What changed in this filing

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Item 1. Business

2023-02-14 compared with 2022-02-15 · 91 added, 93 removed, 201 unchanged (48% of the section changed)

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As such, our compression services play a critical role in the production, processing, and transportation of both natural gas and crude oil.

We 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.

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

Demand for our services is driven by the domestic production of natural gas and crude oil.

As such, we have focused our activities in areas of attractive natural gas and crude oil production, which are generally found in these shale and unconventional resource plays.

As such, we have focused our activities in areas with attractive natural gas and crude oil production, which generally are found in these shale and unconventional resource plays.

According to studies promulgated by the EIA, the production and transportation volumes in these shale plays are expected to collectively increase over the long term.

Furthermore, the changes in production volumes and pressures of shale plays over time require a wider range of compression than in conventional basins.

We believe we are well-positioned to meet these changing operating conditions due to the operational design flexibility inherit in our compression units.

While our business focuses largely on compression services serving infrastructure applications, including centralized natural gas gathering systems and processing facilities, which utilize large horsepower compression units, typically in shale plays, we also provide compression services in more mature conventional basins, including gas lift applications on crude oil wells targeted by horizontal drilling techniques.

Gas lift, a process by which natural gas is injected into the production tubing of an existing producing well, in order to reduce the hydrostatic pressure and allow the oil to flow at a higher rate, and other artificial lift technologies are critical to the enhancement of oil production from horizontal wells operating in tight shale plays.

We operate a modern fleet of compression units, with an average age of approximately nine years.

Furthermore, changes in production volumes and pressures of shale plays over time require a wider range of compression service levels than in conventional basins.

We believe we are well-positioned to meet these changing operating conditions due to the operational design flexibility inherit within our compression-unit fleets.

Our business largely focuses on compression services serving infrastructure applications, including centralized natural gas gathering systems and processing facilities, which utilize large horsepower compression units, typically in shale plays.

We also provide compression services in more mature basins, including gas lift applications on crude oil wells targeted by horizontal drilling techniques.

Gas lift is a process by which natural gas is injected into the production tubing of an existing producing well to reduce hydrostatic pressure and allow the oil to flow at a higher rate.

This process, and other artificial-lift technologies are critical to the enhancement of oil production from horizontal wells operating in tight shale plays.

We operate a modern fleet of compression units, with an average age of approximately 11 years.

We acquire our compression units from third-party fabricators who build the units to our specifications, utilizing specific components from original equipment manufacturers and assembling the units in a manner that provides us the ability to meet certain operating condition thresholds.

Our standard new-build compression units are generally configured for multiple compression stages allowing us to operate our units across a broad range of operating conditions.

Our standard new-build compression units generally are configured for multiple compression stages, which allows us to operate our units across a broad range of operating conditions.

The design flexibility of our units, particularly in midstream applications, allows us to enter into longer-term contracts and reduces the redeployment risk of our horsepower in the field.

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The compression units in our modern fleet are designed to be easily adaptable to fit our customers’ changing compression requirements.

Focusing on the needs of our customers and providing them with reliable and flexible compression services in geographic areas of attractive production helps us to generate stable cash flows for our unitholders.

We provide compression services to our customers under fixed-fee contracts with initial contract terms typically between six months and five years, depending on the application and location of the compression unit.

We provide compression services to our customers under fixed-fee contracts with initial contract terms that typically range from six months to five years, depending on the application and location of the compression unit.

We typically continue to provide compression services at a specific location beyond the initial contract term, either through contract renewal or on a month-to-month or longer basis.

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We provide compression services to major oil companies and independent producers, processors, gatherers and transporters of natural gas and crude oil.

Regardless of the application for which our services are provided, our customers rely upon the availability of the equipment used to provide compression services and our expertise to maximize the throughput of product, reduce fuel costs and minimize emissions.

Our customers may have compression demands in conjunction with their field development projects in areas of the U.S.

Regardless of the application for which our services are provided, our customers rely on the availability of the equipment used to provide compression services and our expertise to maximize the throughput of product, reduce fuel costs and minimize emissions.

Our customers may have compression demands in conjunction with their field

development projects in areas of the U.S.

where we are not currently operating, and we continually consider further expansion of our geographic areas of operation in the U.S.

based upon the level of customer demand.

Our modern, flexible fleet of

compression units, which have been designed to be rapidly deployed and redeployed throughout the country, provides us with opportunities to expand into other areas with both new and existing customers.

