units were recorded at their issuance date fair value, net of issuance cost.

Net income allocations increase the carrying value and declared distributions decrease the carrying value of the Preferred Units.

As the Preferred Units are not currently redeemable and it is not probable that they will become redeemable, adjustment to the initial carrying value is not necessary and would only be required if it becomes probable that the Preferred Units would become redeemable.

Changes in the Preferred Units balance are summarized below (in thousands):

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Balance at December 31, 2018 $ 477,309

Issuance of Preferred Units on April 2, 2018, net

Net income allocated to Preferred Units

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Conversion of Class B Units to common units 6,397,965 ( 6,397,965 )

6,397,965 ( 6,397,965 )

Number of units outstanding, December 31, 2019 96,631,976 —

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Number of units outstanding, December 31, 2020 96,962,323 —

As of December 31, 2020, ETO held 46,056,228 common units, including 8,000,000 common units held by the General Partner and controlled by ETO.

Vesting of phantom units

Issuance of common units under the DRIP

Number of units outstanding, December 31, 2021 97,344,707 —

As of December 31, 2021, Energy Transfer LP held 46,056,228 common units, including 8,000,000 common units held by the General Partner and controlled by Energy Transfer LP.

The limited partners holding our common units have the following rights, among others:

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• right to approve certain amendments of the Partnership Agreement;

• right to electronic access of an annual report, containing audited financial statements and a report on those financial statements by our independent public accountants within 90 days after the close of the fiscal year end;

• right to receive information reasonably required for tax reporting purposes within 90 days after the close of the calendar year.

USA COMPRESSION PARTNERS, LP

Notes to Consolidated Financial Statements

• right to receive information reasonably required for tax reporting purposes within 90 days after the close of the calendar year.

Class B Units Conversion

On July 30, 2019, 6,397,965 Class B Units automatically converted into common units on a one-for-one basis, resulting in the issuance of 6,397,965 common units to ETO.

On July 30, 2019, 6,397,965 Class B Units representing limited partner interests in us (“Class B Units”) automatically converted into common units on a one-for-one basis, resulting in the issuance of 6,397,965 common units to Energy Transfer.

Following the conversion, there are no longer Class B Units outstanding.

Cash Distributions

As the USA Compression Predecessor is deemed to be the predecessor of the Partnership for financial reporting purposes, cash distributions made by the Partnership in periods prior to the Transactions Date are not included within the results of operations presented within the consolidated financial statements for the year ended December 31, 2018.

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

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Unitholders Total

February 8, 2019 $ 0.525 $ 47.2 $ 0.7 $ 47.9

May 10, 2019 0.525 47.3 0.6 47.9

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

2021 2022 2023 2024 2025 Total

2022 2023 2024 2025 Thereafter Total

Remaining performance obligations

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(13) Transactions with Related Parties

We provide compression services to entities affiliated with ETO, which as of December 31, 2020, owned approximately 47 % of our limited partner interests and 100 % of the General Partner.

The following table summarizes the revenues from ETO on our consolidated statement of operations (in thousands):

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

The following table summarizes the revenues from Energy Transfer on our consolidated statement of operations (in thousands):

Year Ended December 31,

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$ 11,967 $ 12,372 $ 19,967

We had $ 0.1 million and $ 0.5 million within related party receivables on our consolidated balance sheets as of December 31, 2020 and December 31, 2019, respectively, from such affiliated ETO entities.

Additionally, the Partnership had a $ 44.9 million related party receivable from ETO as of December 31, 2020 and December 31, 2019 related to indemnification for sales tax contingencies incurred by the USA Compression Predecessor.

We had approximately $ 18,000 and $ 120,000 within related party receivables on our consolidated balance sheets as of December 31, 2021 and December 31, 2020, respectively, from such affiliated Energy Transfer entities.

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

See Note 16 for more information related to such sales tax contingencies.

ETO provided certain benefits to the USA Compression Predecessor employees which did not continue following the Transactions Date.

ETO provided medical, dental and other healthcare benefits to the USA Compression Predecessor employees.

The total amount incurred by ETO for the benefit of the USA Compression Predecessor employees for the year ended December 31, 2018 was $ 1.9 million, which was allocated to the USA Compression Predecessor and recorded in operation and maintenance and general and administrative expenses, as appropriate.

