What changed in this filing

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Item 1. Financial Statements

2022-08-02 compared with 2022-05-03 · 114 added, 79 removed, 389 unchanged (33% of the section changed)

18 unchanged sentences

Total assets $ 2,719,892 $ 2,767,979

Liabilities, Preferred Units and Partners’ Capital

Liabilities, Preferred Units and Partners’ Capital (Deficit)

Current liabilities:

9 unchanged sentences

Preferred Units 477,309 477,309

Partners’ capital:

Partners’ capital (deficit):

Common units, 97,941 and 97,345 units issued and outstanding, respectively

1 unchanged sentence

Warrants 8,812 13,979

Total partners’ capital 41,618 101,108

Total liabilities, Preferred Units and partners’ capital $ 2,736,952 $ 2,767,979

Total partners’ capital (deficit) ( 12,065 ) 101,108

Total liabilities, Preferred Units and partners’ capital (deficit) $ 2,719,892 $ 2,767,979

See accompanying notes to unaudited condensed consolidated financial statements.

2 unchanged sentences

(in thousands, except per unit amounts)

Three Months Ended March 31,

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

2022 2021 2022 2021

Contract operations $ 163,969 $ 151,800 $ 321,637 $ 304,325

6 unchanged sentences

Selling, general and administrative 13,914 15,288 29,179 29,088

Gain on disposition of assets ( 179 ) ( 1,255 )

Loss (gain) on disposition of assets 1,031 ( 1,105 ) 852 ( 2,360 )

Impairment of compression equipment — 2,403 432 4,953

3 unchanged sentences

Interest expense, net ( 33,079 ) ( 32,350 ) ( 64,917 ) ( 64,638 )

Other 21 45 41 70

Total other expense ( 33,058 ) ( 32,305 ) ( 64,876 ) ( 64,568 )

9 unchanged sentences

USA COMPRESSION PARTNERS, LP

Unaudited Condensed Consolidated Statements of Changes in Partners’ Capital

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

(in thousands, except per unit amounts)

For the Three Months Ended March 31, 2022

For the Six Months Ended June 30, 2022

Common units Warrants Total

7 unchanged sentences

Partners’ capital ending balance, March 31, 2022 27,639 13,979 41,618

For the Three Months Ended March 31, 2021

Distributions and DERs, $ 0.525 per unit

( 51,154 ) — ( 51,154 )

Issuance of common units under the DRIP 508 — 508

Unit-based compensation for equity classified awards 65 — 65

Exercise and conversion of warrants into common units 5,167 ( 5,167 ) —

Net loss attributable to common unitholders’ interests ( 3,102 ) — ( 3,102 )

Partners’ capital (deficit) ending balance, June 30, 2022 $ ( 20,877 ) $ 8,812 $ ( 12,065 )

For the Six Months Ended June 30, 2021

Common units Warrants Total

8 unchanged sentences

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

Vesting of phantom units 277 — 277

Distributions and DERs, $ 0.525 per unit

( 50,963 ) — ( 50,963 )

Issuance of common units under the DRIP 402 — 402

Unit-based compensation for equity classified awards 54 — 54

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

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

See accompanying notes to unaudited condensed consolidated financial statements.

2 unchanged sentences

(in thousands)

Three Months Ended March 31,

Six Months Ended June 30,

Cash flows from operating activities:

6 unchanged sentences

Deferred income tax benefit ( 183 ) ( 133 )

Gain on disposition of assets ( 179 ) ( 1,255 )

Loss (gain) on disposition of assets 852 ( 2,360 )

Impairment of compression equipment 432 4,953

21 unchanged sentences

Net cash used in financing activities ( 86,412 ) ( 128,802 )

Increase in cash and cash equivalents 15 97

Change in cash and cash equivalents — —

Cash and cash equivalents, beginning of period — 2

8 unchanged sentences

Changes in financing costs included in accounts payable and accrued liabilities $ ( 265 ) $ 120

Exercise and conversion of warrants into common units $ 5,167 $ —

See accompanying notes to unaudited condensed consolidated financial statements.

13 unchanged sentences

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

Operating results for the three months ended March 31, 2022 are not necessarily indicative of the results that may be expected for the year ending December 31, 2022.

Operating results for the three and six months ended June 30, 2022 are not necessarily indicative of the results that may be expected for the year ending December 31, 2022.

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

25 unchanged sentences

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 the unaudited condensed consolidated statements of operations in the period of sale or disposition.