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

Our assets and operations are organized into a single reportable segment and are all located and conducted in the U.S.

Our modern, flexible fleet of compression units, which have been designed to be rapidly deployed and redeployed throughout the country, provides us with opportunities to expand into other areas with both new and existing customers.

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

Our assets and operations are organized into a single reportable segment and all are located and operated within the U.S.

See our consolidated financial statements, and the notes thereto, in Part II, Item 8 “Financial Statements and Supplementary Data” for financial information on our operations and assets;

such information is incorporated herein by reference.

Recent Developments

Seventh Amended and Restated Credit Agreement

On December 8, 2021, we amended and restated our existing credit agreement by entering into the Credit Agreement which, among other things, extended the maturity of our revolving credit facility until 2026, as described further in Part II, Item 7 “Management’s Discussion and Analysis of Financial Condition and Results of Operations – Liquidity and Capital Resources – Revolving Credit Facility.”

Beginning in the first quarter of 2020, the COVID-19 pandemic prompted several states and municipalities in which we operate to take extraordinary and wide-ranging actions to contain and combat the outbreak and spread of the virus, including mandates for many individuals to substantially restrict daily activities and for many businesses to curtail or cease normal operations.

These mandates and restrictions have varied across jurisdictions and, over time, have been rescinded and reinstated as the severity of the pandemic fluctuated.

For as long as COVID-19 continues or worsens, governments may impose additional similar restrictions or reinstate previously lifted ones.

To date, our field operations have continued largely uninterrupted as the U.S.

Department of Homeland Security designated our industry part of our country’s critical infrastructure.

Thus far, remote work and other COVID-19 related conditions have not significantly impacted our ability to maintain operations or caused us to incur significant additional expenses;

however, we are unable to predict the duration or ultimate impact of current and potential future COVID-19 mitigation measures.

Our Operations

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In certain instances, we also engineer, design, install, operate, service, and repair certain ancillary equipment used in conjunction with our compression services.

We have consistently provided average service run times at or above the levels required by our customers.

In general, our team of field service technicians services only our compression fleet and ancillary equipment.

We consistently have provided average service run times at or above the levels required by our customers.

In general, our team of field technicians services only our compression fleet and ancillary equipment.

In limited circumstances, and for established customers, we will agree to service third-party owned equipment.

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Our units can be rapidly and cost effectively modified for specific customer applications.

As of December 31, 2021, the average age of our compression units was approximately nine years.

As of December 31, 2022, the average age of our compression units was approximately 11 years.

Our modern, standardized compression unit fleet is powered primarily by the Caterpillar 3400, 3500, and 3600 engine classes, which range from 401 to 5,000 horsepower per unit.

These larger-horsepower units, which we define as 400 horsepower per unit or greater, represented 87.1% of our total fleet horsepower (including compression units on order) as of December 31, 2022.

The remainder of our fleet consists of smaller horsepower units ranging from 40 horsepower to 399 horsepower that are primarily used in gas lift applications.

The remainder of our fleet consists of smaller-horsepower units ranging from 40 horsepower to 399 horsepower that are used primarily in gas lift applications.

We believe the average age and overall composition of our compressor fleet result in fewer mechanical failures, lower fuel usage, and reduced environmental emissions.

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(1) As of December 31, 2022, we had 66 large horsepower units, consisting of 165,000 horsepower, on order for delivery during 2023.

Subsequent to December 31, 2021, we ordered an additional 20 large horsepower units, consisting of 50,000 horsepower, on order for delivery during 2022.

Many of our compression units contain devices that enable us to monitor the units remotely through cellular and satellite networks to supplement our technicians’ on-site monitoring visits.

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Each of our compression units is subjected to rigorous sizing and diagnostic analyses, including lubricating oil analysis and engine exhaust emission analysis.

We have proprietary field service automation capabilities that allow our service technicians to electronically record and track operating, technical, environmental and commercial information at the discrete unit level.

We have proprietary field-service automation capabilities that allow our service technicians to electronically record and track operating,

technical, environmental, and commercial information at the discrete unit level.

These capabilities allow our field technicians to identify potential problems and often act on them before such problems result in down-time.

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A major overhaul involves the periodic rebuilding of the unit to materially extend its economic useful life or to enhance the unit’s ability to fulfill broader or more diversified compression applications.

Because our compression fleet is comprised of units of varying horsepower that have been placed into service with staggered initial on-line dates, we are able to schedule overhauls in a way that avoids excessive annual maintenance capital expenditures and minimizes the revenue impact of down-time.