ETO also provided a matching contribution to the USA Compression Predecessor employees’ 401(k) accounts.

The total amount of matching contributions incurred for the benefit of the USA Compression Predecessor employees for the year ended December 31, 2018 was $ 0.9 million, which was allocated to the USA Compression Predecessor and recorded in operation and maintenance and general and administrative expenses, as appropriate.

ETO also provided a 3 % profit sharing contribution to the 401(k) accounts for all USA Compression Predecessor employees with base compensation below a specified threshold.

The contribution was in addition to the 401(k) matching contribution and employees became vested in the profit sharing contribution based on years of service.

ETO allocated certain overhead costs associated with general and administrative services, including salaries and benefits, facilities, insurance, information services, human resources and other support departments to the USA Compression Predecessor which did not continue following the Transactions Date.

Where costs incurred on the USA Compression Predecessor’s behalf could not be determined by specific identification, the costs were primarily allocated to the USA Compression Predecessor based on an average percentage of fixed assets, net income (loss) and Adjusted EBITDA.

The USA Compression Predecessor believes these allocations were a reasonable reflection of the utilization of services provided.

However, the allocations may not fully reflect the expenses that would have been incurred had the USA Compression Predecessor been a standalone company during the periods presented.

During the year ended December 31, 2018, ETO allocated general and administrative expenses of $ 1.8 million to the USA Compression Predecessor.

Pursuant to that certain Board Representation Agreement entered into by us, the General Partner, ET LP and 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).

USA COMPRESSION PARTNERS, LP

Notes to Consolidated Financial Statements

Pursuant to that certain Board Representation Agreement entered into by us, the General Partner, Energy Transfer LP and 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).

(14) Unit-Based Compensation

Long-Term Incentive Plan

In connection with the Partnership’s initial public offering in January 2013, the board of directors of the General Partner (the “Board”) adopted the USA Compression Partners, LP 2013 Long-Term Incentive Plan (“LTIP”) for certain employees, consultants and directors of the General Partner and any of its affiliates who perform services for us.

In January 2013, the board of directors of the General Partner (the “Board”) adopted the USA Compression Partners, LP 2013 Long-Term Incentive Plan (as amended, the “LTIP”), which is available for certain employees, consultants and directors of the General Partner and any of its affiliates who perform services for us.

The LTIP provides for awards of unit options, unit appreciation rights, restricted units, phantom units, DERs, unit awards, profits interest units and other unit-based awards.

On November 1, 2018 and effective the same day, the Board approved and adopted The First Amendment to the LTIP which, among other things, increased the number of common units of the Partnership available to be awarded under the LTIP by 8,590,000 common units (which brought the total number of common units available to be awarded under the LTIP to 10,000,000 common units) and extended the term of the LTIP until November 1, 2028.

Under the LTIP, the maximum number of common units available for issuance is 10,000,000 and the term of the LTIP is until November 1, 2028.

Awards that are forfeited, canceled, paid or otherwise terminate or expire without the actual delivery of common units will be available for delivery pursuant to other awards.

8 unchanged sentences

Phantom units granted to independent directors do not have a cash settlement option and as such we account for these awards as equity.

Each phantom unit is granted in tandem with a corresponding DER, which entitles the recipient to receive an amount in cash on a quarterly basis equal to the product of (a) the number of the recipient’s outstanding, unvested phantom units on the record date for such quarter and (b) the quarterly distribution declared by the Board for such quarter with respect to the Partnership’s common units.

During the years ended December 31, 2020 and 2019, and the period from the Transactions Date to December 31, 2018, an aggregate of 741,963 , 717,869 and 1,136,447 , respectively, phantom units (including the corresponding DERs) were granted under the LTIP to the General Partner’s executive officers and certain of its employees and independent directors.

The phantom units (including the corresponding DERs) awarded are subject to restrictions on transferability, customary forfeiture provisions and time vesting provisions.

Phantom unit awards granted after July 30, 2018 vest incrementally, with 60 % of the phantom units vesting at the end of the third year following the grant and the remaining 40 % vesting at the end of the fifth year following the grant.

Phantom unit awards that were granted to employees of USAC Management prior to July 30, 2018 vest evenly over a three-year service period.

Phantom units granted prior to July 30, 2018 vest in full in the event of a change in control followed by a termination of employment, and phantom units granted on or after July 30, 2018 vest in full upon a change in control.