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 approximately $ 138,000 and $ 3,000 for the three months ended March 31, 2022 and 2021, respectively.

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

Capitalized interest was approximately $ 208,000 and $ 346,000 for the three and six months ended June 30, 2022, respectively, and approximately $ 98,000 and $ 101,000 for the three and six months ended June 30, 2021, respectively.

Impairment of Long-Lived Assets

1 unchanged sentence

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 desired 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 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.

1 unchanged sentence

The fair value of the asset is measured using quoted market prices or, in the absence of quoted market prices, based on an estimate of discounted cash flows, the expected net sale proceeds compared to the other similarly configured fleet units we recently sold or a review of other units recently offered for sale by third parties, or the estimated component value of the equipment we plan to use.

Refer to Note 5 for more detailed information about impairment charges during the three months ended March 31, 2022 and 2021.

Refer to Note 5 for more detailed information about impairment charges during the three and six months ended June 30, 2022 and 2021.

Identifiable Intangible Assets

4 unchanged sentences

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

Revenue is measured at 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.

3 unchanged sentences

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

USA Compression Finance Corp.

Texas also imposes on partnerships an entity-level income tax that is based on Texas sourced taxable margin (the “Texas Margin Tax”) and such tax impacts are included in the unaudited condensed consolidated financial statements.

Our wholly owned finance subsidiary, USA Compression Finance Corp.

(“Finance Corp”), is a corporation for U.S.

federal and state income tax purposes and such tax impacts are included in the accompanying unaudited condensed consolidated financial statements.

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 unaudited condensed consolidated financial statements a provision for the Texas Margin Tax.

federal and state income tax purposes and such tax impacts, if any, are also included in the unaudited condensed consolidated financial statements.

Pass Through Taxes

8 unchanged sentences

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

As of March 31, 2022, our financial instruments consisted primarily of cash and cash equivalents, trade accounts receivable, trade accounts payable and long-term debt.

As of June 30, 2022, our financial instruments consisted primarily of cash and cash equivalents, trade accounts receivable, trade accounts payable and long-term debt.

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

10 unchanged sentences

(3) Trade Accounts Receivable

The allowance for credit losses, which was $ 1.5 million and $ 2.1 million as of March 31, 2022 and December 31, 2021, respectively, is our best estimate of the amount of probable credit losses included in our existing accounts receivable.

The allowance for credit losses, which was $ 1.3 million and $ 2.1 million as of June 30, 2022 and December 31, 2021, respectively, is our best estimate of the amount of probable credit losses included in our existing accounts receivable.

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

3 unchanged sentences

Writeoffs charged against the allowance ( 103 )

Balance as of March 31, 2022 $ 1,493

For the three months ended March 31, 2022, we recognized a reversal of $ 0.5 million of our provision for expected credit losses.

Improved market conditions for customers due to higher commodity prices was the primary factor contributing to the decrease to the allowance for credit losses for the three months ended March 31, 2022.

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

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

Balance as of June 30, 2022 $ 1,254

For the three and six months ended June 30, 2022, we recognized reversals of $ 0.2 million and $ 0.7 million, respectively, of our provision for expected credit losses.

Favorable market conditions for customers due to higher commodity prices was the primary factor contributing to the decrease to the allowance for credit losses for the three and six months ended June 30, 2022.

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

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

(4) Inventories

23 unchanged sentences

Leasehold improvements 5 years

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

Three Months Ended March 31,

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

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

2022 2021 2022 2021

Depreciation expense $ 51,614 $ 51,882 $ 103,334 $ 105,567

Gain on disposition of assets 179 1,255

Loss (gain) on disposition of assets 1,031 ( 1,105 ) 852 ( 2,360 )

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

For the three months ended March 31, 2022 and 2021 , we determined to retire 10 and 12 compressor units, respectively, for a total of approximately 1,400 and 5,600 horsepower, respectively, that were previously used to provide compression services in our business.

As a result, we recorded impairments of compression equipment of $ 0.4 million and $ 2.6 million for the three months ended March 31, 2022 and 2021 , respectively.

For the six months ended June 30, 2022, we determined to retire 10 compressor units for a total of approximately 1,400 horsepower that were previously used to provide compression services in our business.

As a result, we recorded an impairment of compression equipment of $ 0.4 million for the six months ended June 30, 2022.

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

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

The primary causes for these impairments were:

1 unchanged sentence

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

No impairment was recorded for the three months ended June 30, 2022.