We believe that our customers, by outsourcing their compression requirements, can achieve higher compression run-times, which translates into increased volumes of either natural gas or crude oil production and, therefore, increased revenues.

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This ongoing communication allows us to quickly identify and respond to our customers’ compression requirements.

Our customers consist of more than 275 companies in the energy industry, including major integrated oil companies, public and private independent exploration and production companies, and midstream companies.

Our ten largest customers accounted for approximately 39%, 35% and 33% of our revenue for the years ended December 31, 2021, 2020 and 2019, respectively.

Our customers consist of approximately 275 companies in the energy industry, including major integrated oil companies, public and private independent exploration and production companies, and midstream companies.

Our ten largest customers accounted for approximately 38%, 39%, and 35% of our total revenues for the years ended December 31, 2022, 2021, and 2020, respectively.

Suppliers and Service Providers

The principal manufacturers of components for our natural gas compression equipment include Caterpillar, Inc., Cummins Inc., and Arrow Engine Company for engines, Air-X-Changers and Alfa Laval (US) for coolers, and Ariel Corporation, Cooper Machinery Services Gemini products and Arrow Engine Company for compressor frames and cylinders.

We also rely primarily

on four vendors, A G Equipment Company, Alegacy Equipment, LLC, Standard Equipment Corp.

and Genis Holdings LLC, to package and assemble our compression units.

Although we rely primarily on these suppliers, we believe alternative sources for natural gas compression equipment are generally available if needed.

The principal manufacturers of components for our natural gas compression equipment include Caterpillar Inc., Cummins Inc., and Arrow Engine Company for engines;

Air-X-Changers and Alfa Laval (US) for coolers;

and Ariel Corporation, Cooper Machinery Services Gemini products, and Arrow Engine Company for compressor frames and cylinders.

We also rely primarily on four vendors, A G Equipment Company, Alegacy Equipment, LLC., Standard Equipment Company, and Genis Holdings LLC, to package and assemble our compression units.

Although we primarily rely on these suppliers, we believe alternative sources for natural gas compression equipment generally are available if needed.

However, relying on alternative sources may increase our costs and change the standardized nature of our fleet.

We have not experienced any material supply problems to date.

Although lead-times for new Caterpillar engines and new Ariel compressor frames have in the recent past varied between six months and one year due to changes in demand and supply allocations, as of December 31, 2021, lead-times for such engines and frames are slightly less than one year.

Although lead-times for new Caterpillar engines and new Ariel compressor frames have in the recent past varied between six months and one year due to changes in demand and supply allocations, as of December 31, 2022, lead-times for such engines and frames are slightly more than one year.

Please read Part I, Item 1A “Risk Factors – Risks Related to Our Business – We depend on a limited number of suppliers and are vulnerable to product shortages and price increases, which could have a negative impact on our results of operations”.

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On a regional basis, we experience competition from numerous smaller companies that may be able to more quickly adapt to changes within our industry and changes in economic conditions as a whole, more readily take advantage of available opportunities, and adopt more aggressive pricing policies.

Additionally, the historical availability of attractive financing terms from financial institutions and equipment manufacturers has made the purchase of individual compression units affordable to our customers.

We believe that we compete effectively on the basis of price, equipment availability, customer service, flexibility in meeting customer needs, quality and reliability of our compressors, and related services.

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Compliance with these environmental laws and regulations may expose us to significant costs and liabilities and cause us to incur significant capital expenditures in our operations.

We are often obligated to provide information to customers in obtaining permits or approvals in our operations from various federal, state and local authorities.

We often are obligated to provide information to customers in obtaining permits or approvals in our operations from various federal, state, and local authorities.

Permits and approvals can be denied or delayed, which may cause us to lose potential and current customers, interrupt our operations, and limit our growth and revenue.

Moreover, failure to comply with these laws and regulations may result in the assessment of administrative, civil, and criminal penalties, imposition of remedial obligations, and the issuance of injunctions delaying or prohibiting operations.

Private parties may also have the right to pursue legal actions to enforce compliance as well as to seek damages for non-compliance with environmental laws and regulations or for personal injury or property damage.

Private parties also may have the right to pursue legal actions to enforce compliance as well as to seek damages for non-compliance with environmental laws and regulations or for personal injury or property damage.