Award recipients do not have all the rights of a unitholder in the Partnership with respect to the phantom units until the units have vested.

On the Transactions Date and in connection with the closing of the CDM Acquisition, and pursuant to the change in control provisions of our outstanding phantom unit awards, all of the performance-based phantom units granted during 2018, 2017 and 2016 and outstanding as of the Transactions Date, vested immediately upon the change in control event at 100 % of the target level.

In addition, all outstanding time-based phantom units held by our CEO vested immediately upon the change in control event.

As such, 563,544 outstanding phantom units vested resulting in $ 6.8 million of compensation expense recognized during the year ended December 31, 2018.

ETO had a long-term incentive plan for the USA Compression Predecessor’s employees, officers and directors.

ETO had granted restricted unit awards to the USA Compression Predecessor’s employees that vested on a pro-rata basis incrementally over a five-year vesting period, with vesting based on continued employment as of each applicable vesting date.

Upon vesting, ETO common units were issued.

These restricted unit awards also entitled the recipients of the unit awards to receive, with respect to each ETO common unit subject to such award that had not vested or been forfeited, a corresponding DER entitling the recipient to a cash payment equal to the cash distribution per ETO common unit paid by ETO to its unitholders promptly following each such distribution.

All unit-based compensation awards were treated as equity within the USA Compression Predecessor financial statements.

Each phantom unit is granted in tandem with a corresponding DER, which entitles the recipient to receive an amount in cash on a quarterly basis equal to the product of (i) the number of the recipient’s outstanding, unvested phantom units on the record date for such quarter and (ii) the quarterly distribution declared by the Board for such quarter with respect to the Partnership’s common units.

USA COMPRESSION PARTNERS, LP

Notes to Consolidated Financial Statements

The unit and per-unit amounts disclosed in the remainder of this note for periods prior to the Transactions Date reflect amounts related to ETO.

These amounts have been retrospectively adjusted to reflect a 1.5 to one unit-for-unit exchange related to the merger of ETO and Sunoco Logistics Partners L.P.

in April 2017 and a 0.4124 to one unit-for unit exchange related to the merger of ETO and Regency Energy Partners LP in April 2015.

The unit and per-unit amounts do not reflect the conversion of ETO units to ET LP units as a result of the ETE Merger in October 2018.

On the Transactions Date and in connection with the closing of the CDM Acquisition, and pursuant to the change in control provisions of the USA Compression Predecessor’s outstanding phantom unit awards, all of the USA Compression Predecessor’s outstanding phantom unit awards were forfeited.

During the years ended December 31, 2021, 2020 and 2019, an aggregate of 638,903 , 741,963 and 717,869 , respectively, phantom units (including the corresponding DERs) were granted under the LTIP to the General Partner’s executive officers and certain of its employees and independent directors.

The phantom units (including the corresponding DERs) awarded are subject to restrictions on transferability, customary forfeiture provisions and time vesting provisions.

Phantom unit awards granted after July 30, 2018 vest incrementally, with 60 % of the phantom units vesting on December 5 of the third year following the grant and the remaining 40 % vesting on December 5 of the fifth year following the grant.

Phantom unit awards that were granted to employees of USAC Management prior to July 30, 2018 vested evenly over a three-year service period.

Phantom units granted on or after July 30, 2018 vest in full upon a change in control.

Award recipients do not have all the rights of a unitholder in the Partnership with respect to the phantom units until the units have vested.

As of December 31, 2021 and 2020, our total unit-based compensation liability was $ 13.3 million and $ 9.2 million, respectively.

1 unchanged sentence

During the years ended December 31, 2021, 2020 and 2019, amounts paid related to the cash settlement of vested awards under the LTIP were $ 3.2 million, $ 1.1 million and $ 1.7 million, respectively.

The total fair value and intrinsic value of the phantom units vested under the LTIP was $ 1.7 million, $ 4.6 million and $ 9.7 million for the years ended December 31, 2020 and 2019, and for the period from the Transactions Date to December 31, 2018, respectively.

The total fair value and intrinsic value of the phantom units vested under the LTIP was $ 4.0 million, $ 1.7 million and $ 4.6 million for the years ended December 31, 2021, 2020 and 2019, respectively.