Identifiable Intangible Assets

3 unchanged sentences

Amortization expense ( 13,052 ) ( 1,637 ) ( 14,689 )

Net balance as of March 31, 2022 $ 270,322 $ 26,745 $ 297,067

Accumulated amortization of intangible assets was $ 253.6 million and $ 246.3 million as of March 31, 2022 and December 31, 2021, respectively.

Net balance as of June 30, 2022 $ 263,796 $ 25,926 $ 289,722

Accumulated amortization of intangible assets was $ 260.9 million and $ 246.3 million as of June 30, 2022 and December 31, 2021, respectively.

(6) Other Current Liabilities

3 unchanged sentences

Accrued interest expense 31,951 30,850

Accrued payroll and benefits 10,518 8,054

Accrued unit-based compensation liability 17,591 13,280

Accrued capital expenditures 14,544 3,521

________________________________

2 unchanged sentences

Lessor Accounting

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

In 2014, we granted a bargain purchase option to a customer with respect to certain compressor packages leased to the customer.

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

Prior to the customer exercising its bargain purchase option during the second quarter of 2021, revenue and interest income related to the lease was recognized over the lease term.

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

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

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

Maintenance revenue and interest income for the three months ended March 31, 2021 were $ 0.3 million and $ 0.1 million, respectively.

Maintenance revenue and interest income for the six months ended June 30, 2021 were $ 0.3 million and $ 0.1 million, respectively.

(8) Long-term Debt

10 unchanged sentences

The Partnership's obligations under the Credit Agreement are guaranteed by the guarantors party to the Credit Agreement, which currently consists of all of the Partnership's subsidiaries.

In addition, 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 party to the Credit Agreement, excluding real property and other customary exclusions;

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

restricted subsidiaries (subject to customary exceptions).

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.

As of March 31, 2022, we had outstanding borrowings under the Credit Agreement of $ 565.5 million, $ 1.0 billion of borrowing base availability and, subject to compliance with the applicable financial covenants, available borrowing capacity of $ 224.4 million.

Our weighted-average interest rate in effect for all borrowings under the Credit Agreement as of March 31, 2022 was 3.17 %, with a weighted-average interest rate of 2.84 % for the three months ended March 31, 2022.

There were no letters of credit issued as of March 31, 2022.

As of June 30, 2022, we had outstanding borrowings under the Credit Agreement of $ 558.7 million, $ 1.0 billion of borrowing base availability and, subject to compliance with the applicable financial covenants, available borrowing capacity of $ 360.9 million.

Our weighted-average interest rate in effect for all borrowings under the Credit Agreement as of June 30, 2022 was 4.13 %, with a weighted-average interest rate of 3.21 % for the six months ended June 30, 2022.

There were no letters of credit issued as of June 30, 2022.

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

5 unchanged sentences

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.

As of March 31, 2022, we were in compliance with all of our covenants under the Credit Agreement.

As of June 30, 2022, we were in compliance with all of our covenants under the Credit Agreement.

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

4 unchanged sentences

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

As of March 31, 2022, we were in compliance with such financial covenants under the 2026 Indenture.

As of June 30, 2022, we were in compliance with such financial covenants under the 2026 Indenture.

The Senior Notes 2026 are fully and unconditionally guaranteed (the “2026 Guarantees”), jointly and severally, on a senior unsecured basis by all of our 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”).

6 unchanged sentences

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

As of March 31, 2022, we were in compliance with such financial covenants under the 2027 Indenture.

As of June 30, 2022, we were in compliance with such financial covenants under the 2027 Indenture.

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

2 unchanged sentences

We have no assets or operations independent of our subsidiaries, and there are no significant restrictions upon our ability to obtain funds from our subsidiaries by dividend or loan.

Each of the Guarantors is 100 % owned by us.

Each of the Guarantors and Finance Corp is 100 % owned by us.

None of the assets of our subsidiaries represent restricted net assets pursuant to Rule 4-08(e)(3) of Regulation S-X under the Securities Act.

(9) Preferred Units

We had 500,000 Preferred Units outstanding as of March 31, 2022 and December 31, 2021, respectively, with a face value of $ 1,000 per Preferred Unit.

We had 500,000 Preferred Units outstanding as of June 30, 2022 and December 31, 2021, respectively, with a face value of $ 1,000 per Preferred Unit.