While we believe that our operations are in substantial compliance with applicable environmental laws and regulations and that continued compliance with current requirements would not have a material adverse effect on us, we cannot predict whether our cost of compliance will materially increase in the future.

Any changes in, or more stringent enforcement of, existing environmental laws and regulations, or passage of additional environmental laws and regulations that result in more stringent and costly pollution control equipment, waste handling, storage, transport, disposal, or remediation requirements could have a material adverse effect on our operations and financial position.

We do not believe that compliance with current federal, state or local laws and regulations will have a material adverse effect on our business, financial position or results of operations or cash flows.

We do not believe that compliance with current federal, state, or local laws and regulations will have a material adverse effect on our business, financial position, results of operations, or cash flows.

We cannot assure you, however, that future events such as changes in existing laws or regulations or enforcement policies, the promulgation of new laws or regulations, or the development or discovery of new facts or conditions or unforeseen incidents will not cause us to incur significant costs.

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Any such determinations could have the effect of making projects more costly than our customers expected and could require the installation of more costly emissions controls, which may lead some of our customers not to pursue certain projects.

Increased obligations of operators to reduce air emissions of nitrogen oxides and other pollutants from internal combustion engines in transmission service have been enacted by governmental authorities.

Increased obligations of operators to reduce air emissions of nitrogen oxides and other pollutants from internal combustion engines in transmission service have been imposed by governmental authorities.

For example, in 2010, the U.S.

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In recent years, the EPA has lowered the National Ambient Air Quality Standards (“NAAQS”) for several air pollutants.

For example, in 2015, the EPA finalized a rule strengthening the primary and secondary standards for ground level ozone, both of which are 8-hour concentration standards of 70 parts per billion.

For example, in 2015, the EPA finalized a rule strengthening the primary and secondary standards for ground-level ozone, both of which are eight-hour concentration standards of 70 parts per billion (the “2015 NAAQS”).

In December 2020, the EPA announced its decision to retain, without changes, the 2015 NAAQS.

After the EPA revises a NAAQS standard, the states are expected to establish revised attainment/non-attainment regions.

State implementation of the 2015 NAAQS could result in stricter permitting requirements, delay or prohibit our customers’ ability to obtain such permits, and result in increased expenditures for pollution control equipment, which could impact our customers’ operations, increase the cost of additions to property, plant, and equipment, and negatively impact our business.

State implementation of the 2015 NAAQS could result in stricter permitting requirements, delay, or prohibit our customers’ ability to obtain such permits, and result in increased expenditures for pollution-control equipment, which could impact our customers’ operations, increase the cost of additions to property and equipment, and negatively impact our business.

In 2012, the EPA finalized rules that establish new air emissions controls for oil and natural gas production and natural gas processing operations.

Specifically, the EPA’s rule package included New Source Performance Standards to address emissions of sulfur dioxide and volatile organic compounds (“VOCs”) and a separate set of emissions standards to address hazardous air pollutants frequently associated with oil and natural gas production and processing activities.

Specifically, the EPA’s rule package included New Source Performance Standards (“NSPS”) to address emissions of sulfur dioxide and volatile organic compounds (“VOCs”) and a separate set of emissions standards to address hazardous air pollutants frequently associated with crude oil and natural gas production and processing activities.

The rules established specific new requirements regarding emissions from compressors and controllers at natural gas processing plants, dehydrators, storage tanks, and other production equipment, as well as the first federal air standards for natural gas wells that are hydraulically fractured.

In June 2016, the EPA took steps to expand on these regulations when it published New Source Performance Standards, known as Subpart OOOOa, that required certain new, modified or reconstructed facilities in the oil and natural gas sector to reduce methane gas and VOC emissions.

These Subpart OOOOa standards expanded the 2012 New Source Performance Standards by using certain equipment-specific emissions control practices, requiring additional controls for pneumatic controllers and pumps as well as compressors, and imposing leak detection and repair requirements for natural gas compressor and booster stations.

In June 2016, the EPA expanded these regulations when it published additional NSPS, known as Subpart OOOOa, that require certain new, modified, or reconstructed facilities in the oil and gas sector to reduce methane gas and VOC emissions.

These Subpart OOOOa standards expanded the 2012 NSPS by mandating certain equipment-specific emissions control practices, requiring additional controls for pneumatic controllers and pumps as well as compressors, and imposing leak detection and repair requirements for natural gas compressor and booster stations.

In addition, in November 2021, the EPA proposed a rule to further reduce methane and VOC emissions from new and existing sources in the oil and gas sector.