The following table summarizes information regarding phantom unit awards for the periods presented:

2 unchanged sentences

Value per Unit

USA Compression Predecessor's phantom units outstanding at December 31, 2017 324,922 $ 27.10

Forfeited upon change in control, April 2, 2018

( 324,922 ) 27.10

Assumed upon change in control, April 2, 2018 (1)

1,010,522 14.24

1,136,447 15.47

( 571,892 ) 14.79

Phantom units outstanding at December 31, 2018 1,431,064 $ 14.98

Granted 717,869 15.88

Vested ( 301,329 ) 13.06

Forfeited ( 45,620 ) 16.78

( 144,013 ) 17.85

Phantom units outstanding at December 31, 2019 1,801,984 $ 15.09

7 unchanged sentences

Phantom units outstanding at December 31, 2021 2,229,768 $ 13.57

________________________

(1) Following the Transactions Date, the outstanding unvested phantom units granted by the USA Compression Predecessor were forfeited and the outstanding unvested phantom units granted by the Partnership prior to the Transactions Date were maintained.

The number of units assumed upon change in control represent the Partnership’s unvested outstanding phantom units as of March 31, 2018.

The subsequent number of units granted, vested and forfeited reflect activity following the Transactions Date through December 31, 2018.

The unrecognized compensation cost associated with phantom unit awards was an aggregate $ 25.2 million as of December 31, 2021.

4 unchanged sentences

The plan provides for discretionary matching contributions by us on an annual basis.

Aggregate matching contributions made to employees’ 401(k) plans were $ 3.4 million and $ 3.4 million for the

USA COMPRESSION PARTNERS, LP

Notes to Consolidated Financial Statements

years ended December 31, 2020 and 2019, and $ 3.2 million for the year ended December 31, 2018, including $ 0.9 million made by ETO to employees of the USA Compression Predecessor prior to the Transactions Date.

Refer to Note 14 for information about the 401(k) plan provided by ETO to employees of the USA Compression Predecessor.

Aggregate matching contributions made to employees’ 401(k) plans were $ 3.5 million, $ 3.4 million and $ 3.4 million for the years ended December 31, 2021, 2020 and 2019, respectively.

(16) Commitments and Contingencies

1 unchanged sentence

We did not have revenue from any single customer representing 10% or more of total revenue for the years ended December 31, 2021, 2020 or 2019.

As of December 31, 2020, two customers accounted for 13 % and 11 % of our trade account receivables, net balance, respectively.

As of December 31, 2019, no single customer accounted for 10% or more of our trade accounts receivables, net balance.

USA COMPRESSION PARTNERS, LP

Notes to Consolidated Financial Statements

As of December 31, 2021, one customer accounted for 14 % of our trade account receivables, net balance.

As of December 31, 2020, two customers accounted for 13 % and 11 % of our trade accounts receivables, net balance, respectively.

(b) Litigation

1 unchanged sentence

In management’s opinion, the resolution of such matters is not expected to have a material adverse effect on our consolidated financial position, results of operations or cash flows.

Our future capital commitments are comprised of binding commitments under purchase orders for new compression units ordered but not received.

The commitments as of December 31, 2021 were $ 19.3 million, all of which is expected to be settled within the next twelve months.

(d) Sales Tax Contingencies

Our compliance with state and local sales tax regulations is subject to audit by various taxing authorities.

Certain taxing authorities have either claimed or issued an assessment that specific operational processes, which we and other companies in our industry regularly conduct, result in transactions that are subject to state sales taxes.

We and other companies in our industry have disputed these claims and assessments based on either existing tax statutes or published guidance by the taxing authorities.

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

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

We estimate that the range of losses we could incur is from $ 0.0 million to approximately $ 20.0 million, including penalty and interest.

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

The USA Compression Predecessor has several open audits with the Comptroller for certain periods prior to the Transactions Date wherein the Comptroller has challenged the applicability of the manufacturing exemption.

Any liability for the periods prior to the Transactions Date will be covered by an indemnity between us and ETO.

As of December 31, 2020 and 2019, we have recorded a $ 44.9 million accrued liability and $ 44.9 million related party receivable from ETO.

During January 2020, we entered into a compromise and settlement agreement with the Comptroller for the audit of the USA Compression Predecessor for the period from August 2006 to December 2007 for $ 4.0 million, which was paid by the USA Compression Predecessor’s former owner in February 2020.