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

8 unchanged sentences

February 4, 2022 $ 24.375

May 6, 2022 24.375

2022 total distributions

Announced Quarterly Distribution

On April 14, 2022, we declared a cash distribution of $ 24.375 per unit on our Preferred Units.

The distribution will be paid on May 6, 2022 to the holders of the Preferred Units of record as of the close of business on April 25, 2022.

On July 14, 2022, we declared a cash distribution of $ 24.375 per unit on our Preferred Units.

The distribution will be paid on August 5, 2022 to the holders of the Preferred Units of record as of the close of business on July 25, 2022.

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

3 unchanged sentences

Cash distributions on Preferred Units ( 24,375 )

Balance as of March 31, 2022 $ 477,309

Balance as of June 30, 2022 $ 477,309

Redemption and Conversion Features

4 unchanged sentences

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

(10) Partners’ Capital

(10) Partners’ Capital (Deficit)

The change in common units outstanding was as follows:

2 unchanged sentences

Issuance of common units under the DRIP 61,700

Number of units outstanding as of March 31, 2022 97,377,355

As of March 31, 2022, Energy Transfer held 46,056,228 common units, including 8,000,000 common units held by the General Partner and controlled by Energy Transfer.

Exercise and conversion of warrants into common units 534,308

Number of units outstanding as of June 30, 2022 97,940,715

As of June 30, 2022, Energy Transfer held 46,056,228 common units, including 8,000,000 common units held by the General Partner and controlled by Energy Transfer.

Cash Distributions

8 unchanged sentences

February 4, 2022 $ 0.525 $ 51.1 $ 1.2 $ 52.3

May 6, 2022 0.525 51.1 1.2 52.3

2022 total distributions

$ 1.05 $ 102.2 $ 2.4 $ 104.6

Announced Quarterly Distribution

On April 14, 2022, we announced a cash distribution of $ 0.525 per unit on our common units.

The distribution will be paid on May 6, 2022 to common unitholders of record as of the close of business on April 25, 2022.

During the three months ended March 31, 2022, distributions of $ 0.5 million were reinvested under the DRIP resulting in the issuance of 32,648 common units.

As of March 31, 2022 and December 31, 2021, we had two tranches of warrants outstanding, which includes warrants to purchase (i) 5,000,000 common units with a strike price of $ 17.03 per common unit and (ii) 10,000,000 common units with a strike price of $ 19.59 per common unit (collectively, the “Warrants”).

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

On July 14, 2022, we announced a cash distribution of $ 0.525 per unit on our common units.

The distribution will be paid on August 5, 2022 to common unitholders of record as of the close of business on July 25, 2022.

During the six months ended June 30, 2022, distributions of $ 1.0 million were reinvested under the DRIP resulting in the issuance of 61,700 common units.

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

On April 27, 2022, the tranche of Warrants with the right to purchase 5,000,000 common units with a strike price of $ 17.03 per common unit was exercised in full by the holders.

The exercise of the warrants was net settled by the Partnership for 534,308 common units.

As of June 30, 2022, the tranche of Warrants with the right to purchase 10,000,000 common units with a strike price of $ 19.59 per common unit was outstanding and may be exercised by the holders at any time before April 2, 2028.

Loss Per Unit

4 unchanged sentences

Diluted loss per unit is computed using the treasury stock method, which considers the potential issuance of limited partner units associated with our long-term incentive plan and Warrants.

Unvested phantom units and unexercised Warrants are not included in basic loss per unit, as they are not considered to be participating securities, but are included in the calculation of diluted loss per unit to the extent they are dilutive, and in the case of Warrants to the extent that they were considered “in the money.”

For the three months ended March 31, 2022, approximately 803,000 and 13,000 incremental unvested phantom units and “in the money” outstanding Warrants, respectively, were excluded from the calculation of diluted loss per unit because the impact was anti-dilutive.

Our outstanding Warrants not “in the money” were excluded from the calculation for the three months ended March 31, 2022.

For the three months ended March 31, 2021, approximately 710,000 incremental unvested phantom units were excluded from the calculation of diluted loss per unit because the impact was anti-dilutive, and our outstanding Warrants were no t included in the computation as they are not considered “in the money” for the period.

For the three and six months ended June 30, 2022, approximately 1,051,000 and 928,000 incremental unvested phantom units, respectively, were excluded from the calculation of diluted loss per unit because the impact was anti-dilutive.

For the three and six months ended June 30, 2022, approximately 157,000 and 85,000 incremental “in the money” outstanding Warrants, respectively, were excluded from the calculation of diluted loss per unit because the impact was anti-dilutive.