In November 2022, the EPA issued a supplemental proposal to expand its November 2021 proposed rule.

Any additional regulation of air emissions from the oil and gas sector could result in increased expenditures for pollution control equipment, which could impact our customers’ operations and negatively impact our business.

We are also subject to air regulation at the state level.

We also are subject to air regulation at the state level.

For example, the Texas Commission on Environmental Quality (“TCEQ”) has finalized revisions to certain air permit programs that significantly increase the air permitting requirements for new and certain existing oil and gas production and gathering sites for 15 counties in the Barnett Shale production area.

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The cost to comply with the revised air permit programs is not expected to be material at this time.

However, the TCEQ has stated it will consider

expanding application of the new air permit program statewide.

However, the TCEQ has stated it will consider expanding application of the new air permit program statewide.

At this point, we cannot predict the cost to comply with such requirements if the geographic scope is expanded.

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At the federal level, the government could seek to pursue legislative, regulatory, or executive initiatives that may impose significant restrictions on fossil-fuel exploration and production and use, such as limitations or bans on hydraulic fracturing of oil and gas wells, bans or restrictions on new leases for production of minerals on federal properties, and imposing restrictive requirements on new pipeline infrastructure or fossil-fuel export facilities.

Other energy legislation and initiatives could include a carbon tax, methane fee or cap and trade program.

The Inflation Reduction Act of 2022 (the “IRA 2022”) imposes a methane emissions charge on certain oil and gas facilities, including onshore petroleum and natural gas production facilities, that emit 25,000 metric tons or more of carbon dioxide equivalent gas per year and exceed certain emissions thresholds.

While specific rules and regulations under the IRA 2022 have yet to be released, we do not believe that this methane fee will have a material adverse effect on our business, financial position, results of operations, or cash flows.

Other energy legislation and initiatives could include a carbon tax or cap-and-trade program.

At the state level, many states, including the states in which we or our customers conduct operations, have adopted legal requirements that have imposed new or more stringent permitting, disclosure, or well construction requirements on oil and gas activities.

Further, although Congress has not passed such legislation, almost half of the states have begun to address GHG emissions, primarily through the planned development of emissions inventories or regional GHG cap and trade programs.

In addition, almost half of the states have begun to address GHG emissions, primarily through the planned development of emissions inventories or regional GHG cap-and-trade programs.

Depending on the particular program, we could be required to control GHG emissions or to purchase and surrender allowances for GHG emissions resulting from our operations.

Independent of Congress, the EPA undertook to adopt regulations controlling GHG emissions under its existing CAA authority.

For example, in 2009, the EPA officially published its findings that emissions of carbon dioxide, methane and other GHGs endanger human health and the environment, allowing the agency to proceed with the adoption of regulations that restrict emissions of GHG under existing provisions of the CAA.

In 2009 and 2010, the EPA adopted rules regarding regulation of GHG emissions from motor vehicles and requiring the reporting of GHG emissions in the U.S.

Independent of the U.S.

Congress, the EPA undertook to adopt regulations controlling GHG emissions under its existing CAA authority.

For example, in 2009, the EPA officially published its findings that emissions of carbon dioxide, methane, and

other GHGs endanger human health and the environment, allowing the agency to proceed with the adoption of regulations that restrict emissions of GHG under existing provisions of the CAA.

In 2009 and 2010, the EPA adopted rules regarding regulation of GHG emissions from motor vehicles and required the reporting of GHG emissions in the U.S.

from specified large GHG emissions sources, including petroleum and natural gas facilities such as natural gas transmission compression facilities that emit 25,000 metric tons or more of carbon dioxide equivalent per year.

In addition, from time to time, there have been various proposals to regulate hydraulic fracturing at the federal level.

Hydraulic fracturing involves the injection of water, sand and chemicals under pressure into the rock formation to stimulate gas production.

Hydraulic fracturing involves the injection of water, sand, and chemicals under pressure into the rock formation to stimulate oil and gas production.

Any limitations or bans on hydraulic fracturing at the federal level could increase the costs of operations for our customers who operate on federal land, and negatively impact our business.

Some states have also passed legislation or regulations regarding hydraulic fracturing.

Some states also have passed legislation or regulations regarding hydraulic fracturing.

For example, in 2019, Colorado passed Senate Bill 19-181, which delegates authority to local governments to regulate oil and gas activities and requires the Colorado Oil and Gas Conservation Commission to minimize emissions of methane and other air contaminants.