As of December 31, 2019, we recorded a $ 4.0 million asset from the USA Compression Predecessor’s former owner in other accounts receivable and a $ 4.0 million liability in accrued liabilities in our consolidated balance sheets.

(d) Environmental

Certain taxing authorities have either claimed or issued an assessment that specific operational processes, which we and others in our industry regularly conduct, result in transactions that are subject to state sales taxes.

We and others in our industry have disputed these claims and assessments based on either existing tax statutes or published guidance by the taxing authorities.

We are currently protesting certain assessments made by the Oklahoma Tax Commission (“OTC”).

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

We estimate that the range of losses we could incur is from $ 0 to approximately $ 19.5 million, including penalty and interest.

As of December 31, 2021 and 2020, we have recorded a $ 44.9 million accrued liability and $ 44.9 million related party receivable from Energy Transfer related to open audits with the Office of the Texas Comptroller of Public Accounts (the “Comptroller”), wherein the Comptroller has challenged the applicability of the manufacturing exemption.

(e) Environmental

The Partnership’s operations are subject to federal, state and local laws and rules and regulations regarding water quality, hazardous and solid waste management, air quality control and other environmental matters.

3 unchanged sentences

These evolving laws and regulations and claims for damages to property, employees, other persons and the environment resulting from current or past operations may result in significant expenditures and liabilities in the future.

USA COMPRESSION PARTNERS, LP

Notes to Consolidated Financial Statements

(17) Recent Accounting Pronouncements

In March 2020, FASB issued ASU 2020-04, Reference Rate Reform (“Topic 848”):

Facilitation of the Effects of Reference Rate Reform on Financial Reporting.

The amendment to Topic 848 provides relief from certain contract modification accounting requirements for the transition away from LIBOR and certain other reference rates.

Adoption of the amendments in this update are optional, effective upon issuance and may be adopted during any interim or annual period through December 31, 2022.

Modifications to our Credit Agreement during the effective period of this amendment will be assessed and if the modifications meet the criteria for the optional expedients and exceptions, we intend to adopt Topic 848 and apply the amendments as applicable.

In August 2020, FASB issued ASU 2020-06, Debt—Debt with Conversion and Other Options (Subtopic 470-20) and Derivatives and Hedging—Contracts in Entity’s Own Equity (Subtopic 815-40):

2 unchanged sentences

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

We are currently evaluating the impact, if any, of the amendments to ASU 2020-06 on our consolidated financial statements.

Supplemental Selected Quarterly Financial Data

In the opinion of our management, the summarized quarterly financial data below (in thousands, except per unit amounts) contains all appropriate adjustments, all of which are normally recurring adjustments, considered necessary to present fairly our financial position and the results of operations for the respective periods.

March 31, June 30, September 30, December 31,

2020 (1) 2020 2020 2020

$ 178,999 $ 168,651 $ 161,666 $ 158,367

Operating income (loss) $ ( 569,710 ) $ 34,894 $ 38,771 $ 31,193

Net income (loss) $ ( 602,461 ) $ 2,684 $ 6,519 $ ( 1,474 )

Net loss attributable to common unitholders’ interests $ ( 614,648 ) $ ( 9,504 ) $ ( 5,669 ) $ ( 13,661 )

Net loss per common unit – basic and diluted $ ( 6.36 ) $ ( 0.10 ) $ ( 0.06 ) $ ( 0.14 )

March 31, June 30, September 30, December 31,

2019 2019 2019 2019

$ 170,746 $ 173,675 $ 175,756 $ 178,188

Operating income $ 35,528 $ 42,891 $ 46,164 $ 43,801

Net income $ 6,587 $ 9,949 $ 13,315 $ 9,281

Net income (loss) attributable to common and Class B unitholders’ interests

$ ( 5,600 ) $ ( 2,239 ) $ 1,127 $ ( 2,906 )

Net income (loss) per common unit – basic and diluted

$ ( 0.02 ) $ 0.01 $ 0.02 $ ( 0.03 )

Net loss per Class B Unit – basic and diluted

$ ( 0.55 ) $ ( 0.51 ) $ ( 0.47 ) $ —

________________________

(1) During the three months ended March 31, 2020, we recognized a $ 619.4 million impairment of goodwill.

We adopted this new standard on January 1, 2022.

The impact on our disclosures is not material and there was no impact to our consolidated financial statements.

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

What changed 10-K

Item 9A. Controls and Procedures