For the three and six months ended June 30, 2021, approximately 803,000 and 757,000 incremental unvested phantom units, respectively, were excluded from the calculation of diluted loss per unit because the impact was anti-dilutive, and our then-outstanding Warrants were not included in the computation as they were not considered “in the money” for either period.

(11) Revenue Recognition

1 unchanged sentence

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

Three Months Ended March 31,

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

2022 2021 2022 2021

Contract operations revenue $ 167,853 $ 154,733 $ 329,339 $ 310,202

2 unchanged sentences

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

Three Months Ended March 31,

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

2022 2021 2022 2021

Services provided over time:

6 unchanged sentences

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

We had no contract assets as of March 31, 2022 and December 31, 2021.

We had no contract assets as of June 30, 2022 and December 31, 2021.

Deferred Revenue

1 unchanged sentence

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

Balance sheet location March 31,

Balance sheet location June 30,

2022 December 31,

3 unchanged sentences

________________________________

(1) We recognized $ 42.1 million of revenue during the three months ended March 31, 2022 related to our deferred revenue balance as of December 31, 2021.

(1) We recognized $ 2.9 million and $ 45.0 million of revenue during the three and six months ended June 30, 2022, respectively, related to our deferred revenue balance as of December 31, 2021.

Performance Obligations

As of March 31, 2022, the aggregate amount of transaction price allocated to unsatisfied performance obligations related to our contract operations revenue was $ 437.3 million.

As of June 30, 2022, the aggregate amount of transaction price allocated to unsatisfied performance obligations related to our contract operations revenue was $ 505.6 million.

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

3 unchanged sentences

(12) Transactions with Related Parties

We provide compression services to entities affiliated with Energy Transfer, which as of March 31, 2022 owned approximately 47 % of our limited partner interests and 100 % of the General Partner.

We provide compression services to entities affiliated with Energy Transfer, which as of June 30, 2022 owned approximately 47 % of our limited partner interests and 100 % of the General Partner.

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

Three Months Ended March 31,

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

2022 2021 2022 2021

Related party revenues $ 3,887 $ 2,944 $ 7,705 $ 5,894

We had approximately $ 201,000 and $ 18,000 within related party receivables on our unaudited condensed consolidated balance sheets as of March 31, 2022 and December 31, 2021, respectively, from such affiliated Energy Transfer entities.

Additionally, the Partnership had a $ 44.9 million related party receivable from Energy Transfer as of March 31, 2022 and December 31, 2021 related to indemnification for sales tax contingencies.

We had approximately $ 997,000 and $ 18,000 within related party receivables on our unaudited condensed consolidated balance sheets as of June 30, 2022 and December 31, 2021, respectively, from such affiliated Energy Transfer entities.

Additionally, the Partnership had a $ 44.9 million related party receivable from Energy Transfer as of June 30, 2022 and December 31, 2021 related to indemnification for sales tax contingencies.

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

1 unchanged sentence

(a) Major Customers

We did not have revenue from any single customer representing 10% or more of total revenue for the three months ended March 31, 2022 or 2021.

We did not have revenue from any single customer representing 10% or more of total revenue for the three and six months ended June 30, 2022 or 2021.

(b) Litigation

3 unchanged sentences

Our future capital commitments are comprised of binding commitments under purchase orders for new compression units ordered but not received.

The commitments as of March 31, 2022 were $ 60.8 million, all of which is expected to be settled within the next twelve months and $ 40.1 million of which we expect to settle in the remainder of 2022.

The commitments as of June 30, 2022 were $ 53.2 million, all of which is expected to be settled within the next twelve months and $ 24.2 million of which is expected to be settled in the remainder of 2022.

(d) Sales Tax Contingencies

5 unchanged sentences

We estimate that the range of losses we could incur is from $ 0 to approximately $ 19.5 million, including penalty and interest.

As of March 31, 2022 and December 31, 2021, 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.

For more information, see Note 16 to the consolidated financial statements included in our 2021 Annual Report.

(14) Subsequent Event

On April 27, 2022, the tranche of warrants with the right to purchase 5,000,000 common units with a strike price of $ 17.03 per common unit was exercised in full by the holders.

The exercise of the warrants was net settled by the Partnership for 534,308 common units.

As of June 30, 2022 and December 31, 2021, 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.

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

What changed 10-Q

Item 1. Financial Statements