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Such delays, limitations, or prohibitions could result in decreased demand for our services.

Litigation risks are also increasing, as a number of cities, local governments and other plaintiffs have sued companies engaged in the exploration and production of fossil fuels in state and federal courts, alleging various legal theories to recover for the impacts of alleged global warming effects, such as rising sea levels.

Litigation risks also are increasing, as several cities, local governments, and other plaintiffs have sued companies engaged in the exploration and production of fossil fuels in state and federal courts, alleging various legal theories to recover for the impacts of alleged global warming effects, such as rising sea levels.

Many of these suits allege that the companies have been aware of the adverse effects of climate change for some time but defrauded their investors by failing to adequately disclose those impacts.

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At the international level, nearly 200 nations entered into an international climate agreement at the 2015 United Nations Framework Convention on Climate Change in Paris, under which participating countries did not assume any binding obligation to reduce future emissions of GHGs but instead pledged to voluntarily limit or reduce future emissions.

The Paris Agreement went into effect on November 4, 2016, and the United States formally rejoined in February 2021.

The United States has established an economy-wide target of reducing its net GHG emissions by 50-52 percent below 2005 levels in 2030 and achieving net zero GHG emissions economy-wide by no later than 2050.

The Paris Agreement went into effect on November 4, 2016, and the U.S.

formally rejoined in February 2021.

has established an economy-wide target of reducing its net GHG emissions by 50-52 percent below 2005 levels by 2030 and achieving net zero GHG emissions economy-wide by no later than 2050.

In addition, certain U.S.

city and state governments have announced their intention to satisfy their proportionate obligations under the Paris Agreement.

Although it is not currently possible to predict with specificity how any proposed or future GHG legislation, regulation, agreements or initiatives will impact our business, any legislation or regulation of GHG emissions that may be imposed in areas in which we conduct business or on the assets we operate, including a carbon tax, methane fee or cap and trade program, could result in increased compliance or operating costs or additional operating restrictions or reduced demand for our services, and

could have a material adverse effect on our business, financial condition and results of operations.

Notwithstanding potential risks related to climate change, the EIA estimates that oil and gas will continue to represent a major share of energy use through 2050.

Although it is not currently possible to predict with specificity how any proposed or future GHG legislation, regulation, agreements or initiatives will impact our business, any legislation or regulation of GHG emissions that may be imposed in areas in which we conduct business or on the assets we operate, including a carbon tax or cap-and-trade program, could result in increased compliance or operating costs, additional operating restrictions, or reduced demand for our services, and could have a material adverse effect on our business, financial condition, and results of operations.

Notwithstanding potential risks related to climate change, the EIA estimates that crude oil and natural gas will continue to represent a major share of energy use through 2050.

However, recent activism directed at shifting funding away from companies with energy-related assets could result in limitations or restrictions on certain sources of funding for the energy sector, which could have an adverse effect on our ability to obtain external financing.

Finally, it should be noted that some scientists have concluded that increasing concentrations of GHG in Earth’s atmosphere may produce climate changes that have significant weather-related effects, such as increased frequency and severity of storms, droughts, floods and other climatic events.

Finally, some scientists have concluded that increasing concentrations of GHG in Earth’s atmosphere may produce climate changes that have significant weather-related effects, such as increased frequency and severity of storms, droughts, floods, and other climatic events.

If any of those effects were to occur, they could have an adverse effect on our or our customers’ assets and operations, or result in increased cost or difficulty obtaining insurance.

Another possible consequence of climate change is increased volatility in seasonal temperatures.

The market for natural gas liquids (“NGLs”) and natural gas is generally impacted by periods of colder weather and warmer weather, so any changes in climate could affect the market for these fuels, and thus demand for our services.

The market for natural gas liquids (“NGLs”) and natural gas generally is impacted by periods of colder weather and warmer weather, so any changes in climate could affect the market for these fuels, and thus demand for our services.

Despite the use of the term “global warming” as a shorthand for climate change, some studies indicate that climate change could cause some areas to experience temperatures substantially colder than their historical averages.

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We recognize the need to decrease emissions and integrate alternative energy sources into our operations, and we actively pursue economically beneficial opportunities to reduce our environmental footprint.

To that end, we have been exploring the use of a dual-drive technology, which offers the ability to switch compression drivers between an electric motor and a natural gas engine, to reduce our emissions of nitrogen oxide, carbon monoxide, CO2 and VOCs.

To that end, we have continued the commercialization of dual-drive technology in our natural gas compression services, deploying our first compression units with dual-drive technology in the third quarter of 2022.

Dual-drive technology offers the ability to switch compression drivers between an electric motor and a natural gas engine, to reduce our emissions of nitrogen oxide, carbon monoxide, carbon dioxide, and VOCs.

Water discharge .

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In any event, our customers assume responsibility under the majority of our standard natural gas compression contracts for obtaining any permits that may be required under the CWA, whether for discharges or developing property by filling wetlands.

On December 7, 2021, the EPA and the U.S.

Army Corps of Engineers issued a proposed rule revising the standard for what constitutes jurisdictional waters and wetlands subject to the protections and requirements of the CWA.

Should the proposed rule be adopted or a different rule promulgated that expands the jurisdictional reach of the CWA, our customers could face increased costs and delays due to additional permitting and regulatory requirements and possible challenges to permitting decisions.

On January 18, 2023, the EPA and the U.S.

Army Corps of Engineers issued a final rule revising the standard for what constitutes jurisdictional waters and wetlands subject to the protections and requirements of the CWA.

Several lawsuits challenging the final rule have been filed in federal court.

In addition, the U.S.

Supreme Court has granted review of Sackett vs.

EPA , which involves issues related to CWA scope and jurisdiction.

The Court’s decision in Sackett , which is expected in the coming months, could impact the validity of the final rule and trigger further regulatory action.

Changes to the jurisdictional reach of the CWA could cause our customers to face increased costs and delays due to additional permitting and regulatory requirements, and possible challenges to permitting decisions.

Safe Drinking Water Act.

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Congress continues to consider legislation to amend the SDWA.

Several states have also proposed or adopted legislative or regulatory restrictions on hydraulic fracturing, including prohibitions on the practice.

Several states also have proposed or adopted legislative or regulatory restrictions on hydraulic fracturing, including prohibitions on the practice.

We cannot predict the future of such legislation and what additional, if any, provisions would be included.

If additional levels of regulation, restrictions and permits were required through the adoption of new laws and regulations at the federal or state level or if the agencies that issue the permits develop new interpretations of those requirements, that could lead to delays, increased operating costs and process prohibitions that could reduce demand for our compression services, which could materially adversely affect our revenue and results of operations.

If additional levels of regulation, restrictions, and permits were required through the adoption of new laws and regulations at the federal or state level, or if the agencies that issue the permits develop new interpretations of those requirements, it could lead to delays, increased operating costs, and process prohibitions that could reduce demand for our compression services, which could materially adversely affect our revenue and results of operations.

Site remediation .

The Comprehensive Environmental Response, Compensation, and Liability Act (“CERCLA”) and comparable state laws may impose strict, joint, and several liability without regard to fault or the legality of the original conduct on certain classes of persons that contributed to the release of a hazardous substance into the environment.

These persons include the owner and operator of a disposal site where a hazardous substance release occurred and any company that

transported, disposed of or arranged for the transport or disposal of hazardous substances released at the site.

These persons include the current and former owners and operators of the site where the hazardous substance release occurred and any company that transported, disposed of, or arranged for the transport or disposal of the hazardous substance released at the site.

Under CERCLA, such persons may be liable for the costs of remediating the hazardous substances that have been released into the environment, for damages to natural resources, and for the costs of certain health studies.

In addition, where contamination may be present, it is not uncommon for the neighboring landowners and other third parties to file claims for personal injury, property damage and recovery of response costs.

In addition, where contamination may be present, neighboring landowners and other third parties sometimes file claims for personal injury, property damage, and recovery of response costs.

While we generate materials in the course of our operations that may be regulated as hazardous substances, we have not received notification that we may be potentially responsible for cleanup costs under CERCLA at any site.

While we do not currently own or lease any material facilities or properties for storage or maintenance of our inactive compression units, we may use third party properties for such storage and possible maintenance and repair activities.

In addition, our active compression units typically are installed on properties owned or leased by third party customers and operated by us pursuant to terms set forth in the natural gas compression services contracts executed by those customers.

While we do not currently own or lease any material facilities or properties for storage or maintenance of our idle compression units, we may use third-party properties for such storage and possible maintenance and repair activities.

In addition, our revenue-generating compression units typically are installed on properties owned or leased by third-party customers and operated by us pursuant to terms set forth in the natural gas compression services contracts executed by those customers.

Under most of our natural gas compression services contracts, our customers must contractually indemnify us for certain damages we may suffer as a result of the release into the environment of hazardous and toxic substances.

We are not currently responsible for any remedial activities at any properties we use;

however, there is always the possibility that our future use of those properties may result in spills or releases of petroleum hydrocarbons, wastes or other regulated substances into the environment that may cause us to become subject to remediation costs and liabilities under CERCLA, the Resource Conservation and Recovery Act or other environmental laws.

however, there always is the possibility that our future use of those properties may result in spills or releases of petroleum hydrocarbons, wastes, or other regulated substances into the environment that may cause us to become subject to remediation costs and liabilities under CERCLA, the Resource Conservation and Recovery Act or other environmental laws.

We cannot provide any assurance that the costs and liabilities associated with the future imposition of such remedial obligations upon us would not have a material adverse effect on our operations or financial position.

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The Occupational Safety and Health Act (“OSHA”) and comparable state laws strictly govern the protection of the health and safety of employees.

The OSHA hazard communication standard, the EPA community right-to-know regulations under Title III of CERCLA and similar state statutes require that we organize and, as necessary, disclose information about hazardous materials used or produced in our operations to various federal, state and local agencies, as well as employees.

The OSHA hazard communication standard, the EPA community right-to-know regulations under Title III of CERCLA, and similar state statutes require that we organize and, as necessary, disclose information about hazardous materials used or produced in our operations to various federal, state, and local agencies, as well as to employees.

Human Capital Management

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Our employees are our greatest asset, and we seek to attract and retain top talent by fostering a culture that is guided by our four pillars of people, culture, equipment, and service.

These four pillars guide our values in a manner that respects all people with a commitment to safety and the environments where we operate.

These four pillars rest on a foundation of safety and guide our values in a manner that respects all people with a commitment to safety and the environments where we operate.

Ethics and Values.

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We provide continuous training opportunities for employees, including training that is required by applicable laws, regulations, standards, and permit conditions.

Our safety standards and expectations are clearly communicated to all operations employees with the expectation that each individual has the obligation to make safety their highest priority.

Our safety standards and expectations are clearly communicated to all employees with the expectation that each individual has the obligation to make safety their highest priority.

Our safety culture promotes an open environment for discovering, resolving, and sharing safety challenges.

We strive to eliminate unwanted safety events and support our safety culture through a comprehensive program that includes a dedicated field operations-based safety team, monthly employee safety meetings, and safety audits, among other things.

A portion of our senior management bonuses and field management bonuses are dependent on our safety performance.

We promote employee empowerment, leadership, communication, personal responsibility to comply with standard operating procedures and regulatory requirements, effective risk reduction processes, and personal wellness.

goal is operational excellence, which includes maintaining an injury- and incident-free workplace.

To achieve this, we strive to hire and maintain the most qualified and dedicated workforce in the industry and make safety and safety accountability part of our daily operations.

A portion of our senior management bonuses and field leadership bonuses are dependent on our safety performance.

We promote employee empowerment, leadership, communication, and personal responsibility to comply with standard operating procedures and regulatory requirements, effective risk reduction processes, and personal wellness.

Our goal is operational excellence, which includes maintaining an injury- and incident-free workplace.

To achieve this, we strive to hire and maintain a highly qualified and dedicated workforce, and create a safety culture with safety accountability as part of our daily operations.

The OSHA Total Recordable Incident Rate (“TRIR”) is a key performance indicator by which we evaluate the success of our safety program.

TRIR provides a measure of occupational safety performance for the year by calculating the number of recordable incidents compared to the total number of hours worked by all employees.

Out of approximately 1,600,000 hours worked in 2021, our TRIR was 0.75 for 2021.

We believe our low TRIR and our 3,800,000 hours worked without a lost time event speaks to our investment in and focus on safety.

Regarding COVID-19, as an essential business providing critical energy infrastructure services, we place a high priority on the safety of our employees and the continued operation of our assets, and we continue to follow and operate in accordance with federal, state and local health guidelines and safety protocols.

We also continue to follow the U.S.

Center for Disease Control guidance and provide employees with training and direction to help maintain the health and safety of our workforce.

Out of approximately 1.65 million hours worked in 2022, our TRIR was 0.12 for 2022 versus the 2022 industry average of 0.70.

We believe our low TRIR speaks to our investment in and focus on safety.

Available Information

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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 1. Business